Blocking of GSTR-1 if GSTR-3B is not filed

Updated on: Aug 27th, 2021


2 min read

Blocking of GSTR-1 filing has been notified by adding a new sub-rule (6) under Rule 59 of the CGST Rules. The Central Board of Indirect Taxes and Customs (CBIC) issued the update vide notification no. 94/2020 dated 22nd December 2020. This rule deals with the form and manner of furnishing details of outward supplies.

Latest Updates on GSTR-1

1st February 2022
Budget 2022 updates-
(1) The last date to make amendments, corrections in GSTR-1, and upload missed invoices or debit/notes of one financial year is no longer the due date to file September return of the following year, but it is 30th November of the following year or filing of annual return, whichever is earlier.
(2) The amendments also prescribe tax period-wise sequential filing of details of outward supplies.

21st December 2021
(1) From 1st January 2022, taxpayers cannot file GSTR-1 if the previous period’s GSTR-3B was not filed.
(2) From 1st January 2022, the GST officers can initiate recovery proceedings without any show-cause notice against taxpayers who under-report sales in GSTR-3B compared to GSTR-1.

29th August 2021
Company taxpayers can continue filing GSTR-1 and GSTR-3B using EVC or DSC up to 31st October 2021 via the CGST notification number 32/2021 dated 29th August 2021.

26th August 2021
From 1st September 2021, taxpayers will not be able to file GSTR-1 or use the IFF for August 2021 on the GST portal if they have pending GSTR-3B filings. It applies if GSTR-3B is pending for the past two months till July 2021 (monthly filer) or for the last quarter ending 30th June 2021 (quarterly filer) as per CGST Rule 59(6).

All about blocking of GSTR-1 and IFF filing

If a registered taxpayer fails to file the return in GSTR-3B for the preceding 2 months then he would not be allowed to provide the details of outward supplies of goods or services or both in GSTR-1. The CGST Rule 59(6) covers this aspect.

Further, if the taxpayer has opted into the QRMP scheme to file returns on a quarterly basis, then he will not be allowed to file B2B sales on the IFF or file GSTR-1 if GSTR-3B of last quarter is pending for filing.

As per prior provisions, non-filing of GSTR-3B resulted in the blocking of e-way bill generation. But, as per new rules, it will result in the blocking of the e-way bill as well as GSTR-1 of the registered person. Also, if a taxpayer is required to file GSTR-3B due to the applicability of Rule 86B and fails to do so, his GSTR-1 will get blocked.

For example, if the taxpayer has not filed GSTR-3B for April and May, then his GSTR-1 will get blocked for June. For quarterly return filers if the taxpayer fails to file GSTR-3B for the preceding tax period then he will not be permitted to file GSTR-1 for subsequent quarters. The main motto of the Government behind this is to track the non-filers and make them compliant.

Rule 59(6) implementation on the GST portal

The GST portal is implementing this on the GST portal starting from 1st September 2021. Hence, if a taxpayer tries to save data of GSTR-1 or use IFF for August 2021 and attempts to click the ‘Submit’ button for filing, the portal throws an error. It flags any pending GSTR-3B returns for two months in a row (up to July 2021) or one quarter (ending 30th June 2021). The taxpayer should file pending GSTR-3B returns to perform GSTR-1 filing.
Tax officers cannot intervene to unblock the filing as it is system-automated.

Impact of the blocking of GSTR-1 filing

If a taxpayer is unable to file GSTR-1 then the counterparty will not be able to claim the credit on such purchase. Non-uploading of invoices in GSTR-1 will result in the non-reflection of the transaction in the counterparty’s GSTR-2A and GSTR-2B. Thus, the recipient will be automatically denied credit.

How to resolve the issue?

Filing of GSTR-3B will result in unblocking of GSTR-1. The Government wants the taxpayer to be compliant and thus these new provisions have been added to the existing rules and regulations.

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