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HOW TO SET OFF LIABILITY IN FORM-3B

This article addressees the need of the hour that is “How to Set Off Liability in GSTR Form-3B” as still many professionals are facing problem while dealing with TAB 6:Payment of Taxes of the Form-3B.

Let us first take a look at the eligibility of set-off.

The input tax credit would be eligible for set off as under:

  1. SGST LIABILITY would be allowed first to be utilised against SGST LIABILITY and then IGST LIABILITY.
  2. Similarly, CGST CREDIT would be allowed first to be utilised against CGST LIABILITY and then IGST LIABILITY.
  3. IGST CREDIT would be allowed for IGST LIABILITY, CGST LIABILITY and then SGST LIABILITY in that order.

Let’s summarize above in a tabular form:

IGST LIABILTY CGST LIABILITY SGST LIABILITY
IGST ITC YES YES YES
CGST ITC YES YES NO
SGST ITC YES NO YES

 

Therefore, the SGST would not be allowed to be adjusted to the CGST and vice versa. This may lead to accumulation of credit in some places.

Step by step guide on how to file GSTR FORM-3B :

  1. After login with username and password, select Return Dashboard.
  2. Select Financial Year 2017-18 and suitable return filing period be it July, August, September or October. Click Search and Select GSTR-3B
  3. Declare your liabilities and ITC claims in Section 3.1 and 4 respectively by clicking on the respective tabs and furnishing the required information.Remember that Transitional ITC cannot be claimed in GSTR 3B. It can be claimed only through TRANS 1 and TRANS 2. But in case you have already filed FORM TRANS-1, then the transitional credit can be used for the payment of liability in FORM-3B.
  4. Enter details of interest, if payable, in Section 5.1. Late fee will be computed by the system.
  5. Click on Save GSTR-3B button. After you save the data, Submit button will get enabled. Please note that after submit, no modification is possible. Hence ensure that details are filled correctly before clicking on Submit button.
  6. On clicking Submit GSTR-3B button, System will post (debit) the self-assessed liabilities including system generated late fee in Liability Register and credit the claimed ITC into ITC ledger.
  7. After this the Payment of Tax tab will be enabled, please click it as Balance Liability has to made zero by offsetting the same with available input tax credit and balance in cash ledger which is deposited by creating a challan.
  8. Either CHECK BALANCE button to view the balance available for credit under Integrated Tax, Central Tax, State Tax and Cess or the balance can also be viewed just by moving the mouse over data entry boxes. Kindly note that this includes transitional credit also, if GSTR FORM TRAN-1 is already submitted.
  9. Now, we need to set-off the liabilities using a combination of Cash and Input Tax Credit. The TAB 6 gets enabled for such set-off of liabilities.

Let’s take an example to understand the entire set-off mechanism on the GST Portal:

OTHER THAN REVERSE CHARGE LIABILITY BE:

IGST:Rs. 1,500/-

CGST: Rs. 2,000/-

SGST: Rs. 3,000/-

REVERSE CHARGE LIABILITY:

IGST:Rs. 400/-

CGST: Rs. 600/-

SGST: Rs. 600/-

INPUT TAX CREDIT AVAILABLE:

IGST: Rs. 2000/-

CGST: Rs. 500/-

SGST: Rs. 500/-

Now,

  1. IGST Credit of Rs.1100/-+Rs.400/-(paid under reverse charge) will be used to offset the IGST Liability of Rs.1500/- which means that the entire IGST liability of Rs.1500/- is set-off.
  2. CGST Credit of Rs.500/-+Rs. 600/-(paid under reverse charge) will be used to offset the CGST Liability of Rs.1100/-
  3. SGST Credit of Rs.500/-+Rs. 600/-(paid under reverse charge) will be used to offset the SGST Liability of Rs.1100/-
  4. Remaining Rs.900/- of IGST Credit will be now used for the payment for CGST Liability to the extent of further Rs.900/- which means that the CGST liability of Rs.2000/- is set-off partially in Point No. 2. above and the remaining here.
  5. The SGST liability will be set-off from the cash ledger now as the entire input tax credit has been utilized and therefore Rs.1900/- from the cash ledger under SGST Head and the Rs.1100/- already set-off in pint no. 3 will satisfy the entire SGST Liability of Rs. 3000/-.
  6. The Reverse Charge Liability is to be always made through cash ledger by generating the challan irrespective of the available input tax credit. So the reverse charge liabilities under IGST, CGST and SGST heads are to paid in CASH Rs. 400/- , Rs. 600/- and Rs. 600/- respectively.

This is how it appears on the GST Portal:

SOME SYSTEM CHECK S THAT ARE ACTIVE ON THE GST PORTAL WHILE OFFSETTING THE LIABILITY ARE AS FOLLOWS:

  1. It will not offset liability if the Reverse charge liabilities are not set-off only through CASH.
  2. It ensures sufficient balance in Cash and ITC Ledger to offset liability.
  3. In case of ITC utilisations, the system checks the prioritization rules viz. IGST Credit has to be first utilised for paying IGST liability and remaining for CGST liability and thereafter SGST liability; SGST credit has to be first used for paying SGST liability and then IGST liability; CGST Credit has to be first used for CGST liability and the remaining for IGST Liability; SGST credit cannot be used for paying CGST liability and CGST credit cannot be used for paying SGST liability
  4. The Central Taxes Transitional credit like excise duty, service tax etc. increases the ITC Ledger under CGST head whereas the VAT, Entry tax etc., transitional credit increases the ITC Ledger under SGST head. Transitional ITC, if available in ITC ledger (only if TRANS-1 is filed on the portal) can be used for payment of liabilities of GSTR-3B.
  5. If balance is less in electronic cash ledger and we are trying to utilize more amount then system will show error that the balance in electronic cash ledger is not sufficient.
  6. Press the OFFSET LIABILITY button to pay off the liabilities.
  7. The OFFSET SUCCESSFUL BOX will appear on the Screen.
  8. Go back to the Return Filing Month and select the one for which we are filing the GSTR Form-3B. The TAB 6: Payments of Taxes will show the balance liability as zero now.
  9. Check the box on declaration statement at the end of the page.
  10. Select Authorized Signatory filing the Form-3B.
  11. Click on File GSTR-3B button with Digital Signature Certificate (DSC) or Electronic Verification Code(EVC).
  12. Message for successful filing will appear and Acknowledgement will get generated.
  13. Form-3B is filed for the month.

Comments 4

I.V.J.Gupta

March 15, 2018

It is very nice and easily understandable even the learner can follow and succeed in his work. Thanks a lot.

vatsala gode

May 15, 2018

Monthly returns GSTR 3B filed for Mar 2018 but amount did not get deducted from cash ledger. But I received returns filed message with ARN number. I came to know this now. Tell me what to do?

NOOKARAJU

July 26, 2018

By mistake I have made payment in others instead of fee how can I set off from others to fee

RIDHI BHATNAGAR

July 28, 2018

By mistake i had not filled 3B from november 2017 but our outstanding tax liability paid on time.what we i do
to filling gst 3b ,late fees not charge ? please help and suggest