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Consequences Of Inaccurate Reporting of Inter-State B2C Sales In GSTR-3B According to the GSTR-3B format, the return filer must report inter-state sales to unregistered customers, sales to composition dealers, and UIN holders in table 3.2

By Archit Gupta

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GSTR-3B is a self-declared summary return in which taxpayers must report the summary figures of sales, Inputs Tax Credit (ITC) claimed, and net tax payable. Businesses must do the table-wise reporting as mandated in GSTR-3B format.

Though the department released guides and advisories on reporting in Goods and Services Tax (GST) returns, the burden of proof for the submitted data still remains on the taxpayers. Hence, GST-registered businesses must verify and validate the data before filing the returns.

Also, the department makes timely amendments and issues clarifications regarding return format to nudge taxpayers towards accurate reporting. Accordingly, it recently clarified reporting of inter-state B2C sales in GSTR-3B.

The taxpayers must report the inter-state B2C sale invoices, including their amendments in tables 5/7B/9/10 of GSTR-1 and the summary figure in GSTR-3B. Similarly, the sales to composition dealers and UIN holders, including its amendments, must be filled in tables 4A/4C/9 of GSTR-1 and be referred to while reporting values in GSTR-3B.

According to the GSTR-3B format, the return filer must report inter-state sales to unregistered customers, sales to composition dealers, and UIN holders in table 3.2. It is important to note that the taxpayers should segregate the said sales according to the place of supply while reporting them.

However, many taxpayers were reporting in a bulk manner without properly bifurcating the sales based on the state in which they sold goods or provided services. This practice created challenges for the government to ascertain consumption in a particular state and allocate tax revenue among states/UTs.

Hence, to address this issue, the department has clarified that the taxpayers must report all interstate B2C sales in table 3.2 of GSTR-3B only after classifying them according to the place of supply. It also clarified that similar practice needs to be followed in case of sales to composition taxpayers/UIN holders.

If the taxpayers fail to bifurcate the inter-state sales, as clarified by the department, it will lead to notices. Also, it may attract a general penalty of up to INR 25,000.

Hence, the businesses shall focus on improving KYC & customer onboarding, especially while capturing the addresses of unregistered customers. Also, they need to maintain proper books of accounts to accurately report interstate B2C sales in GSTR-3B.

This clarification helps the government allocate tax revenue to the relevant states. The affected suppliers operate in banking, finance, insurance, telecom, stock broking, digital payment facilitation, e-commerce and OTT platforms.

Archit Gupta

Founder & CEO, Clear

Clear (née ClearTax) is India’s leading Fintech SaaS company with the mission of simplifying finance. We are trusted by over 6 million Indians, more than 50,000 tax professionals, 1 million small businesses and 3,000 large Enterprises. For small and large businesses, our product suite covers invoicing, GST, range of managed services and credit. For tax professionals, we offer comprehensive GST, Income Tax and TDS solutions. For individuals, we offer tax and wealth management solutions. With this Series C round, we have raised $140 million in equity capital since inception. Our investors include Y Combinator, Composite Capital, Elevation Capital, Founders Fund and Sequoia Capital.


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