The Goods and Services Tax regime in India has mandated several returns for taxpayers to report their transaction details, discharge liabilities, and claim eligible credits periodically. One such form, GSTR-5, caters specifically to foreign players registered in India as non-resident taxable persons to declare their outward taxable supply details from India.
GSTR-5 comprises two parts, with Part 2 focusing specifically on the consolidation of invoice-level supply data along with linked tax payments for a tax period.
Components And Detailed Breakdown Of GSTR-5 Part 2 In GST:
GSTR-5 Part 2 comprises three key sections to consolidate various outward supply details and associated tax payments for the tax period:
A. Table 6: Details Of Outward Supplies And Amendments
This section forms the core of compliance requirements from the perspective of transaction-level granular reporting mandates for NRTPs. Every single outward invoice, export sale, debit or credit note, and amendments thereto provided to GST-registered Indian recipients have to be declared individually here.
For each taxable supply, key details like customer GSTIN, unique invoice series number, date of issue, associated order number, state of place of supply, invoice value, applicable tax rate, HSN code, item description, quantity sold, taxes billed, etc. need to be furnished. Any subsequent amendments, additions, or deletions of documents concerning that supply must also be reflected appropriately in this table.
Such extensive documentation will permit seamless invoice matching at the recipients’ end subsequently for ITC self-declarations while taking adequate care to limit reporting duplicity. Appropriate item-wise classification applying the right tax rate also gets enabled through this section.
This section captures the invoice-level granular information concerning all taxable outward supplies:
- Table 6 of GSTR-5 Part 2 reports document-level details of invoices and debit or credit notes concerning B2B supplies.
- Each taxable supply transaction reflecting GSTIN, supply type, document type, rate, and value needs reporting.
- Any amendments to previously reported supplies are also featured here.
- Key totaling elements captured are the taxable value, integrated tax, central tax, state tax, and cess.
|Type of Supply
|B2B, Export with payment, Export without payment, etc.
|Inter-state or Intrastate
|Tax Invoice, Debit Note, Credit note, and Supplementary invoice
|For each supply: GSTIN, invoice number, date, place of supply, taxable value, tax rate, and amount; HSN
|Amendments To Reported Supplies
|Any additions, amendments, or deletions of supplies declared in earlier tax periods
B. Table 7 Of GSTR-5 Part 2:
This section aims to report a period-level consolidation of those supplies that either don’t entail any GST taxability by statute (like zero-rated exports) or merit complete exemptions owing to certain non-taxable product categories. Such aggregate values get bifurcated across:
- The exempted supply total gets further divided into inter-state and intrastate amounts.
- Covers the consolidation of nil-rated, exempted, and non-GST outward supplies.
- Capturing such data enables deriving a holistic picture of the overall trade by NRTPs with Indian entities.
Table 7 aims to consolidate the remaining categories of supplies—nil-rated, fully exempted, and non-GST supplies—made to Indian recipients at an aggregate value level for each:
- Supplies qualifying as nil-rated attract 0% tax, like exports or SEZ sales.
- The exempted category covers those goods and services exempt fully by statute, like certain healthcare products.
- Non-GST Outward supplies refer to petrol and alcohol, which fall outside the GST taxability ambit currently.
C. Table 8 Of GSTR-5 Part 2:
The last section focuses on declaring a summary of GST payments already discharged by NRTPs corresponding to the reportable outward taxable supplies. It requires tabulating month-wise payment references made via digitally generated GST PMT-06 challans separately for:
- Integrated tax
- Central tax
- State tax
- Cess amount
The cumulative monthly paid values captured here reflect the corresponding tax component values billed and managed through Table 6. Any mismatches in tax computations between Table 6 and Table 8 would be flagged by the systems to the suppliers for reconciliation before filing.
Compliance Requirements For GSTR-5 Part 2:
Certain pivotal compliance requirements must be addressed by NRTPs in their GSTR-5 Part 2 filings:
- Quarterly reporting, unlike monthly schedules for regular registered dealers, necessitates collating three months of invoice data.
- All amendments, additions, or deletions of documents concerning previously declared supplies must also be captured, requiring past-period tracking.
- The tax payment values across Central, State, Integrated, and Cess heads should seamlessly reconcile with taxes billed cumulatively across the corresponding taxable invoice supplies. Any mismatches must be explained.
- HSN-wise summary classification of invoices merits monitoring for turnover greater than Rs 1.5 crore in a fiscal year to report correct 4-digit HSN codes.
- Only input tax credits on the import of goods and services qualify for GSTR-5. Other input taxes need to be disallowed via the prescribed calculations.
Also Read: Best Practices for GSTR-5 Compliance
Strategies For Accurate Documentation In GSTR-5, Part 2:
As GSTR-5 Part 2 necessitates detailed invoice-level reporting across amended documents, nil-rated registers, payment reconciliations, etc. every quarter, staggering volumes of data require management. Hence, a robust, fool-proof documentation approach right from the onset holds the key to compliance success.
Tax Invoice Creation:
As tax invoices form the primordial source for all reporting, ensuring comprehensive, accurate capture of details like place of supply, customer GSTIN, product classification, quantity, rate, and taxes at the billing stage is pivotal. Invoice numbering sequences must be centralized across accounting systems and billing terminals. Mandating invoice approvals by the finance team aids compliance.
Given staggered quarterly reporting deadlines, instead of manual interventions, script-based automated reconciliation of invoices and taxes extracted into GSTN-provided standard templates every month will aid reliability. Access restrictions preventing edits by field staff after extractions further reinforce integrity.
Considering amended supplies of prior tax periods also merit inclusion, secure central archival of signed e-invoicing JSON files beyond the mandatory 5 years is vital. Equal focus must remain on exported shipping bills and foreign currency receipts.
Sample-based self-audits before final submissions help verify aspects like place of supply rules, appropriate classification of goods or services affecting rates, calculation of eligible credits, reversal amounts, etc. Duplicate reporting across successive tax periods requires monitoring.
Legal Aspects Concerning GSTR-5, Part 2:
Certain key legal guidelines surround the GSTR-5 Part 2 filing by NRTPs, such as:
- Annual aggregate turnover less than Rs. 20 lakhs is exempt from the mandatory registration requirement itself.
- Continuous non-filing of GSTR-5 for 6 months can potentially lead to GST registration cancellation.
- Any delayed payment of taxes beyond filing due dates attracts 18% interest per year with mandatory late fee payments.
- Invoice reporting deviations in the supplier’s GSTR-5 vs. recipient’s records could initiate complementary clarifications from tax officers.
Maximizing Benefits Of GSTR-5 Part 2 Adherence:
For overseas businesses registered as NRTPs in India, ensuring accuracy and transparency around GSTR-5 Part 2 compliances directly unlocks several short- and long-term advantages:
Reduced Working Capital Costs:
Timely reconciliation and reporting of output GST liabilities in the quarterly GSTR-5 Part 2 matched with corresponding payments allow optimal working capital utilization. Any delayed reconciliations owing to inaccurate documentation or missing invoices result in delayed filing and a consequent 18% interest burden until actual payment.
Swifter Dispute Resolution:
One pivotal perk includes rapid clarifications with minimum penalties during any invoice mismatches between the common transactions reported differently in supplier GSTR-5 Part 2 and recipient returns. Readily available transaction-level granular data aids in faster clarification responses.
Healthy Vendor Relationships:
Indian customer partners like distributors often accord preference to reliable overseas suppliers demonstrating serious tax compliance. Displaying commitment to local regulations earns long-term goodwill, driving business volumes.
Enhanced Supplier Rating:
Higher supplier ratings directly correlate with consistent, accurate adherence across filings like GSTR-5 Part 2. As certain statutory incentives get linked to top ratings, it accentuates credibility.
Part 2 of GSTR-5 forms the core of outward supply reporting responsibility for NRTPs. By instituting strong documentation, integrating appropriate checks, and addressing legal nuances upfront, NRTPs can master GSTR-5 Part 2 compliances for mutually smoother GST compliance experiences.
Frequently Asked Questions:
1. How will refunds be claimed from GSTR-5 Part 2?
A refund of excess tax paid can be claimed by filing FORM GST RFD-01A along with supporting documents.
2. Why is GSTR-5 mandatory?
GSTR-5 is pivotal because it contains all the business details for non-residents, including their sales and purchases. The information from GSTR-5 is used in GSTR-2, which is for the buyers.
3. When is GSTR-5 due?
According to the GST Act, GSTR-5 has to be filed by the 20th of the following month. For instance, the return for October 2018 would be due on November 20th, 2018.
4. Can a representative file GSTR-5 Part 2?
Yes, an authorized representative can file GSTR-5 Part 2 on behalf of the non-resident taxpayer.
5. Is e-signing of GSTR-5 Part 2 mandatory?
Yes, the digital signature of the authorized signatory is mandatory for the online filing of GSTR-5 Part 2.
6. How will ITC be claimed from GSTR-5 Part 2?
ITC from GSTR-5 Part 2 will be auto-populated in the recipient’s GSTR-2A and can be claimed in GSTR-3B.
7. Is it possible to file GSTR-5 Part 2 quarterly?
No, GSTR-5 Part 2 has to be filed monthly based on the transactions for that particular month.
8. What is the validity period of the login credentials for GSTR-5 Part 2 filing?
The login credentials can be used for 3 months from the date of generation. New credentials need to be requested after expiration.
9. Can corrections be made to a submitted GSTR-5 Part 2?
Yes, corrections can be made by filing a revised return before the due date of the annual return.
10. Can revisions be made to GSTR-5 Part 2 filed for previous tax periods?
No, only the return for the current tax period can be revised. Past-period returns cannot be altered.