Hard-locking GSTR-3B: A new compliance milestone and its pitfalls

Introduction

Since its inception, the GST framework has envisaged a system-based matching mechanism, where self-assessed returns are pre-filled using data from other statutory filings made by taxpayers. The original return formats—GSTR-1, GSTR-2, and GSTR-3—were designed to operationalize this approach. However, due to limitations in the GST portal, these forms were never fully implemented.

In their place, Form GSTR-3B was introduced as a simplified interim return. Over time, several technological initiatives—such as e-invoicing, the Invoice Furnishing Facility (IFF), Form GSTR-2B, Form GSTR-1A, and the Invoice Management System (IMS)—have been rolled out to move closer to the originally envisioned system-driven compliance model.

In line with this progression, the idea of hard-locking auto-populated data in GSTR-3B has recently gained traction. Most notably, the GSTN advisory dated 7 June 2025 announced that, beginning with the July 2025 tax period, outward liability in GSTR-3B—auto-populated from GSTR-1/IFF—will be non-editable. Any corrections must be routed through GSTR-1A before filing.

This article analyses the legal and operational challenges posed by the proposed hard-locking of GSTR-3B data. This article also highlights the lack of clarity surrounding the extent of hard-locking contemplated from the July 2025 tax period.

The hard-locking proposal

Pursuant to the recommendations of the GST Council, the GSTN has issued a series of advisories outlining a phased approach to implementing hard-locking of auto-populated data in Form GSTR-3B. These advisories mark a significant shift toward a system-driven compliance framework, wherein outward liability and input tax credit—auto-populated from GSTR-1/IFF and GSTR-2B, respectively—will become non-editable. Any corrections to these figures will be permitted only through Form GSTR-1A or appropriate amendments in subsequent periods. A summary of these advisories is provided below:

GST Advisory Summary Table (As of June 2025)

The summary reveals that three parallel hard-locking proposals are under consideration: for output tax liability, ITC data, and Table 3.2 of GSTR-3B. While the GSTN advisory dated 7 June 2025 confirms that output liability fields in GSTR-3B will be hard-locked from the July 2025 tax period, it makes no mention of the earlier advisories which addressed hard-locking of Table 3.2 of GSTR-3B. This omission creates ambiguity regarding the exact scope of hard-locking contemplated from the tax period of July 2025.

Another key concern is the automatic addition of output tax liability to a supplier’s return when a recipient rejects a credit note via the Invoice Management System (IMS). This mechanism currently lacks statutory backing, as the relevant amendments to Section 34(2) and Section 38 of the Central Goods and Services Tax Act, 2017 (‘CGST Act’), introduced through the Finance Act, 2025, are yet to be notified.[1] Under the existing regime, taxpayers could manually delete such auto-populated liability in GSTR-3B. However, with hard-locking proposed from the July 2025 tax period, this flexibility may no longer be available, potentially resulting in involuntary tax liability without express legal sanction.

Hard-locking lacks legal sanction

The current legal framework under the GST law does not provide statutory backing for the proposed hard-locking of GSTR-3B data based on GSTR-1 or GSTR-2B. Unless suitable legislative amendments are made, such hard-locking risks being seen as a practice rooted in portal-based functionality rather than in law, effectively creating a regime governed by ‘GST portal law’ rather than the statute itself.

Key legal observations include:

• Section 39 of the CGST Act, which mandates the furnishing of returns, does not distinguish between editable and non-editable tax periods for GSTR-3B. No amendment has been made to restrict a taxpayer's right to revise or correct data before filing.
• Section 39(9) of the CGST Act allows rectification of errors or omissions in GSTR-3B for earlier tax periods until November of the following financial year. Hard-locking removes the practical ability to make corrections at the time of filing, effectively curtailing a statutory right provided by Section 39(9).
• The scheme of the GST law after 1 October 2022 relating to availment of ITC only on those invoices reflecting in Form GSTR-2B inherently recognises the option to edit auto-populated figures in GSTR-3B. In the absence of any further changes to the law, a question arises as to how the hard-locking feature can be justified in the context of ITC. It also remains to be seen on how the feature would function from a credit perspective when the law requires a taxpayer to undertake different kinds of reversals. 

• The Invoice Management System (IMS), essential to the contemplated hard-locking, lacks legal foundation pending amendments to the CGST Act and CGST Rules. The GST Council has only recently begun considering such amendments (e.g., through amendments to Section 38 of the CGST Act, introduced through the Finance Act, 2025 to provide a legal framework in respect of generation of GSTR-2B based on action taken on IMS).[2]

• Section Rules 88C and 88D of the Central Goods and Services Tax Rules, 2017 (‘CGST Rules’), which deal with mismatches between GSTR-1 vs. GSTR-3B and GSTR-2B vs. GSTR-3B respectively, may become redundant under a hard-locked regime, since no mismatch would be possible if editing is not permitted. Their continued existence raises a valid question—is hard-locking truly a statutory mandate, or merely a portal-level constraint inconsistent with the law?

With recent advisories treating hard-locking as the norm, a deeper concern is—are GSTN advisories evolving into a legislative instrument? If so, this represents a departure from established legislative hierarchy, introducing a new class of ‘portal-enforced compliance’ without statutory authority. Such measures, absent legal sanction, may be open to constitutional and judicial challenge.

Operational challenges

While the GSTN infrastructure has significantly matured over the past eight years, enabling the vision of a seamless, system-based return filing regime, the proposed shift to hard-locked, auto-populated GSTR-3B is not without operational and technical hurdles.

A major challenge lies in the incomplete or erroneous population of GSTR-2B, especially with respect to inward supplies and import transactions. Many taxpayers continue to face issues in getting invoices and Bills of Entry (BOEs) to reflect correctly in GSTR-2B. Acknowledging these glitches, GSTN had introduced a self-service BOE retrieval tool[3], yet many users still find themselves compelled to raise grievance tickets due to persistent non-population and data sync failures. This issue has led to ongoing litigation over mismatches between GSTR-2B and GSTR-3B, particularly where eligible ITC on imports is missed out from the system-generated statements.

The proposed hard-locking of GSTR-3B based on GSTR-1 would significantly constrain a taxpayer’s ability to rectify inadvertent errors prior to filing GSTR-3B once the taxpayer has missed the option to make the correction in GSTR-1A for said tax period. Mistakes such as tax paid under wrong head often arise due to clerical oversight or incorrect POS selection in GSTR-1. If these errors are not promptly corrected through GSTR-1A or amendments, the taxpayer may face cash flow issues and delayed refunds with no immediate recourse for correction.

A related complexity also arises in the context where taxpayers discharged liabilities via Form DRC-03 or the electronic liability ledger, while continuing to raise tax invoices or debit notes (e.g., to pass on ITC to recipients) and report them in GSTR-1. Since the tax was already paid through DRC-03, such transactions were typically excluded from GSTR-3B, avoiding double tax accounting. Under a hard-locked regime, this practice becomes infeasible—any tax reported in GSTR-1 would compulsorily reflect as liability in GSTR-3B, preventing the taxpayer from passing on ITC unless the liability is paid again through the return.

These examples highlight that technical capability and legal flexibility must be addressed before hard-locking can be effectively implemented across the GST framework.

Conclusion

The move to hard-lock GSTR-3B aims to improve accuracy and bring consistency in return filing. However, without clear legal backing and a fully reliable system, it raises concerns. Taxpayers still face technical glitches, and the law does not yet support locking return data.

Courts have consistently prioritized substantive justice over procedural rigidity, allowing taxpayers to correct genuine and inadvertent errors in GSTR‑1 and GSTR‑3B—especially when the errors cause no loss to revenue and stem from technical glitches or clerical oversight.[4] Proceeding with implementation of hard-locking would result in a surge of litigation relating to revision of returns.

For hard-locking to work well, it needs proper changes in the law, a smooth portal experience, and clear rules. Until then, enforcing it may cause more confusion than compliance.

[The authors are Associate Partner and Principal Associate, respectively, in GST practice at Lakshmikumaran & Sridharan Attorneys, Chennai]

[1] As per the 55^th GST Council Meeting recommendations to provide legal framework for IMS, the amendments to Section 34(2) and Section 38 of the CGST Act have been introduced vide Section 126 and Section 127 of the Finance Act, 2025. However, the amendments are yet to come into force.

[2] Para C.7 of the 55^th GST Council Meeting recommendations available here.

[3] GSTN Advisory dated Sep 17th, 2021 available here.

[4] CBIC v. Aberdare Technologies Private Limited & Ors., 2025 (4) TMI 101 - SC ORDER [The Supreme Court upheld the Bombay High Court’s decision allowing revision of both GSTR‑1 and GSTR‑3B beyond the statutory deadline, provided there is no loss of government revenue. The Court emphasized that software limitations cannot justify denial of these corrections, affirming taxpayers' right to amend bona fide clerical mistakes]; Orient Traders v. Deputy Commissioner of Commercial Taxes, 2023 (1) TMI 838 - Karnataka High Court [The Karnataka HC allowed correction of GSTR‑3B for July 2017 and March 2018—specifically to rectify the misclassification of IGST as CGST/SGST. It held this would not prejudice revenue and granted permission to amend the returns online].