GSTR-3B or GSTR-1? Derailed comparison with Use Case and Report Insights

Aman has a small business selling clothes. He needs to file a GST return, yet he gets his GSTR-3B and GSTR-1 mix-ups. And here are the ways they assist him:

Key Differences:
 

Why This Matters for Aman?
 

• GSTR-3B helps Aman:
   
  • Pay GST quickly with a simple summary.
     
  • Claim credit for taxes paid on purchases.
     
• GSTR-1 helps Aman:
   
  • Share detailed sales data with customers and the government.
     
  • Avoid mismatches in his future filings.

Because he files his taxes correctly, Aman can avoid getting into trouble with the law.

What is GSTR-3B? (Simple Explanation with Example)

GSTR-3B is the monthly summary return that must be filed every month following the GST rules. It makes it simple for them to list their wide sales, purchase orders and tax settlements.

Example: Aman’s Clothing Store
 

• Aman sells clothes worth ₹2,00,000 in a month.
   
• He buys raw materials worth ₹1,00,000 (with GST paid).
   
• He must file GSTR-3B to:
   
  • Declare his total sales (₹2,00,000).
     
  • Claim Input Tax Credit (ITC) on purchases (₹18,000 GST paid on ₹1,00,000 at 18%).
     
  • Pay the remaining tax (if any).

Key Points About GSTR-3B
 

Why does GSTR-3B Matter for Aman?
 

• Helps him pay GST quickly without detailed invoices.
   
• Allows him to claim credit for taxes paid on purchases.
   
• Avoids penalties if filed on time.

By properly submitting GSTR-3B, Aman meets compliance standards and prevents problems with taxes.

What is GSTR-1? (Simple Explanation with Example)

GSTR-1 is a detailed sales return filed by businesses under GST. It lists all outward supplies (sales) made during a month or quarter.

Example: Aman’s Clothing Store

• Aman sells:
   
  • ₹1.5 lakh worth of clothes to other businesses (B2B)
     
  • ₹50,000 worth to retail customers (B2C)
     
• He must file GSTR-1 to:
   
  • Upload invoice details for B2B sales (buyer’s GSTIN, amount, tax)
     
  • Report total B2C sales (no invoice details needed if under ₹2,50,000 per customer)

Key Points About GSTR-1
 

Why GSTR-1 Matters for Aman?
 

• Helps his buyers claim ITC (appears in their GSTR-2A).
   
• Avoids mismatches with his GSTR-3B filing.
   
• Prevents the blocking of future GST filings if delayed.

By filing GSTR-1 correctly, Aman ensures smooth business for himself and his customers.

How Aman Files GSTR-3B and GSTR-1: A Simple Guide

Aman runs a small clothing business. Here's how he files his GST returns each month:

Step 1: Record Sales (GSTR-1)
 

• B2B Sales: Sells ₹1,50,000 to another store (issues tax invoice with GSTIN).
   
• B2C Sales: Sells ₹50,000 to retail customers (reports as one total).
   
• Filing:
   
  • Uploads B2B invoices with details (GSTIN, amount, tax).
     
  • Reports B2C sales as a single amount.
     
  • Files by the 11th of next month.

Step 2: Pay Tax (GSTR-3B)
 

• Total Sales: ₹2,00,000 (₹1,50,000 B2B + ₹50,000 B2C)
   
• Tax Due: ₹36,000 (18% GST on ₹2L)
   
• ITC Claim: ₹18,000 (from fabric purchases)
   
• Net Tax Payable: ₹18,000 (₹36,000 - ₹18,000)
   
• Filing:
  • Pays ₹18,000 via cash ledger.
     
  • Files summary by the 20th of next month.

Key Differences in Aman's Filing Process:
 

Why This Matters?

 

• GSTR-1 helps Aman's buyers claim credit.
   
• GSTR-3B helps Aman pay the correct tax.
   
• Filing both on time avoids penalties.

Because of this, Aman ensures that his company operates without problems or legal hassles.

Conclusion

To Aman, filling out GSTR-1 and GSTR-3B properly makes his accounts for the business just as clean and organised. By recording each sale and preparing a monthly summary (GSTR-1 and GSTR-3B), he makes sure he follows all required GST laws. Timely submission of GSTR-1 by Aman allows his business customers to get their due input tax credit and appreciate his services. 

By filing GSTR-3B before the 20th, he can avoid paying penalties because he pays the correct tax. Aman forgets that he may end up with penalties or get into difficulty when tax inspectors review his books, much as his business would struggle if he did not keep proper records. Because he knows these basic returns, Aman does not have to worry about taxes when trying to expand his clothing business. Filing your GST consistently and with accuracy is not.

FAQs

1. What happens if I file GSTR-1 late?

Late filing blocks your GSTR-3B filing and attracts ₹50/day late fees (₹100/day total for CGST+SGST). Your buyers also can't see your invoices to claim their input tax credit.

2. Can I correct mistakes in GSTR-1 after filing?

Small errors can be fixed in next month's return, but major changes may need a GST amendment form. Always double-check before submitting.

3. Why does GSTR-3B show less tax than GSTR-1?

This mismatch triggers tax notices. It usually happens when you forget to include some sales in GSTR-3 B. Both returns should match your actual sales.

4. Do I need to file both returns if I had no sales?

Yes, you must file "Nil returns" for both GSTR-1 and GSTR-3B to stay compliant, even in months with zero business activity.

5. How does GSTR-1 help my customers?

When you file GSTR-1, your business customers automatically see these invoices in their GSTR-2A/2B, helping them claim input tax credit.

6. What's the penalty for a wrong ITC claim in GSTR-3B?

Wrong claims may lead to tax notices, interest (18% per year), and penalties equal to 100% of the wrongly claimed amount.

7. Can I file GSTR-3B without filing GSTR-1 first?

No, the GST portal blocks GSTR-3B filing if GSTR-1 is pending. Always file GSTR-1 before the 11th/13th to avoid this.

8. Why do I pay tax in GSTR-3B but show details in GSTR-1?

GSTR-1 shares invoice details with buyers and the tax department, while GSTR-3B is where you calculate and pay your tax dues.

9. What if I can't pay the full tax while filing GSTR-3B?

Partial payments still require filing on time. Balance tax attracts 18% interest, but late filing adds extra penalties (₹50/day).

10. How long should I keep GST invoices?

Maintain all invoices and records for at least 6 years. The tax department can ask for them during audits or notices.

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LoansJagat Team

‘Simplify Finance for Everyone.’ This is the common goal of our team, as we try to explain any topic with relatable examples. From personal to business finance, managing EMIs to becoming debt-free, we do extensive research on each and every parameter, so you don’t have to. Scroll up and have a look at what 15+ years of experience in the BFSI sector looks like.