The Goods and Services Tax (GST) has substantially streamlined the indirect tax process in India since its implementation in 2017. Form GSTR 7 is for tax returns that can be filed by anyone who deducts tax while making payments to suppliers for inward supply received. By the 10th of the following month, every registered taxpayer who is obliged to deduct GST at source must file a return in the form GSTR-7.
So, let's go over GSTR 7 (Goods and Services Tax Returns) in-depth in this article, including rules, return filing, and all other important aspects.
What is GSTR 7?
The GSTR7 document is a monthly return form that all taxable individuals who need to deduct Tax Deducted at Source (TDS) under GST are required to file. The TDS amount deducted, the amount paid and payable, as well as any TDS refund claimed, will all be listed on Form GSTR-7. The individual whose TDS is deducted may claim the Input Tax Credit (ITC) for that TDS and use it to pay their output tax debt. Once the GSTR 7 due date for filing has passed, each deductee can see the information of TDS deducted electronically in Form GSTR-2A.
On account of the return submitted in Form GSTR-7, the certificate for the TDS collected will be made accessible to the deductee in the Form GSTR-7A.
GSTR 7: Return Filing
People who deduct taxes when crediting a payment to suppliers for inward supplies received must file Form GSTR-7. The obligations of the tax deductor under GSTR 7 return are listed below:
- In Form GSTR-7, one must state their TDS liability for a specified period (monthly).
- Within the time limit, the tax deductor should file an accurate and complete return, considering the TDS credit that may be provided to the counterparty taxpayer following the Deductor's submission of a GST TDS return in Form GSTR-7.
- In accordance with that return, provide information of the TDS deducted within three key headings: central tax, state tax, and integrated tax.
- Provide the deductee with a TDS certificate.
After the GST TDS due date of filing Form GSTR-7, each deductee can access TDS information deducted in PART ‘C' of Form GSTR-2A electronically. In addition, depending on the return submitted in GSTR-7, the certificate of such TDS deducted will be made accessible to the deductee in Form GSTR-7A.
Also Read: A Guide to Filing GST Annual Returns (GSTR-9)
Who needs to file Form GSTR-7?
The following people deduct TDS under section 51 of the Central Goods and Services Tax (CGST) Act. So, GSTR 7 applicability caters to the following:
- Local authority
- A department or organisation of the Central or state governments;
- Government agencies
- The Government may notify a specific group of people based on the Council's recommendations.
- An authority, a board, or a body established by Parliament, a State Legislature, with the government owning 51% of the equity.
- A society founded by the federal, state, or local government & registered under the Societies Act of 1860.
How to file GSTR-7?
The GSTR 7 form contains eight tables that have information about the tax deducted. The procedures are outlined below.
GSTIN: The taxpayer's Goods and Services Tax Identification Number (GSTIN) is automatically added in GSTR-2A when the return is filed. It's the one-of-a-kind GST Identification Number that each registered taxpayer receives after GST registration.
Legal name of the Deductor: This part contains the registered person's name, which is auto-populated. By logging into the GST Portal, every registered person's trade name can be auto-populated as well.
Trade Name: The Deductor's business name, if any.
TDS details: The specifics of the tax amount deducted at source by authorised Deductor can be observed in this section. It will include the deductee’s GSTIN, total amount, and TDS amount. The tax due will be provided under three components based on the information provided in this heading (CGST, SGST, and IGST).
Modifications to TDS information for any previous tax period: Entering the original and revised details in this section will allow you to make any corrections to the data given in prior months' returns. TDS certificate, Form GSTR-7A, will be revised as a result of this amendment.
Tax deduction at source and paid: This section contains information about the amount of tax taken from the deductee and the amount of tax received by the government.
Interest, late fee payable and paid: If the TDS amount is subject to interest or late fees, this part will show the interest and late costs due, as well as the amount paid to date.
Refund claimed from electronic cash ledger: This section contains information about any refunds you may have received from the electronic cash ledger for TDS payments. This part will also specify the bank account to which the TDS refund should be credited.
TDS/Interest payment debit entries in electronic cash ledger: When you finish filling out the return and paying the TDS, as well as any interest, the entries in this area are auto-populated.
Once all details have been appropriately provided, the taxpayer must sign a declaration stating correct information.
What happens if the deductee rejects the TDS credit entry?
TDS credit entries that are rejected will be auto-populated in Table 4 of the Form GSTR-7. Moreover, the deductor will need to change the relevant details in the next tax period's Form GSTR-7.
The data will be transmitted to the appropriate GSTIN for acceptability following the correction of the details in Form GSTR-7. This process will continue until the counter-party accepts the TDS details.
Different ways of signing Form GSTR-7
Digital Signature Certificates and Electronic Verification Codes are two different ways to file Form GSTR-7:
Electronic Verification Code: By generating an OTP, the Electronic Verification Code (EVC) confirms the user's identification on the GST Portal. The OTP is sent to the Authorised Signatory's registered phone number, entered in Section A of the Registration Application.
Digital Signature Certificate: Digital Signature Certificates (DSC's) are the electronic counterparts to paper certificates. A digital certificate can be used to authenticate one's identity, gain access to data on the Internet, or digitally sign documents. DSCs are issued by recognised Certifying Authorities in India. The GST Portal accepts only PAN-based Category II & III DSCs.
Penalty for failing to file GSTR 7
The GST Council has implemented rules and regulations for late returns and missed tax payment deadlines to ensure that the system runs smoothly. Late submission of GSTR-7 incurs a late fee of Rs.100 under the Central Goods and Services Tax (CGST) and Rs.100 under the State Goods and Services Tax (SGST). The maximum late amount, however, shall not exceed Rs 5,000. If you are late in filing your Integrated Goods and Services Tax (IGST), you will not be charged a penalty. In addition to the late fee, an interest rate of 18% per year is charged from the following day of the due date for filing the return until the day of payment.
E.g., Let's say a taxpayer with a taxable income of Rs.5000 misses the tax payment deadline in a certain month and wants to make up the difference in 2 days.
In that instance, the calculation will be: 5000*18/100*2/365= Rs.4.93 per day.
GSTR-7 Filing Prerequisites
The following are the prerequisites for filing the GSTR-7:
- You must be a GST registered taxpayer with a GSTIN of 15 digits, depending on your PAN.
- Your company's total revenue should be more than 20 lakh rupees.
- All transactions in which you deduct and pay tax on behalf of your vendors must be documented.
- A valid User ID and password are required for Tax Deductor.
How to submit a GSTR 7 return online?
The TDS Deductor can use the GST Portal to file the GSTR-7 return by following the instructions below.
- Go to the GST Portal https://services.gst.gov.in/services/login
- Then, log in to the GST Portal with the user’s name and password.
- Go to the Services > Returns > Returns Dashboard command once you're in the portal.
- You can also go to the Dashboard and click on the Returns Dashboard link.
- The Files Returns tab will then appear.
- Then, choose the Financial Year and Return Filing Period from the drop-down box for which you wish to file the return and hit the search button.
- Once you are in the file return, click on the 'Prepare online' button in the GSTR-7 to file the return by making online entries.
- You can click on the 'Prepare offline' button in the GSTR-7 to file a return to make offline entries.
- The page GSTR-7 – Return for Tax Deducted will appear.
- To file the GSTR-7 returns, you'll need to fill out eight sections, including all the required information and sign a certification validating that the information is correct.
How to Preview GSTR-7
- If you want to verify that the information you submitted is correct, you can preview the GSTR7 return by clicking the PREVIEW button and download the GSTR-7 Summary document for your review.
- Before submitting the GSTR 7 return, it is recommended that you download and double-check each section of the information.
- Please keep in mind that any changes must be done before submission and within the same month.
Also Read: GSTR-10: Return Filing, Format, Eligibility & Rules
To ensure fair taxation, the government has adopted a variety of rules and regulations. In GST, the entire taxes procedure is split into two parts: the buyer and the supplier. The returns' chain verifies that all of the data submitted is correct. Various forms are generated for verifying transactions. GSTR-7 plays an integral role since it is used for filing monthly returns for GST registered persons for deducting TDS under GST. Every facet of GSTR 7 has been covered in this article. We hope you have understood everything about GSTR7 . For more useful information, visit Khatabook.