The introduction of Goods and Services Taxes in our nation was a paradigm shift towards a new normal in the taxation system. It is fascinating to know that GST replaced almost 17 different kinds of indirect taxes levied by the State and the Central governments, thereby bringing greater transparency and ease of compliance. GST returns are also uniform across the nation and are very user-friendly to furnish and file. Let us dive into the details:
Every person registered under the Goods and Services Tax (GST) Act is liable to GST Taxes.
There are various types of GST Taxes which are as follows:
CGST and SGST/UTGST
When goods or services are sold/supplied within a state (intra-state transactions), both the Central GST (CGST) and State GST (SGST) will be collected separately. For example, the value of goods sold within a state is Rs 1,00,000.00, and the GST rate is 18%.
Taxable value: Rs 1,00,000.00
Add: CGST @9%: Rs 9000.00
SGST @9%: Rs 9000.00
So, the invoice value is Rs 1,18,000.
If the goods are sold with a ‘union territory,’ the word SGST is replaced by ‘UTGST.’
When goods or services are sold/supplied from one state to another state (inter-state transactions), then Integrated GST (IGST) will be collected. For example, the value of goods sold from one state to another is Rs 1,00,000.00, and the GST rate is 18%.
Taxable value: Rs 1,00,000.00
Add: IGST @18%: Rs 18,000.00
So, the invoice value is Rs 1,18,000.00.
Here, CGST and SGST are not collected separately but are integrated.
Individuals registered under GST have to file certain GST returns (abbreviated as GSTR) periodically. The period may be monthly, quarterly, or annually depending on several factors, viz, nature of the business, type of registration, the quantum of turnover, etc.
GST returns can be filed through the online GST portal: www.gst.gov.in.
There are two types of registration schemes under GST for taxpayers, Regular and Composition, depending on which GST Returns are filed.
As the name suggests, regular taxpayers are subject to normal provisions of GST law. The taxpayers under this scheme collect GST taxes on the supply of goods or services and can avail of Input Tax credit (ITC) to pay the net GST taxes to the Government. GST returns for regular taxpayers comprise of GSTR-1, GSTR-3B, GSTR-2B, GSTR-9, which are explained as follows:
GSTR-1: This return contains details about the supply/sales of goods or services. The details shown in GSTR-1 are as follows:
- B2B Supply: Business to Business (B2B) covers those goods or services supplied to persons registered under GST. For example, Mr. A, a registered trader, sold goods to another trader Mr. B who is also registered under GST.
This supply will come under the B2B table of GSTR-1 of Mr. A. Details like invoice no., taxable value, rate of GST, type of supply (intrastate or interstate), etc., will have to be mentioned.
- B2C Supply: Business to Consumer (B2C) covers those goods or services supplied to persons not registered under GST. In the above example, if Mr. B is not registered under GST, such supply will come under the B2C table of GSTR-1 of Mr. A.
Where invoice value is less than Rs 2,50,000, B2C supplies can be clubbed together rate-wise and shown in aggregate under B2C(small). B2C invoice of value exceeding Rs. 2,50,000 has to be shown separately under B2C (large).
- Credit and Debit note: All purchase returns, sales returns, discounts (relating to B2B or B2C invoices) will be covered under this table.
- Amendments: GSTR-1, once filed, cannot be revised. If there were errors in the filed returns, such invoices or values could be rectified in the subsequent returns under this table.
Periodicity of GSTR-1:
- Monthly on 11th of every month – If aggregate turnover in the previous financial year exceeds Rs 5 crore.
- Quarterly on the 13th the month following every quarter – If aggregate turnover is equal to or below Rs 5 crore, taxpayers can file GTSR-1 quarterly. However, they can also choose to file this return monthly.
GSTR-3B: This return is a monthly or quarterly declaration containing summarised details of all outward supplies, input tax credit availed, tax liability computed, and GST taxes paid. The sales/supplies shown in GSTR-3B must match with GSTR-1 for every tax period.
Also, the ITC available in GSTR-3B must match GSTR-2B (view-based return containing details of ITC for the tax period). Such GST reconciliation is essential to figure out any mismatches or discrepancies. Once filed, GSTR-3B cannot be revised. Any corrections have to be done in subsequent returns.
Periodicity of GSTR-3B:
- Monthly filing of return on 20th of every month- If aggregate turnover in the previous financial year is more than Rs.5 crore.
- Quarterly filing of return on 22nd of the month following the quarter for a particular category of States and 24th of the month following the quarter for another category of States – If aggregate turnover is equal to or below Rs 5 crore, taxpayers can file GTSR-3B quarterly. However, they can also choose to file this return monthly.
GSTR-2B: GSTR-2B is a view-based return important for the recipient or buyer. GSTR-2B was introduced in August 2020 and contained all the details of inward supplies of goods and services, i.e., purchases made from GST registered suppliers during a particular tax period. Details in this return are auto-populated based on returns submitted by the suppliers in their GSTR-1 returns.
ITC information will be covered from the date of filing GSTR-1 for the previous month to filing GSTR-1 for the current month. The return can be viewed on the 12th of every month. Buyers can refer to this return for availing correct Input Tax Credit (ITC) while filing GSTR-3B.
Alteration can be done in GSTR-2B (unlike in GSTR-2A). Actions such as ‘reversal,’ ‘ineligible,’ ‘reverse charge’ are there, which can be used while filing GSTR-3B.
GSTR-9: It is also known as Annual Return and contains all GSTR-1, GSTR-3B, GSTR-2A/2B for a financial year. Any mistakes like short/excess GST payment, errors in GST invoices, etc., can be corrected in this return. Annual return has to be filed by 31st December following the relevant year.
This is an optional scheme of concessional tax designed to provide some benefits to small taxpayers compared to the regular scheme. Persons whose turnover is up to Rs 1.5 crore (or Rs 75 lacs for specified states) can opt for this scheme.
The tax rate is as minimum as 1 % for manufacturers and traders, 5% for restaurants, and 6% for other service providers. GST Returns for Composition scheme comprise of CMP-08 and GSTR-4, which are explained as follows:
CMP-08: It is a challan-cum-statement filed by the 18th of the month following every quarter where composition taxpayers have to show details of outward supplies for a particular quarter and can pay GST tax thereon.
GSTR-4: It is the Annual Return for Composition taxpayers and contains all the data of CMP-08 for the financial year. Any mistakes like short/excess GST payment, errors in GST invoices, etc., can be corrected in this return. GSTR-4 has to be filed by 30th April following the relevant year.
GST Returns are an indispensable part of GST laws. Non-filing or Incorrect filing of GST returns attracts penalties, fines, and notices from the department. Hence, care should be taken that returns are filed timely with correct tax rates, taxable values, etc.