GST Returns Explained: GSTR-1 vs GSTR-3B & Input Tax Credit
Filing GST returns can feel overwhelming, but understanding the difference between GSTR-1 (sales), GSTR-2B (purchases), and GSTR-3B (payment) is the foundation of tax compliance in India.
Mastering Input Tax Credit (ITC) rules—especially the "Golden Rule" that you can only claim ITC if your vendor has filed their return—can save thousands in taxes. This guide explains the filing process, Composition Scheme, and QRMP option to simplify your GST journey.
What is GST Return Filing?
A GST Return is a document containing details of your income (sales), expenses (purchases), and tax liability. Every registered dealer must file returns to the government.
Core Components:
- Outward Supplies: Your Sales.
- Inward Supplies: Your Purchases.
- ITC (Input Tax Credit): GST paid on purchases (Asset).
- Output Tax Liability: GST collected on sales (Liability).
How to File GST Return (Step-by-Step)
GST Return Types: GSTR-1 vs GSTR-3B
Understanding these forms is critical for compliance.
| Feature | GSTR-1 | GSTR-3B |
|---|---|---|
| Purpose | Details of Sales | Summary & Payment |
| Content | Invoice-wise details | Total Sales, ITC, Liability |
| Due Date | 11th of Next Month | 20th of Next Month |
| Payment | No Tax Payment | Tax Paid Here |
Input Tax Credit (ITC): The Golden Rule
You can ONLY claim ITC if your supplier has filed their GSTR-1 and the invoice appears in your GSTR-2B.
- You possess a valid Tax Invoice.
- Goods/Services have been received.
- Supplier has paid tax to the government.
- You have filed your GSTR-3B.
- Payment to supplier made within 180 days.
Composition Scheme
A simplified scheme for businesses with turnover up to ₹1.5 Crore.
| Pros | Cons |
|---|---|
| ✅ Quarterly Filing (GSTR-4) | ❌ No ITC Allowed |
| ✅ Low Tax Rate (1% Traders) | ❌ Cannot collect GST from customers |
| ✅ Less Compliance Burden | ❌ No Inter-State Sales allowed |
QRMP Scheme
For taxpayers with turnover up to ₹5 Crore.
- •Filing: File returns (GSTR-1/3B) once a Quarter.
- •Payment: Pay tax Monthly via a simple challan (PMT-06).
- •Benefit: Reduces returns from 24 to 8 per year.
Risks of Non-Compliance
₹50/day (Nil returns: ₹20/day).
18% p.a. on unpaid tax liability.
E-Way Bill generation blocked.
Registration can be cancelled.
Frequently Asked Questions (FAQs)
Final Verdict
GST compliance is non-negotiable. Timely filing not only saves penalties but ensures smooth working capital flow via ITC.
Fincado Research Team
Fact CheckedOur analysis is built on deep-dive research into RBI Benchmarks and lender-specific disclosures. We verify every interest rate and fee structure against real-world borrower approvals to ensure the highest level of accuracy for Indian home buyers.
Disclaimer: GST laws and due dates are subject to change. This guide is for informational purposes only. Please consult a Chartered Accountant (CA) or tax professional for specific business advice.
Managing a business?
Use our tools to calculate GST liability and plan finances.