Implementation of Rule 59(2) on GST portal and consequences

The Rule-59(6) has been inserted vide Notification No. 1/2021 dated 1st January 2021, and this rule provides for restriction in filing of GSTR-1 in cases where GSTR-3B for the previous two monthly tax-periods is not filed by monthly filers or GSTR-3B for the previous quarterly tax period is not filed by quarterly filers.        

Now, GSTN has issued an update to inform taxpayers that this rule will be implemented on GST Portal with effect from 1st September, 2021.

The system will check whether taxpayers have done filing of GSTR-3B as per Rule 59(6) before allowing taxpayers to file GSTR-1. This check will operate on clicking the SUBMIT button of GSTR-1 and the system will give an error message if the condition of Rule-59(6) is not met.

Cosequently, taxpayer would not be able to transfer the credit as he could not file the GSTR-1/IFF.