In India, businesses registered under the GST law are required to file periodic returns to stay compliant, and one of the most common returns is GSTR-1. This form details the outward supplies, or sales, a business makes. But what happens when there are no transactions to report? That’s where the GST Department introduced the concept of a Nil return. Like ordinary returns, Nil returns are mandatory for all GST-registered businesses, including SEZ units and temporarily inactive entities, and they must be filed by the 10th day of the following month or quarter. Failure to file the return on time attracts a ₹50/day late fee and may lead to GST registration cancellation. The process to file the return is simple and done through the official GST portal.
In this guide, we shall understand what the Nil GSTR-1 return is, the need to file it, its requirements, and the detailed step-by-step filing process.
What is GSTR-1?
Before understanding the GSTR-1 Nil Return, it is essential to understand the GSTR-1 return. GSTR-1 is a monthly or quarterly return that businesses registered under GST have to file, in which they provide the details of the outward supply of goods and services.
The GSTR-1 form contains details of:
- Invoices for outward supplies made during the reporting period
- Credit notes and debit notes issued to customers
- Exports and inter-state supplies of goods and services
The return has to be filed by the taxpayer by the 10th day of the subsequent month or within the 10th day of the quarter, depending on whether the taxpayer is required to file monthly or quarterly.
What is a Nil GSTR-1 return?
A Nil GSTR-1 return is a GSTR-1 return filed when the taxpayer has not made any outward supplies – sales or service transactions during the reporting period. The return is a declaration that no business activity has occurred in the specific period, and hence, there are no sales or supplies to report.
Not making any outward supply does not mean the business is exempt from filing the GST return; it simply indicates that the company did not engage in any sales or transactions during the period. Businesses with Nil GSTR-1 still need to file the return on time to comply with the law and avoid penalties or late fees.
Nil GSTR-1 Return vs. GSTR-1 Return
| Nil GSTR-1 Return | Regular GSTR-1 Return | |
| Definition | Return filed when there are no outward supplies | Return filed to report actual outward supplies |
| Transaction data | No sales, invoices, or outward supply data | Contains full details of invoices, sales, and other supplies |
| Filing requirement | Mandatory if registered under GST, even with zero activity | Mandatory for all registered taxpayers with outward supplies |
| Impact on ITC claim of the buyer | No impact | Impacts the buyer’s ability to claim Input Tax Credit (ITC) |
| Risk of errors | Very low | High due to manual invoice and data entry |
| Penalty for late filing | ₹50 per day (₹25 CGST + ₹25 SGST) | Same penalty as Nil GSTR-1 Return, but late filing may also affect ITC reconciliation |
| Data verification | No verification is required as there are no transactions to verify. | Mandatory invoice matching and HSN/SAC validation |
| Use case | For inactive or temporarily non-operational businesses | For businesses with regular outward supplies |
Why is Nil GSTR-1 filed?
The requirement to file Nil GSTR-1 arises from the GST framework itself. Even businesses that have not made any sales during a specific month or quarter are legally obligated to file a return, even if that return shows no transactions. The reasons for filing Nil GSTR-1 include:
- Legal compliance: GST law mandates that businesses must file GST returns even in the absence of business activity to maintain transparency in the system and comply with the law.
- Avoiding penalties: Failure to file the GSTR-1 return, even if it is a nil return, can attract late fees and penalties.
- Updated GST record: Filing Nil GSTR-1 ensures that the taxpayer’s GST record is up to date, without any discrepancies for the period in question.
Who should file Nil GSTR-1?
Nil GSTR-1 should be filed by:
- If a business is registered under GST but did not make any sales or have any supply of goods or services during the tax period.
- SEZ units and developers
- Casual taxable persons with no outward supplies, reverse-charge supplies, credit/debit notes, amendments, or advances to report
- Businesses that are temporarily inactive, but still registered under GST.
Documents required
Keep the following documents ready while filing
- GST Registration Certificate
- Login Credentials (GSTIN, username, password)
- Bank Statements (if requested by authorities)
- Acknowledgement Receipts of previous GSTR-1 filings (if applicable)
Steps to File Nil GSTR-1 on the Official GST Portal
Follow the following steps for filing the GSTR-1 return:
Step 1: Visit the GST portal at https://www.gst.gov.in.
Step 2: Log in to your account
- Click on the Login button on the homepage.
- Enter your Username and Password, and click on Login.
- You may be asked for an OTP (One-Time Password) sent to your registered mobile number for additional security.
Step 3: Go to the returns’ dashboard
- Once you have logged in, go to the “Services” section in the top menu.
- Under the “Returns” option, select the “Returns Dashboard.”
- Choose the financial year and return filing period
For example, the month or quarter for which you are filing Nil GSTR-1.
Step 4: Select the GSTR-1 from the dashboard
- In the Returns Dashboard, under the “Monthly Return” section, click on “GSTR-1 or GSTR-1 – Outward Supply Return.”
- Choose the appropriate tax period for which you are filing the Nil return.
Step 5: Select the “Nil Return” option
- Once you are directed to the GSTR-1 form, you will see an option to file a “Nil Return.”
- If no outward supplies were made during the period, click the option indicating that there were no sales or supplies for that period.
- This may appear as a checkbox or a dropdown menu with the option for “Nil Return”.
Step 6: Check the details
- When you select the Nil Return option on the GST portal, the system will automatically remove the requirement to fill in any supply details such as invoices or HSN codes.
- Do not enter many entries into any of the sections. If there is any data in this section, clear it before submitting the return.
Step 7: Submit the return
- After selecting the Nil option, click on the “Submit” button to submit the Nil GSTR-1 return. Confirm and proceed to generate an acknowledgement.
- Once you submit your return, you will receive an acknowledgement receipt or confirmation message from the GST portal stating that your return has been successfully filed. Download this acknowledgement.
What happens if Nil GSTR-1 is not filed?
If you fail to file your Nil GSTR-1 return on time, it can lead to late fees and penalties:
- Late Fee: A late fee of ₹50 (₹25 CGST + ₹25 SGST) per day the return is delayed will be applicable, even if the return is Nil
- Interest and penalties: If the Nil return is not filed, it can affect other GST filings.
- Cancellation of GST registration: In case the default continues, the GST authorities may cancel the GST registration of the business.
Nil GSTR-1 in case of GST registration cancellation
When the GST registration of a business is cancelled, the obligation to file GSTR-1 is not automatically removed. In such cases, it is important to file the last Nil GSTR-1 return for the period leading up to the cancellation:
- Final compliance requirement: Filing Nil GSTR-1 ensures that you are closing all GST obligations properly before your registration is cancelled. It marks the end of any transaction or outward supply for the period during which the cancellation applies.
- Helps in preventing discrepancies in GST records: If Nil GSTR-1 is not filed during the cancellation process, your GST records might show that your business has failed to meet compliance, which could result in future legal complications or a delayed cancellation process.
- Helps in avoiding legal penalties: If the GST authority finds that Nil GSTR-1 has not been filed during the cancellation process, you can be penalised.
- Impact on the final tax returns: Filing Nil GSTR-1 helps ensure that no pending taxes, returns, or documentation issues remain after the cancellation process is complete.
Frequently Asked Questions
1. What is Nil GSTR-1?
A Nil GSTR-1 return is filed when a registered business has no outward supplies (sales) during a specific tax period.
2. Who is required to file Nil GSTR-1?
Any GST-registered taxpayer who has made no outward supplies, exports, or inter-state sales during a month or quarter must file Nil GSTR-1.
3. Is Nil GSTR-1 mandatory?
Yes, filing Nil GSTR-1 is legally mandatory, even if there are no transactions for the period.
4. When should Nil GSTR-1 be filed?
It must be filed by the 10th of the following month for monthly filers or the 10th of the month following the quarter for quarterly filers.
5. Can Nil GSTR-1 be filed if other returns are pending?
No. All previous GST returns must be filed before Nil GSTR-1 can be submitted for the current period.
6. What happens if Nil GSTR-1 is not filed on time?
A late fee of ₹50 is levied, even if no transactions occurred. Continuous non-filing can even lead to cancellation of GST registration.
7. Can inactive businesses file Nil GSTR-1?
Yes, inactive or temporarily non-operational businesses still need to file Nil returns for compliance.
8. Do composition scheme taxpayers file Nil GSTR-1?
No, Composition taxpayers are required to file a different return (CMP-08). Nil GSTR-1 applies to regular taxpayers only.
9. Does Nil GSTR-1 affect input tax credit (ITC)?
No, since there are no outward supplies, Nil GSTR-1 has no impact on ITC.
10. Can Nil GSTR-1 be filed during a GST audit?
Yes, as long as there are genuinely no outward supplies during the audit period, Nil GSTR-1 can be filed.
11. How do you file Nil GSTR-1?
Log in to the GST portal, select the appropriate period under GSTR-1, choose the Nil filing option, and submit.
12. Do I need to file Nil GSTR-1 separately for each GSTIN?
Yes, if your business is registered in multiple states, you are required to file Nil GSTR-1 for each GSTIN individually.
13. Can Nil GSTR-1 be filed after the due date?
Yes, but a late fee of ₹50 per day (₹25 CGST + ₹25 SGST) applies from the due date until the return is filed.
