J P Chawla & Co. LLP

Understanding the Similarity Between GSTR-1 and GSTR-3B

Businesses are constantly working towards improving their processes and ensuring accurate tax filings in the ever-changing world of GST compliance. One of the main challenges faced by taxpayers is to ensure that GSTR-1 and GSTR-3B returns are perfectly synchronized. It is crucial to align these two key components of GST reporting in order to avoid any discrepancies or potential issues with tax authorities.

This article will help you understand  the significance of streamlining GSTR-1 and GSTR-3B, highlighting why it is more beneficial to strive for consistency rather than trying to explain differences. We will also discuss  proactive strategies to address and minimize any discrepancies. By understanding the importance of maintaining uniformity in these returns, businesses can confidently navigate the complexities of GST compliance, resulting in a smoother and more efficient taxation process.

What are GSTR-1 and GSTR-3B?

Form GSTR-1 is a statement of return that must be completed by regular dealers to record all the outward supplies made during a month or quarter. In simpler terms, GSTR-1 is a return form where sales and other outward supplies information must be recorded. On the other hand, GSTR-3B is a monthly self-assessment return. When filing GSTR-1, you need to include details of outward supplies that support the liability declared in GSTR-3B.

What is the process for filing the GSTR-1 form?

The GSTR-1 form comprises of various tables where registered businesses are required to provide details of their outward supplies.

  • You need to log into the GST portal and go to the “GSTR-1” section.
  • You need to click on the ‘Schedule’ tab and select ‘File GSTR-1 Return’.

In order to file GSTR-1, you need to first login into your GST registration account. You can do this by clicking on the link at the top right corner of your GST portal screen or by logging in using your registered email ID & password. Once logged in, you will see a list of all your registered businesses under which you have assigned business activity codes (BAC). Now select the business activity code for which GSTR-1 needs to be filed. Clicking on that BAC will take you directly to that.

The nature of GST returns is interconnected.

The seamless connection throughout the tax reporting process is established by interlinking all GST returns, such as e-invoice, GSTR-1, and GSTR-3B. It should be noted that although there is an option to update or make changes in these returns, it is not advisable to exercise this option.

Ideally, the data initially captured in the e-invoice should seamlessly transfer to GSTR-1 and subsequently to GSTR-3B without any modifications. This ensures that the reporting is consistent and accurate. Modifying the data at a later stage can introduce complications and raise the possibility of discrepancies. Therefore, it is wise for businesses to follow the recommended practice of preserving the integrity of the data across interconnected GST returns. By doing so, they can minimize the need for adjustments and establish a smooth and dependable compliance process.

Updated Advisory: Liability / Discrepancy Found in GSTR1 – GSTR3B (DRC-01B)

The government has recently issued a new advisory regarding online compliance for Liability / Difference Appearing in GSTR1 – GSTR3B (DRC-01B). GSTN has created a feature that allows taxpayers to provide an online explanation for any disparities found in their GSTR-1 & 3B returns..   

The functionality of comparing the liability declared in GSTR-1/ IFF (Invoice Furnishing Facility) with the liability paid in GSTR-3B/3BQ for each return period results in the taxpayer receiving an intimation in the form of DRC-01B if either the declared liability exceeds the paid liability by a predefined limit or the percentage difference goes beyond the configurable threshold. In relation to GST, businesses are increasingly receiving notices from the GST Network (GSTN) that highlight disparities in their tax filings or financial records.

The implementation of the new form DRC-01B carries great importance because it promotes a transparent and cooperative method for resolving issues. By using this form, businesses are able to offer thorough explanations with supporting information that can assist the government in making informed choices. This proactive approach not only enhances communication between businesses and the government, but also guarantees that the government obtains complete insights for a fair and precise evaluation. If additional measures are deemed required, the government has the option to initiate a formal process by issuing a Show Cause Notice (SCN), allowing businesses to respond and present additional evidence to support their position.

Putting emphasis on the right processes and tools

It is important for businesses to give priority to creating strong procedures and using efficient tools in order to minimize variations in GST returns. This will help them avoid the need for lengthy explanations. By introducing efficient workflows and making use of technology solutions, organizations can decrease the likelihood of inconsistencies and discrepancies in their GST filings.

Businesses can improve their GST returns, efficiency, compliance, and overall financial management by investing in the appropriate processes and tools.

Here are some best practices and recommendations: 

Before filing

For businesses aiming to maintain compliance efficiency, it is crucial to ensure a seamless alignment between GSTR-1 and GSTR-3B filings. To accomplish this, implementing smart practices and utilizing suitable tools can greatly decrease discrepancies and the necessity for explanations. Here are some valuable suggestions:

  • Simplify Data Management: To maintain a traceable and transparent transaction trail, it is recommended to use only one source of data when generating an e-invoice and refrain from making any edits afterwards. Instead, if necessary, manage any required adjustments through Credit or Debit Notes (CDN). This practice helps businesses avoid the need for unnecessary explanations.
  • Ensure regular reconciliation is conducted: It is crucial to conduct a comprehensive reconciliation between your GSTR-1 and the government-prepared GSTR-1 before submitting it. This step is necessary to detect any missing or unnecessary entries, which can then be rectified promptly. By addressing discrepancies at the invoice level during this reconciliation process, the filing of the GSTR 1 form can be streamlined, reducing the chances of any errors.

After filing

  • Create Comparative Reports: In this task, your objective is to produce comparative reports.  Once the GST returns have been filed, it is essential to produce monthly 1-3B comparative reports at the organizational level. These reports give a detailed summary of how each GSTIN within the organization has submitted their returns. By comparing the data from GSTR-1 and GSTR-3B, organizations can pinpoint any inconsistencies or deviations in the filings, allowing them to implement necessary measures.
  • Recognize and Keep Track of Differences: The comparative reports that are created identify the GSTINs that have inconsistencies in their filings. It is crucial to closely monitor these GSTINs in order to comprehend the reasons behind the disparities. By examining the causes, such as errors in data entry or system problems, organizations can take corrective actions and offer guidance to the respective GSTINs. This proactive approach guarantees that future returns are prepared with precision, reducing the likelihood of recurring discrepancies.
  • Manage Notices and Litigations: To ensure smooth GST operations, organizations should establish a centralized repository at the organizational level. This repository will keep track of notices and GST litigation pertaining to GSTR-1 and GSTR-3B filings. It will serve as a reference for other GSTINs within the organization, offering valuable insights into possible issues and legal matters. By monitoring notices and litigations, organizations can take a proactive approach in resolving similar problems, thereby minimizing their impact on compliance and facilitating efficient GST operations throughout the organization.


The reports generated from GSTR-1 and GSTR-3B provide a detailed snapshot of organizational GST compliance. By comparing the data from these two reporting periods, organizations can identify any inconsistencies or deviations in their filings. Additionally, by managing notices and litigation related to returns filed under these reports, organizations can ensure efficient GST compliance throughout the organization.

To know more about the topic please write to us at contact@jpc.co.in