How to File GST Returns for Your Startup in India?

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GST in a nutshell

The era of a uniform tax system in India was implemented with the GST (Goods and Services Tax). It’s a transparent and comprehensive method of taxation followed across the county. With GST, the Indian financial establishment is leveraged to a more efficient and unambiguous tax structure. The system follows a complex tax structure specifying different rates of tax for different commodities across the supply chain. It brings in an element of ease in business operations plus offers neutral choices irrespective of the organization and its business model. 

Essentially, India needed the GST system to address the issues of multiple rates of tax across different structures. GST replaced the earlier system of VAT, central excise duties, central sales tax, luxury taxes etc.  With GST, export rates are more competitive on the global front. It helps to curb tax evasions and thereby keeps a check on corruption in the country.

The GST advantage for Indian startups

Previously, an Indian startup that showcased a turnover of more than 5 lakh had to shell out huge tax amount in the form of VAT. This tax slab has now been increased to a good 20 lakh. That means small startups can find tax evasions coming their way and conduct their businesses by staying out of the tax bracket. GST rules for the service sector are much more relaxed. According to estimates, the presence of startups in India is high, particularly among the service sector. It will cut down on costs that previously drained into the tax bucket, thus helping to save money from the company’s capital funds. 

With technological advancements, the entire process has been upgraded to a sophisticated online system. Right from looking up a form to filling relevant details and filing for returns, it’s a smooth online process. The trouble of visiting different tax offices is a thing of the past. Dependency on experts to calculate various tax elements like service tax, VAT etc. increases complications. With GST, startups can rely on simple tax calculations and everything in one form and under one roof. Uniform tax rates across different states are a boon for startups having a huge online presence and those into e-commerce business handlings. 

GST return filing for startups

Before filing for returns under GST, it’s very important to keep track of the last date to file for returns, lest you invite trouble for your business in the form of penalties. Keep a check on the important dates before you proceed further. Documents required to file for returns include your sales and purchase invoices. 

Given below is detailed know-how of return filing for startup companies. The most crucial part of filing for returns is selecting the ‘type of return’ form. Every return type is described in a separate form and you have to choose them accordingly. Let us understand them briefly:

  • GSTR1 – Details to be filed include GST invoices for services rendered by the taxpayer. To be filed within the 10th of every month. 
  • GSTR2– Details pertaining to the purchases made by the taxpayer to be submitted before the 15th of every month. 
  • GSTR3– An auto-generated form based on details fed in GSTR1 and GSTR2. To be filed before the 20th of every month. Turnover of your startup is generated in this stage. 
  • GSTR4 is applicable for startups involved in interstate trade operations and those that have a turnover of a minimum of 75 lakh per annum.
  • GSTR5 is not applicable for Indian startups; it is to do with foreigners conducting business in India for a short tenure without a permanent base here. 
  • GSTR6 to be filed before the 13th day of a month for details on credit distribution. 
  • GSTR7 gives information pertaining to all the tax deductions carried out in a month. This needs to be filed before the 10th of every month. 
  • GSTR8 by e-commerce and online startups to be filed before 10th of every month. 
  • GSTR9 to be compulsorily submitted by all startups for complete details on tax paid in an entire year. Form to be submitted before 31st December every year. 
  • GSTR10 comes into picture if a startup has lost its registration number or surrendered it for some reasons. 
  • GSTR11 is for individuals. 

The entire process right from form submission to returns filing is an automated process and performed online. Steps to be followed include:

  • Registration formalities – Any Indian startup should compulsorily register itself under the GST system and obtain a registration number. This is a 15 digit number that is derived by means of registering your startup through an online procedure. The 15 digit includes the state code of the state where your startup is located plus your PAN number. 
  • Visit the official GST website and look out for the ‘services’ section. Under this, locate the ‘returns dashboard’ and start filling the form with relevant details. Make correct entries about the financial year for which returns are filed and specify the financial period as well.’
  • Choose the type of ‘return’ that you intend to file. 
  • ‘Prepare’ the return form and click on ‘submit’. 

An expert would be able to guide the right kind of return filing for your startup and the variations applicable to online and e-commerce set-ups.