GST Return Filing Eligibility: Who Needs to File and Who Doesn’t?
GST Return Filing Eligibility
A value-added tax system known as the Goods and Services Tax (GST) exists in many nations, including India, Canada, and Australia. Throughout the whole supply chain, from the manufacturer to the consumer, it is a comprehensive indirect tax imposed on providing products and services. The tax system is simplified by replacing several indirect taxes with the GST, including value-added tax, service tax, and excise duty. The GST system is intended to be open, effective, and simple to manage, as well as to lower tax evasion and boost government revenue.
GST returns must be filed for businesses to comply with the law and avoid fines. Additionally, it guarantees that the government has correct data on the taxable purchases and supplies made by the companies. Businesses can also collect input tax credits and prevent a loss of earnings by completing GST filings.
The registration status of a firm under GST determines whether or not it is eligible to file a GST return. Any company or individual providing goods or services must register for GST and file GST returns if their annual sales surpass the threshold of Rs. 20 lakhs (Rs.10 lakhs for states in the particular category).
All registered firms must file a GST return, regardless of whether any transactions occurred within a specific time. Therefore, a Nil return must be submitted even if there were no transactions during the period in question.
Certain firms, such as those that supply exempt goods or services or those with an annual turnover below the threshold level, are excluded from registering under the GST. But even if a company registers freely, it still needs to submit GST filings.
Depending on the business’s turnover and type of operations, GST returns are filed monthly, quarterly, or annually. Small enterprises having revenue of up to Rs. 1.5 crores can file quarterly returns, whilst those with a turnover over that amount must do so monthly.
In conclusion, regardless of the volume of transactions, any firm or person registered for GST must complete GST returns by the deadline to avoid fines and comply with the law.
- Goods and Services Tax (GST) is a comprehensive indirect tax system implemented in several countries, including India, Canada, and Australia. It simplifies the tax structure by replacing multiple indirect taxes like value-added, service, and excise duty.
- GST returns must be filed to comply with the law, avoid fines, and ensure accurate data on taxable purchases and supplies. Even if there are no transactions, businesses registered under GST must file Nil returns.
- The registration status of a business determines the eligibility to file GST returns. Any entity providing goods or services must register for GST if their annual sales exceed the threshold of Rs. 20 lakhs (Rs. 10 lakhs for special category states). Exempt goods or services suppliers are also required to file GST returns if they voluntarily register under GST or engage in interstate transactions.
- GST returns can be filed monthly, quarterly, or annually based on turnover and business operations. Small enterprises with revenue up to Rs. 1.5 crores can choose quarterly returns, while those above that threshold must file monthly returns.
- Certain businesses are exempt from registering under GST, such as those with turnover below the threshold, suppliers of exempt goods or services, agricultural pursuits, and intrastate businesses. However, exemptions do not absolve them from other relevant laws and rules.
- E-commerce operators must register for GST to collect Tax Collected at Source (TCS) on behalf of vendors and file GST returns (GSTR-8) to report TCS collected and supply information.
- Non-resident taxpayers providing goods or services in India must register for GST, appoint an authorized agent, file GSTR-5 to declare purchases, and file GSTR-5A if supplies are made through e-commerce platforms.
- Businesses dealing exclusively in exempted goods or services are not required to register or file GST returns, but they cannot claim input tax credits on their purchases.
- Input Service Distributors (ISDs) can register to distribute input tax credits to other business units within their organization, simplifying the credit-claiming process.
- Filing GST returns accurately and on time is crucial to maintain compliance with GST regulations, avoiding penalties, and ensuring smooth business operations.
Who Needs to File GST Returns?
1) Businesses whose annual revenue exceeds the threshold
Any company or individual providing goods or services must register for GST and file GST returns if their annual sales surpass the threshold of Rs. 20 lakhs (Rs. 10 lakhs for some special category states). The threshold limit is lower for other companies, such as those involved in the supply of commodities in specific states or those registered under the composition scheme. Businesses registered under GST must file Nil returns even if no transactions are within a specific period.
2) Businesses registered under GST
GST returns must be filed by all organizations and people who have registered for the GST. Businesses must register under the GST if their yearly revenue exceeds the threshold of Rs. 20 lakhs (Rs. 10 lakhs in some special category states). Some companies, such as those that supply exempt goods or services, may not be required to register under the GST. However, if a company registers freely, it is still required to submit GST returns. Even if there were no transactions during a specific time, GST returns must still be filed.
3) Businesses engaged in inter-state transactions
Businesses that do interstate business, or sell products or services to clients in other states, must register for the GST and submit GST reports. Businesses that transact over state lines must also get an 18-digit unique identification number (GSTIN) and include it in all invoices and other pertinent paperwork. To disclose interstate supplies made during the tax period, these businesses must also file extra reports, including the GSTR-3B.
4) Composition scheme taxpayers
Instead of filing monthly GST returns, businesses registered under the composition system must file quarterly filings. Small firms with yearly sales of up to Rs. 1.5 crores may use the composition plan, which allows them to pay a predetermined percentage of their sales as tax and has fewer compliance requirements.
5) Input service distributors
A business can claim the input tax credit (ITC) on the GST paid on input services such as accounting, IT, or legal services when they receive invoices for those services. However, it might not be practical for each unit to claim the ITC separately if the company has numerous units or branches. The business may register as an Input Service Distributor (ISD).
An ISD is a business unit that collects invoices for input services and distributes ITC to other business units. For instance, a company’s head office might get an invoice for legal services rendered to a branch office. The main office can give credit to the branch office and claim the ITC on the GST that was paid on the invoice.
6) E-commerce operators
Businesses that run online marketplaces to purchase and sell products and services are known as e-commerce operators. E-commerce businesses must register for GST to collect tax (TCS or Tax Collected at Source) for the vendors who sell products or provide services through their platforms. To report the TCS collected and provide information on the supplies made through their platform, they must additionally file GST reports (GSTR-8). Moreover, e-commerce operators would also need to submit additional GST filings, depending on their business type and turnover.
Who Doesn’t Need to File GST Returns?
1) Businesses with turnover below the threshold limit
Businesses and individuals do not need to register for GST or file GST returns if their annual revenue is less than the threshold limit of Rs. 20 lakhs (Rs. 10 lakhs for some special category states). However, if a company registers voluntarily for GST, it is still required to submit returns even if there are no transactions for a given timeframe. Additionally, some companies may not be required to register under the GST, such as those involved in providing exempt products or services or those registered under the composition scheme. These companies are likewise exempt from filing GST returns. However, these companies must submit GST returns if they voluntarily register under the GST or conduct interstate business.
2) Businesses exempted from GST
Certain companies are exempt from registering for GST and submitting GST returns. Small enterprises with annual revenue below the threshold limit of Rs. 20 lakhs (Rs. 10 lakhs for some special category states), companies involved in providing exempt goods or services, agricultural pursuits, and some designated services are among them. Additionally, organizations that only conduct intrastate business and provide products or services may not be required to register for GST. If these companies want to engage in e-commerce platforms or collect input tax credits, they may still need to register for GST. It is crucial to remember that even if a firm is exempt from GST, it must still abide by all other relevant laws and rules.
3) Businesses dealing exclusively in exempted goods/services
Businesses do not need to register for GST or submit GST returns if they only sell exempt products or services. Milk, educational services, healthcare services, and passenger transportation are examples of exempted products and services that are not subject to GST. However, businesses that only offer exempt items or services are not qualified to collect input tax credits on their purchases. Even though most of a company’s revenue originates from the exempt supply, the company may still be required to register for GST and file reports if it deals in exempt and taxable goods and services.
4) Non-resident taxpayers
Non-resident taxpayers must register for GST and submit GST returns if they provide goods or services in India. These non-resident taxpayers are required to choose an authorized agent in India who is in charge of fulfilling all GST requirements, such as submitting returns and paying taxes. Non-resident taxpayers must submit the GSTR-5 return to declare their purchases made in India and, if eligible, collect an input tax credit. Furthermore, non-resident taxpayers who make supplies of goods or services through e-commerce platforms must register for GST and submit the GSTR-5A return to record the specifics of those supplies. Non-resident taxpayers must abide by all GST rules to avoid fines and other repercussions.
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