GSTR 3: Eligibility, Format, Due Date & Return Filing 

GSTR-3 is a crucial monthly return under the GST framework that consolidates the details provided in GSTR-1 and GSTR-2. It presents a comprehensive monthly summary of sales and purchases, total inward and outward supplies, tax liabilities, taxes paid, and input tax credit (ITC) claimed by a taxpayer. Every GST-registered dealer is required to file GSTR-3 for the final assessment of tax liabilities, ensuring that all transactions are accurately reported and remain compliant with GST regulations. In this article, we will discuss GSTR-3 eligibility, format, due date, and the step-by-step return filing process.

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What is GSTR 3 Return? 

GSTR-3 is a monthly return that provides a summarised report of all transactions, including sales, purchases, and interstate movement of stock for a particular month, along with the GST liability. As mentioned, this return is auto-generated by consolidating data from GSTR-1 and GSTR-2, offering a complete picture of a taxpayer’s monthly activities. By reconciling tax credits and liabilities, GSTR-3 ensures accuracy, transparency, and efficient tax administration within the GST system. Filing GSTR-3 timely and accurately helps taxpayers avoid penalties and fully benefit from eligible input tax credit (ITC). This return applies to all GST-registered taxpayers who have neither opted for the composition scheme nor hold a Unique Identification Number (UIN), and it is not applicable to non-resident taxpayers. 

Who Should File GSTR 3 Return?

Every GST-registered person is required to file GSTR-3 on a monthly basis, regardless of whether they have carried out any transactions during the month. However, certain categories of registered persons are exempt from filing GSTR-3. Instead, they follow separate return filing procedures under different forms and rules. These categories include:

• Input Service Distributors (ISD): They are required to file GSTR-6 to distribute input tax credits.
• Composition Dealers under GST: Registered under the composition scheme, they file GSTR-4 quarterly instead of GSTR-3.
• Non-resident taxable persons: These taxpayers file GSTR-5 for their tax reporting.
• Persons collect TCS (Tax Collected at Source): They file returns under GSTR-8.
• Persons deduct TDS (Tax Deducted at Source): They are required to file GSTR-7.
• Suppliers of online information and database access or retrieval services (OIDAR): Suppliers liable to pay tax under Section 14 of the IGST Act are not required to file GSTR-3.

When to File GSTR 3 Return?

GSTR-3 return for a particular month must be filed on or before the 20th of the following month. For example, if you are filing GSTR-3 for the month of September 2023, it must be submitted before the 20th of October 2023. Eligible GST taxpayers must file the return before the due date to avoid late fees, interest charges, and disruptions in compliance.

What must be done before filing a GSTR-3 return?

Before filing the GSTR-3 return, certain steps must be completed to ensure a smooth and error-free submission:

• GST Registration: You must be a registered taxpayer under GST and possess a valid 15-digit PAN-based GSTIN.
• Prior Filing of GSTR-1 and GSTR-2: Make sure that GSTR-1 and GSTR-2 for the relevant month have already been filed, as GSTR-3 is auto-generated based on the data provided in these returns.
• Verification Method: Keep your verification method ready. You can validate your return using an Electronic Verification Code (EVC) sent to your registered mobile number, a Class 2 or higher Digital Signature Certificate (DSC), or an Aadhaar-based e-sign.
• Payment of Tax Liability: It is crucial to pay your GST liability for the month before filing the return. You can review this payable amount in the GSTR-3 summary generated on your GST portal. Ensuring tax payment in advance prevents rejection or delays in return submission.

GSTR 3 Return Filing - Section by Section Explanation

GSTR-3 is a comprehensive monthly return form with 15 headings, designed to capture complete tax details for a given period. It consists of two parts — Part A, which is auto-populated from GSTR-1, GSTR-1A, and GSTR-2, and Part B, which requires manual input. Below, we explain each section in detail, outlining the information that must be reported accurately under GSTR-3.

1. Provide GSTIN

Enter the 15-digit GST Identification Number (GSTIN). If the final GSTIN is not yet allotted, the provisional ID can also be used.

2. Name of the Taxpayer

The legal name and trade name of the taxpayer will be auto-populated, ensuring identification accuracy.

GSTR 3: Part A

Part A of GSTR-3 is completely auto-populated from GSTR-1, GSTR-1A, and GSTR-2. It contains key financial data and tax computations for the tax period and helps taxpayers understand their tax liability and credits available. Below is a detailed explanation of each section included in Part A:

3. Turnover

This section auto-populates the total turnover for the period, divided into the following categories:

• Taxable Turnover (Other than zero-rated): Includes sales to registered and unregistered persons, excluding exports and reverse charge transactions.
• Zero-rated supply with payment of tax: Export sales with IGST payment, eligible for refund.
• Zero-rated supply without payment of tax: Export sales made under Bond/LUT without IGST.
• Deemed Exports: Supplies made to SEZ units where goods do not physically leave India.
• Exempted: Goods and services not attracting GST.
• Nil Rated: Supplies taxed at 0%.
• Non-GST Supply: Sales of items outside GST scope like petroleum products or electricity.

4. Outward Supplies

This section auto-populates data from GSTR-1, summarizing all sales transactions.

4.1 Inter-State Supplies (Net for the month) Breakdown of interstate sales as:

• A. Taxable supplies: Interstate sales excluding reverse charge and exports, categorized tax-rate wise.
• B. Supplies attracting reverse charge: Sales on which the recipient pays tax.
• C. Zero-rated supply with IGST payment: Export sales with IGST payment.
• D. E-commerce sales subject to TCS: Supplies made via e-commerce operators, with the operator’s GSTIN displayed.

Note: Exports under bond/LUT and reverse charge amendments are excluded here.

4.2 Intra-State Supplies (Net for the month):

Similar structure as above but for intra-state sales.

4.3 Tax effect of amendments in outward supplies:

Details of any changes made in invoices from prior returns, with impacts on tax liability or ITC adjustments.

5. Inward Supplies Attracting Reverse Charge (Including Import of Services)

Auto-filled using GSTR-2 data:

5A. Inward supplies on which tax is payable on reverse charge basis

Summarizes purchases liable for reverse charge, net of advances and adjustments.

5B. Tax effect of amendments for reverse charge supplies

Reflects adjustments due to changes in invoices attracting reverse charge, impacting tax liability or ITC.

6. Input Tax Credit (ITC)

Details of ITC available and adjustments made:

Part I

• Inputs: ITC on raw materials.
• Input Services: ITC on services like consulting.
• Capital Goods: ITC on assets like laptops and machinery.
• ITC from ISD: Input credit received from Input Service Distributors.

Part II

• Changes and rectifications from previous months’ returns, impacting ITC eligibility.

7. Addition and Reduction in Output Tax for Mismatch and Other Reasons

Data auto-populated from GSTR-2, showing mismatches and adjustments:

• a. Mismatched/duplicate ITC claims: Reversals of excess ITC claimed.
• b. Tax liability on mismatched credit notes: Liability added due to credit note errors.
• c. Reclaim of ITC on rectified mismatches (invoices): Refunds for previously missed ITC.
• d. Reclaim of ITC on rectified mismatch credit notes: Reduction in output tax due to corrections.
• e. Negative tax liability from previous tax periods: Excess tax paid earlier, adjusted this month.
• f. Advances adjusted with current supplies: Tax paid on advances now adjusted.
• g. ITC reversal/reclaim for other reasons: Adjustments made for any other ITC corrections.

8. Total Tax Liability

Comprehensive tax liability computed under different heads:

• 8A. On outward supplies: Tax on sales made.
• 8B. On inward supplies under reverse charge: Tax on reverse charge purchases.
• 8C. On ITC reversals or reclaims: Adjustments affecting tax liability due to ITC corrections.
• 8D. On mismatches and other rectifications: Additional tax arising from corrections or amendments.

9. Credit of TDS and TCS

Auto-populated from TDS/TCS returns, reflecting tax deductions/collections credited against liability.

10. Interest Liability

Breakdown of interest calculated due to:

• Mismatches in outward supplies.
• Incorrect ITC claims.
• Other ITC reversals.
• Delay in tax payments.
• Interest credits from rectifications.
• Carried forward interest liabilities. The system calculates the final interest liability with separate figures for CGST, SGST, and IGST.

11. Late Fee

Displays late fee applicable for delayed filing. The standard rate is ₹100 per day (capped at ₹5,000), applicable for CGST and SGST, with no late fee for IGST.

GSTR 3: Part B

Part B of GSTR-3 is to be manually completed by the taxpayer, while Part A is auto-populated from GSTR-1, GSTR-1A, and GSTR-2. Part B focuses on tax payment details, interest or late fees, refunds, and ledger adjustments. Here’s a section-wise explanation:

12. Tax Payable and Paid

In this section, you need to declare the tax liability and specify how it’s being discharged — through cash or Input Tax Credit (ITC). For instance, if your total tax liability is ₹50,000 and your available ITC is ₹20,000, you can pay ₹30,000 in cash (report in Column 3) and utilize ₹20,000 of ITC (report under Columns 4, 5, and 6 as applicable). Ensure ITC usage follows the prescribed rules for offsetting tax liability.

13. Interest, Late Fee, and Other Amounts (Other than Tax) Payable and Paid

Report any interest and late fees payable and paid in this section, with proper classification under CGST, SGST, and IGST. For example, if you have an interest liability of ₹1,000 and a late fee of ₹500 (only for CGST and SGST), report these amounts separately along with payment details. Remember, no late fee applies to IGST.

14. Refund Claimed from Electronic Cash Ledger

This section allows you to claim a refund if you have excess cash in your electronic cash ledger after meeting all monthly return liabilities. For example, if you paid ₹60,000 but your actual liability is ₹55,000, you may claim a refund of ₹5,000. Upon filing GSTR-3, this refund claim will reflect as a debit entry in your electronic cash ledger.

15. Debit Entries in Electronic Cash/Credit Ledger

This part is auto-filled by the system after tax payments are made and the return is submitted. It shows the actual debit entries from your electronic cash and credit ledgers corresponding to tax, interest, and fee payments.

Lastly, you must complete the declaration confirming that all the information provided is accurate and complete.

For detailed information: How to File GSTR-3B Returns?

Consequences of Late or Non-Filing of GSTR-3 Return

Failing to file GSTR-3 returns on time can lead to serious compliance issues and financial penalties for taxpayers. If the GSTR-3 return is not filed, it will restrict the filing of GSTR-1 for the following month, disrupt the entire GST filing cycle and attract heavy fines and penalties.

In the case of late filing, the taxpayer will face both interest and late fee charges:

• Interest:
• Charged at 18% per annum on the outstanding tax amount.
• The interest is calculated from the next day after the due date (i.e., from the 21st of the following month) until the date of payment.
• Late Fee:
• ₹100 per day under CGST and ₹100 per day under SGST, totaling ₹200 per day.
• The maximum late fee can go up to ₹5,000 under each Act.
• Importantly, there is no late fee applicable on IGST.

Conclusion

In conclusion, GSTR-3 serves as a critical monthly return that consolidates data from GSTR-1 and GSTR-2, offering taxpayers a complete overview of their sales, purchases, tax liabilities, and input tax credits. It ensures accuracy and transparency in GST compliance while helping taxpayers reconcile their financial records and avoid penalties. Timely and correct filing of GSTR-3 is essential for maintaining seamless GST compliance and leveraging eligible ITC benefits for any GST-registered person not covered under special categories like composition dealers or ISDs.

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• GSTR-1 Filing
• GSTR-2 Filing
• GSTR-3B Filing
• GSTR-4 Filing
• GSTR-5 Filing
• GSTR-5A Filing
• GSTR-6 Filing
• GSTR-7 Filing
• GSTR-8 Filing
• GSTR-9 Filing
• GSTR-10 Filing
• GSTR-11 Filing