The Goods and Services Tax (GST) of India constitutes a revolutionary tax reform. Its objective is to streamline the convoluted indirect taxation system within the nation. Amongst various integral components, we emphasise here one—the GST return. This element plays a vital role in ensuring compliance as well as facilitating revenue collection.
This article will explore not only the concept of GST returns but also their diverse types, individuals obligated to file them, and how to file GST returns.
What is GST Return?
Wondering, ‘What is GST return?’ The tax authorities require a registered taxpayer to submit their GST return, disclosing business activity for a specific time period. This includes sales, purchases, and tax liabilities. This obligation serves not merely as an act of transparency, but it provides companies with the mechanism to determine precisely how much GST is owed or potentially eligible for a refund.
Submitting a GST return is of paramount importance to the GST system. It guarantees government collection of accurate tax income. Further, it encourages accountability and transparency. These returns serve a dual purpose for the government. They gather crucial data to cross-check tax payment accuracy and identify potential instances of tax evasion.
Who Should File a GST Return?
Every firm is not required to submit GST returns. Rather, only taxpayers registered under the GST regime must fulfill the obligation of GST return filing. Businesses must register for GST and submit their returns if their yearly revenue surpasses the specified threshold limitations. Several company types have upper and lower bounds, which include:
1. Regular Taxpayers
To register for GST and submit a return, a firm must possess an average annual revenue of Rs. 40 lakhs for its products and Rs. 20 lakhs for its services. The state, however, determines the criteria.
2. Composition Scheme
If small firms’ yearly revenue does not exceed Rs. 1.5 crores, they have the option to select the composition scheme. Under this plan, companies allocate a predetermined proportion of their earnings for GST payment and receive an exemption from routine GST report filing. This is a strategy that streamlines financial processes. On the contrary, they choose to submit the CMP-08, a more simple response.
3. Casual Taxable Person
During the time in which they engage in temporary activities, individuals or firms conducting occasional taxable transactions outside their regular business location must register as casual taxable entities. They are also required to file GST reports.
4. Input Service Distributor
An input service distributor (ISD) is a company that acquires services and disperses input tax credits to its branches or divisions. To record the allocation of input tax credits, ISDs must submit GST reports.
Types of GST Returns
There are several different sorts of returns used in India’s GST return filing procedure, each with its own function. Let’s examine the types of GST returns:
1. GSTR-1
A registered taxpayer must utilise this return to list any sales or supplies they made to third parties. It contains information on the sales invoices, credit notes, and debit notes issued throughout the course of a specific tax period. Businesses subject to the composition system must file GSTR-1 quarterly in addition to monthly for normal taxpayers.
2. GSTR-3B
A taxpayer’s entire tax due, input tax credit, and tax payments are detailed in the summary report GSTR-3B. Regular taxpayers, including those who are a part of the composition plan, file it once a month.
3. GSTR-2A and GSTR-2B
These returns, which the GST system automatically generates, contain details about a taxpayer’s inbound purchases or supply. Input tax credit reconciliation and accuracy checks for GST returns are both done by the taxpayers using this data.
4. GSTR-4
Businesses that have enrolled for the composition program must submit GSTR-4. It is a periodic report that lists the elements of the taxpayer’s sales and tax obligations.
5. GSTR-5
Non-resident foreign taxpayers who do business in India must file Form GSTR-5. It gives information about their taxable suppliers, taxes paid, and input tax credits.
6. GSTR-6
To record the allocation of input tax credits to their branches or units, Input Service Distributors (ISDs) must submit GSTR-6. It includes details on the bills to which the credit has been applied.
7. GSTR-7
Taxpayers who must deduct tax at source (TDS) from payments to suppliers must complete this form. Information on TDS deductions and the accompanying payments to the government is included in GSTR-7.
8. GSTR-8
Operators of e-commerce sites must submit GSTR-8 forms. It contains information about the purchases made using their platform as well as tax collected at source (TCS).
9. GSTR-9 and GSTR-9C
These yearly reports and audit findings offer a thorough overview of a taxpayer’s financial activity and tax compliance for a given fiscal year. Regular taxpayers must file GSTR-9. However, those whose revenue exceeds Rs. 2 crores and calls for a tax audit must file GSTR-9C.
How to File GST Return?
In India, submitting a GST return is essential to following the tax code of the nation. The procedure makes sure that companies appropriately disclose their financial operations and contribute to the system for collecting taxes. Here are detailed instructions on the GST return filing process:
Step 1: Visit the GST Portal
Start by going to the official GST website, which is accessible at www.gst.gov.in. The central hub for all GST-related filings and operations is this portal.
Step 2: Obtain Your GST Identification Number (GSTIN)
Your company will receive a 15-digit GST identification number (GSTIN) upon registration. This special identification number, which is required for all GST-related transactions, is based on your state code and PAN (Permanent Account Number).
Step 3: Upload Invoices
You must utilise appropriate GST software or send your invoices to the GST portal after you get your GSTIN. An invoice reference number, which is used to monitor and identify the transaction, will be assigned to each uploaded invoice.
Step 4: File Outward and Inward Returns
You must submit outbound returns, inbound returns, and cumulative monthly returns in order to complete the GST return filing procedure. The GST Common Portal (GSTN) allows for the online filing of these returns.
Step 5: Correct Errors and Refile if Necessary
If your submitted returns include any mistakes or inconsistencies, you can fix them and resubmit the returns via the GST site. For compliance and to prevent penalties, accurate reporting is crucial.
Step 6: Verification of Outward Supplies
The information about your outward supplies will be available to your clients or beneficiaries in GSTR-2A once you file GSTR-1. They must subsequently confirm, validate, and amend these facts. They must also register any credit or debit notes connected to these transactions.
Step 7: Furnish Details of Inward Supplies
As a recipient, you must fill out the GSTR-2 form with information on the inbound supply of taxable goods and services. Reconciling your input tax credit with the supplier’s outbound supply requires you to complete this step.
Step 8: Accept or Reject Modifications
The supplier has the choice to accept or reject the revisions made by the receiver in GSTR-1A after receiving the recipient’s information about inbound supplies. This guarantees that both parties agree on the reported transactions.
Conclusion
The Indian Goods and Services Tax system incorporates the filing of GST returns as a vital element. This mechanism not only fosters accountability and transparency but also facilitates governmental revenue collection through taxation. To comply with the law, businesses must understand and follow rigorously the diverse aspects of GST returns, along with their associated filing procedures.
All taxpayers, be they normal taxpayers, members of a composition scheme, or distributors of input services, regardless of their specific category, must consciously acknowledge and fulfill their GST responsibilities by submitting returns accurately and punctually. Failure to do so may result in fines, even legal repercussions. Consequently, it remains important for businesses operating within India’s evolving tax landscape, regardless of size, to maintain constant vigilance in staying updated on all aspects related to GST return filing.
FAQs
1. In India, who is required to file GST returns?
Companies with yearly revenue surpassing the set threshold limitations, private individuals involved in taxable transactions, and Input Service Distributors (ISDs), all registered taxpayers, must file GST reports.
2. What forms of GST returns are there, and how frequently should they be filed?
Several GST return forms exist, like GSTR-1 for outbound supplies, GSTR-3B, a tool to calculate total tax due, and GSTR-9, used for yearly reporting. The frequency of filing, whether monthly, quarterly, or annually, depends on the category in which the taxpayer falls into.
3. What happens if I don’t submit my GST returns by the due date?
Penalties and interest fees may apply for late submission of GST returns. Additionally, it can result in the suspension of your GST registration.
4. If I made a mistake when completing my GST returns initially, can I change them?
Yes, you can make changes to your GST returns if you find mistakes or inconsistencies. Within a certain time window, the GST site allows for revisions and re-filing. Correcting errors as soon as possible is essential to preventing compliance problems.