The Goods and Services Tax Network (GSTN) has recently issued an advisory on June 29, 2023, regarding online compliance pertaining to liability or difference appearing in returns. This advisory introduces a new functionality on the GST portal, allowing taxpayers to explain differences between their GSTR-1 (outward supplies) and GSTR-3B (summary return) online. In this article, we will provide a comprehensive guide on this online compliance process and its implications, based on GSTN Advisory.
Understanding the New Functionality
The newly developed functionality on the GST portal aims to compare the liability declared in GSTR-1/IFF with the liability paid in GSTR-3B/3BQ for each return period. If the declared liability exceeds the paid liability by a predefined limit or the percentage difference exceeds a configurable threshold, the taxpayer will receive an intimation in the form of DRC-01B Part-A. This feature has been implemented in accordance with the directives of the GST Council.
Filing a Reply in Form DRC-01B Part B
Upon receiving an intimation in Form DRC-01B Part-A, it becomes mandatory for the taxpayer to file a reply in Form DRC-01B Part-B. This step requires the taxpayer to provide clarification and reasoning for the discrepancy. The form offers an automated dropdown menu for clarification, and there is also space to include additional details if required. It is essential to file this reply in a timely manner to avoid any interruptions in the filing of GSTR-1/IFF for subsequent tax periods.
Applicability of Intimation in Form DRC-01B Part-A
Form DRC-01B Part-A is applicable to various types of taxpayers, including regular taxpayers, SEZ units/developers, casual taxpayers and the taxpayers who have opted in or opted out of the composition scheme. Regardless of the taxpayer category, it is important for all eligible individuals and entities to comply with the requirements of intimation in Form DRC-01B Part-A to ensure seamless filing of GSTR-1/IFF.
Importance of Timely Filing of Reply in Form DRC-01B Part-B
If a taxpayer fails to file a response in Form DRC-01B Part B for a previous tax period in response to intimation in Form DRC-01B Part-A, they will not be able to file their Form GSTR-1/IFF for the subsequent tax period. It is crucial to adhere to the specified timelines and ensure the timely filing of Form DRC-01B Part B to avoid any disruptions in the future filing process.
Intimation and Reference Number
Once the intimation in Form DRC-01B Part A is generated, a unique reference number will be assigned to the taxpayer. This reference number will be communicated to the taxpayer via email and SMS, containing important information related to the intimation. It is vital for taxpayers to check both their email and mobile messages for these notifications. Additionally, the intimation can also be accessed on the GST portal by navigating to Services > Returns > Return Compliance > Liability Mismatch DRC-01B.
Filing Frequency for Form DRC-01B Part-B
The frequency of filing reply in Form DRC-01B Part-B depends on whether the taxpayer files GSTR-3B on a monthly or quarterly basis. For quarterly filers (QRMP), the intimation in Form DRC-01B Part-A will be generated on quarterly basis, after filing the quarterly GSTR-3B. Conversely, for monthly filers, Form DRC-01B Part-A will be generated on a monthly basis after filing the monthly GSTR-3B. Taxpayers should file the reply in Form DRC-01B Part-B accordingly, aligning with the frequency of their GSTR-3B filing.
Seamless GSTR-1/IFF Filing after Reply
After filing the reply in Form DRC-01B Part-B, taxpayers can instantly proceed to file their GSTR-1/IFF. In the event of any issues encountered during the filing process, it is recommended to log out and log in again after a few minutes. This simple step can often resolve any technical glitches and facilitate the smooth filing of GSTR-1/IFF.
Ensuring Accuracy of ARN and Details
While entering the Acknowledgement Reference Number (ARN) to file the reply in Form DRC-01B Part-B, it is essential to ensure the accuracy of the ARN. The ARN should correspond to the same DRC-03 Part-A and GSTIN. Furthermore, the DRC-03 should have been filed on or after the date when DRC-01B Part-A was issued. It is also important to confirm that the cause of payment specified in the DRC-03 is “Liability mismatch – GSTR1 to GSTR-3B.” Additionally, the overall tax period should align with the period for which DRC-01B Part A was issued. Monthly filers should ensure that the period includes both the “From” and “To” dates, while quarterly filers should cover at least one month within the quarter.
Modifying or Deselecting Reasons
If a taxpayer needs to modify or deselect a reason for the payment difference after providing the details, it is important to follow the correct procedure. When attempting to deselect a reason, the system will display an error message requesting the deletion of previously entered details. By deleting the details entered for the reason selected earlier, the taxpayer can proceed to deselect that reason successfully.
Mandatory Compliance with Form DRC-01B Part A
Compliance with the intimation in Form DRC-01B Part-A is mandatory for taxpayers. If such an intimation is issued for the difference between the liability declared in GSTR-1/IFF and the amount paid through GSTR-3B/3BQ that exceeds the predefined limit, it is imperative to file reply in Form DRC-01B Part-B, providing the necessary details to reconcile the difference. Failure to file the required response in Form DRC-01B Part-B will prevent the taxpayer from filing GSTR-1/IFF for subsequent tax periods.
Conclusion
The introduction of the online compliance process by GSTN is a significant step towards simplifying the reconciliation of liability differences between GSTR-1 and GSTR-3B returns. By understanding the functionality, adhering to the filing requirements and timely responding to intimation in Form DRC-01B Part-A, the taxpayers can ensure a smooth compliance journey.