From September 1, non-filers of GST return will be banned from filing GSTR-1

Taxpayers who have not filed the GSTR-3B returns in the preceding two months will not be able to file details of outward supplies in GSTR-1 from September 1, the Goods and Services Tax Network (GSTN) has said in an advisory. The GSTN said that Rule-59(6) of Central GST rules which provides for restriction in the filing of GSTR-1, will come into effect from September 1, 2021.

While the taxpayers file GSTR-1 of a particular month by the 11th day of the subsequent month, GSTR-3B, through which businesses pay taxes, is filed in a staggered manner between the 20th-24th day of the succeeding month, reports news agency PTI. The move will be enacted under Rule-59(6) of CGST Rules, 2017, which comes into effect from September 1, 2021, said the GSTN.

After the CGST Rule-59(6) comes into effect, the system will check whether GSTR-3B for the previous two monthly tax periods has been filed by monthly filers or not. Quarterly filers will have to file GSTR-3B for the previous quarterly tax period. Failure to comply with these stipulations will result in banning on filing GSTR-1 returns. “This check will operate on clicking the SUBMIT button of GSTR-1 and the system will give an error message if the condition of Rule-59(6) is not met. It may be noted that records which have been saved in GSTR-1 will remain saved and filing of such records will be permitted after Rule-59(6) is complied with," the GSTN said.

What does this mean?

According to the rule, a registered person shall not be allowed to furnish the details of outward supplies of goods or services or both in form GSTR-1, if he/she has not furnished the return in form GSTR-3B for the preceding two months. For taxpayers filing the quarterly return, GSTR-1 filing would be restricted if he/she has not furnished the return in form GSTR-3B for the preceding tax period.

"Compliant taxpayers would appreciate this move as till now their input tax credit was also at risk in case vendors do not file their GSTR-3B even though such invoice is appearing in GSTR-2A," EY tax partner Abhishek Jain told news agency PTI.

Jain said that this is a well-thought restriction and a necessary control check to eliminate the cases where taxpayers although report their supply invoices in GSTR-1 but do not submit their corresponding GSTR-3B return through which tax is actually paid to the government.