Blocking and Unblocking of GSTR-1

To make sure that the taxable registered persons comply with the GST provisions, CBIC has issued a notification (Notification No. 01/2021) regarding blocking and unblocking GSTR-1 on 1st January 2021. So, in this blog, we will cover all the aspects relating to the blocking and unblocking of GSTR-1.

What is GSTR-1?

GSTR-1 is a type of GST return that needs to be filed by all normally registered taxpayers on a monthly or quarterly basis. GSTR-1 contains all the information related to the sale of goods or/and services.

What is FORM GSTR-3B?

GSTR-3B is a type of GST return that contains all the information related to the inward and outward supplies. GSTR-3B needs to be filed by all the normal registered taxable persons monthly or quarterly basis.

Blocking of GSTR-1 Filing

Here are the situation according to the issued notification, where the taxpayer will not be able to file GSTR-1:

1. If he/she has failed to file GSTR-3B for the previous 2 months.
2. If he/she is a quarterly filer and has failed to file GSTR-3B for the previous tax period. Moreover, such taxpayers will also be barred from using the Invoice Furnishing Facility (IFF).
3. Any taxpayer who is not allowed to use his/her electronic credit ledger available to discharge tax liability, in excess of 90% such tax liability under rule 86B and who has failed to file GSTR-3B for the previous tax period. Moreover, such taxpayers will also be barred from using the Invoice Furnishing Facility (IFF).

Unblocking of GSTR-1

According to this notification, no taxpayer will be able to file GSTR-1 until they file their GSTR-3B. This will help the tax authorities in tracking the non-filers of tax evaders.

Impact of Blocking GSTR-1

If the supplier’s GSTR-1 filing facility gets blocked due to non-filing of GSTR-3B for the relevant tax period. Then in such a case, the recipient will not be able to claim his/her eligible Input Tax Credit (ITC) as the details of invoices will not reflect in his/her GSTR-2A and GSTR-2B which will ultimately impact their business relations and creditworthiness in the market.

Moreover, the e-way bill generation facility will also get blocked along with GSTR-1 which  impact the movement of goods or/and services impacting the business cash-flow.

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