Your client engaged in building construction filed NIL GSTR-1 and GSTR-3B for FY 2024-25. Later, bank statements showed ₹25 lakh receipts, and no Income Tax Return (ITR) has been filed yet. How should the ITR be filed and GST returns rectified?
What can be done:-

1. Income Tax Return:
   The client must file ITR-3 (or applicable ITR) for AY 2025-26, declaring the actual business receipts and income. If a NIL or incorrect ITR was already filed, a Revised Return under section 139(5) should be filed.
2. GST Returns:
   GST returns cannot be revised once filed. The missed outward supplies should be reported in subsequent GSTR-1 and GSTR-3B, along with payment of applicable GST, interest, and late fees. Final reconciliation should be done while filing the annual return (GSTR-9).

1. Income Tax (AY 2025-26)

• File a Belated Return: Since the original deadline is over, you must file a Belated Return (u/s 139(4)).
• Penalty: A late filing fee (u/s 234F)  will apply.
• Restriction: You cannot carry forward any business losses, and interest under sections 234A/B/C will apply on any unpaid tax.
• Form: Use ITR-4 (Presumptive) or ITR-3 (Actuals) to declare the ₹25 lakh.

2. GST Rectification (FY 2024-25)

• Catch-up Filing: You must report the ₹25 lakh in the current month’s GSTR-1 and GSTR-3B.
• Interest: You must pay 18% per annum interest on the tax amount, calculated from the original due date of the month the money was received until the date of payment.
• GSTR-9 (Annual Return): Use this to finalize the reconciliation. Since the monthly returns were NIL, the GSTR-9 will show a mismatch that must be explained by the tax payments made in the subsequent year.