GST Returns, Types, Process, Compliance, Challenges

Goods and Services Tax (GST) has revolutionized the indirect tax system in India by replacing multiple taxes with a unified tax structure. GST returns play a pivotal role in this system, serving as the mechanism through which taxpayers report their financial transactions to the government. GST return filing is a critical aspect of the GST framework, serving as the primary means for taxpayers to communicate their financial transactions to the government. Adherence to compliance requirements, accurate reporting, and timely filing not only ensure legal compliance but also contribute to the efficiency and transparency of the overall tax system. Businesses, regardless of their size, must embrace technology, stay informed about regulatory changes, and establish robust processes to navigate the complexities of GST return filing successfully. As the GST framework evolves, staying updated with changes and proactively addressing compliance challenges are essential for businesses to thrive in the dynamic taxation landscape.

• Understanding the Significance of GST Returns:

GST returns are essential documents that taxpayers submit to the tax authorities at regular intervals, typically monthly or quarterly. These returns provide a comprehensive overview of a taxpayer’s financial transactions, detailing sales, purchases, tax liability, and input tax credit. The significance of GST returns lies in their role as a tool for transparency, accountability, and the seamless flow of credit across the supply chain.

Types of GST Returns:

The GST return filing process involves different types of returns, each serving a specific purpose.

1. GSTR-1 (Outward Supplies):

Filed by registered taxpayers to report details of outward supplies (sales) of goods and services. It includes information on taxable, exempt, and nil-rated supplies.

2. GSTR-2 (Inward Supplies):

Currently suspended. Initially designed for reporting details of inward supplies (purchases) for claiming input tax credit based on the information furnished by the supplier in their GSTR-1.

3. GSTR-3 (Monthly Summary):

An auto-generated summary return based on GSTR-1 and GSTR-2, providing a summary of the taxpayer’s monthly tax liability.

4. GSTR-4 (Composition Scheme):

Filed by taxpayers registered under the Composition Scheme to report their quarterly tax liabilities.

5. GSTR-5 (Non-Resident Taxable Person):

Filed by non-resident taxpayers to report their outward supplies, inward supplies, tax liability, and input tax credit.

6. GSTR-6 (Input Service Distributor):

Filed by Input Service Distributors (ISD) to distribute the input tax credit to their branches.

7. GSTR-7 (Tax Deducted at Source):

Filed by taxpayers deducting tax at source to report details of TDS deducted, TDS liability, and TDS paid.

8. GSTR-8 (E-commerce Operators):

Filed by e-commerce operators to report details of supplies made through their platforms and the tax collected at source.

9. GSTR-9 (Annual Return):

An annual return filed by regular taxpayers, providing a summary of the entire year’s transactions, including reconciliation of input tax credit.

• GSTR-9A (Composition Scheme Annual Return):

An annual return filed by taxpayers registered under the Composition Scheme.

• GSTR-9C (Reconciliation Statement):

Filed by taxpayers whose annual turnover exceeds a specified limit, along with GSTR-9, and includes a reconciliation statement and certification by a chartered accountant.

GST Return Filing Process:

The process of filing GST returns involves several steps to ensure accurate reporting and compliance.

1. Maintaining Books of Accounts:

Taxpayers must maintain detailed and accurate books of accounts, including records of purchases, sales, input tax credit, and other financial transactions.

2. Generating Invoices:

Issuing tax-compliant invoices for outward supplies and ensuring that invoices received for inward supplies are also GST compliant.

3. Recording Transactions:

Systematically recording all financial transactions in the accounting system to facilitate the preparation of GST returns.

4. Filing GSTR-1:

Taxpayers must file GSTR-1 by the 11th of the following month to report their outward supplies. This includes details of sales, exports, and other relevant information.

5. Matching Inward Supplies:

Taxpayers reconcile their purchases with the details provided by their suppliers in their GSTR-1. This reconciliation ensures accurate input tax credit claims.

6. Filing GSTR-3B:

The monthly summary return, GSTR-3B, is filed by the 20th of the following month. It includes details of outward and inward supplies, input tax credit, and the computation of the tax liability.

7. Payment of Tax:

Taxpayers must pay their tax liability by the due date to avoid penalties and interest. The payment is made through the online portal.

8. Reconciliation and Rectification:

Regular reconciliation of books of accounts with GST returns helps identify any discrepancies. If errors are found, taxpayers can rectify them in subsequent returns.

9. Filing Annual Returns:

The annual return, GSTR-9, is filed by December 31 of the following financial year. It provides a comprehensive summary of the entire year’s transactions.

Compliance Requirements for GST Returns:

Ensuring compliance with GST returns involves adherence to various regulations and timelines.

1. Timely Filing:

Strict adherence to the due dates for filing different GST returns is crucial to avoid penalties and maintain compliance.

2. Accuracy in Reporting:

Taxpayers must accurately report their financial transactions, ensuring that the details in the returns match their books of accounts.

3. Input Tax Credit Reconciliation:

Regular reconciliation of input tax credit with GSTR-2A (auto-generated from GSTR-1) is necessary to identify and rectify any mismatches.

4. Payment of Tax:

Timely payment of the tax liability is essential to avoid interest and penalties. The payment should be made through the designated online portal.

5. Annual Return Filing:

All eligible taxpayers must file their annual return, GSTR-9, by the specified deadline, providing a comprehensive overview of the entire financial year.

6. Audit and Certification:

Taxpayers meeting the turnover criteria must undergo an annual audit, and the audit findings are reported in GSTR-9C, certified by a chartered accountant.

Impact of GST Returns on Businesses:

Efficient GST return filing positively impacts businesses in several ways:

1. Input Tax Credit Availability:

Timely and accurate filing of GST returns ensures the availability of input tax credit, reducing the overall tax liability.

2. Legal Compliance:

Businesses that comply with GST return filing requirements demonstrate legal compliance, avoiding penalties and legal repercussions.

3. Transparency and Trust:

Transparent reporting builds trust with customers, suppliers, and tax authorities, fostering a positive business environment.

4. Avoidance of Penalties:

Timely filing of returns helps businesses avoid penalties and interest, contributing to overall financial stability.

5. Efficient Supply Chain:

The smooth flow of credit across the supply chain is facilitated by accurate reporting and compliance with GST returns.

6. Data-Driven Decision Making:

Access to accurate and up-to-date financial data through GST returns enables businesses to make informed decisions and strategic planning.

Challenges and Considerations:

While GST returns are crucial for the functioning of the tax system, businesses often face challenges in the filing process:

1. Complexity of Compliance:

The complexity of GST laws and frequent changes in compliance requirements pose challenges for businesses in ensuring accurate filing.

2. Technology Adoption:

Small and medium enterprises may face challenges in adopting and adapting to the technological requirements of GST return filing.

3. Input Tax Credit Reconciliation:

Reconciling input tax credit with GSTR-2A can be time-consuming, and discrepancies may require manual intervention.

4. Timely Data Entry:

Timely and accurate data entry is crucial for GST return filing, and delays or errors can lead to compliance issues.

Monthly Returns, Annual Return and Final Return Due dates for filing of Returns

Goods and Services Tax (GST) framework in India mandates regular filing of returns by registered entities. These returns comprise monthly, quarterly, annual, and final returns, each serving a specific purpose and having different due dates. It’s important to note that these due dates can be subject to change by the GST Council and the Central Board of Indirect Taxes and Customs (CBIC), so always check for the latest updates.

Monthly Returns

1. GSTR-1: This return is for outward supplies of goods and services. It is due by the 11th of the following month. For businesses with an aggregate turnover of up to Rs. 1.5 crore, filing GSTR-1 quarterly is optional.
2. GSTR-3B: This is a monthly summary return that includes details of outward supplies, inward supplies, and the payment of tax. The due date for GSTR-3B is staggered:
   • For businesses with an annual turnover of more than Rs. 5 crore, the due date is the 20th of the following month.
   • For businesses with an annual turnover of up to Rs. 5 crore, the due date is either the 22nd or the 24th of the following month, depending on the state/UT.

Quarterly Returns

For small taxpayers with a turnover of up to Rs. 5 crore opting for the QRMP (Quarterly Return Monthly Payment) scheme:

• GSTR-1 and GSTR-3B are to be filed quarterly, with due dates being the 13th of the month following the quarter for GSTR-1, and the 22nd or 24th of the month following the quarter for GSTR-3B, depending on the state/UT.

Annual Returns

1. GSTR-9: This is the annual return for regular taxpayers, due by 31st December of the next financial year.
2. GSTR-9A: This was the annual return for those opting for the Composition Scheme. However, GSTR-9A filing has been waived off for FY 2017-18 to FY 2019-20. Always check for the latest updates for subsequent years.
3. GSTR-9C: This is a reconciliation statement, required to be filed by taxpayers whose annual turnover exceeds Rs. 2 crore. It is essentially a tax audit report, and its due date aligns with that of GSTR-9, which is 31st December of the next financial year.

Final Return

• GSTR-10: This is the final return to be filed by a taxpayer whose GST registration has been cancelled or surrendered. The due date for filing GSTR-10 is within three months of the date of cancellation or the date of cancellation order, whichever is later.

Special Cases

• GSTR-5: For non-resident taxable persons, the due date is the 20th of the following month.
• GSTR-5A: For OIDAR (Online Information and Database Access or Retrieval Services) providers from outside India to unregistered persons in India, the due date is the 20th of the following month.
• GSTR-6: For Input Service Distributors (ISD), the due date is the 13th of the following month.

Remember, GST return filing is a dynamic area with frequent updates and changes by the authorities. Always refer to the official GST portal or notifications for the most current information.