Are you a small business owner who is finding it difficult to follow the tax filing procedure under the new regime of GST? Worry not; in this article, we will walk through the details of everything involved in GST. We will be learning about the types of GST returns, who should be filing and when these things need to be done to ensure the seamless functioning of your business.
Let us begin.
What is GST, and who should file it?
GST is a document that has all the information about your sales, purchases, a tax that you have acquired from making sales, and the tax that you have paid while making purchases. Filing GST returns allows you to know what the tally is and what is the amount of tax you will need to pay the government of India.
Who should file GST returns?
Every business owner or dealer who is registered with the GST system will have to file GST returns. People falling under the below-mentioned criteria should file GST returns.
- Regular Business owners
- Businesses that are registered under the composition scheme
- Other types of business owners and dealers
- Auto-drafted returns
- Tax notice
Now, let’s take a look at the different types of GST returns and what each type of business is supposed to pay.
Types of GST returns for GST Registered businesses
GSTR1 is a type of tax return that business owners will have to pay either on a monthly basis or a quarterly basis.
The duration is based on turnover. If the turnover is less than INR 1.5 crores, then the GST return can be filed quarterly. If the turnover is over 1.5 crores, then the returns should be filed monthly.
GSTR1 contains all the information of the sales a business has made in the time period of filing.
GSTR2 is filed for all the transactions an organization has made for inward purchases. This could contain all the taxes they have paid for services and purchases. Every registered GST user should file GSTR2 regardless of the nature of their transactions for the month. Unlike GSTR1, the GSTR2 should be filed every month, and the due date for this is the 15th of next month.
GSTR2 is required as it used by the government to tally the reports that are coming out of GSTR1s.
GSTR-2B is a type of tax filing extended to casual, regular, and SEZ level taxpayers. These types of tax filings can be done based on the GSTR1, GSTR5, and GSTR6 filings provided by their supplier/employer/contractor.
GSTR2Bs are generated on the 12th of every month and should contain all transactions till the 12th of the previous month.
GSTR3 is a summary of the GSTR1 and the GSTR2s of every month. This contains all the purchases and sales history. This can be quickly collated by extracting data from GSTR1 and GSTR2s. It informs the business owner of the GST liability they are accountable for every month.
GSTR3 should be filed by the 20th of every next month. For those businesses whose turnover is less than 1.5 crores, the due dates for filing GSTR3s will be announced by the government soon.
GSTR-3B is a tax that every business should file by the 20th (turnover less than 1.5 crores) & 24th (turnover greater than 1.5 crores) of every month. Regardless of the profit or loss made, business owners should file this tax. Unlike others, once filed, a GSTR-3B cannot be revised.
GSTR9 is a consolidated annual report that every business registered with the GST system should file. It is a combination of all the sales and purchases that a company has made over the year and also features sections that include CGST, SGST, IGST, and HSN.
GSTR9 is a version that contains all the information that a business submits in the GSTR1s, GSTR2s, and GSTR3s on a monthly or quarterly basis. This is primarily to ensure that there is 100% transparency in the filing system.
GSTR9s should be filed before the 28th of February every year.
Every business whose annual turnover is between INR 2-5 crores will have to file for GSTR9C. This a reconciliation statement and certification. The GSTR9C consists of the financial year’s audit report in context and tallies it with the organization’s GSTR9 reports. This must be made by a Chartered Accountant or a Cost Accountant. The last date for filing the GSTR9C is the 28th of February every year.
Types of GST returns that businesses registered under Composition Scheme should file
GSTR4 is a tax filed by a composition taxpayer and is done annually before the 30th of April of every financial year. A composition taxpayer is a business owner whose annual turnover is under 1.5 crores. The GSTR4 helps the taxpayer skip the tedious tasks of filing returns regularly due to their income generated.
GSTR9A is a tax return that is to be filed by users who have opted for the composition scheme.
GST returns filed by other businesses that were not mentioned above
GSTR5 is a tax return that every non-resident taxpayer should file by the 20th of every month. A non-resident taxpayer is an entity that does not reside in India but frequently conducts business in India in the form of manufacturing. A GSTR5 is a consolidated report of all the user’s sales and purchases in a month.
GSTR6 is a tax return that must be filed by Input service distributors (ISD) every month. This is due on the 13th of every next month, and this has to be filed by the ISDs even if the financials for that month show nil returns. A GSTR6 contains all the details of the tax input the user has received and the distribution of their Input Tax Credit (ITC)
GSTR7 is to be filled by business owners who are required to deduct tax at source. This is necessary as it helps keep a transparent tally between the tax deducted by the business owner (employer) and the employee (tax deducted from). This is also used when the employee files his/her’s GST returns. A GSTR7 contains information on the TDS liability, TDS paid, and TDS claims, if any are made. The business owner should file GSTR7s by the 10th of every month that follows.
GSTR8 is a tax return that business that deals in the e-commerce business should file for all the transactions where they have collected tax at the source. Any entity that facilitates online payments and has a digital retail front qualifies as an e-commerce business.
The tax collected at the source should reflect in the businesses GSTR 2A application.
E-commerce businesses should file their GSTR8 returns by the 10th of the next month.
E-commerce businesses should also file GSTR9B.
GSTR10 is a type of tax return filed by GST users who have requested for cancellation of their registration. This also called a final return.
This tax return should only be filed by those users whose registrations have either been canceled or if they have surrendered it.
The final return is not to be confused with Annual returns.
GSTR10 should be filed within three months from the date of cancellation.
GSTR11 is a tax return filed by those granted a UIN (Unique Identification Number). Users with UINs are eligible to claim the tax they paid for purchasing goods and services in India.
UINs are generally granted to foreign diplomats, members of the UNO, Embassies of foreign countries, etc.
These users will have to file the GSTR11 form to claim their GST returns.
GST returns for Amendments
GSTR1A is a tax return form that allows you to make changes or amendments to the GSTR1 form. However, this form is no longer in use.
Auto drafted tax returns
GSTR2A is a purchase-related tax return that gets generated when a business owner files a GSTR1 tax return. This houses all the information related to purchases made by the business in the month in context. GSTR2As are generally auto-generated. However, business owners must verify the credentials before submitting them.
Like the GTSR1A, this tax return form is also auto-generated based on the information processed by the business in the forms GSTR1, GSTR5, and GSTR7. This form is a view-only form, and changes cannot be made in this by any entity. This is to maintain a clear tax record of all the entity’s filings in the given financial year.
GSTR3A is a notice that is sent to businesses that fail to file their GST returns. A taxpayer is allotted a maximum of 15 days to pay their taxes before the late payment fee is brought into effect.
Late filing & penalties for late filing of returns
A late fee is the government’s fee when a user fails to file their GST returns on time. According to the type of GST return, a late fee is levied. The late fee usually ranges between INR 10 to INR 50 per day from the last date of filing. This fee cannot, however, cross INR 5000 for one time period of filing.
A late fee has to be paid in cash, and the user cannot use the e-portal to do this.
All the users who file their GST return Annually, except for those under GSTR9, should pay a late fee fine to both the state and the central government.
Hence the daily late fee applicable in this case would INR 50.
Frequently asked questions
Should I file GST returns even if my business has no activity?
Yes, even if the business shows a NIL return, the business owner will have to file for that duration.
What is return frequency?
Return frequency is the number of times a business owner files GST returns. If the turnover is more than 1.5 crores, the business will have to file his/her returns monthly. And, if the turnover is under 1.5 crores, the user can file every quarter.
As a small business owner, can I file GST returns myself, or will I have to hire a person?
Ideally, you can do it yourself, but it’s best to onboard professional help as it will allow you more time to focus on things that are best for you and let the experts take care of the tedious task of filing GST returns for your business.