The GST is a tax paid on the supply of goods and services. It has to be paid by the supplier of goods and services to the Government.
(Read: Goods and Services Tax (GST) Explained)
We are also familiar with the concept of input tax credit. The seller of goods or services will be given input tax credit (ITC) for the tax already paid on inputs/ raw materials. To illustrate: Let us say that the GST rate is 10 % on all products. A chips manufacturer buys raw materials (potatoes) worth Rs. 10, makes chips and sells it to a retailer at Rs 20. The GST payable by him on supply will be Rs. 2 (10 % of 20). But, he will get input tax credit on the GST paid on potatoes worth Rs. 10 by the supplier (Re. 1). Thus, the final amount of GST payable by him will be Re 1. (Rs 2 – Re 1)
In other words, GST payable = Output tax – input tax
Now, we will come the subject of filing GST returns. How to file GST returns and the forms used by the supplier to file GST returns.
There are three forms that will be used by the most suppliers to file monthly GST returns – GSTR-1, GSTR-2 and GSTR-3.
GSTR-1: Arvind wants to file his GST returns for the month of October. The first step to file GST returns is to fill the GSTR-1 form. The supplier has to do it by the 10th of the subsequent month.
In this form, the supplier uploads the sales invoices of all the supply of goods and services made by him. This form computes the output tax liability.
Note: The sales invoice/ bill will have details of the recipient of goods and services. This invoice will be automatically available in the GSTR-2A form of the recipient. To illustrate: Arvind is a mustard oil manufacturer who sells 10 litres of oil to a retailer named B in October. Arvind will have to upload the sales invoice on his GSTR-1 form by 10th November. It will be made available in the GSTR-2A form of B on 11th November.
GSTR-2A: It is the details of all inward supplies. This is an auto-populated form. It will be filled by the system automatically and will be available to the supplier on the 11th of the subsequent month.
Arvind must have bought inputs like mustard seeds etc. to manufacture oil. The tax paid on buying seeds will be deducted from his output GST liability as input tax credit. To illustrate: Arvind has bought mustard seeds from C in October. C is the seller. C must have uploaded the sales invoice in his GSTR-1 by 10th November. The invoice will have details of the recipient (Arvind). Hence, this invoice will be available in Arvind’s GSTR-2A form on 11th November.
GSTR-2: Arvind already has details of his inward supplies in GSTR 2A on 11th. He will reconcile these invoices with his own accounts books.
The period from 11th to 15th of the subsequent month is available to the supplier to make modifications in GSTR 2A. If an invoice is not available in GSTR 2A, Arvind can make necessary modifications.
The final details of inward supplies is submitted is submitted in GSTR 2.
To illustrate: Arvind has bought mustard seeds from E. But, E forgot to upload the sales invoice in his GSTR 1 form. Hence, the invoice is not available in Arvind’s GSTR 2A. So, Arvind makes the modifications
Note: The modifications will be made available to the supplier (in this case E) in Form GSTR 1A. E can accept or reject. If E accepts, his GSTR 1 will be amended automatically.
GSTR-1A: The time between 16th and 20th of the subsequent month is available to accept or reject the modifications in Form GSTR 1A.
Arvind could have also failed to upload a sales invoice in GSTR 1. The recipients will make modifications through their GSTR-2A.
Arvind has to accept or reject. His GSTR 1 will be amended accordingly.
GSTR-3: Finally, after all the cross-verification of invoices between suppliers and recipients, the automated form for final tax returns is available on 20th of the subsequent month. It computes output tax liability and input tax liability through details in GSTR 1 and GSTR 2 respectively.
Arvind has to file his monthly GST returns through the form GSTR-3
To summarise, to file GST returns for Oct, Arvind will upload all his sales invoices (outward supplies) in GSTR-1 by 10th of November. He will receive the details of all his input purchases (inward supplies) in GSTR-2A by 11th. He can make corrections (if any) in his GSTR-2A from 11th to 15th. Then, he will have 16th to 20th of Nov to accept or reject the corrections made by his recipients. It will be available in GSTR-1A. His GSTR 1 will be amended accordingly. The final GST returns will be made available in GSTR 3 for filing and payment.
Read: The final structure of GST