Is Filing a NIL GST Return Mandatory?

Since the introduction of the Goods and Services Tax in India, it has been obligatory for registered businesses to file periodic returns declaring their sales, purchases, and tax liability. Although most business persons are conscious of the fact that they must file GST returns if they have any transactions, many of them are not exactly sure what to do when there are no business activities or taxable sales in the period of consideration.

A common question arises: “Do I still need to file a GST return even if there are no transactions?”

The answer is yes, filing a NIL GST return is mandatory for all registered taxpayers, even when there are no outward or inward supplies during a tax period.

This blog explains what a NIL GST return is, why it must be filed, and what consequences arise from non-compliance. It also outlines the simple process for filing it accurately and on time.

Understanding What a NIL GST Return Means?

A NIL GST return is essentially a declaration filed by a registered taxpayer stating that there were no sales, purchases, or tax liability during a specific tax period. In other words, it means that there were no outward or inward supplies, no input tax credit claimed, and no GST payable.

For instance, if a small trader or service provider did not conduct any business during a particular month or quarter, they are still required to file their regular GST return, marked as NIL.

The reason is simple: GST registration comes with a continuing compliance obligation. The government and GST portal must receive a confirmation from the registered entity that no transactions took place during the reporting period.

Requirements for Filing a NIL GST Return

GST law requires all taxpayers with an active GSTIN (Goods and Services Tax Identification Number) to file returns periodically, either monthly or quarterly. NIL returns pertain to

• Regular taxpayers registered under the GST law, who have no commerce or business activity during the tax period
• Taxpayers registered under the composition scheme who are filing GSTR-4 and have no turnover or supplies
• Taxpayers who normally file quarterly under the QRMP (quarterly return with monthly payment) scheme and have no supplies in the quarter
• E-commerce sellers or service suppliers who have not made sales in a month

Even if the taxpayer is temporarily halting normal business operations or is waiting for business, the GST law requires a continuous filing obligation until an application has been made to revoke or cancel the registration.

Legal Requirement: Is it Compulsory?

Yes, it is legally compulsory to file a NIL GST return.

Under the Central Goods and Services Tax (CGST) Act, 2017, every registered person must file a return for each specified tax period, regardless of whether any supplies were made.

Where filing is concerned, two key provisions to note are:

• Section 39 of the CGST Act requires every registered person to file returns for every tax period.
• Rule 61 of the CGST Rules provides the form and manner of return filing.

This maintains transparency and up-to-date returns in the GST system.

Not filing returns – even NIL returns – is a sign of non-compliance and incurs wrist fees, penalties and limits on your future return filing.

Types of NIL GST Returns

Depending on the taxpayer, NIL returns can be provided in different formats –

• GSTR-1 (Monthly/Quarterly) – NIL return to file when there are no outward supplies.
• GSTR-3B (Monthly) – NIL return to file when there are no sales, no purchases or input tax credit to claim for the period.
• GSTR-4 (Composition scheme) – Annually filed by composition taxpayers when there is no turnover.
• GSTR-9 (Annual Return) – NIL return could be shown if the taxpayer’s business has no transactions during the financial year.

It is crucial to note that all the applicable returns must be filed independently (even if they all have NIL entries).

How to File a NIL GST Return?

Filing a NIL return is simple and can be done online through the GST portal or the mobile app.

Steps for filing NIL GSTR-3B (Monthly Return) –

1. Log in to the GST portal using your credentials.
2. Navigate to the Returns Dashboard and select the relevant financial year and tax period.
3. Choose GSTR-3B and click on “Prepare Online.”
4. Enter zero in all applicable fields (sales, purchases, ITC, tax payable).
5. Tick the NIL Return option.
6. Submit the return and complete the filing using EVC (Electronic Verification Code) or Digital Signature.

For taxpayers under the QRMP scheme, NIL returns can also be filed conveniently through the SMS filing facility, by sending a simple text message from the registered mobile number in the prescribed format.

Risks of Not Filing a NIL GST Return

There are various penalties and compliance risks associated with not filing NIL returns. Typical risks include:

• Late Fee: A fee of ₹20 per day (₹10 under CGST + ₹10 under SGST) is applied until the filing of your return; and while ₹20 per day may be small, it adds up significantly.
• Interest Exposure: Even without tax, you may be exposed to interest charges if you file a return after a prior return was filed late.
• Block on Future Filings- The GST system will prohibit you from filing later returns until you comply with your previous return.
• Suspension or cancellation of GST Registration- Tax officers may suspend or cancel your registration for consistent failure to file returns over a six-month cycle.
• Compliance Rating- Failing to file on time will negatively affect your compliance rating with tax officers, which may affect your audit and income tax assessments.

So, it is important to proactively file NIL returns to maintain a good record with all tax authorities.

Advantages of Filing NIL Returns Timely

Although it may seem pointless to file a return with no numbers, it actually comes with its own advantages:

• Remains in compliance with GST requirements and avoids penalties.
• Maintains GST registration recency and credibility.
• Maintains the eligibility to claim future input tax credits and for refunds.
• Builds a positive compliance history for government contracting and audits.
• Prevent system blocks that may prevent tax returns from being filed or generating e-way bills.

Regularly filing NIL returns supports that the business is maintaining compliance and is active in the GST system, even when there is nothing to report.

Conclusion

Filing a NIL GST return is legally required of every registered taxpayer under the GST system; it is not voluntary. A registered taxpayer must file their return every period, even when the business has not had any sales, purchases and/or taxable transactions over the period.

Filing on time helps to avoid penalties and suspension of registration and helps demonstrate to the tax authority that your business is in good standing. Once you understand the purpose of NIL returns and have filed them, you proactively demonstrate responsible tax behaviour to the tax authority and ensure that you are GST-ready for future periods.

Essentially, novelties are practical and imperative; a simple, preventative measure to avoid larger tax implications down the road for your business.