B2B vs B2C invoices in GSTR-1

The basic split

GSTR-1 treats sales differently depending on who bought:

• B2B (business to business): buyer is registered under GST and has given you a GSTIN. Each invoice is reported separately with the buyer's GSTIN, so it flows to their GSTR-2B and they can claim credit.
• B2C (business to consumer): buyer is not registered, whether a household, a small shop below the threshold, or a business that simply did not give a GSTIN. Nobody claims credit on these, so most are reported in summary.

Composition dealers are registered and have a GSTIN, so a sale to one is B2B even though they cannot claim credit. A business that is not registered at all is B2C, however large the order.

Decision table

The B2C Large limit is invoice value above ₹1 lakh at present (it was ₹2.5 lakh until 2024). Confirm the current figure on gst.gov.in. Details in B2C Large invoices in GSTR-1.

Worked example

A Jaipur furniture showroom in December:

• Sale to a registered interior firm in Jaipur, ₹1,80,000 + 18% → Table 4, CGST + SGST, with the firm's GSTIN.
• Sale to a registered hotel in Udaipur (same state), ₹4,50,000 + 18% → Table 4.
• Sale to a homeowner in Gurugram, Haryana, delivered there, ₹1,40,000 + 18% (invoice value ₹1,65,200) → inter-state, unregistered, above the limit → Table 5, IGST, place of supply 06-Haryana.
• Sale to a homeowner in Delhi, invoice value ₹70,800 → inter-state, below the limit → Table 7, one line for Delhi at 18%.
• Thirty-five counter sales in Jaipur to walk-in buyers totalling ₹6,20,000 taxable → Table 7, one line for Rajasthan at 18%.

Table 7 ends up with two summary lines: Rajasthan 18% and Delhi 18%. Invoice-level detail for B2C small sales stays in your books.

Why getting this right matters

• Your buyer's credit. A registered buyer's invoice reported as B2C never reaches their GSTR-2B. They cannot claim the credit and will hold your payment until you amend it.
• State revenue. B2C sales are summarised state-wise because the tax on inter-state B2C sales goes to the consuming state. A wrong state on a B2C line sends tax to the wrong state.
• E-invoicing. If you are covered by e-invoicing, B2B invoices must be reported to the invoice registration portal, while B2C invoices are not. A B2B sale wrongly billed as B2C misses its IRN. See e-invoicing and IRN.

Common mistakes and how to avoid them

1. GSTIN not captured at billing. Ask every business buyer for their GSTIN before the first bill and save it in the party master, not on the invoice alone.
2. Cash sale ledger used for a registered buyer. Counter staff bill a dealer under "Cash Sales" to save time. Create the party ledger instead.
3. Wrong state on unregistered parties. For B2C, the state of the delivery address decides IGST or CGST + SGST. Record it.
4. GSTIN entered but invalid. One wrong character and the portal rejects the line. Check new GSTINs on the portal's search taxpayer facility.
5. Buyer registers mid-year. Invoices before their registration date stay B2C; after it, B2B. Update the master from the right date.

Fixing a misclassified invoice

If a B2B invoice went into Table 7 by mistake, amend it in a later GSTR-1: reduce the B2CS line through the B2CS amendment table and add the invoice to Table 4 through the amendment route the portal provides, or use GSTR-1A for the current period before GSTR-3B is filed where available. The buyer will see it in the GSTR-2B of the period in which you report it. Amendments must be made within the time limit in the law, which ends around November after the financial year closes. More in GSTR-1 amendments.

This is general information, not tax advice.

Seeing the split in Cashflow OS

The GSTR-1 view in Cashflow OS, prepared from your TallyPrime data, shows separate tiles for B2B, B2C Large and B2C Small. Tapping a tile opens the bills behind it, so a dealer billed without a GSTIN or a Delhi customer marked as Rajasthan stands out before you download the JSON and file on the portal.