Goods and Service Tax Network (GSTN), which manages the entire IT system of the GST portal, has announced that businesses that have not filed GSTR-3B returns form for the past two months will not be allowed to file details of outward supplies in GSTR-1 from September 1, 2021. 

Businesses have to file GSTR-1 by the 11th day of the subsequent month while they can file GSTR-3B in a staggered manner between the 20th-24th day of the succeeding month. Notably, with the GSTR-3B form, businesses pay their monthly taxes.  

GSTN said in its advisory 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. The new rule implements that 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 or she has not furnished the return in Form GSTR-3B for the preceding two months.”

For taxpayers filing quarterly return, GSTR-1 filing would be restricted if he has not furnished the return in Form GSTR-3B for preceding tax period.

EY Tax Partner Abhishek Jain told PTI 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 (due to constant follow-ups from recipients' side) but do not submit their corresponding GSTR-3B return through which tax is actually paid to the government.

"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," Jain added.