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What is GSTR?
Goods and service tax is a single taxation which came into being in India in the year 2017 replacing various indirect taxes such as VAT and Service tax. One of the integral requirements of any entity under GST is every entity is required to mandatorily submit GST returns detailing sale and purchase of goods and services, the input tax credit and taxes paid to the tax authorities.
Every time a business entity gets itself registered under GST, one of the mandatory requirements is the business entity is required to mandatorily submit GST returns based on the volume of turnover as well as the number of business activities carried out during that particular period. Trustful submission enables businesses to be in a position whereby they are able to correctly account for input taxed credit and comply with the requirements of the GST Act. Failure to do so may expose the business to penalties, interests and in some cases, limitation in claiming input tax credit.
What are the advantages of
filing GST Returns
GST has eliminated cascading effects. In past transactions, taxes were often levied on taxes themselves on particular dealings, which is no longer the case with GST due to the abolishment of several taxes which included central excise duty, service tax and VAT as well. You prevent paying taxes on taxes which in itself allows for monetary savings.
Structured Approach
Before the implementation of GST, the tax filing structure was chaotic. The introduction of GST has ensured that all taxes are remitted through a cashless system and the aches of filing taxes are now a thing of the past.
Smooth Transmission of ITC
A supplier’s paid tax is already deducted to his tax liabilities. The passing on of the Input Tax Credit to the buyer is possible only when both would have paid tax and filed a return respectively. Where this is not done, the registered Person misses out the input credit as there was no return filed on time.
Avoid Fines and Interest
In the event of the return being filed late, in addition to claiming return, the taxpayer will incur a penalty of Rs.50 for each such day. Such costs and measures are very painful hence the return should be filed as soon as possible. Taxpayers are also required to file Tax returns even where there is no tax payable to avoid incurring a late fee of Rs.20 per each day delayed. The remaining tax will incur 18% interest in one year.
Steps for
Filing GST Returns
Gather Required Information
Compile details of sales, purchases, input tax credit, and tax payments for the relevant period.
Select the Relevant Return Form
Based on your business type and turnover, choose the appropriate form (e.g., GSTR-1, GSTR-3B).
Upload Data
Enter or upload details of outward and inward supplies, along with tax payment information.
Reconcile and Verify
Reconcile your data with auto-populated forms (e.g., GSTR-2A) to ensure accuracy.
Submit and Pay Tax
Submit the return and pay any outstanding GST liability using electronic cash or credit ledgers.
File and Acknowledge
File the return using a digital signature (DSC) or electronic verification code (EVC). Save the acknowledgment for future reference.
Types of GSTR
GST returns are very important and periodic filings for the registered taxpayers when they wish to report their income, purchases, and tax liabilities. Here are the main types of GSTR:
GSTR-1
Is submitted each month or quarter which captures all the outward supply (sale) of goods and or services.
GSTR-1A:
(Reintroduced in 2024) Ability to revise such detail/ amendments to GSTR-1 before GSTR-3B is lodged.
GSTR-2A
A passive form obtained by the taxpayer that highlights the purchase aspects of the taxpayer based on the figures recorded by their service providers on their GSTR-1.
GSTR-3B
Is filed every month as a summary return which states the summary of got and gave supplies, the credit got on the tax paid and the tax owed.
GSTR-4
Turnover exceeding 20 lakh rupees filed once a year by the composition dealers showing quarterly returns.
GSTR-5
This is provided by non-resident taxable persons which give a periodical return.
GSTR-6
This return is submitted on a monthly basis by Input Service Distributors, and they provide the details about credit on input tax which was received and distributed.
GSTR-7
Submitted monthly by persons who have been required to deduct TDS giving details of TDS collection and payment.
GSTR-8
Monthly submission by e-commerce operators regarding the value of supplies made on his platform and TCS on such sales.
GSTR-9
An yearly return giving the summary of GSB returns filled monthly or quarterly in the previous year.
GSTR-9C
GSTR-9C: This is a GSTR-9 and audited financial statement comparison which is filed by a taxpayer having turnover more than ₹2 crores during the year.
GSTR-10
This return is filled by the registered business whose GST registration got canceled and it contains the information regarding stock holding as on the date of cancellation.
GSTR-11
This return is filled by persons having Unique Identification Number (UIN) for claim filing purposes on the inward supplies.
GSTR Filing Frequency
The frequency of filing GST returns depends on the taxpayer's type of registration and turnover. Below is an overview of the various GSTR forms and their filing frequencies:
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Monthly Returns
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GSTR-1: Filed by regular taxpayers to report outward supplies.
- Frequency: Monthly (11th of the following month) for turnover above ₹5 crore.
- For QRMP Scheme: Quarterly for turnover up to ₹5 crore.
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GSTR-3B: A summary return of outward and inward supplies with tax payment.
- Frequency: Monthly (20th of the following month) for turnover above ₹5 crore.
- For QRMP Scheme: Quarterly for turnover up to ₹5 crore (taxes paid monthly through PMT-06).
- The Quarterly Return Filing and Monthly Payment (QRMP) Scheme for GSTR-1, states that any filing of returns by businesses with an annual turnover below ₹5 crores would be done on a quarterly basis as opposed to monthly. But under the QRMP scheme, GSTR-1 is also filed on a quarterly basis but the last date to file it is the 13th day of the month that follows the last month of every quarter.
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GSTR-1: Filed by regular taxpayers to report outward supplies.
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Quarterly Returns
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GSTR-1 (Under QRMP Scheme): Filed quarterly for businesses with a turnover of up to ₹5 crore.
- Due Date: 13th of the month following the quarter.
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CMP-08: Filed by composition scheme taxpayers for quarterly tax payment.
- Due Date: 18th of the month following the quarter.
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GSTR-1 (Under QRMP Scheme): Filed quarterly for businesses with a turnover of up to ₹5 crore.
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Annual Returns
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GSTR-9: Annual return summarizing the taxpayer's yearly activities.
- Frequency: Annually (31st December of the following financial year).
- Mandatory for: Taxpayers with turnover above ₹2 crore.
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GSTR-9C: A reconciliation statement filed along with GSTR-9 by taxpayers undergoing GST audits.
- Frequency: Annually for turnover above ₹5 crore.
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GSTR-9: Annual return summarizing the taxpayer's yearly activities.
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Nil Returns
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Taxpayers with no transactions during a tax period must file nil returns for GSTR-1, GSTR-3B, or other applicable forms.
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Input Tax Credit (ITC)
Input Tax Credit (ITC) is the backbone of GST, allowing businesses to claim credit for the tax paid on purchases (inputs) used for business purposes. This ensures tax neutrality and avoids cascading taxes.
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Eligibility for ITC
- Taxpayer must be registered under GST.
- Goods or services must be used for business purposes.
- A valid tax invoice is required.
- ITC can only be claimed if the supplier has filed their GST returns and tax is reflected in GSTR-2A/2B.
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Restrictions on ITC
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ITC is not available for:
- Personal expenses.
- Motor vehicles (except in certain cases).
- Goods/services used for exempt supplies.
- Membership fees for clubs or health facilities.
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How to Claim ITC
- Reconcile purchase invoices with GSTR-2A/2B.
- Report eligible ITC in GSTR-3B.
- Ensure the supplier has filed GSTR-1 to avoid discrepancies.
Reverse Charge Mechanism (RCM) in GST
The Reverse Charge Mechanism (RCM) is a concept where the recipient of goods or services is liable to pay GST instead of the supplier. This is contrary to the normal tax flow, where the supplier collects and remits GST.
When RCM is Applicable
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Notified Goods and Services:
GST laws specify certain goods and services where RCM applies, such as:
- Goods: Cashew nuts, tobacco leaves, raw cotton.
- Services: Legal services by advocates, transportation services (GTA).
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Unregistered Supplier Transactions:
- If a registered recipient purchases goods or services from an unregistered supplier, RCM applies, except for exempted goods/services.
-
Import of Services:
GST under RCM must be paid by the recipient for services imported from outside India.
Key Features of RCM- The recipient pays the tax directly to the government.
- ITC can be claimed for GST paid under RCM if the goods/services are used for business purposes.
- Include details of inward supplies liable to RCM in GSTR-1 under the specified section.
GST Refunds
GST refunds are applicable when the taxpayer pays excess GST or is eligible for a refund due to specific circumstances. Refunds ensure liquidity for businesses and prevent blocking of funds.
Scenarios for GST Refunds
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Excess Payment of GST:
Refund of GST paid higher than the actual liability.
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Export of Goods/Services:
Exports are zero-rated under GST. Refunds can be claimed for:
- Unutilized ITC.
- IGST paid on exports.
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Accumulated ITC:
Refunds are granted for unutilized ITC due to:
- Inverted duty structure (higher tax rate on inputs than outputs).
- Zero-rated supplies (e.g., exports).
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Provisional Assessment Finalization:
Refunds are applicable if tax paid under provisional assessment exceeds the finalized amount.
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Deemed Exports:
Certain transactions classified as deemed exports (e.g., supply to SEZs) qualify for refunds.
Process for Claiming GST Refunds
- File Form RFD-01 on the GST portal.
- Submit supporting documents, such as tax invoices, shipping bills, or proof of payment.
- Refunds are processed after verification by tax authorities.
- Refunds are typically credited within 60 days from the date of application.
Key Points
- Interest is payable by the government if refunds are delayed beyond 60 days.
- Refunds can be tracked on the GST portal.
GST Notices: Cancellation, Suspension, and Tax Amount Issues
GST notices are issued by tax authorities for non-compliance, discrepancies, or overdue liabilities. Here’s a breakdown of the types of notices and their implications.
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Cancellation of GST Registration
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Reason: GST registration may be canceled due to:
- Non-filing of GST returns for a specified period.
- Business closure or change in constitution.
- Taxpayer found non-compliant.
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Notice Type: Form GST REG-17: Issued to show cause why registration should not be canceled.
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Remedy: File a reply in Form GST REG-18 within the stipulated time (usually 7 days).
-
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Suspension of GST Registration
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Reason: GST registration may be suspended when:
- Discrepancies are found during audits.
- Non-compliance with GST laws is suspected.
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Notice Type: Suspension Order via REG-31.
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Remedy: Address the discrepancies or file clarifications to reinstate the registration.
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Tax Amount Mismatches
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Reason: Notices are issued when:
- Discrepancies exist between GSTR-1 and GSTR-3B.
- ITC claimed does not match supplier filings in GSTR-2A/2B.
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Notice Type: Form ASMT-10 for discrepancies in returns.
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Remedy: File a response and rectify errors in subsequent returns.
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Steps to Respond to GST Notices
- Log in to the GST Portal: Access the notice under the “Notices/Orders” section.
- Review the Notice: Identify the type of discrepancy or compliance failure.
- File a Response: Submit your response online within the prescribed timeline. Use forms like REG-18 or DRC-03 as applicable.
- Rectify Errors: File revised returns or make payments to address the issue.
List of Documents Required
for GST Return Filing
When you're ready to get on the GST Return Filing journey, having the right documents is crucial. This ensures a smoother process and helps avoid unnecessary delays.
Applicant Documents
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GST Registration Certificate
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DSC of Authorised Director/Partner
Supporting Documents
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Consolidated data as per the prescribed format
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Invoices/Data of the inward and outward supplies
NOTE:
*We will collect additional documents based on the information you provided to the filingbee.
Thank You