The implementation of the Goods and Services Tax (GST) has caused a lot of confusion. While there’s a lot of back and forth on the subject, no one seems to have a decent grasp on the subject.
What is the Goods and Services Tax?
GST, in simple terms, is a comprehensive, indirect tax levied on goods and services. It was introduced and implemented to replace the previous tax structure that incorporated excise duty, entertainment tax, services tax, and others. If you are a business that provides a service or goods, you will need to ensure you register yourself for a Goods and Services Tax Identification Number (GSTIN).
Why should you File for Tax Returns?
Every Indian citizen must register for GST and file timely tax returns. The nation depends on its citizens to progress economically. Moreover, this was the main reason why the Government implemented the GST tax system in the first place. When you file tax returns, it shows that you are responsible for your country. Your tax money is used to develop the nation’s facilities and infrastructure.
What happens if you do not file your GST returns?
Given how the Union Minister of India fronts the GST council, the Income Tax Department is held accountable. If you do not pay your taxes on time, you will be held responsible by the Income Tax Department. You will be liable to pay a 10% penalty if you have a valid reason for not paying your tax on time. However, if they find that you do not have a valid reason to justify your evasion of tax payments, you may be required to pay a 100% penalty.
Who is liable to file GST returns?
If you are wondering how GST returns work and how to file GST returns, read the following:
GSTR-1
Every normal taxpayer has to pay this and file this monthly return unless you happen to be a small taxpayer or your previous year’s turnover is 1.5CR. In such a case, you may file your GST return quarterly.
GSTR-2A
This is known as a read-only return. You do not need to take any action for this GST return.
GSTR-2 (Suspended)
Filing the GSTR-2 return is suspended.
GSTR-3
The GSTR-3 is generated automatically based on your GSTR-1 and GSTR-2 returns.
GSTR-3B
The GSTR-3B refers to a monthly declaration that you are required to file if you are a normal taxpayer under the GST regime.
GSTR-4 / CMP-08
You will have to file this GST return if you are a part of the composition scheme under GST. According to the Composition Scheme, if you are a business owner with an annual turnover of 1.5CR or more, you are allowed to set a certain GST tax rate on your turnover.
GSTR-5
This return concerns non-resident foreign taxpayers. If you do not live in India but have your business registered under the Goods and Services Tax structure, you will have to file this GST return every month.
GSTR-6
The GSTR-6 is a monthly return that you will have to file as an Input Service Distributor. You will have to include all the Input Credit Distribution and System of Distribution details.
GSTR-7
You will have to file this monthly return to deduct TDS.
GSTR-8
This refers to a monthly return that you will have to file if you happen to be an E-commerce operator registered to a GST number under the GST regime and need to collect tax at the source.
GSTR-9
The GSTR-9 is a tax return you will have to file annually. You will need to include details like SGST, IGST, and CGST.
GSTR-9A
This is an annual return that was waived off for taxpayers under the GST composition scheme in the years 2017-2018 and 2018-2019.
GSTR-9C
This return has to be filed by taxpayers who have an annual turnover of two crores.
GSTR-10
You will have to file this GST return if your GST registration is canceled. Be sure to file this within three months from the time of cancellation.
GSTR-11
Finally, this GST return is for those who have received their unique GSTIN. Be sure to note that this concerns foreign diplomats and embassies who are not obligated to pay taxes in India.
