Compliance with GST laws must be ensured by filing GST returns, and non-compliance can result in penalties and fines. Therefore, it is crucial for companies doing business in India to comprehend and abide by the rules for submitting GST returns.
On July 1, 2017, the Goods and Services Tax (GST), an indirect tax system, was implemented in India. It replaced several other indirect taxes imposed by the federal and state governments. Registered taxpayers must submit various returns regularly under the GST system to report sales, purchases, and taxes paid.
Taxpayer transactions, purchases, and tax liability for a given period are listed in the GST return. Several GST returns, including GSTR-1, GSTR-2A, GSTR-3B, and GSTR-4, are submitted online via the GST portal. GSTR-1 is a monthly or quarterly report that lists all outgoing purchases the taxpayer has made.
GSTR-2A is an auto-populated form that displays the details of all inward supplies received by the taxpayer based on the information given by the suppliers in their GSTR-1. The GSTR-3B is a monthly return that lists the taxpayer's monthly tax obligations and expenditures. Taxpayers chosen for the GST Composition Scheme must submit a GSTR-4 quarterly report.
Did You Know? The country's tax code reform depends on timely GST returns submission.
GST in India
GST, or Goods and Services Tax, has been implemented in India. It applies to the supply of goods and services where taxpayers must register for GST filing their returns daily. The structure simplifies taxation procedures for taxpayers while ensuring compliance and increasing government revenue.
Types of Taxpayer
Many different taxpayer categories must submit various GST returns. They consist of:
1. Regular Taxpayers
Businesses that must register under GST and have a yearly turnover of INR 20 lakhs (or INR 10 lakhs for specified states) or more are considered regular taxpayers. They must submit GSTR-1, GSTR-2A, and GSTR-3B monthly reports and the related tax payments.
2. Composition Taxpayer
Small taxpayers with a yearly revenue of up to INR 1.5 crores are considered composition taxpayers. They must submit quarterly reports, including GSTR-4, and are permitted to pay tax at a reduced rate. They are not qualified to apply for an input tax refund and must pay taxes based on their turnover.
3. Input Service Distributors (ISDs)
ISDs are businesses that receive bills for input services and pass them along to other divisions or sections of the same company. They must disperse the input tax credit to the appropriate branches or units each month and submit monthly reports, including GSTR-6.
4. Non-resident Taxpayers
Non-resident taxpayers are organisations or people who don't have a permanent presence in India but still provide products or services to customers there. They must register for GST and use a designated tax representative to submit their returns.
5. Casual Taxpayer
Casual taxpayers are persons that do not have a GST registration but occasionally or temporarily provide products or services. They must submit returns and register as casual taxpayers for their temporary activity.
6. TDS/TCS Deductors
TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) deductors are people or organisations that must withhold or collect tax from payments made to vendors or customers at the source. They must apply for GST and submit monthly returns, such as GSTR-7 for TDS and GSTR-8 for TCS.
7. E-commerce Operators
Companies that offer an internet marketplace for buyers and sellers are known as e-commerce operators. They must register for GST, gather tax on behalf of the sellers, and deposit it. They must also submit GSTR-8 and other periodic returns.
Businesses operating in India must thoroughly understand the various GST payer types. Doing so will enable them to calculate their tax obligations and adhere to all relevant rules and regulations.
Importance of Filing GST Returns
Businesses in India must file GST returns to comply with the applicable laws and regulations. Here are some significant justifications for why submitting GST returns is crucial:
- Following the GST system, registered taxpayers must submit GST returns; otherwise, they risk fines, penalties, and other legal repercussions.
- Businesses can only claim input tax credits (ITCs) for taxes paid on expenditures and purchases if they have submitted GST returns. The company may miss out on the chance to claim ITC if the GST returns are not filed, which could increase its tax liability.
- Businesses can determine their tax liabilities and make timely tax payments, which can avoid interest and penalty costs, by filing GST returns.
- By timely submitting GST returns, businesses can preserve a positive standing among their stakeholders, suppliers, and consumers. Failure to comply with GST regulations may result in bad press and damage the company's image.
Various GST Return Types
A registered taxpayer may be required to submit different types of GST returns under India's Goods and Services Tax (GST) system, depending on company activities and turnover. The various GST return types are listed below:
A monthly or quarterly return called the GSTR-1 contains information about all outward supplies of products or services a registered taxpayer made during a specific period. All regular taxpayers, composition taxpayers, and e-commerce operators must submit this return.
Based on the supplier's GSTR-1, GSTR-2A is an auto-populated return that includes information about all inward supplies of products or services a registered taxpayer has received. It is produced automatically following the GSTR-1's due date.
The GSTR-3B is a monthly return that lists all of a registered taxpayer's outward and inward supplies for a specific period. All regular taxpayers, composition taxpayers, and e-commerce operators must submit this return.
Composition taxpayers must submit the GSTR-4 quarterly return, which contains information about all of their outgoing and incoming supplies and their quarterly tax obligations.
The GSTR-5 is a monthly report that non-resident taxpayers must submit. It contains information about all outgoing and incoming supplies made during the previous month.
GSTR-6 is a monthly return that Input Service Distributors (ISDs) submit, and it contains information about all the invoices received and sent to the corresponding branches or units.
A tax deductor who deducted TDS from payments made to suppliers must submit GSTR-7 monthly. This return contains information on the TDS deducted and paid and other relevant details.
The GSTR-8 is a monthly return that e-commerce operators must submit. It contains information about all the supplies made using the e-commerce platform and the amount of tax collected and paid.
All regular taxpayers, composition taxpayers, and e-commerce operators must submit the GSTR-9 annually. The information on all the supplies produced, the claimed input tax credits, and the tax liability for the fiscal year are all included in this return.
GST Due Date
The due dates for submitting GST returns depend on the type of GST return and the taxpayer's turnover. The deadlines for a few of the typical GST filings are listed below:
1. GSTR-1: The due date for GSTR-1 is the 11th of the following month for taxpayers with a turnover of more than ₹ 5 crores in the previous financial year. For taxpayers with a turnover of up to ₹ 5 crores, the due date is the 13th of the following month for quarterly filers and the 11th of the following month for monthly filers.
2. GSTR-3B: The due date for GSTR-3B is the 20th of the following month for all taxpayers, regardless of their turnover.
3. GSTR-4: The due date for GSTR-4 is the 18th of the month following the end of the quarter.
4. GSTR-5: The due date for GSTR-5 is the 20th of the following month.
5. GSTR-6: The due date for GSTR-6 is the 13th of the following month.
6. GSTR-7: The due date for GSTR-7 is the 10th of the following month.
7. GSTR-8: The due date for GSTR-8 is the 10th of the following month.
8. GSTR-9: The due date for GSTR-9 is December 31st of the following financial year.
9. GSTR-10: The due date for GSTR-10 is within three months of the date of cancellation or the date of the order of cancellation, whichever is later.
Penalties for Not Filing GST Returns
There are penalties for violating different rules under India's Goods and Services Tax (GST) system, including late or incomplete GST return filing. The following are some penalties for submitting GST returns late or not at all:
1. Late Filing Charge
The delayed filing of GSTR-1, GSTR-3B, and GSTR-4 is subject to a late filing charge. A maximum of ₹ 5,000 is charged as the late filing cost, which is ₹ 50 per day of delay (or ₹ 20 per day for taxpayers with no tax liability). The GSTR-10 late fee is ₹ 100 per day of late filing, up to a limit of 0.25% of the taxpayer's revenue.
2. Interest for Delayed Payment
For taxes that are paid late, interest is assessed at a rate of 18% annually. From the payment due date until the payment date, interest is computed on the sum of unpaid taxes.
3. Penalties for Not Filing
A taxpayer who fails to submit GST returns for three consecutive months will be subject to a penalty of ₹10,000 or 0.25% of their annual revenue, whichever is greater. Each GST application is subject to this fine.
4. Suspension of GST Registration
A taxpayer's GST registration may be suspended if they consistently fail to submit GST returns for six months.
5. Cancellation of GST Registration
A taxpayer's GST registration may be terminated if they consistently fail to submit GST returns for twelve months.
GST ultimately brings about a good change in the majority of business sectors. Businesses would gain many benefits from on-time filing returns. Notably, these deadlines are subject to change, and taxpayers are advised to stay informed of any adjustments by checking the official GST portal or government notifications.
Taxpayers should submit their GST returns on time because failing to do so can result in fees and fines. Both the price of locally sourced goods and the expense of transportation can be significantly reduced. The various GST returns every taxpayer must understand.
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