Manual GST Filing Risks Under Automated Enforcement 2026-27

For most of GST's early years, filing felt like a form-filling exercise. Fill GSTR-1, fill GSTR-3B, pay, submit. If the two returns did not match, the department often noticed only when a return was picked for scrutiny or audit.

That is no longer how it works. The GST portal now matches your returns against each other and against e-invoice, e-way bill and Invoice Management System (IMS) data, and several checks send intimations automatically. Filing from a register without reconciling is no longer small operational sloppiness. It is a compliance risk with real financial consequences.

What Has Actually Changed

There is no single "April 2026 zero-mismatch rule" that rejects GSTR-3B when ITC exceeds GSTR-2B. We could not find any GSTN advisory, CBIC notification or GST Council decision that introduces one. What has changed is a series of smaller, verifiable steps:

1. GSTR-3B liability is locked. From the July 2025 tax period, the tax liability in Table 3 of GSTR-3B is auto-populated from GSTR-1, GSTR-1A and IFF and cannot be edited; from the November 2025 tax period, Table 3.2 is locked too (GSTN advisory of 5 December 2025). Corrections go through GSTR-1A before filing GSTR-3B.

2. ITC is tied to GSTR-2B. Under Section 16(2)(aa) of the CGST Act and Rule 36(4) (from 1 January 2022), ITC is available only on invoices that appear in your GSTR-2B. Table 4 ITC is auto-populated from GSTR-2B and is still editable, but an excess claim beyond the notified threshold triggers a DRC-01C intimation under Rule 88D.

3. IMS since October 2024. Buyers can accept, reject or keep supplier invoices pending before GSTR-2B is generated on the 14th; records left without action are deemed accepted.

4. 30-day e-invoice reporting limit. From 1 April 2025, businesses with aggregate annual turnover (AATO) of Rs 10 crore or more cannot report an invoice or credit note to the IRP more than 30 days after its date. E-invoicing itself applies once AATO in any year from FY 2017-18 exceeds Rs 5 crore.

GSTN and tax administrations also use data analytics (including GSTN's Business Intelligence and Fraud Analytics tools) to compare these data streams and pick cases for scrutiny:

• GSTR-1 (outward supplies declared by the seller)
• GSTR-3B (summary return and tax paid)
• GSTR-2B (ITC available to the buyer, built from suppliers' GSTR-1 and IMS actions)
• E-invoices (reported to the IRP)
• E-way bills (generated for movement of goods, generally above Rs 50,000 consignment value)

Typical mismatches these comparisons surface:

• GSTR-1 shows a B2B supply but no e-invoice exists (for taxpayers required to e-invoice).
• An e-invoice exists but the supply is missing from GSTR-1.
• GSTR-3B tax paid is lower than GSTR-1 liability (now largely prevented by the Table 3 lock, but it can still arise across periods).
• ITC claimed in GSTR-3B exceeds GSTR-2B.
• E-way bills cover more goods movement than GSTR-1 reports.

What Happens When a Mismatch Is Flagged

Some consequences are system intimations under a specific rule; others need an officer's decision.

1. DRC-01B and DRC-01C: System Intimations

• DRC-01B (Rule 88C): issued where the liability in GSTR-1/IFF exceeds the tax paid in GSTR-3B beyond the notified amount and percentage.
• DRC-01C (Rule 88D): issued where ITC claimed in GSTR-3B exceeds ITC available in GSTR-2B beyond the notified amount and percentage.

In both cases you have 7 days to pay the difference through DRC-03 or explain it in Part B. If you do neither, you cannot file GSTR-1 or IFF for the next period until you respond. Our DRC-01B and DRC-01C reply guide covers the process.

2. Scrutiny and DRC-01A

Under Section 61, an officer can scrutinise returns and issue ASMT-10 asking you to explain discrepancies. Before a show cause notice under Section 73 or 74 (or Section 74A for FY 2024-25 onwards), the officer may also send DRC-01A setting out the proposed tax, interest and penalty. You can pay or reply in Part B within the time given in the intimation.

3. ITC Restrictions (Rules 86A and 86B)

• Rule 86A: the Commissioner, or an officer authorised by him not below the rank of Assistant Commissioner, can block credit in your electronic credit ledger if there are reasons to believe it was fraudulently availed or is ineligible. Only the amount in question is blocked, and the block lapses after one year. This is an officer's decision, not an automatic system block.
• Rule 86B: if the value of your taxable supplies (other than exempt and zero-rated supplies) exceeds Rs 50 lakh in a month, you cannot use ITC to pay more than 99% of your output tax, so at least 1% goes in cash, subject to the exceptions in the rule.

4. Suspension of Registration (Rule 21A)

Under Rule 21A(2A), where a comparison of GSTR-3B with GSTR-1, or with the inward supplies built from suppliers' GSTR-1 (GSTR-2B), shows significant differences or anomalies indicating contravention, registration can be suspended and you are intimated in Form REG-31. You must explain within 30 days why the registration should not be cancelled. During suspension you cannot make taxable supplies. The suspension is revoked once the officer is satisfied with your reply, or cancellation proceedings follow.

5. Inspection, Search and Seizure (Section 67)

Serious or suspicious patterns can lead to inspection, search and seizure under Section 67 of the CGST Act. These are officer-led actions, though data analytics often identifies the case.

The common thread: the first signal is usually generated by data matching, not by an officer who knows your business. The most direct way to handle it is not to create the mismatch in the first place.

Why Manual Filing Fails the New Test

"Manual filing" here does not mean paper forms. It means:

• Filing GSTR-1 from what the accountant types in, without reconciling against e-invoices reported to the IRP.
• Filing GSTR-3B with a rough ITC figure without reconciling GSTR-2B.
• Generating e-way bills only when a transporter asks, rather than as part of the invoice workflow.
• Ignoring IMS and letting every supplier invoice be deemed accepted.

Each of these used to be a survivable shortcut. Now each produces a mismatch the portal can see.

Consider a typical scenario:

The setup: A Bengaluru trader with AATO of Rs 12 crore (so both e-invoicing and the 30-day reporting limit apply) issues 40 B2B invoices a month. His accountant files GSTR-1 from an Excel register. Three invoices are sent to the IRP more than 30 days after their date and are rejected. Eight e-way bills were never generated because the transporter did not ask.

What the data shows:

• GSTR-1: 40 supplies reported.
• E-invoices on the IRP: 37 (3 could not be reported after the 30-day limit).
• E-way bills: 32 (8 missing).

The consequences are concrete. The tax on all 40 supplies is still payable, since it is his liability either way. But the three invoices without an IRN are not valid tax invoices (Rule 48(5)), so his buyers may be unable to claim ITC on them and will push back. Moving goods without a required e-way bill exposes the consignments to detention and penalty under Section 129. And the gap between GSTR-1 and the IRP and e-way bill data is exactly the kind of discrepancy that leads to an ASMT-10 or DRC-01A.

The Types of Mismatches That Attract Scrutiny

Type 1: Missing E-Invoice

You reported a supply in GSTR-1 but the IRP has no matching IRN. It happens when an invoice is raised outside the e-invoice workflow. Fix: generate the e-invoice first, then record the sale.

Type 2: Late E-Invoice (30-Day Limit)

For AATO of Rs 10 crore or more, the IRP rejects invoices and credit notes reported more than 30 days after their date. Fix: set a 7-day internal limit for IRP reporting.

Type 3: GSTR-3B ITC Exceeding GSTR-2B

You claimed ITC from your purchase register, but the supplier has not filed (or filed late), so the credit is not in GSTR-2B. This is what triggers DRC-01C. Fix: reconcile GSTR-2B before filing GSTR-3B, chase non-filing suppliers and use IMS actions.

Type 4: E-Way Bill Without a GSTR-1 Entry

An e-way bill was generated against your GSTIN but no matching supply appears in your GSTR-1. It can be a genuine miss or misuse of your GSTIN. Fix: check the e-way bill portal reports for your GSTIN every month.

Type 5: GSTR-3B Tax Lower Than GSTR-1

Your GSTR-1 shows Rs 5 lakh of tax but GSTR-3B pays Rs 4.2 lakh. Since the Table 3 lock this mostly arises from amendments or period mismatches, and it is what triggers DRC-01B. Fix: correct errors through GSTR-1A before filing GSTR-3B and pay the auto-populated liability.

Type 6: Buyer Rejects Your Invoice in IMS

The buyer rejected your invoice in IMS, so it drops out of the buyer's GSTR-2B. Your own liability does not change automatically. Fix: review your customers' rejections, amend the invoice in GSTR-1A or a later GSTR-1 where the rejection is valid, and talk to the buyer where it is a mistake.

What a Clean Filing Workflow Looks Like

A compliance process that holds up under data matching has four non-negotiables:

The workflow is not new. The consequence of skipping it is.

What Tax Garden's GST Process Looks Like

A reconciled filing workflow takes more effort than a manual one, but it is mechanical, repeatable and testable. Tax Garden's GST process follows six steps built around the data points the portal compares:

1. Invoice issuance triggers IRN generation the same day.
2. GSTR-1 is drawn from the IRP data, not from a separate register.
3. GSTR-2B is downloaded and reconciled to the purchase register line by line; mismatches are taken up with suppliers before filing.
4. GSTR-3B uses the auto-populated figures; any change to ITC is documented with evidence, and liability errors are corrected through GSTR-1A.
5. E-way bills are generated from the same invoice system, and reports are pulled monthly to confirm there are no orphan entries.
6. IMS is reviewed twice a month to accept, reject or keep pending with a reason.

The result is filings that rarely trigger system intimations. When they do (because upstream data issues happen), the reconciliation is ready before the intimation arrives.

The Bottom Line

The compliance bar moved. Filing GST correctly now means reconciling five data sources, not form-filling from a register. For a small business owner doing this alongside running the business, the time cost and the risk of missing one data stream are high.

Tax Garden's GST plans are built around this. We reconcile all five data sources before every return, so mismatches are caught before filing rather than after a DRC-01B, DRC-01C or DRC-01A arrives. The most common trigger is ITC claimed ahead of GSTR-2B; see our DRC-01B and DRC-01C guide for how those intimations work.

Explore our plans or see how it works.

This guide is based on Sections 16, 61, 67, 73, 74 and 129 of the CGST Act, 2017, Rules 21A, 36(4), 48(5), 86A, 86B, 88C, 88D and 138 of the CGST Rules, 2017, GSTN advisories on hard-locking of GSTR-3B liability (June 2025) and Table 3.2 (5 December 2025), and GSTN advisories on IMS and the 30-day e-invoice reporting limit. We found no official source for a "zero-mismatch policy" that rejects GSTR-3B. Thresholds and portal functions change; check gst.gov.in News and Updates for the current position.

Frequently Asked Questions

Can I claim ITC in GSTR-3B for an invoice that is not in my GSTR-2B?

No. Under Section 16(2)(aa) and Rule 36(4), ITC can be claimed only for invoices that the supplier has reported and that appear in your GSTR-2B. If a supplier has not filed GSTR-1, follow up and claim the credit in the month it appears in GSTR-2B, within the Section 16(4) time limit.

Who has to follow the 30-day e-invoice reporting limit?

The 30-day limit for reporting invoices and credit notes to the IRP applies to businesses with aggregate annual turnover of Rs 10 crore or more. E-invoicing itself is mandatory once turnover in any year from FY 2017-18 exceeds Rs 5 crore. An invoice not reported in time cannot get an IRN, which affects the buyer's ITC.

What is a DRC-01A notice and should I reply to it?

DRC-01A is an intimation sent before a formal show cause notice, telling you the tax, interest and penalty the officer proposes, often based on a mismatch. You can pay the amount or reply with a reconciliation and documents in Part B. Replying with evidence at this stage often avoids a full show cause notice under Section 73 or 74.

Can my GST registration be suspended for return mismatches?

Yes. Under Rule 21A, registration can be suspended where the system finds significant differences between GSTR-1 and GSTR-3B, or between GSTR-2B and GSTR-3B, and there are indications of contravention. You are intimated in Form REG-31 and must explain within 30 days why the registration should not be cancelled. While suspended you cannot make taxable supplies, so respond quickly with a reconciliation.

How often should a small business reconcile GST data?

At least monthly, before filing GSTR-3B. Match your sales register with e-invoices and GSTR-1, your purchase register with GSTR-2B and IMS actions, and e-way bills with dispatches. Reviewing IMS twice a month helps catch rejected or missing supplier invoices before they turn into mismatch notices.