As per the GST law, every individual/Company/LLP registered under the GST Act has to furnish the details of sales, purchases, and the tax paid by filing form GST returns with the administrative authorities explained by Edge Legal.
As a business person/ firm, one of your first priorities will be to do is GST return filing. Hence, knowing the ropes can help you make the process smoother and simpler. While filing a GST return, you are supposed to provide all the particulars related to your business activities, like the tax liability declarations, tax payments, and also any other related information as per instructions provided by the government.
The GST return filing process has to be done electronically in the GST portal. A facility has to be offered for the manual process of GST return filing tasks. This facility helps the business taxpayer in India to prepare the return offline and then upload it on GSTN through the facilitation center. There are also various components of GST returns filing that you need to know about.
The GST return mainly includes purchases, output GST on the sales, input tax credits as per GST paid while making the purchases, and also includes the total sales. In order to file the GST return, the purchase invoices and GST compliant sales are needed.
What is GST Return Filing?
Any person who applies for GST registration will also have to make a GST return filing. The GST return is basically a document that is needed as per the Indian tax authorities of law, to be filed. It will be used by the authorities of tax for the purpose of calculating the tax liability.
Who is eligible for GST returns?
Business owners and dealers who are registered under GST must file two monthly GST returns and one annual GST returns. The nature of the business also dictates the GST that is to be filed. GST returns are of various types and the late filing of GST returns will result in a penalty of Rs.100 per day till the day the GST returns are filed. Once the filing is done, any tax liability must be promptly paid to the government.
GST Input Tax Credit Reconciliation
GST or Goods and Services Tax is an indirect tax that depends on the value-added at each stage of the supply chain of a particular service or goods until it reaches the customer or consumer. With GST, tax is imposed at various stages, and to nullify the cascading effect, it is designed in a way that is meant to refund all parties that are involved in the various stages with the exception of the final consumer. This element that is employed to offset the tax liability is called an input tax credit.
An insight into the GST filing procedure in India
Any business person who has taken the registration, but has not crossed the limit of exemption will have to comply with the step-by-step GST billing process. From 1st April 2019, the GST Council has increased the threshold limits of annual aggregate turnover for GST registration. According to this, any business in the normal category states, having a turnover of Rs 40 lakhs for the sale of goods needs to register. This limit is raised from Rs 10 lakhs to Rs 20 lakhs for the special category states.
There has not been any change in the threshold limits for service providers. The same has been kept at Rs 20 lakhs and Rs 10 lakhs for the normal category states and the special category states respectively.
Special category states include,
State of Jammu and Kashmir and States of Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim, and Uttarakhand.
Once the taxpayer crosses the limit of exemption, he/she will start filing for GST returns. Even in cases where no taxable supplies are received or made during a particular period, the taxpayer will have to file the NIL return. So, there is no way that you can avoid GST filing. If you miss out on filing the return of one period, then you will not be able to file the next period’s return.
Let us simplify GST in this way- Any business will have to file monthly GST returns twice an annual return once. This implies that as a total, you will have to file GST returns 26 times a year. The GST portal issues 4 different types of forms for filing the GST returns. They are:
- Return for purchases
- Return for supplies
- Annual returns
- Monthly returns
In the case of small business taxpayers in India who have opted for a composition scheme, they just have to file GST returns on a quarterly basis. The return filing process can be done online.
Benefits of GST Return Filing
Elimination of the cascading effect
The introduction of GST into the Indian tax system has done away with several other taxes like central excise duty, service tax, customs duty, and state-level value-added tax. Thus a single GST has eliminated the cascading effect of tax on tax.
Higher threshold benefits
Before GST was introduced, VAT or value-added tax was applicable for any business that had an annual turnover of 20 lakhs. Services that saw a turnover of fewer than 10 lakhs did not have to pay service taxes.
Earlier startups with an annual turnover of 5 lakh had to pay VAT which would be very difficult for business during the initial stages. But as GST has replaced VAT, businesses can set off the service tax on their sales.
E-commerce for the quick supply of goods
Startups are making a strong presence online offering their services and products through their websites. Under VAT, there were many types of VAT laws, and the supply of goods online, that is, E-commerce was never a well-defined one. For instance, if you need to deliver goods to various states, then you will have to file the VAT declaration first. After that, you will need to provide registration details about the trucks which deliver the goods. In many instances, goods end up being seized by the authorities due to a lack of proper documents. GST has now removed all such confusing processes.
Regulations and accountability
The pre-GST period witnessed a disorganized tax filing system. Presently, all taxes are paid online and major hassles that were a part of tax filing have been eliminated in the process of introducing GST. This has resulted in industries becoming more accountable and tax filing laws are better regulated than before.