How to File a Nil GST Return?
Nil GST return can be filed when there are no outward supplies during the month or quarter, for which the return is filed for. This form serves as the main purpose to claim an input tax credit on their returns. The GST law requires every taxpayer to file a return for the period even with no transactions
Under GST, every taxpayer is bound to file a tax return for every tax period. Furthermore, GSTR-1 is a monthly return that taxpayers must pay. However, taxpayers have a common query about whether they are required to file nil GST return for a period when there have been no transactions..
Let’s explore more about nil GST returns.
What is Nil GST Return?
Businesses report their outgoing supplies via the GSTR-1 filed every month. Despite having no commercial activity in the month, regular taxpayers with GST registration must file a Nil GST return. Simply put, it’s a return that reports all sales transactions of businesses. The GSTR-1 Nil return can be filed quickly online, taking only a few minutes to complete.
Moreover, the primary purpose of nil GST return filing is to inform the Income Tax Return department that you didn’t pay your taxes because you didn’t meet the criteria for taxable income. Businesses file nil GST returns or GSTR-1 when there have been no sales transactions in the given month.
Taxpayers, if they meet the following conditions, must file GSTR-1:
- The taxpayer is registered as a casual or normal taxpayer, a Special Economic Zone developer/unit (SEZ Unit), or an SEZ Developer and has a valid GSTIN.
- The taxpayer must have selected the frequency of filing nil GST returns, monthly or quarterly, on the GST portal.
NIL GST Return: Two Types of Returns You can File
Under the current GST system, taxpayers must file nil GST returns for both GSTR-1 and GSTR-3B. Failing to file the return, taxpayers will have to pay the penalty.
GSTR-3B
It is a self-declaration form filed by taxpayers for providing details on outward supplies, tax paid, how much input tax credit they have received, and the amount of tax liability ascertained. Furthermore, all taxpayers registered under GST are required to file GSTR-3B. However, before taxpayers file this form, they must reconcile their input tax credit and sales details through GSTR-1 and GSTR-2B. It’s vital for eliminating errors and preventing the suspension of registration in the future.
GSTR-1
Taxpayers file GSTR-1 to provide details on outward supplies of goods and services. During a tax period, it consolidates the debit-credit notes and invoices you have raised during sales transactions. All GST-registered taxpayers must file the GSTR-1. Registered sellers and suppliers should report minor changes to sale invoices in their GSTR-1 returns.
Also Read: GST Rates in India [2022]: Understanding the Latest GST Rates
Why is it Important to File a GSTR-1 NIL Return?
Business owners with an annual income of over Rs. 2,50,000 must file a GSTR-1 income tax return. However, business owners who earn less than Rs. 2,50,000 in a year are also advised to file income tax returns. It helps the income tax department to keep up with your business’s monthly or quarterly income.
The taxpayer is required to file nil returns under GSTR 1 even if there is no business activity in the business. If GST returns are not filed on time, a penalty of Rs.100 per day will be charged.
A nil GST return is primarily filed as proof of income for the Income Tax department. Furthermore, it’s possible for taxpayers to get a refund with GSTR-1 NIL returns filing.
How to File a GSTR-1 Nil Return?
Any taxpayer registered under GST is required to complete nil GST return filing. It includes those who have not earned income through sales transactions in a month or quarter. Furthermore, the GSTR-1 report contains information on advanced received, credits and debit notes issued, modified advance amounts, and summarized documents. The process of filing a NIL return under GSTR-1 is explained below:
- Step 1: Go to the registration portal for GST and log in to your account with valid credentials. On the dashboard page, click on ‘Return Dashboard.’
- Step 2: Once you have clicked on ‘Return Dashboard,’ a screen will appear. You can choose ‘Prepare Online’ after mentioning the filing period.
- Step 3: You will receive a summary of the GSTR-1 return once you have clicked on ‘Prepare Online.’ You should make sure that all fields of the GSTR-1 return are marked either nil or zero.
- Step 4: After validating all facts and information you have entered, check the box indicating the same and click on ‘Submit.’
- Step 5: Click on the ‘Proceed’ button to accept the GSTR-1 filing in the confirmation window. Once you have hit the continue button, you cannot make any changes to the information you have entered. Thus, you should ensure the validity of the GSTR-1.
- Step 6: You must use EVC verification or a digital signature of class 2 for digitally signing the GSTR-1 after submitting the final return for completing the GSTR-1 nil return filing process.
Why is it Necessity to File a Nil Return under GST?
The necessity to file a nil return under GST arises when a registered person or business has not turned out taxable income via outward supplies in a given month against which the nil GST return is filed. Furthermore, taxpayers must enter numerous details in GSTR-3B and GSTR-1 returns. However, a person with no sales does not need to fill out the same number of details as a normal taxpayer on the GSTN Network.
Procedure for Filing Nil GSTR-3B Return
Here’s the online method of filing nil GSTR-3B return:
Step 1: Go to the GST portal
Step 2: Select a valid month for which you are filing a GSTR-3B return from the return dashboard.
Step 3: You will get a prompt on your window with a list of questions related to GSTR-3B.
Step 4: Select the option ‘yes’ for the first question – Do You Want to File Nil Return?
Step 5: The GST portal will direct you to the e-Sign window, where you can file the return through EVC or DSC.
Step 6: You are good to file the nil return with the above-mentioned process.
GSTR-1 Filing For Taxpayers
Here’s the web-based method for filing GSTR-1 for taxpayers:
Step 1: Visit the GST portal
Step 2: Select the valid financial year and month and click on search on the return dashboard.
Step 3: Click on ‘Prepare Online’ from the list of options on your screen.
Step 4: Under GSTR -1, select B2C (Others) and fill out the necessary details.
Step 5: Select zero under all fields once you have opted for the place of supply.
Step 6: Revert to the GSTR-1 Dashboard once you have clicked on the save button.
Step 7: Click on the ‘Generate Summary’ option.
Step 8: Verify your GST return summary details and click on the ‘Submit’ button.
Step 9: File the nil GST return via EVC or DSC option.
Penalty for Late Filing of GSTR-1 Nil Return
Earlier, taxpayers were required to pay the penalty for the late filing of nil GST return at the rate of Rs.200 per day. However, the penalty amount was reduced by a notice released by the Central Board of Direct Taxes. Currently, taxpayers are required to pay Rs.20 per day as nil GST return late fees.
Also Read: What Is GST HSN Code And How To Find HSN Code?
Final Word
Even though filing a GSTR-1 nil return may seem irrelevant at times, it should be filed without delay in order to avoid penalties. As far as post-filing benefits are concerned, maintaining a consistent track record of filing nil GST returns is a good idea. If a taxpayer has a good track record of filing returns, including nil GST return, he or she may qualify for easy loans, lower taxes, and easier business operations. Taxpayers who file their returns seamlessly indicate their trustworthiness.
FAQs on Nil GSTR Return
Ans: Yes, you can file nil GST return by SMS. You can send an SMS to 14409 number to file Nil Form GSTR-1. Once the message is received, the GST Portal proceeds with the process after checking for validations. Send a second SMS with the verification code to the same number. The GST Portal will send you the ARN on the registered email ID and mobile number of the taxpayer to inform you about the successful nil GST return filing.
Ans: An EVC is an alphanumeric ten-digit code that is used by users to authenticate themselves. The GST portal allows a user to validate their identity with a one-time password. A password will be sent to the registered phone number of the taxpayer, and the authorized signatory can proceed with the process using the password.
Ans: Digital Signature Certificate (DSC) is a secured way of digitally signing the documents on the GST portal. DSCs are issued by specified authorities who receive recommendations from the Ministry of Corporation Affairs. DSCs of Class 2 and 3 are the only ones accepted on the GST portal. Upon logging into the GST portal, the user must first register their DSC to validate they have a DSC.
Disclaimer
This article is solely for educational purposes. Navi doesn't take any responsibility for the information or claims made in the blog.
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