How to Avoid Common Errors While Filing GSTR-1 & GSTR-3B

Introduction

Every registered business under GST must file GSTR-1 and GSTR-3B regularly. However, many businesses — including MSMEs and startups — often make avoidable filing mistakes that may lead to penalties, ITC mismatches, and notices from the department.
As experienced Tax Consultants in Mumbai, we at Makwana Sweta & Associates have helped hundreds of clients avoid these errors. In this blog, we break down the most common GSTR-1 and GSTR-3B errors and how you can avoid them in FY 2025.

Quick Overview: GSTR-1 and GSTR-3B

Before we dive into the mistakes, let’s briefly understand the purpose of each form:

Return	Purpose	Frequency
GSTR-1	Statement of outward supplies	Monthly/Quarterly
GSTR-3B	Summary return to pay GST	Monthly

Note: You must file GSTR-1 before GSTR-3B to ensure smooth reconciliation and accurate ITC availability to buyers.

1. Mismatch Between GSTR-1 and GSTR-3B

What happens?
The sales reported in GSTR-1 don’t match with what’s declared in GSTR-3B. This causes confusion in tax liability and affects ITC for your buyers.

How to avoid:

• Always reconcile sales data before filing both returns.
• Use accounting software or a reconciliation tool.
• File GSTR-1 accurately, as it auto-populates GSTR-2B for buyers.

2. Wrong or Missing HSN Codes

Why this matters:
The government mandates HSN/SAC codes based on turnover. Incorrect or missing codes lead to notices and compliance issues.

Tip to fix:

• Check the HSN requirement based on turnover:
  • Up to ₹5 Cr – 4-digit code
  • Above ₹5 Cr – 6-digit code
• Update your invoicing system to include the correct HSN code.

3. Delayed Filing or Missed Deadlines

Consequence:
Late filing leads to:

• ₹50/day penalty (₹25 CGST + ₹25 SGST)
• Late fee even when NIL return
• Interest @18% on tax dues

Solution:

• Set calendar reminders.
• Consider automation or a CA’s assistance to stay on schedule.

4. Incorrect Tax Amount (CGST/SGST/IGST)

Why it’s risky:
Charging the wrong tax — e.g., IGST on intra-state sale — leads to rejections, refunds, or excess payment.

Prevention tips:

• Verify your customer’s location and GSTIN before invoicing.
• Train staff on tax rules or seek guidance from a Chartered Accountant in Mumbai.

5. ITC Mismatch and Reversal Issues

Common issue:
Claiming ineligible or excess Input Tax Credit (ITC) in GSTR-3B — especially when the vendor has not uploaded the invoice in GSTR-1.

Smart approach:

• Always reconcile ITC with GSTR-2B, not GSTR-2A (2B is final).
• Do not claim ITC unless reflected in GSTR-2B.

6. Wrong Classification of Supplies

What this means:
Misreporting B2B as B2C or exporting goods as domestic sale can lead to compliance issues and refund delays.

Fix it like a pro:

• Review invoices before uploading.
• Use accounting software that differentiates B2B, B2C, export, SEZ supplies.

7. Not Reporting Nil or Non-Financial Returns

Myth: If there is no sale, no return is required.
Reality: Even in case of NIL transactions, you must file zero return.

Missing NIL returns may lead to GSTIN suspension.

8. Wrong Adjustment of Credit Notes and Advances

Common issue:

• Forgetting to adjust credit/debit notes
• Not paying tax on advance receipts

How to correct:

• Use credit notes against specific invoices only
• Pay tax on advance received for services, and adjust in next return

9. Errors in Reverse Charge Mechanism (RCM)

If you forget to:

• Report RCM purchases
• Pay tax under RCM
• Claim ITC correctly on RCM

…you can lose eligible ITC and attract penalties.

Example: Legal fees, GTA, import of services are under RCM.

10. Incorrect Place of Supply

Especially important for service providers and inter-state transactions.
Wrong POS = Wrong tax type = Rejection by recipient, more notices

Always confirm GSTIN and state code of customer.

Penalties for Common GSTR Filing Errors

Error	Likely Penalty
Late Filing	₹50/day (₹20 for NIL)
Wrong ITC	18% interest + penalty
Mismatch in returns	Show-cause notice
Repeated errors	Suspension of GSTIN

Best Practices to Avoid GSTR-1 & GSTR-3B Errors

• Reconcile GSTR-1 and GSTR-3B monthly
• Match ITC with GSTR-2B
• Use GST-compliant software
• Maintain invoice and proof trail
• Consult a CA offering GST Services in Mumbai or PAN India
• Schedule internal GST health checks every quarter

Need Help? Call the Experts

At Makwana Sweta & Associates, our team of experienced Chartered Accountants in Mumbai offers end-to-end GST return filing, reconciliation, and health checks to ensure your business stays 100% GST compliant.

Let us help you file GSTR-1 and GSTR-3B error-free — no notices, no penalties.

Useful Links

• Outbound: GST Portal – Returns
• Inbound: GST Services by CA Sweta Makwana