Different GST returns
In India, under the Goods and Services Tax (GST) regime, businesses are required to file various types of GST returns to report their financial transactions to the tax authorities. Here are the different types of GST returns:
GSTR-1 (Monthly/Quarterly Return):
GSTR-1 is a return that contains details of all outward supplies (sales) made by a taxpayer. It includes information on the value of supplies, tax charged, and the recipient’s details. It needs to be filed by the 11th of the following month for regular taxpayers.
GSTR-2 (Monthly/Quarterly Return):
GSTR-2 is a return that contains details of all inward supplies (purchases) received by a taxpayer. It is auto-populated based on the details furnished by the suppliers in their GSTR-1. However, GSTR-2 has been temporarily suspended, and taxpayers are not required to file it.
GSTR-3 (Monthly Return):
GSTR-3 is a monthly return that summarizes the details of outward supplies, inward supplies, input tax credit (ITC), and the tax liability for the month. It was proposed earlier, but it has been temporarily suspended.
GSTR-3B (Monthly Return):
GSTR-3B is a simplified monthly return that provides a summary of outward and inward supplies, ITC, and the payment of taxes for the month. It is a self-declaration return and is widely used by businesses to meet their GST compliance requirements.
GSTR-4 (Quarterly Return):
GSTR-4 is a quarterly return that is filed by taxpayers who have opted for the Composition Scheme. It contains details of the total turnover, tax payable, and payment of taxes.
GSTR-5 (Monthly Return for Non-Resident Taxpayers):
GSTR-5 is a monthly return filed by non-resident taxpayers who conduct business in India. It contains details of inward and outward supplies and the tax liability.
GSTR-6 (Monthly Return for Input Service Distributors):
GSTR-6 is a monthly return filed by Input Service Distributors (ISD) to distribute the ITC to units receiving input services.
GSTR-7 (Monthly Return for Tax Deducted at Source):
GSTR-7 is a monthly return filed by tax deductors under GST. It contains details of TDS deducted and deposited with the government.
GSTR-8 (Monthly Return for E-commerce Operators):
GSTR-8 is a monthly return filed by e-commerce operators who are required to collect TCS (Tax Collected at Source) on the supplies made through their platform.
GSTR-9 (Annual Return):
GSTR-9 is an annual return filed by regular taxpayers providing a summary of all the monthly/quarterly returns filed during the financial year.
GSTR-9A (Annual Return for Composition Taxpayers):
GSTR-9A is an annual return filed by taxpayers who have opted for the Composition Scheme.
GSTR-9C (Reconciliation Statement and Certification):
GSTR-9C is a reconciliation statement and certification, which is required to be filed by taxpayers with a turnover above a specified limit. It is accompanied by a reconciliation statement and an audited financial statement.
These are the primary GST returns applicable under the Indian GST system. It’s important for businesses to be aware of their specific filing requirements based on their turnover, nature of business, and other factors. Additionally, they should stay updated with any changes or notifications issued by the tax authorities.
Electronic Liability Credit:
The Electronic Liability Credit is a section on the GST portal where a registered taxpayer can view and track their tax liabilities. It reflects the total amount of tax that a taxpayer is required to pay to the government. This includes the tax liability on supplies made, any reverse charge liabilities, and other tax obligations.
The Electronic Liability Credit is calculated based on the details furnished in the taxpayer’s GSTR-1 (outward supplies) and GSTR-3B (summary of supplies and liabilities) returns. It helps the taxpayer keep track of their tax obligations and make timely payments to the government.
The Cash Ledger is another section on the GST portal where a registered taxpayer maintains an electronic ledger of the cash that is available for making tax payments. It contains two major components:
Any payments made towards tax liabilities, interest, penalty, or any other amount due under GST are credited to the Cash Ledger. This can be done through various modes like internet banking, debit/credit card, or over-the-counter payment.
Refunds and Other Credits:
Any amount received by the taxpayer as a refund or any other credit under GST is also credited to the Cash Ledger.
The amount available in the Cash Ledger can be used by the taxpayer to discharge their tax liabilities. For example, if a business has a tax liability for a certain period, they can use the funds available in the Cash Ledger to make the required tax payment.
How They Work Together:
- When a taxpayer files their GSTR-1 and GSTR-3B returns, the Electronic Liability Credit reflects the total amount of tax due.
- To make the tax payment, the taxpayer transfers the required funds from their bank account to the Cash Ledger through online payment methods.
- Once the funds are available in the Cash Ledger, the taxpayer can use this amount to offset their tax liability by filing the return and making the payment.
- The taxpayer can then download the payment challan for their records.
The Cash Ledger ensures that taxpayers have the necessary funds available to meet their tax obligations. It provides a transparent and secure way to make payments, reducing the likelihood of tax evasion or delays in payments.
Different assessment under GST
Under the Goods and Services Tax (GST) regime in India, there are several types of assessments that a registered taxpayer may undergo. These assessments are conducted by tax authorities to ensure compliance with GST laws and to verify the accuracy of returns filed by taxpayers. Here are the different types of assessments under GST:
This is the regular assessment process where registered taxpayers are responsible for self-assessing their tax liability, filing returns, and paying the tax due.
When a taxpayer is unable to determine the correct amount of tax to be paid, they can request for provisional assessment. The tax authority may grant provisional assessment for a specified period, allowing the taxpayer to pay tax on a provisional basis.
In a scrutiny assessment, the tax authority examines the return filed by the taxpayer, along with any other documents or information, to verify the correctness of the return. This can be initiated if there are discrepancies or if the tax authority deems it necessary.
Best Judgment Assessment:
If a taxpayer fails to file a return or provides incomplete information, the tax authority may make a best judgment assessment based on available information and previous tax records.
Summary assessment is a form of provisional assessment made by the proper officer of the tax authority on a summary basis and without audit or scrutiny.
Assessment of Non-Filers:
Tax authorities have the power to assess individuals or businesses that fail to file their GST returns within the prescribed time frame.
If a case is complex or the revenue involved is high, the tax authority may order a special audit by a Chartered Accountant or Cost Accountant. The appointed auditor will submit a report to the tax authority.
Audit by Tax Authorities:
Tax authorities can conduct audits of registered taxpayers to verify compliance with GST laws. This may involve a review of records, books of accounts, and other relevant documents.
Audit by Chartered Accountants or Cost Accountants:
Registered taxpayers whose turnover exceeds a specified threshold (currently ₹5 crore) are required to get their accounts audited by a Chartered Accountant or Cost Accountant.
Finalization of Assessment:
After scrutiny, verification, and assessment, the tax authority issues an order finalizing the assessment. This may result in additional tax liabilities, refunds, or no changes, depending on the findings.
It’s important for taxpayers to maintain accurate and complete records of their transactions and comply with all GST requirements. Failure to do so can lead to penalties and legal consequences. Additionally, the specific procedures and timelines for assessments may be subject to change, so it’s advisable to consult with tax professionals or refer to official government notifications for the most up-to-date information.
Interest applicable under GST
Under the Goods and Services Tax (GST) regime in India, interest may be applicable in certain situations where a registered taxpayer fails to fulfill their tax-related obligations within the specified timeframes. The applicable interest rates and scenarios for which interest is charged are outlined below:
Late Filing of GST Returns (GSTR-3B, GSTR-1, etc.):
- Interest Rate: The interest rate for late filing of GST returns is 18% per annum (9% for CGST and 9% for SGST/UTGST).
- Scenario: If a taxpayer fails to file their GST returns by the due date, they are liable to pay interest on the outstanding tax liability from the due date to the actual date of filing.
Delayed Payment of GST (After Filing Return):
- Interest Rate: The interest rate for delayed payment of GST is 18% per annum (9% for CGST and 9% for SGST/UTGST).
- Scenario: If a taxpayer files their GST return on time but fails to make the payment of tax due, they are liable to pay interest on the outstanding tax liability from the due date to the actual date of payment.
Reversal of Input Tax Credit (ITC):
- Interest Rate: The interest rate for the reversal of ITC is 24% per annum (12% for CGST and 12% for SGST/UTGST).
- Scenario: If a taxpayer wrongly claims or utilizes ITC and subsequently reverses it, they are liable to pay interest on the amount reversed.
Non-Payment of TDS or TCS:
- Interest Rate: The interest rate for non-payment of TDS (Tax Deducted at Source) or TCS (Tax Collected at Source) is 18% per annum (9% for CGST and 9% for SGST/UTGST).
- Scenario: If a taxpayer fails to remit the TDS or TCS collected or deducted within the specified timeframe, they are liable to pay interest on the outstanding amount.
Determination of Tax Under Section 73 or 74:
- Interest Rate: The interest rate for cases where tax is determined under Section 73 (demand raised by tax authorities) or Section 74 (demand raised by taxpayer) is 18% per annum (9% for CGST and 9% for SGST/UTGST).
- Scenario: If the tax authorities or the taxpayer determines the tax liability after an assessment, interest is applicable on the determined tax amount.
Others (e.g., for Delayed Refunds, etc.):
- In addition to the scenarios mentioned above, interest may be applicable in various other situations as specified by the GST law.
Important Points to Note:
- The interest is calculated on a daily basis, from the due date to the actual date of payment or filing of return.
- Interest is calculated separately for CGST, SGST/UTGST, and IGST (in case of inter-state transactions).
- The interest liability is self-assessed by the taxpayer and is required to be paid along with the tax liability.
It’s crucial for businesses to be aware of these interest provisions under GST and to ensure timely compliance to avoid incurring interest charges. For specific cases and detailed calculations, it’s advisable to consult with tax professionals or refer to official government notifications.