Why You Need to File Both GSTR-1 and GSTR-3B (And Not Just One)

When it comes to GST compliance, many businesses and tax professionals still struggle to understand the importance of filing both GSTR-1 and GSTR-3B. Some assume that filing just one of the two returns is enough to stay compliant. But here’s the truth: filing only GSTR-1 or only GSTR-3B can expose your business to mismatches, ITC issues, and potential penalties.

Let’s break down what each return is, why both are mandatory, and the consequences of skipping either.

What Are GSTR-1 and GSTR-3B?

Before we get into the "why", let’s quickly revisit the "what".

GSTR-1: Statement of Outward Supplies

GSTR-1 is a monthly or quarterly return that captures details of all outward supplies (sales) made by a registered taxpayer. It includes invoice-level data for B2B transactions, summaries for B2C sales, export invoices, and credit/debit notes.

Filing GSTR-1 is critical because:

• It allows your buyers to claim Input Tax Credit (ITC).

• It helps the government match outward supply data with inward supply claims across the ecosystem.

• It auto-populates GSTR-2A and GSTR-2B for recipients.

GSTR-3B: Summary Return with Tax Payment

GSTR-3B is a self-declared summary return filed monthly/quarterly. It contains details of total taxable value, input tax credit claimed, and tax payable. It also includes the actual tax payment, making it essential from a cashflow and compliance perspective.

Unlike GSTR-1, it doesn’t capture invoice-level data. But it’s the return through which businesses discharge their tax liabilities.

Why Filing Both GSTR-1 and GSTR-3B Is Mandatory

Filing just one of the two leads to incomplete compliance. Here’s why you must file both GSTR-1 and GSTR-3B regularly:

Legal Requirement Under GST Law

The GST law mandates that every registered person (except for composition dealers and a few exempt categories) must file both GSTR-1 and GSTR-3B. Filing one does not exempt you from filing the other. Non-filing or delayed filing attracts late fees, interest, and even suspension of GSTIN.

Mismatches Can Lead to ITC Denial

If the sales you declare in GSTR-1 don't match the tax liability declared and paid in GSTR-3B, the system may flag discrepancies. This can:

• Restrict your buyers from claiming full ITC.

• Trigger GST audits or scrutiny.

• Affect your vendor credibility.

Auto-populated Returns and Reconciliation

From April 2022, GSTN has enabled auto-drafting of GSTR-3B from GSTR-1. If your GSTR-1 is not filed accurately, it can result in:

• Wrong auto-populated values in GSTR-3B.

• Mismatches in tax paid vs. tax collected.

• Delays in monthly reconciliation and return filing.

Impact on E-Invoicing and E-Way Bills

GSTR-1 data plays a crucial role in enabling e-invoicing and e-way bill generation. Missing or incorrect filing affects:

• Real-time validation of invoices.

• Movement of goods.

• Compliance ratings under GSTN.

Common Scenarios Where Non-Filing Causes Trouble

Let’s look at a few real-life examples:

• Scenario 1: A business files GSTR-3B but skips GSTR-1. Result? Buyers cannot view invoices in GSTR-2B and fail to claim ITC, leading to disputes and strained relationships.

• Scenario 2: A taxpayer files GSTR-1 with inflated sales, but pays lesser tax in GSTR-3B. Result? Mismatch triggers notices and demands from the GST department.

• Scenario 3: A firm files GSTR-1 and 3B but with different reporting periods. Result? Month-on-month mismatches and reconciliation headaches during annual filings.

Filing Only GSTR-1 or GSTR-3B Is Risky. Here’s Why

Filing Only GSTR-1	Filing Only GSTR-3B
ITC mismatch for buyers	Sales data missing for buyers
Notices for tax evasion	No invoice trail to support tax paid
GSTR-3B auto-fill errors	GSTR-2B not generated for recipients
Impacts compliance rating	Impacts e-invoicing and e-way bills

To avoid these issues, timely and accurate filing of both returns is critical.

Impact on Annual GST Returns

Incorrect or delayed GST Return filing can lead to:

• Mismatch in GSTR-9 vs books of accounts

• Higher reconciliation efforts in GSTR-9C

• Exposure to late fees, audits, and notices

Final Thoughts

In the battle of GSTR1 vs GSTR3B, there is no winner. You need both, every month. Skipping one doesn’t just affect your compliance, it affects your clients, vendors, and long-term business credibility.

Whether you're a tax consultant managing 50+ clients or a business owner with multiple GSTINs, make sure you’re filing both GSTR-1 and GSTR-3B on time, accurately, and without gaps.

Frequently Asked Questions (FAQs)

Can I file GSTR-3B without filing GSTR-1?

Technically, yes. But it leads to compliance issues, affects your buyers’ ITC, and may result in notices.

Is GSTR-3B more important than GSTR-1?

Both are equally important. GSTR-1 gives sales visibility; GSTR-3B is for tax payment. You must file both.

What happens if GSTR-1 and GSTR-3B don’t match?

You may receive scrutiny notices, buyers may face ITC rejection, and reconciliation becomes difficult.

What if I miss filing either return for a month?

Late fees, interest, and GSTIN suspension risk applies. It can also impact annual returns.