Monthly GST Returns Filing – GSTR-1 & GSTR-3B Made Simple

Every registered business under GST must file monthly, quarterly, or annual returns to report sales, purchases, tax liabilities, and Input Tax Credit (ITC). The two key monthly GST returns are:

✔ GSTR-1 – Report of outward supplies (sales)
✔ GSTR-3B – Summary return of sales, purchases, ITC claims, and tax payments

Timely GST filing helps businesses stay compliant, avoid penalties, and claim Input Tax Credit (ITC).

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What is GSTR-1

GSTR-1 is a GST return that businesses file to report their sales (outward supplies) every month or quarter. It includes details of:

✔ B2B Sales – Sales to GST-registered businesses.
✔ B2C Sales – Sales to unregistered customers.
✔ Exports & SEZ Supplies – Sales outside India or to SEZ units.
✔ Debit & Credit Notes – Adjustments to previous invoices.

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Types of GST Returns

GST returns, their due dates, and penalties for late filing.

Reasons to File GSTR-1

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Buyers Get Input Tax Credit (ITC)

Your customers can claim ITC only if your sales are correctly reported.

Avoids Late Fees & Penalties

Delay in filing can result in a fine of ₹50 per day (₹20 for Nil returns).

Mandatory Under GST Law

Every GST-registered business (except composition dealers) must file it.

Prevents Tax Mismatches & Notices

Wrong or missing details can cause errors in GST records, leading to notices from tax authorities.

Keeps Business Transactions Transparent

Proper reporting avoids future disputes and errors.

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Process for Filing GSTR-1 (Outward Sales Return)

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  • Gather all sales invoices, debit/credit notes, export invoices, and e-way bill details.
  • Compare sales data with sales ledger, e-way bill portal, and previous GSTR-1 filings.
  • Ensure all B2B, B2C, and export transactions are accurately recorded.

Important: Any incorrect or missing invoices can be amended in the next month’s GSTR-1.

  • sit the GST Portal (www.gst.gov.in).
  • Enter your Username & Password to access the dashboard.
  • Go to the Returns Dashboard and select the financial year & return period.
  • Click on “Prepare Online“ under GSTR-1.
  • B2B Sales (Business to Business) – Enter GSTIN, invoice details, tax amount.
  • B2C Large (Interstate sales above ₹2.5 lakh) – Provide buyer’s state and invoice details.
  • B2C Small (Other sales) – Summary of smaller sales transactions.
  • Exports & SEZ Supplies – Provide shipping details & LUT details if applicable.
  • Debit & Credit Notes – Adjust sales if needed.
  • Amendments (if any) – If there are corrections for previous returns, enter the revised details.

Tip: Data can also be uploaded using an Excel template or GST software.

  • Click on “Preview GSTR-1“ to review the entered data.
  • If any corrections are needed, update before submitting.

Important: Once GSTR-1 is filed, no modifications are allowed for the same period.

  • Click “Proceed to File“ and submit using:
      • EVC (Electronic Verification Code) – OTP verification via registered mobile/email.
      • DSC (Digital Signature Certificate) – Required for companies & LLPs.
             ✔ Download the acknowledgment receipt for records.

Differences Between GSTR-1 & GSTR-3B

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What is GSTR-3B

GSTR-3B is a monthly summary GST return that businesses file to report their total sales, input tax credit (ITC), and tax payment. Unlike GSTR-1, it does not require invoice-level details but provides an overall summary of tax liability and ITC adjustments.

It includes details of:

✔ Total Sales (Outward Supplies) – Summary of all taxable sales during the period.
✔ Input Tax Credit (ITC) Claims – GST paid on purchases that can be used to offset tax liability.
✔ Tax Liability & Payment – GST payable after adjusting ITC.
✔ Reverse Charge Transactions (RCM) – Tax paid on purchases where the buyer is liable to pay GST.
✔ Nil, Exempt & Non-GST Supplies – Sales that are exempt, zero-rated, or outside the GST scope.

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Types of GST Returns

GST returns, their due dates, and penalties for late filing.

Process for Filing GSTR-3B (Summary Tax Return)

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  • Gather sales details (from GSTR-1), purchase invoices, and ITC details from GSTR-2B.
  • Compare Input Tax Credit (ITC) in GSTR-2B with purchase ledger.
  • Verify any reverse charge transactions and tax payments.

Important: Only ITC reflecting in GSTR-2B is allowed to be claimed under new GST rules.

  • Visit www.gst.gov.in and log in using your credentials.
  • Navigate to Returns Dashboard and select the return period.

Click on “Prepare Online” under GSTR-3B.

  • Outward Supplies (Sales Data) – Auto-populated from GSTR-1 (Verify & confirm).
  • Input Tax Credit (ITC) Claimed – Auto-populated from GSTR-2B (Ensure accuracy).
  • Reverse Charge Liability (RCM Transactions) – Declare any tax liability under RCM.
  • Total Tax Payable – CGST, SGST, IGST calculated based on taxable supplies.
  • Late Fees & Interest (If applicable) – Enter the amount payable for delayed filing.

Tip: Ensure that ITC is not more than the amount in GSTR-2B to avoid mismatches.

  • Click on “Preview Draft GSTR-3B” to review all details before submission.
  • If tax liability is higher than ITC, make the payment using:
      • Cash Ledger – If additional tax needs to be paid.
      • Credit Ledger – If ITC is available for adjustment.
  • Click on “Proceed to File“ and submit using:
      • EVC (OTP verification) or DSC (for businesses requiring digital signatures).
             ✔ Download the acknowledgment receipt for records.

Key Differences Between GSTR-1 & GSTR-3B

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Frequently Asked Questions

What is GST Input Tax Credit (ITC)?

GST Input Tax Credit allows businesses to deduct the tax they have paid on inputs from the tax they need to pay on output. This means if you are a business owner, you can reduce the taxes you pay on sales by the amount of GST paid on purchases.

Who is eligible to claim GST Input Tax Credit?

Businesses registered under GST can claim ITC. This is applicable to goods and services used for business purposes. It is not available for goods or services exclusively used for personal use or those exempt under GST.

How can I claim GST Input Tax Credit?

To claim ITC, ensure that you possess a valid tax invoice or debit note issued by a registered supplier. You also need to ensure that these purchases are entered in your GST returns and that the taxes on inputs have been paid to the government by your suppliers.

What conditions must be fulfilled to claim ITC?

The conditions include possession of a tax invoice, receipt of goods or services, the supplier has paid the corresponding tax to the government, and the GST return has been filed.

What documents are required to claim ITC?

The essential documents include tax invoices, debit notes, and a receipt of goods or services. Supplementary documentation might include shipping documents and contracts if applicable.

Can ITC be claimed on capital goods?

Yes, ITC can be claimed on capital goods used for the business. However, if the capital goods are used for exempt supplies or personal use, the ITC claim will be restricted accordingly.

What happens if ITC is not claimed within the stipulated time?

ITC should be claimed within the financial year in which the invoice is dated, or before the due date of filing the GST return for September of the following year, whichever is earlier. If missed, the opportunity to claim ITC for that period is lost.

How is ITC managed in case of returns or purchase cancellations?

If goods or services are returned, the ITC claimed on the original purchase has to be reversed. Similarly, for cancellations, any ITC claimed must be adjusted against future liabilities.

Are there any restrictions on claiming ITC?

Yes, ITC cannot be claimed on motor vehicles, food expenses, employee benefits, and other personal consumption goods. Goods and services used for making exempt supplies or for non-business purposes are also not eligible.

How to manage ITC on input services distributed as ISD?

Input Service Distributor (ISD) mechanism allows the distribution of tax credits on input services used at multiple locations of the same business. The ISD registration is required to distribute the credit, and it must issue an ISD invoice clearly mentioning the amount of credit distributed.