The fast growth of the Indian economy and the various measures taken by the government to encourage non-residents to engage in trade and business in India have resulted in an increase in transactions involving the supply of goods and services by non-residents in India. Such transactions come under the purview of the GST law of India. As per latest GSTR-5 Amendments, every non-resident supplier has to register with GST, pay taxes, and file returns as specified under the compliance rules of the country.
Non-resident suppliers are required to file returns in Form GSTR-5, giving the details of their inward and outward supplies, tax liability, and other information related to their businesses in India. The return gives a comprehensive picture of the financial activities of the non-resident taxpayer and ensures that all tax liabilities are cleared and GST guidelines are adhered to. Accurate and timely filing of GSTR-5 is important for a business as a compliance requirement to avoid penalties and other legal consequences and also to improve their business by building consumer trust and their reputation in the industry.
Amendments and revisions in GSTR-5
In spite of taking due care, errors sometimes happen while filing the returns. Though GSTR-5 cannot be modified or revised after it is filed, there is an option for amendment in the subsequent returns while filing, thus ensuring the submission of correct information to the tax authorities.
Possible Errors in GSTR-5 Filing
- Discrepancies in Reporting Supplies: There may be errors while uploading the invoice details, leading to inaccurate reporting of sales and purchases and errors in tax computation. Such errors can result in penalties and other consequences. This can be avoided by maintaining proper records of all the invoices and other documents pertaining to the transactions in a systematic and orderly manner.
- Incorrect Claiming of Input Tax Credit: Input tax credit is the credit that a supplier can claim on the tax that he pays on purchases made for the business against the tax liabilities on his sales, subject to certain conditions. One of the conditions is that the supplier should not be a non-resident supplier. In other words, non-resident suppliers are not eligible for input tax credit except for the import of goods eligible under GST. Often, taxpayers claim ineligible input tax credit in GSTR-5, resulting in their getting notices from the tax authorities.
- Mistakes in Calculation of Tax Liabilities: Mistakes in calculation of tax can happen because of incorrect tax rates, wrong inputs of taxable values, compensation CES, etc.
- Omission in Reporting Transactions: A common mistake in reporting is missing transactions. Sometimes some transactions are missed while reporting, leading to the wrong calculation of supplies and tax liability.
Steps to Rectify Errors in GSTR-5
Businesses can ensure compliance by making modifications to the errors in previous returns filed in the next return that is filed after the error is noticed.
Review the Original GSTR-5 Return: The first step is to review the previous return thoroughly for any errors or mismatches before the current return is submitted.
Upload the amendments in the tables provided: Separate tables have been provided in GSTR-5 for amendments to imports of goods, outward supplies, B2C (large and small invoices), and credit/debit notes for supplies to registered and unregistered persons, which have to be updated when any amendments need to be reported.
File the Correct Return: After the amendments pertaining to the previous returns are uploaded in the tables provided, the corrected return can be submitted for the current month in the GST portal.
Amendment details in GSTR-5
The taxpayer has to login to the GST portal with his valid user ID and password and navigate to the GSTR-5 page.
To report the amendment details, the following tables are provided in GSTR-5:
Table 4-Amended Import of Goods: In this table, the details of the amendments to the import of goods are entered.
Table 8A: Amendment to Outward Supplies: In this table, details of amendments to outward supplies to registered persons (including UIN) are entered.
Table 8A: Amendment B2C (Large Invoices): There is also provision in the table for entering the amendments to inter-state supplies to unregistered persons (large invoices).
Tables 9A, 9B: Amendment to B2C (small): In this table, details of amendments to outward supplies to unregistered persons are to be entered.
Table 8C: Amendment to Credit/Debit Notes (RD): In this table, details of amendments to credit or debit notes for supplies to registered persons are to be entered.
Table 8C: Amendment to Credit/Debit Notes (UNRD): In this table, there are details of amendments to credit or debit notes for supplies to unregistered persons.
After entering the details in the other tables as required and payment of tax, the liabilities are offset, and the file return option is enabled, where the taxpayer has to file the return of the current month after incorporating the amendments to the previous returns.
Benefits of Recent GSTR-5 Amendments
- Tax Liability: The tax liability of the taxpayer can be substantially affected by incorporating the amendments. The tax amount could increase or decrease depending on the type of error in the previous returns.
- Input Tax Credit: Inaccurate claims of ITC can affect the tax calculation. If the ITC on imports has been inadvertently omitted, it can affect the tax calculation and reduce the tax liability after the amendment incorporating the ITC. On the other hand, if an ineligible ITC is taken while calculating tax in the previous returns, after amendment, the tax liability could increase in the current return.
- Compliance: The amendment provides the scope for rectification of errors in previous returns, which in turn helps in ensuring compliance.
- Avoiding Penalties and Legal Consequences: Amendments help in avoiding penalties and other legal consequences due to incorrect filing of the GSTR-5.
- Transparency and Integrity: Amendments in GSTR-5 provide non-resident taxpayers the opportunity to maintain transparency and integrity in their returns and compliance, which in turn helps them to protect their reputation and build trust among their customers.
- Time and Cost Savings: Amendments provide taxpayers the opportunity to avoid penalties due to incorrect filing and also save time by avoiding reply notices, litigation, and other complications.
Accurate filing of GSTR-5 is crucial for non-resident taxpayers, not only for the taxpayers but also for the tax authorities, as it maintains the transparency and integrity of compliance. As all the details are accurate after amendments, the government is able to monitor the sales, purchases tax calculated, and also the applicable input tax credit claims. Accurate GST returns help in building accuracy and transparency in the tax system and help in the economic growth of the country.
Frequently Asked Questions
- What is the penalty for filing an incorrect GSTR-5?
Answer: The taxpayer may be liable for fines and other penalties depending on the kind of error and the taxpayer’s intention. The penalty for non-compliance in GST is Rs. 10000/- or 10% of the tax owed, whichever is higher, subject to a maximum of Rs. 25000/- when the error is genuine and not done intentionally with an intent to cheat.
- What is the validity period of registration in GST for a non-resident taxable person?
Answer: The certificate of registration issued to non-resident taxpayers after registration is valid for 90 days, unless a shorter duration is mentioned while applying for such registration. This certificate can be extended further for a period of 90 days by the concerned GST officer.
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