Sequential Filing of GST Returns: Mandatory Filing of GSTR-1 Before Filing GSTR-3B

File GSTR-1 before GSTR-3B for the same tax period starting from October 2022 return period onwards. GST Network requires a sequential approach for filing regular GST returns to ensure accurate submissions of GST data. But why is this process so significant? Let’s discuss.

What is the Sequential Filing of GSTR-1 and GSTR-3B?

Sequential filing implies filing of GSTR-1 containing your sales transactions followed by the filing of GSTR-3B return with the summary of total tax liability and making GST payments. If you do not file GSTR-1 for a given tax period (month or quarter), then you will not be able to file GSTR-3B for the same tax period.

The changes were carried out by CGST law amendments. CGST Sections 37 and 39 were notified on 28th September 2022.

Think of it as filling out your income details before paying the tax—this sequence ensures that your sales and tax filings are consistent, cutting down on errors.

Who Needs to Follow Sequential Filing?

This filing order applies to every GST-registered taxpayer who submits both GSTR-1 and GSTR-3B. Even if you have no sales or tax liability to report (a nil return), you still need to stick to the sequence.

From When is Sequential Filing Applicable?

The mandatory sequential filing came into effect from 1st October 2022. It means this law applies for the October 2022 return period onwards. However, changes were implemented prospectively on the GST portal from 1st November 2022.

Before this, businesses could technically file their returns in any order. But with growing instances of mismatched data, the GST Council decided to bring in this change.

Advisory on Sequential Filing of GSTR-1

GSTN’s advisory on sequential filing of GSTR-1 was issued on 21st October 2022. Here’s what the advisory says:

• Filing GSTR-1 is mandatory before you can file GSTR-3B for the same period.
• If previous GSTR-1 returns are pending, clear those first. Only then can you move forward to file GSTR-1 of the current period.

The official notification number 18/2022–Central Tax dated 28th September 2022 was issued to legally give effect to the same.

The goal is to ensure that your outward supplies match your tax payments—simple but effective.

Changes on the GST Portal: What to Expect

After this rule was implemented, the GST portal was updated to enforce sequential filing. Here’s how it works now:

• If GSTR-1 for a previous period isn’t filed, you cannot file GSTR-3B for that period or any subsequent ones.
• The system blocks filing and displays an error message explaining what’s pending.

This mechanism ensures you clear your backlog before moving forward.

Penalty for Failure to Sequence Filing

Non-compliance with the sequential filing order attracts significant penalties:

• Late Fees: INR 50 per day for non-compliance, capped at INR 5,000 for each return.
• Interest: 18% per annum on outstanding tax liabilities for delayed filings.
• GST registration cancellation: Non-filing of GSTR-1 for two consecutive tax periods may lead to cancellation of the taxpayer's GST registration.
• ITC Denial: Recipients may face ITC mismatches if suppliers fail to file GSTR-1.

These repercussions emphasise the importance of adhering to the filing sequence.

Example of Sequential Filing of GST Returns

Let’s say you’re running a business, Sharma Enterprises:

You forget to file GSTR-1 for August 2024.

• When you try filing GSTR-3B for the same period, the portal blocks it.
• You can’t even file GSTR-1 for September 2024 because the system forces you to clear the backlog first.

This cascade of delays may lead to quickly accruing late fees, not to mention the stress of dealing with blocked filings.

Sequential filing of GST returns is a simple yet significant change in the compliance process. Filing GSTR-1 first ensures accuracy in tax declarations and smoothens the reconciliation process. A little effort upfront saves a lot of trouble later. So, ensure your returns are in sequence, and you’ll have no trouble navigating this mandate!