The Goods and Services Tax (GST) regime was introduced in India in July 2017, with the aim of simplifying the indirect tax structure by bringing various types of taxes under one umbrella. Along with this system came new compliance requirements, one of which is the filing of the GST annual return. While businesses registered under GST are generally expected to file this yearly return, not every registered person is obligated to do so. The law itself carves out specific exemptions.
For the taxpayers, it is very important to understand these exemptions in a proper manner. Misinterpretation of compliance responsibilities could lead to various penalties, unnecessary filings or even scrutiny from various authorities. This article explores who exactly is exempted from filing the GST annual return, why these exemptions exist, and how businesses can ensure they are on the right side of compliance.
Understanding the GST Annual Return
Before going into the exemptions, it’s very important to understand what the annual return actually means.
The GST annual return, filed through Form GSTR-9, is a consolidated statement of all monthly or quarterly returns filed during a financial year. It essentially works as a summary of outward supplies (sales), inward supplies (purchases), input tax credit availed, tax paid, refunds claimed and demands raised.
This annual compliance ensures that the information furnished in periodic returns matches the books of accounts and any discrepancies are reconciled. For businesses, it acts as a financial health check in terms of GST compliance.
The due date for filing the annual return is generally the 31st December of the following financial year, although the government has discretion to extend it to give businesses more time.
Who Must File and Who Does Not File GST Annual Return?
The law under Section 44 of the CGST Act, 2017, makes it mandatory for every registered person (except certain categories) to furnish an annual return. So, while the general rule is “all registered taxpayers must file,” the exceptions are crucial.
Let’s now break down the categories of taxpayers who are exempted from filing GST annual return:
1. Casual Taxable Persons
A casual taxable person is someone who occasionally undertakes transactions that involve the supply of goods or services in a taxable territory where they do not have a fixed place of business.
For example, a trader who participates in an exhibition in another state for a few weeks and makes sales there qualifies as a casual taxable person.
Since their registration is temporary and valid only for a limited period, the government has exempted them from the requirement of filing annual returns. They have already settled their dues before their registration expires, making annual filing unnecessary.
2. Non-Resident Taxable Persons
Non-resident taxable persons (NRTP) are those who do not reside in India but occasionally supply goods or services here. Like casual taxable persons, their registration is temporary in nature and meant only for the duration of their taxable operations in India.
For instance, a foreign company participating in an Indian trade fair and supplying goods for a short time would fall under this category.
Given the temporary scope of their business, the law relieves them from the annual return obligation. They only need to fulfil return filing requirements during the validity of their registration.
3. Input Service Distributors (ISD)
An Input Service Distributor is not directly engaged in sales or supplies but functions to distribute the credit of input services to different units of a company.
For example, a head office that pays for advertisement services benefiting multiple branches and then distributes the input tax credit among them operates as an ISD.
Since ISDs are not directly involved in the outward supply of goods or services, the government has exempted them from filing GSTR-9. Their compliance burden is limited to distributing input tax credit via their monthly returns.
4. Persons Paying TDS under GST
Certain government departments, agencies, and notified entities are required to deduct tax at source (TDS) under GST when they make payments to suppliers. These entities are registered only for the purpose of TDS compliance.
Since they are not involved in regular business transactions or input-output adjustments, they too are exempt from filing annual returns.
5. Persons Paying TCS under GST (E-commerce Operators)
E-commerce operators like Amazon, Flipkart or Zomato, who collect tax at source, viz., (TCS) while facilitating sales through their platform, are also spared from filing GSTR-9.
Their compliance responsibility is already covered through monthly TCS returns, so an additional annual filing would serve no real purpose.
6. Small Taxpayers with Specific Relief
Over the years, the government has provided relief to small taxpayers in regard to annual return filing. For certain financial years (such as 2017–18, 2018–19 and 2019–20), taxpayers with turnover up to the limit of ₹2 crore were exempted from filing GSTR-9.
Why Are These Exemptions Provided?
The logic behind exemptions is fairly straightforward:
- Temporary Registrations: Casual and non-resident taxable persons operate for a short duration, so annual compliance is redundant.
- Special Purpose Entities: ISDs, TDS deductors, and TCS collectors exist to fulfil specific functions, not to engage in the full cycle of supplies. Their periodic returns already serve the intended purpose.
- Ease of Doing Business: Small taxpayers form the backbone of the economy. Overburdening them with complex annual filings could discourage entrepreneurship.
By defining these exemptions, the GST framework strikes a balance between maintaining compliance discipline and avoiding unnecessary paperwork.
Common Misconceptions
Many businesses assume that once exempted from GSTR-9, they have no compliance obligations at all. This is not true.
- Casual and non-resident taxable persons still need to file their periodic GSTR-1 and GSTR-3B during their registration period.
- TDS and TCS entities must regularly file their TDS/TCS returns.
- ISDs are required to submit GSTR-6 on a monthly basis.
Exemption from the annual return does not mean exemption from GST compliance altogether.
Conclusion
Filing an annual return under GST may sound intimidating, but the law does not expect every registered person to comply with this requirement. Casual taxable persons, non-resident taxable persons, ISDs, TDS deductors, and TCS collectors are exempted from filing GSTR-9. Additionally, small taxpayers have received specific year-based relief in the past.
For businesses, the key takeaway is to correctly determine their category and turnover so that they neither miss a filing nor file unnecessarily. With proper understanding and timely compliance, GST does not have to be overwhelming. Instead, it can work as the transparent and streamlined tax system it was meant to be.
