No late fees for filing GSTR-7 after deadline; Here’s why these taxpayers still need to file it to avoid serious consequences
Sometimes you need to show a good faith and file your monthly GST returns on time despite no risk of attracting a late filing penalty. GSTR-7 is one such monthly return.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;} The Goods and Services Tax Network (GSTN) has informed that no late filing fees are required to be paid if a taxpayer is filing ‘nil’ GSTR-7 return late i.e. after the deadline. However, since October 2024, GSTR-7 filing has been made sequential, so you really can’t skip filing any month’s GSTR-7 as doing so would prevent you from filing it for subsequent months.
“Attention Taxpayers! Issues related to the late fees on ‘Nil’ GSTR-7 filings for Oct 2024 return will be resolved tonight. In line with Notification No. 23/2024-Central Tax, dated 8th Oct 2024, no late fee payment is needed to file ‘Nil’ GSTR-7 return starting from October 2024 return period, on GST portal,” said GST Tech (Infosys_GSTN) on X (formerly Twitter) on December 7, 2024.
Is filing GSTR-7 mandatory for all GST registered taxpayers on or before 10th of each month?
GSTR-7 is a monthly return to be filed by every GST registered taxpayer who is required to deduct Tax at Source (TDS) under GST, capturing all the details of TDS deducted, TDS paid and payable, refund claimed etc. The deadline for filing GSTR-7 is December 10, 2024 for the November 2024 tax period. If in the given tax period, you did no transactions where TDS under GST is required to be deducted then you need to file a ‘nil’ GSTR-7 return.GSTN in an advisory dated December 4, 2024 said, “As per Notification No. 17/2024-Central Tax, dated 27th September 2024, effective from 01.11.2024, GSTR-7 filing has been made sequential from the October tax period. Hence, GSTR-7 return is to be filed in chronological order, beginning with the return period of October 2024. It is pertinent to mention that for a month in which no deduction has been made, deductors need to file NiL return for the same month.”
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Chartered Accountant Akhil Pachori says, "GSTN highlights that even if no TDS deductions are made during a given tax period, such deductors must file a Nil GSTR-7 return. Earlier this was not the case as filing Nil GSTR-7 return was not mandatory. Now GSTN also said that the sequence must be maintained for GSTR-7 return. This means if you don’t file October’s GSTR-7 return then you won’t be able to file November’s GSTR-7 return. So in this way the month wise sequence of GSTR-7 returns have to be maintained now.”
Why you must file nil GSTR-7 return on time even if no late fees for nil return
While the deadline to file GSTR-7 is 10th of each month, taxpayers filing a nil GSTR-7 return do not need to pay any late filing fee. Do note, other taxpayers who need to file GSTR-7 need to pay the late filing fee if they miss the deadline.Although it's a relief that no late filing fee is required to be paid for filing nil GSTR-7 late, this does not mean you don’t need to file GSTR-7.
Chartered Accountant Bimal Jain, founder, A2Z Taxcorp LLP, says, “A GST registered person who is required to file a nil GSTR-7 return can file it after the deadline with no repercussions of late filing fees. However, since October 2024 the GSTR-7 return has been made sequential. So, in case if a taxpayer fails to file GSTR-7 for any preceding month then the subsequent month’s GSTR-7 can’t be filed. For example: a taxpayer had to file a nil GSTR-7 return for November as in this month he had no transactions where TDS was required to be deducted. Hence if he fails to file November’s nil GSTR-7 and in December he had to deduct TDS, he can’t file GSTR-7 for December, because now GSTR-7 needs to be filed sequentially. Hence, I would advise taxpayers to always file GSTR-7 even if it's a nil return as non-filing of it has serious repercussions for subsequent months filing of GSTR-7.”
Penalty for those who deducted TDS but failed to file GSTR-7 on or before the deadline
Chartered Accountant Himank Singla, Partner, S B H S & Associates, explains the consequences of non-filing of GSTR-7:As per the provision of section 39(3) & Section 39(1), Return of TDS will be filed within 10 days after the end of the month in which deduction is made. As per Rule 66(1), return of TDS is to be filed in Form GSTR- 7 through a common GST portal either directly or from a facilitation centre notified by the commissioner.
Penal Provisions: There would be a penalty of Rs 10,000 or an amount equivalent to tax not deducted or tax shortly deducted or collected/ shortly collected but not deposit to the Government, whichever is higher, if the person:
a) fails to deduct TDS
b) deducts short TDS
c) fails to pay TDS to the Government.
Action by Proper Officer against Tax Deductor shall be specified in Section 73/74: Provision of section 73 or 74 is applicable for recovery of tax from deductor and the same procedure (e.g. issuance of show cause notice, serving a statement of calculation of tax, interest and penalty etc) will be followed for recovery of TDS.
Consequences of non-filing of NIL GSTR-7:
Singla explains:
“Even if no tax was deducted in the given month (meaning the TDS for that month is Nil), and the GSTR-7 return is delayed, the late fee payable under Section 47 will be completely waived. This waiver applies even if the return is filed late, provided no tax was deducted during that month.
In very rare cases, during adjudication, even a penalty can be levied. When a person violates a GST Act provision or a regulation adopted under it and no certain punishment has been set forth for that violation, the General penalty under Section 125 may be applicable.
However, Specific guiding principles that should be complied with when assessing penalties under the GST regime are outlined in Section 126 of the CGST Act. According to the Act, there should be no penalties for small violations of tax laws or procedural requirements, especially if they can be quickly fixed and were committed without fraud or severe carelessness. The punishment charged under the GST Act shall be appropriate to the degree and extent of the violation and should be based on the specific facts and circumstances of each instance.
Hence, it is unlikely that any Penalty will be levied even under section 125 too.”
Accoding to Sonam Chandwani, Managing Partner at KS Legal & Associates, "The waiver of late fees for filing Nil GST returns will ease the financial burden on taxpayers, especially small businesses and inactive entities, as they no longer need to worry about paying penalties for delays when they have no tax liability. This change is likely to encourage timely compliance and reduce stress, as taxpayers won't face unnecessary penalties for technical errors or unintentional delays. However, it might lead to some taxpayers becoming more casual about filing deadlines since there are no penalties involved, potentially affecting overall compliance discipline in the long term."
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This story originally appeared on: India Times - Author:Faqs of Insurances
