GST Returns

Chapter VIII of the Draft Model GST Law (the Draft Law) lists the various provisions on GST ‘Returns’ for both intra-State supply (CGST/SGST) and inter-State supply (IGST under Model Draft IGST Law) of goods and services. The common portal e-Forms for furnishing such returns (and details) and procedure for executing the same is detailed in the Draft Return Rules and Draft Return Formats.


Input Tax Credit Eligibility, Claim and Provisional Credit

Furnishing a Return under the provisions of section 34 of the Draft Law is one of the conditions for claiming Input Tax Credit (ITC).

  • Section 36 of the Draft Law entitles* (subject to such conditions and restrictions as may be prescribed in this behalf) every registered taxable to take credit of input tax, as ‘self-assessed’ in such person’s return, and such amount is credited on a ‘provisional basis’ to such person’s electronic credit ledger (ECL).
  • Such ITC is to be utilised only for payment of ‘self-assessed’ output tax liability as per the said return.

*‘Taxable person’ is not entitled to ITC in respect of any ‘invoice’ or ‘debit note’ for supply of goods or services after furnishing of the return under the said section 34 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains, or furnishing of the relevant ‘Annual Return’, whichever is earlier.

> Read more on ‘Input Tax Credit’ (ITC)

 

General Return Process

(Registered Taxable Person with Monthly Return Obligations)

Outward supply details in Form GSTR-1 by the 10th day of the following calendar month (to tax period) furnished by supplier/registered taxable person and made available to recipient(s) via auto-populated Form GSTR-2A through common portal.

Recipient to verify, validate, modify (or if required, delete) the outward supplies details in Form GSTR-2A and furnish electronically the details of inward supplies for tax period in Form GSTR-2 made available to supplier(s) in Form GSTR-1A.

Supplier to either accept or reject the details of Form GSTR-1A communicated on or before 17th day of the said month and the details furnished in Form GSTR-1 to stand amended accordingly.

Return (monthly) furnished by registered taxable person (other than under Composition Levy) in Form GSTR-3 electronically through the common portal on or before the 20th day of the month along with the payment of tax (if any).

Matching, communication of duplication/mismatch, reversal, rectification of discrepancy of claims etc. and final acceptance with communication of input tax credit (ITC) or output tax liability (as the case may be) through Form GST ITC-1.

 

Tax Period’’ means the period for which the return is required to be filed.

Valid Return” means a return furnished under section 34(1) on which self-assessed tax has been paid in full.

Appropriate Government” means the Central Government in case of the IGST and the CGST, and the State Government in case of the SGST.

Casual taxable person” means a person who occasionally undertakes transactions involving supply of goods and/or services in the course or furtherance of business whether as principal, agent or in any other capacity, in a taxable territory where he has no fixed place of business.

Commissioner” means the Commissioner of Central Goods and Services Tax / Commissioner of State Goods and Services Tax and includes Principal Commissioner of Central Goods and Services Tax / Principal Commissioner of State Goods and Services Tax / Chief Commissioner of State Goods and Services Tax appointed under section 4 of the Central/State Goods and Services Tax Act 2016.

Electronic Commerce’ means supply of goods and/or services including digital products over digital or electronic network.

Electronic Commerce Operator’ means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce.

Input Service Distributor” means an office of the supplier of goods and/ or services which receives tax invoices issued under section 28 towards receipt of input services and issues a prescribed document for the purposes of distributing the credit of CGST (SGST in State Acts) and / or IGST paid on the said services to a supplier of taxable goods and / or services having same PAN as that of the office referred to above.

Input Tax” in relation to a taxable person, means the IGST, including that on import of goods, CGST and SGST charged on any supply of goods or services to him and includes the tax payable under sub-section (3) of section 8, but does not include the tax paid under section 9.

Inward supply” in relation to a person, shall mean receipt of goods and/or services whether by purchase, acquisition or any other means and whether or not for any consideration.

Non-resident taxable person” means a taxable person who occasionally undertakes transactions involving supply of goods and/or services whether as principal or agent or in any other capacity but who has no fixed place of business in India.

Output Tax” in relation to a taxable person, means the CGST/SGST chargeable under this Act on taxable supply of goods and/or services made by him or by his agent and excludes tax payable by him on reverse charge basis.

Outward supply” in relation to a person, shall mean supply of goods or services, whether by sale, transfer, barter, exchange, licence, rental, lease or disposal or any other means made or agreed to be made by such person in the course or furtherance of business.

Proper Officer” in relation to any function to be performed under this Act, means the officer of goods and services tax who is assigned that function by the Commissioner of CGST / SGST.

Quarter” shall mean a period comprising three consecutive calendar months, ending on the last day of March, June, September and December of a calendar year.

Recipient” of supply of goods and/or services means 
(a) where a consideration is payable for the supply of goods and/or services, the person who is liable to pay that consideration,
(b) where no consideration is payable for the supply of goods, the person to whom the goods are delivered or made available, or to whom possession or use of the goods is given or made available, and
(c) where no consideration is payable for the supply of a service, the person to whom the service is rendered, and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply.

Explanation The expression “recipient” shall also include an agent acting as such on behalf of the recipient in relation to the goods and/or services supplied.

Return” means any return prescribed or otherwise required to be furnished by or under this Act or rules made thereunder.

Reverse charge’’ means the liability to pay tax by the recipient of supply of goods or services instead of the supplier of such goods or services in respect of such categories of supplies as notified under sub-section (3) of section 8.

Tax” means goods and services tax levied on the supply of goods and/or services under this Act and includes any amount payable under section 9 or subsection (10) of section 18.

Turnover in a State” means the aggregate value of all taxable supplies, exempt supplies, exports of goods and / or services made within a State by a taxable person and inter-state supplies of goods and / or services made from the State by the said taxable person excluding taxes, if any charged under the CGST Act, SGST Act and the IGST Act, as the case may be.

Explanation Aggregate turnover does not include the value of inward supplies on which tax is payable by a person on reverse charge basis under sub-section (3) of Section 8 and the value of inward supplies.

 

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Details of ‘outward supplies’ of goods or services effected, during a tax period on or before the 10th day of the month succeeding the relevant ‘tax period‘ to be provided electronically (Form GSTR-1) by every registered taxable person^^ in the following manner

  • Details to be communicated to the ‘recipient’ of the said supplies within the time and in the manner as may be prescribed (Form GSTR-2A)
  • The Commissioner may, for valid and sufficient reasons, by notification, for such ‘class’ of taxable persons as may be specified therein, extend the time limit for furnishing such details
  • Details of outward supplies” shall include details of invoices, debit notes, credit notes and revised invoices issued in relation to outward supplies made during any tax period


Acceptance or Rejection of Communicated Inward Supplies

Every registered taxable person who has been communicated (Form GSTR-1A) the details under section 33 (or the details pertaining to inward supplies of ‘input service distributor’) shall either accept or reject the details so communicated, on or before the 17th day of the month succeeding the said tax period and the details furnished by him under section 32 shall stand amended accordingly.


Rectification of Errors or Mistakes

Any registered taxable person, who has furnished the above said details for any tax period and which have remained unmatched under section 37 or section 38, is required to, upon discovery of any error or omission therein

  • Rectify* the same in the tax period during which such error or omission is noticed in such manner as may be prescribed
  • Pay the tax and interest (if any) in case there is a short payment of tax on account of such error or omission, in the return to be furnished for such tax period

*No rectification of error or omission in respect of the details furnished is allowed after furnishing of the return under section 34 for the month of September following the end of the financial year to which such details pertain, or furnishing of the relevant annual return, whichever is earlier.

^^ Other than an ‘input service distributor’, a ‘non-resident taxable person’ and a person paying tax under the ‘Composition Levy’ option or Deducting/Collecting Tax at Source under section 46/56

 

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Every registered taxable person^^ is required to verify, validate, modify (or if required, delete) the details relating to ‘outward supplies’ and ‘credit or debit notes’ communicated (Form GSTR-2A) under section 32 to prepare (Form GSTR-2) the details of his/her/its ‘inward supplies’ and ‘credit or debit notes’ in order to

  • Furnish electronically, the details of ‘inward supplies’ of taxable goods and/or services, including inward supplies of goods or services on which the tax is payable on ‘reverse charge’ basis and inward supplies under the (Draft) IGST Act, and credit or debit notes received in respect of such supplies during a tax period after the 10th but on or before the 15th day of the month succeeding the tax period in such form and manner as may be prescribed (Form GSTR-2).


Undeclared Supplies and Credit/Debit Notes

Such person may include therein, the details of inward supplies and credit or debit notes received in respect of such supplies, that have not been declared by the relevant supplier.


Communication of Inward Supply Details to Supplier

  • Details of inward supplies modified, deleted or included by the recipient and furnished is required to be communicated to the supplier concerned in the manner and within the time as may be prescribed (Form GSTR-1A)
  • The Commissioner may, for valid and sufficient reasons, by notification, for such ‘class’ of taxable persons as may be specified therein, extend the time limit for furnishing such details


Rectification of Errors or Mistakes

Any registered taxable person, who has furnished the details as detailed above for any tax period and which have remained unmatched under section 37 or section 38, is required to, upon discovery of any error or omission therein, rectify* the same in the tax period during which such error or omission is noticed in such manner as may be prescribed, and pay the tax and interest, if any, in case there is a short payment of tax on account of such error or omission, in the return to be furnished for such tax period.

*No rectification of error or omission in respect of the details furnished is allowed after furnishing of the return under section 34 for the month of September following the end of the financial year to which such details pertain, or furnishing of the relevant annual return, whichever is earlier.


Communication of Returned Supplies to Supplier

The details of supplies modified, deleted or included by the recipient in the return furnished (Form GSTR-3) under section 34 shall be communicated to the supplier concerned in the manner and within the time as may be prescribed.

^^ Other than an ‘input service distributor’, a ‘non-resident taxable person’ and a person paying tax under the ‘Composition Levy’ option or Deducting/Collecting Tax at Source under section 46/56

 

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Regular Taxable Person (Monthly Return)

Every registered taxable person^^ is required to furnish* in such form and in such manner as may be prescribed (Form GSTR-3) for every calendar month or part thereof, on or before the 20th day of the month succeeding such calendar month or part thereof an electronic return of

  • Inward and outward supplies of goods and/or services
  • Input Tax Credit (ITC) availed
  • Tax payable, tax paid and other particulars as may be prescribed

*Return must be compulsorily furnished for every tax period whether or not any supplies of goods or services have been effected during such tax period.


Discovery of Omission or Incorrect Particulars

Subject to the provisions of sections 32 and 33 of the Draft Law, if after furnishing the above said return, any omission or incorrect particulars therein are discovered (other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities), the said person is required to rectify** such omission or incorrect particulars in the return to be furnished for the month or quarter (as the case may be) during which such omission or incorrect particulars are noticed, subject to payment of interest, where applicable and as specified in the Act.

**No such rectification of any omission or incorrect particulars shall be allowed after the due date for furnishing of return for the month of September or second quarter, as the case may be, following the end of the financial year, or the actual date of furnishing of relevant annual return, whichever is earlier.

^^ Other than an ‘input service distributor’, a ‘non-resident taxable person’ and a person paying tax under the ‘Composition Levy’ option or Deducting/Collecting Tax at Source under section 46/56


Composition Levy (Quarterly Return)

A registered taxable person paying tax under the ‘Composition Levy’ option under the provisions of section 9 is required to furnish in such form and in such manner as may be prescribed (Form GSTR-4), for each quarter or part thereof, within 18 days after the end of such quarter, an electronic return of the following

  • Inward supplies of goods or services
  • Tax payable and tax paid

*Return must be compulsorily furnished for every tax period whether or not any supplies of goods or services have been effected during such tax period.


Discovery of Omission or Incorrect Particulars

Subject to the provisions of sections 32 and 33 of the Draft Law, if after furnishing the above said return, any omission or incorrect particulars therein are discovered (other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities), the said person is required to rectify** such omission or incorrect particulars in the return to be furnished for the month or quarter (as the case may be) during which such omission or incorrect particulars are noticed, subject to payment of interest, where applicable and as specified in the Act.

**No such rectification of any omission or incorrect particulars shall be allowed after the due date for furnishing of return for the month of September or second quarter, as the case may be, following the end of the financial year, or the actual date of furnishing of relevant annual return, whichever is earlier.

 

Tax Deduction at Source (Monthly Return)

Every registered taxable person required to deduct tax at source under the provisions of section 46 is required to furnish an electronic return, in such form and in such manner as may be prescribed (Form GSTR-7), for the month in which such deductions have been made along with the payment of tax so deducted within 10 days after the end of such month.

 

Input Service Distributor (Monthly Return)

Every taxable person registered as an Input Service Distributor is required an electronic return for every calendar month or part thereof, in such form and in such manner as may be prescribed (Form GSTR-6), within 13 days after the end of such month.


Discovery of Omission or Incorrect Particulars

Subject to the provisions of sections 32 and 33 of the Draft Law, if after furnishing the above said return, any omission or incorrect particulars therein are discovered (other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities), the said person is required to rectify** such omission or incorrect particulars in the return to be furnished for the month or quarter (as the case may be) during which such omission or incorrect particulars are noticed, subject to payment of interest, where applicable and as specified in the Act.

**No such rectification of any omission or incorrect particulars shall be allowed after the due date for furnishing of return for the month of September or second quarter, as the case may be, following the end of the financial year, or the actual date of furnishing of relevant annual return, whichever is earlier.


Non-Resident Taxable Person (Monthly Return)

Every registered non-resident taxable person is required to furnish an electronic return, for every calendar month or part thereof, furnish, in such form and in such manner as may be prescribed (Form GSTR-5), within 20 days after the end of a calendar month or within 7 days after the last day of the validity period of registration, whichever is earlier.


Due Date for Tax Payment under Return

Every such registered taxable person, who is required to furnish a return as abovementioned (excluding ‘Input Service Distributor”), must pay to the account of the appropriate Government the tax due as per such said return not later than the last date on which he is required to furnish such return.

 

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Credit Notes

A registered taxable person, who has supplied such goods and/or services, to reduce output tax liability, may issue to the recipient a ‘credit note* containing such particulars as may be prescribed, where a tax invoice has been issued for such supply and in the following circumstances

  • The taxable value and/or tax charged in that tax invoice is found to exceed the taxable value and/or tax payable in respect of such supply, or
  • Where the goods supplied are returned by the recipient, or
  • Where services supplied are found to be deficient.
  • Any registered taxable person who issues such a credit note, is required to declare the details thereof in the return for the month during which it has been issued (not later than September following the end of the year in which such supply was made, or the date of filing of the relevant Annual Return, whichever is earlier), and the tax liability shall be adjusted in the prescribed manner.

*No reduction in output tax liability of the supplier shall be permitted if the incidence of tax and interest on such supply has been passed on to any other person.


Debit Notes

The taxable person supplying goods and/or services is required to issue to the recipient a ‘debit note(includes a supplementary invoice) containing such particulars as may be prescribed, where

  • A tax invoice has been so issued for the supply and the taxable value and/or tax charged in that tax invoice is found to be less than the taxable value and/or tax payable in respect of such supply, and
  • Such person issuing the debit note is required to declare the details of the same in the return for the month during which it has been issued and the tax liability shall be adjusted in the manner prescribed.

 

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The details of every ‘inward supply’ furnished by a registered taxable person (hereinafter referred to in this section as the ‘recipient’) for a tax period shall, in the manner and within the time prescribed, be matched with 

  • The corresponding details of ‘outward supply’ furnished by the corresponding taxable person (hereinafter referred to in this section as the ‘supplier’) in his/her/its valid return for the same tax period or any preceding tax period,
  • The ‘Additional Duty’ of Customs paid under section 3 of the Customs Tariff Act 1975 in respect of goods imported by the Supplier, and
  • For duplication of claims of Input Tax Credit (ITC).


Matching of Invoices

The claim of ITC in respect of invoices and/or debit notes relating to inward supply that match with the details of corresponding outward supply or with the Additional Duty of Customs paid (subject to the provisions of section 16 (eligibility and conditions for taking input tax credit) or 17 (apportionment of credit and blocked credits), as the case may be, shall be finally accepted and such acceptance shall be communicated, in the manner as may be prescribed, to the recipient (Form GST ITC-1).


Communication of Non-Match and Duplication

Where the ITC claimed by a recipient in respect of an inward supply is in excess of the tax declared by the supplier for the same supply or the outward supply is not declared by the supplier in his/her/its valid returns, the discrepancy shall be communicated to both such persons in the manner as may be prescribed.

The duplication of claims of ITC shall be communicated to the recipient in the manner as may be prescribed.


Non-Rectification, Addition to Output Tax and Interest

The amount in respect of which any discrepancy is communicated and which is not rectified by the supplier in his/her/its valid return for the month in which discrepancy is communicated shall be added^ to the output tax liability of the recipient, in the manner as may be prescribed, in the said return for the month succeeding the month in which the discrepancy is communicated.

  • The amount claimed as ITC that is found to be in excess on account of duplication of claims shall be added to the output tax liability of the recipient in his return for the month in which the duplication is communicated.
  • A recipient in whose output tax liability any amount has been so added, will be liable to pay interest at the rate specified on the amount so added from the date of availing of credit till the corresponding additions are so made.

^The recipient shall be eligible to reduce from his/her/its output tax liability, the amount so added if the supplier declares the details of the invoice and/or debit note in his/her/its valid return within the time specified in section 34 and the interest paid on such amount shall be refunded to the recipient by crediting the amount in the corresponding head of his electronic cash ledger in the manner as may be prescribed.

 

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The details of every credit note relating to outward supply furnished by a registered taxable person (hereinafter referred to in this section as the ‘supplier’) for a tax period shall, in the manner and within the time prescribed, be matched

  • With the corresponding reduction in the claim for input tax credit by the corresponding taxable person (hereinafter referred to in this section as the ‘recipient’) in his valid return for the same tax period or any subsequent tax period, and
  • For duplication of claims for reduction in output tax liability.


Matching of Invoices

The claim for reduction in output tax liability by the supplier that matches with the corresponding reduction in the claim for input tax credit (ITC) by the recipient shall be finally accepted and communicated, in the manner as may be prescribed, to the supplier.


Communication of Non-Match and Duplication

Where the reduction of output tax liability in respect of outward supplies exceeds the corresponding reduction in the claim for ITC or the corresponding credit note is not declared by the recipient in his/her/its valid returns, the discrepancy shall be communicated to both such persons in the manner as may be prescribed.

The duplication of claims for reduction in output tax liability shall be communicated to the supplier in the manner as may be prescribed.


Non-Rectification, Addition to Output Tax and Interest

  • The amount in respect of which any discrepancy is communicated and which is not rectified by the recipient in his/her/its valid return for the month in which discrepancy is communicated shall be added^ to the output tax liability of the supplier, in the manner as may be prescribed, in the return for the month succeeding the month in which the discrepancy is communicated.
  • The amount in respect of any reduction in output tax liability found to be on account of duplication of claims shall be added^ to the output tax liability of the supplier in his return for the month in which such duplication is communicated.
  • The supplier in whose output tax liability any amount has been so added, shall be liable to pay interest at the rate specified from the date of such claim for reduction in the output tax liability till the corresponding additions are made.

^The supplier will be eligible to reduce from the output tax liability, the amount so added, if the recipient declares the details of the credit note in his/her/its valid return within the time specified in section 34 and will be entitled to be refunded for any interest charged on such amount by a credit of such the amount in the corresponding head of his electronic cash ledger (ECL).

 

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First Return (section 35)

Every registered taxable person who has made outward supplies in the period between the date on which such person became liable to registration till the date on which registration was granted, shall declare the same in the first return filed after such grant of registration.


Annual Return (section 39)

  • Every registered taxable person^^ is required to furnish an ‘Annual Return’ for every financial year electronically in such form and in such manner as may be prescribed (Form GSTR-9)*, on or before the 31st day of December following the end of such financial year.
  • Every registered taxable person^^ who is required to get his/her/its accounts audited under the Draft Law is required to furnish electronically (Form GSTR-9B), such Annual Return along with the audited copy of the annual accounts and a reconciliation statement (reconciling the value of supplies declared in the return furnished for the year with the audited annual financial statement) and such other particulars as may be prescribed.


*
Form GSTR-9 for Registered Taxable Person under ‘Composition Levy’


Final Return (section 40)

Every registered taxable person who applies for cancellation of registration is required to furnish a ‘final’ return within 3 months of the date of cancellation or date of cancellation order (whichever is later) in such form and in such manner as may be prescribed (Form GSTR-10).

^^ Other than an ‘input service distributor’, a ‘non-resident taxable person’ and a person paying tax under the ‘Composition Levy’ option or Deducting/Collecting Tax at Source under section 46/56

 

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Delay and Non-Filing of Returns – Issues


Levy of Late Fee Levy (section 42)

Late fee^ of Rs.100 for every day (for which failure continues beyond prescribed due date and subject to a maximum of Rs.5000) shall be payable by the registered taxable person for failure to furnish by the said due date of the following —

  • Details of outward/inward supplies (section 32/33) or
  • Returns (section 34 or 40)

^Such late fee shall be Rs.100 (for every day during which such failure continues subject to a maximum of an amount calculated at a quarter percent of the turnover in the State) where a registered taxable person fails to furnish the return required under section 39 (Annual Return) by the prescribed due date.


Notice to return defaulters (section 41)

Where a registered taxable person fails to furnish a return under section 34, 39 (Annual Return) or 40 (Final Return), a notice would be issued requiring such person to furnish such return within 15 days in such form and manner as may be prescribed.


Cancellation of Registration (section 26)

The ‘proper officer’ may cancel the registration of a ‘taxable person’ from such date (including an anterior date) where —

  • A person paying tax under the ‘Composition Levy’ option has not furnished returns for 3 consecutive tax periods; or
  • Any taxable person, has not furnished returns for a continuous period of 6 months.

> Read about GST ‘Registration‘ and ‘Composition Levy

 


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Email: contact@minustax.com

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