The Goods and Services Tax Act aimed to ease the burden of taxes by integrating multiple taxes into one comprehensive tax and ease compliance. In this system GST is applicable on the supply of all goods and services except the supply of certain items specified under the act. All businesses including non-resident suppliers are required to register in GST and follow the necessary compliance procedures.
Registration under GST is compulsory for non-resident suppliers. There are a separate set of provisions and procedures for registration, filing returns, tax, refunds, etc., for domestic and non-resident taxpayers. But for all tax payers, filing of GST returns and payment of tax within the prescribed time limit is a crucial part of the compliance procedure. In case of non-filing, late or incorrect filing, additional amount as late fees, interest and penalty will be required to be paid. Here we discuss in detail the consequences for non-compliance in GSTR-5, which is the mandatory return that is required to be filed by non-resident taxpayers in India.
Non-Resident Taxable Persons (NRTPs)
As per GST Law (Section 2(77), a non-resident taxable person means any person who occasionally undertakes transactions involving supply of goods or services or both, whether as principal or agent, and who does not have a permanent place of business or residence in India. Non-resident taxable persons who undertake business in India for short periods need to compulsorily obtain registration and comply with the rules and regulation in respect of filing of returns and payment of taxes within the time limit specified under the law.
Importance of GSTR-5 for Non-Resident Taxpayers
GSTR-5 is a mandatory return that all non-resident taxpayers registered under GST are required to file. The return consists of details of outward and inward supplies made by the non-resident taxpayer during the tax period. When the NRTP registers on the GST portal, the user id and password are generated. The taxpayer has to login and file their returns, pay taxes online on the portal. Various facilities are also provided on the portal for the taxpayer like viewing the status of his registration, and can also view and reply to the notices and orders sent by the tax authorities. Payment of all tax liabilities including tax, late fees, interest and any other penalties due have to be cleared before filing GSTR-5.
Due Dates for Filing GSTR-5
GSTR-5 has to be filed by the non-resident taxpayer on or before the 20th of the month succeeding the particular tax period, or within seven days after the end of the validity period of registration whichever is earlier.
Also check: Filing Frequency and GSTR-5 Due Date
Late Fees and other Consequences of Non-Compliance in GSTR-5
The late filing or non-filing of GSTR-5 can result in the following consequences as per GST rules:
- Late Fee: If the GSTR returns are not filed within the due date, a late fee of Rs.50/- per day and Rs.20/- per day for nil returns, subject to a maximum of Rs.5000/-, is applicable.
- Interest on Delayed Payment: In case of delayed payment of the tax liabilities, Interest is charged at the rate of 18% per annum on the outstanding tax amount. The interest is calculated on the amount of outstanding tax, for the number of days from the due date of filing up to the date it is filed.
- Suspension or Cancellation of Registration: Continuous non-compliance with GST rules can lead to suspension or cancellation of GST registration of the taxpayer, resulting in inability to conduct business or access any records on the portal.
- Legal Proceedings: Deliberate tax evasion, withholding or giving wrong information, fraudulent activities can lead to legal proceedings.
- Seizure and Confiscation of Goods: In extreme cases like non-registration, failure to pay GST, incorrect filing of returns, uploading fraudulent invoices, evading taxes may lead to seizure and confiscation of goods.
Therefore, it is very important for businesses to adhere to GST rules, file returns within the due dates and fulfill their tax obligations to avoid these penalties and consequences.
Related Blog: Amendments and Revisions in GSTR-5
Steps to Avoid Non-Compliance
- Ensure Timely and Accurate Filing of Returns
Taxpayers need to ensure timely and accurate filing of GSTR-5 and follow the rules and practices to avoid non-compliance
- Maintain Proper Records
Taxpayers need to maintain accurate records of sales and purchases, reconcile regularly, and use automated software for accurate computation of tax and file error-free returns.
- Regular Updating with GST Laws
It is crucial for taxpayers to stay updated with the latest GST rules and regulations, by regularly stay informed about the notifications, circulars and advisories issued by the GST authorities.
- Note and Incorporate Changes in Rules
The taxpayers need to regularly note and incorporate the changes in tax rates, exemptions, ITC provisions, and other filing requirements to ensure timely and accurate compliance and reduce the risk of penalties and other consequences of non-compliance.
- Conduct Regular Internal Audit
Internal audits help to identify any discrepancies or issues in the records, which makes rectification of errors easy. Rectification of inconsistencies can help to file accurate returns on time.
- Diarize the Due Dates
Another important tool that can be used to avoid late and non-filing of returns on time is to diarize the due dates and set reminders so that inadvertent missing of filing can be avoided.
Seek Professional Advice
When unsure and in doubt, it is safe to seek the advice of professionals to avoid non-compliance. Our expert advisers at CaptainBiz can provide guidance on all matters related to GSTR-5 filing to help ensure accurate and stress-free compliance and minimize the risk of consequences on non-compliance.
Frequently Asked Questions
- How can a taxpayer identify non-compliance?
Answer: Non-compliance with GST can be identified through various means like regular internal audits, data analytics and other tools available today. Technology can be used wisely by taxpayers to ensure timely and accurate filing of GST returns and avoid non-compliance.
- How does a non-resident taxpayer make payment of his tax liabilities in GSTR-5?
Answer: Non-resident taxpayers are required to pay advance tax, that is a rough estimate of tax, along with interest, late fees and other penalties, at the time of registration. This amount is utilized for the tax liabilities at the time of filing GSTR-5. Any difference amount shown in the return has to be paid before filing the return.
- How does the electronic cash ledger provided on the GST portal help taxpayers?
Answer: The electronic cash ledger provided on the portal is very useful for the taxpayer as it shows the amount of deposit which he has deposited at the time of registration, eligible input tax credit, the tax paid and difference if any in the tax liabilities.
Non-compliance in GSTR-5 can lead to late fees, interest and other penalties for the non-resident taxpayer. Proper maintenance of records, regular audit and reconciliation, being updated with the rules and procedures by monitoring the notifications, circulars and advisories issued by the GST authorities can ensure timely filing and payment of taxes. Seeking the help of professionals and use of technology can help taxpayers stay compliant and avoid unpleasant consequences of non-compliance.