Will the input tax credit be impacted if GST annual return is not filed?

GST annual return deadline is December 31: Why should you file it even if not liable to file one

Every Goods and Services Tax (GST) registered person needs to file GST annual return using GSTR-9 form on or before December 31, 2024, for FY 2023-24. However, for FY 2017-18, 2018-19, 2019-20, 2020-21, 2021-22, 2022-23 and 2023-24 it is optional for taxpayers to file GSTR-9 (annual return) if their annual turnover is less than Rs 2 crore.

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GST annual return is filed using GSTR-9, GSTR-9C or GSTR-9A form

There are different GST annual return forms based on the type and turnover of the GST registered business. GSTR-9 is filed by those who have acquired or held a GST registration at any point during the relevant financial year and are required to submit an annual GST return.

Taxpayers who have opted for the composition scheme under GST must use the GSTR-9A form for filing an annual return. If an GST registered person's annual turnover is more than Rs 5 crore then they need to file GSTR-9C along with GSTR-9 (annual return). GSTR-9C is an annual reconciliation statement.

"As per Legal provision of Section 44(1) of CGST Act, every registered person shall be required to file GSTR-9. Hence, irrespective of the turnover, every registered person under GST is required to file GSTR-9. As per Section 44(2), GSTR-9C should be filed along with the annual return (GSTR-9) if the turnover exceeds Rs 5 crore during the relevant FY," says chartered accountant Abhishek Soni, co-founder, Tax2Win.

What is the penalty for not filing GST annual return?

Soni says there is a general penalty of up to Rs 25,000 for not filing GST annual return.

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"Since no specific penalty has been introduced for late filing of GSTR 9C, we may say that the general penalty as mentioned above shall be levied upon a defaulter in this situation," says Soni.

Why should you file the GST annual return though not liable?

"I would advise GST registered taxpayers whose annual turnover is below Rs 2 crore to file GST annual return. This is because when we file a GST annual return it serves as a reconciliation statement about the purchases and sale made, input tax credit claimed, GST liability, etc. So, in the future if the GST department serves a notice, this same reconciliation process needs to be repeated. Hence if a taxpayer has filed GST annual return this statement can be given to the GST department and it will serve as a reconciliation document," says Chartered Accountant Akhil Pachori.

Who is exempted from filing GST annual return

The following taxpayers are exempt from filing a GST annual return:
(a) An Input Service Distributor;
(b) A person paying tax under Section 51 (i.e. TDS deductor);
(c) A person paying tax under Section 52 (i.e. TCS collector);
(d) A casual taxable person; and
(e) A Non-Resident taxable person.

Moreover, the filing of annual return in Form GSTR-9 has been made optional for taxpayers having Aggregate Annual Turnover less than Rs 2 crore for the financial years 2017-18, 2018-19, 2019- 20, 2020-21, 2021- 22, 22-23 and 23-24."

Will the input tax credit of GST registered persons be impacted if annual return is not filed?

Soni says, "The filing of GSTR-9 (Annual Return) and GSTR-9C (Reconciliation Statement) does not directly impact the input tax credit (ITC) of the buyer or seller. While non-filing of GSTR-9 or GSTR-9C may not directly block or reduce ITC,it can lead to inconsistencies, potential disallowances, and increased compliance risks, thereby impacting the buyer's or seller's ability to utilise ITC efficiently."

This story originally appeared on: India Times - Author:Faqs of Insurances