Form GSTR-3B of GST – Boon or Curse?

Form GSTR-3B is a summary return inserted by Government in lieu of Form – GSTR-3. This Form was introduced as stop-gap arrangement to collect tax from the taxpayer. As all the periodical monthly returns were delayed and taxpayers were not able to understand and file the returns on time, Government came out with this temporary solution to introduce Form-3B and started collecting the tax. This return was not drafted at the time of making the GST Act but it came as by-product of intricacies found in other GST Returns such as GSTR-1, GSTR-2 and GSTR-3 .

I wouldn’t say that GSTR-3B is a poorly drafted return and it is full of deficiency because the intention of the government was to smoothly implement GST with minimum disturbance given to taxpayers. With a country which is highly populated like ours, it’s common sense that any new reform would give some bitterness at the beginning. But people forget to for see the ripened fruits which GST would give in the long run. Yes, not everything with GST is right, but flaws are known only when it is put to field for test. Here alone the Government missed out to score complete marks in GST for me.

When I started interacting with GSTN and returns, I found one particular thing with GSTR 3B to be somewhat disturbing – once the  “submit”  button in the return is clicked, one cannot make any changes thereafter and also the “Payment of tax”  section of the return is made visible only  after the submission of the return. It means that on submission you agree for the amount of GST liability to be paid by you and no further changes could be made from here on. Or we could also say that revision of the return is no more possible in GST regime. But in earlier taxation laws we were able to revise the returns. Let us take a tour of changes made in provisions related to GSTR-3B return.

Tour of Changes in Form GSTR-3B return

Notification No.	Scheduled Changes
Notification No. 21 dated 08.08.2017	Form GSTR-3B for the month of July and August 2017 by 20th of the following month.
Notification no. 23 dated 17.08.2017	Every registered person furnishing the return in FORM GSTR-3B shall, subject to the provisions of the said Act, discharge his liability towards tax, interest, penalty, fees or any other amount payable under the Act by debiting the electronic cash ledger or electronic credit ledger.
Notification no. 24 dated 21.08.2017	To amend Notification no.21 dated 08.08.2017 as Government was thinking to further extend the filing of GSTR-3B arrangement for further more time till everything is stabilized especially with the three returns (GSTR-1, Form GSTR-2 and GSTR-3)
Notification no. 35 dated 15.09.2017	To extend filing of GSTR-3B Form till December 2017
GST council meeting dated 10.11.2017	It said that all taxpayers would file return in GSTR-3B form along with payment of tax by 20th of the succeeding month till March 2018

Plain reading of the above changes clears the anomaly of the Government that this temporary return was adopted as a tool for collecting the payment because normal return GSTR-1,2,and 3 could not have been filed because of the deferment of due dates. So where did the government go wrong?

We could tell that it is has something to do with the planning. But one cannot say that because of lack of planning alone we faced these difficulties in GST implementation as there were other factors as well which were not perceived by the law makers and GST Network team like Heavy load on GST network, absence of awareness or knowledge camp on GST, absence of free GST Seva Kendra’s which could assist and file return of taxpayers at least in the initial stages, and so on.

Time to clear the rumor that GSTR-3B Form not just came out from nowhere and it was not meant to be as revenge mechanism to burden honest tax payers as haters of GST say. Instead while drafting the law the government already calculated the risk and confusions which taxpayers will experience with the detailed returns in Form of GSTR-1, GSTR-2 and GSTR-3 at the beginning stages of GST.

Want to know how GSTR 3B was made part of the GST law from the inception of GST itself? Then read the following line: “that where the time limit for furnishing the return GSTR-1 and GSTR-2 mentioned in section 37 and Section -38 respectively is extended and the circumstances so warrant, the commissioner may by notification specify the manner and condition subject to which Form GSTR-3B can be filed.” This is there in CGST rules 2017. Why would government choose to punish taxpayers by burdening them? Instead it is at the receiving end where the risk load is high. Would any one who does business mistreat his client when he would have to receive trade receivables from him on a later date? Likewise, why would the government mistreat its taxpayers as it has to collect taxes from them at a later point.

Hence GSTR-3B was a lifesaver introduced by Government by making appropriate adjustments in GST rules just to comfort the taxpayers and to give them time to understand the new taxation law. It has to be also understood here from reading the above CGST rules (quoted in inverted commas) along with Notification no. 35 dated 15.09.2017 and from the outcome of GST Council Meeting dated 10.11.2017 clause  that where the time limit for furnishing the return GSTR-1 and GSTR-2 is extended and circumstances so warrant, it is needless to mention that none of the above said returns will be filed on due dates as drafted in GST law till 31.3.2018.

Difficulties which Taxpayers at large associate face with GSTR3B return and what they are missing to see :

Areas of Difficulties	Reasons taxpayers give	What they miss to see and misunderstand often
Three monthly returns (+) GSTR-3B return and also reconciliation of GSTR3B Form with GSTR 3 return	Duplication of work as one has to feed the same details in the regular returns and as well as in Form GSTR-3B Tedious job of reconciliation of GSTR-3B return with GSTR 3	To recall that GSTR-3B is only a temporary return just like a life jacket which we wear when we are in water and not when we reach or land in a terrain, it means that we would not be filing GSTR-3B Form for whole of life and only till Ship GSTN hits the terrain (i.e., till all glitches with GSTR 1, 2 and 3 are resolved) Without a budget, a house cannot run. Likewise, without Tax revenue Government cannot sponsor its expenses which it does to run a bigger home than us (i.e. Nation as whole). With difficulties faced in understanding the detailed returns under GST and also the technical glitches faced on the GST network while confronting with detailed returns, it was thought and brought to be in the best interest of taxpayers to ease out the burden – GSTR-3B Form. One could argue that Government could have waited till the technical glitches surrounding Form GSTR-1, GSTR-2 and GSTR-3 got resolved and collected tax thereafter. The answer to this lies in my question whether a house could be run without supplementing the budget with real cash. Yes, reconciliation is going to be tedious task asking for time and money to be spent. But I think Government would come up with offline utility tools which would assist us for great help in this regard.
Wrong Framework	Once the  “submit”  button in the return is clicked one cannot make any changes thereafter and also the “Payment of tax”  section of the return is made visible only  after the submission of the return.	This mistake is figured out after submission of the return. Furthermore there’s no provision of filing a revised return. This is a serious mistake on part of design of GSTR-3B Form. Instead it could have been like, firstly one should prepare the return fully including the pay off portion, thereby total liability under the return should have been knocked off by ITC or out of cash as the case may be. After the preview section, return should be allowed to be submitted and filed. But it is structured the other way round. First, return is submitted and then pay off window is opened with late fees where you have to pay late fees with separate challan and then file the return.

Provision of Quarterly Return to be filed by small and medium businesses and the strings it has got associated with GSTR-3B Form :

Reading out the Contents from GST council Meeting held on 06.10.2017  To facilitate the ease of payment and return filing for small and medium businesses with annual aggregate turnover up to Rs. 1.5 crore, it has been decided that such taxpayers shall be required to file quarterly returns in FORM GSTR-1,2 & 3 and pay taxes only on a quarterly basis, starting from the Third Quarter of this Financial Year i.e. October-December 2017. The registered buyers from such small taxpayers would be eligible to avail ITC on a monthly basis. The due dates for filing the quarterly returns for such taxpayers shall be announced in due course. But for time being, all taxpayers will be required to file FORM GSTR-3B on a monthly basis till December 2017. All taxpayers are also required to file FORM GSTR-1, 2 & 3 for the months of July, August and September 2017. We knew that the due dates for filing the returns for the month of July, 2017 have already been announced. The due dates for the months of August and September 2017 will be announced in due course.

But again a notification came which showed that Government was not ready with its think-tank working on it. In the GST council meeting held on 10.11.2017, Form-3B stood to be extended till March 2018. When the due dates of GSTR-1, 2 and 3 for small & medium business have been made on quarterly basis from third quarter i.e. October to December, 2017, and due dates for the above three return shall be 10.01.2018, 15.01.2018 and 20.1.2018, this clearly hints that GSTR-3B Form in these cases cannot be filed as due date is yet to be approached and it cannot be presumed to be extended as on date which has not fallen due. As per Rule 61[5] of the CGST Rules 2017, it clearly state that when due dates of GSTR -1 and 2 extends, only Form-3B need to be filed.

Moreover, payment in case of quarterly return shall be on quarterly basis, meaning for the quarter ‘October to December 2017’, the payment shall be due on 20.1.2018. If GSTR-3B Form is to be filed by all taxpayers including the quarterly taxpayer, this means that one needs to pay the taxes on monthly basis. This is totally contradictory to provision of GST Act and rules thereof.

The fangs of fire which arose from the GST Council meeting held on 10 November 2017 has the potential to destroy the basic pillar stone of GST –  “Matching Concept under GST” Once small and medium business start filing returns on quarterly basis, how can GSTR-2 be auto-drafter? Registered person buying from a small dealer cannot match returns as a small dealer will file their return on quarterly basis. One registered person files return on monthly basis and other files on quarterly basis. In such situation, where does the matching concept stand and how will GSTR-2A be created? The basic stupa on which GST concept was drafted will be in loop and basic fundamental concept behind the GST will collapse.

Conclusion : Seeing the ambiguity in the decisions which could be gauged from the frequent changes that has taken place in a month’s time, the efforts put in by Government in presenting the clear picture of GST is fading away from the minds of public and taxpayers. People are now in confusion about their stand on GST which was welcomed by majority of them. Soon, Government has to come up with major overhauling activities and protect its pillars on which GST is constructed and to clearly make a statement to taxpayers and public at large about its firmness. They also need to assure them that they would walk with them in times of turbulence such as this. Activity of gaining knowledge never stops once it builds within you, and the accounting softwares in India helps you polish that knowledge further.