GSTR-1 and GSTR-3B: what actually causes mismatches

Most GST notices are not about complex questions. They are about four or five data problems that repeat across the whole economy.

Place of supply

Get this wrong and the tax goes to the wrong government. An intra-state supply is CGST plus SGST; inter-state is IGST. The determination is the place of supply, which for goods is generally where the movement ends, and for services follows a set of rules that vary by service type.

This should never be a human decision at the counter. If your software derives it from the party’s registered state and the delivery location, the error class disappears.

HSN digit count

The number of HSN digits required scales with aggregate turnover, and the thresholds have been tightened over the years. It is a configuration you set once from your current slab. Leaving it to whoever is typing the invoice guarantees a mix of four and six digit codes in the same return.

B2B filed as B2C

An invoice to a registered buyer without their GSTIN captured goes into the return as B2C. The buyer then cannot claim input credit, and you hear about it — usually loudly, usually a month later. Capture the GSTIN on the party master, not on the invoice.

GSTR-1 to GSTR-3B drift

3B is a summary; GSTR-1 is invoice level. They should reconcile. When they do not, the cause is nearly always timing — an invoice landing in one period’s GSTR-1 and the next period’s 3B — or an amendment filed later.

Reconcile every month. At year end the correction window has closed and the conversation becomes about interest rather than about a typo.

Catching it at entry

Fatoza’s GST billing derives the tax split from place of supply, enforces the HSN digit count against your slab, and blocks a B2B invoice without a GSTIN. None of that is clever. It is just the check happening at the moment the mistake is cheap to fix.

General information, not tax advice. GST rules, rates and thresholds change; confirm against the GST portal and your practitioner.