As quoted by Albert Einstein “Any fool can know,the point is to understand.”
To have a better understanding of GSTR-2,we need to get familiar with the term GSTR first.
What is GSTR?
GSTR or Goods and services tax return are the documents containing details of income which a taxpayer is required to file with the tax administrative authorities. This is hence used by tax authorities to calculate tax liability.Under GST, a registered dealer has to file GST returns that includes:
• Output GST (On sales)
• Input tax credit (GST paid on purchases)
To file GST returns, GST compliant sales and purchase invoices are required.
What is GSTR-2?
GSTR-2 is one of the types of GSTR which contains the details of the purchases transactions of the registered dealer for a month.It also includes purchases on which reverse charge applies.
The GSTR-2 filed by a registered dealer is used by the government to check with the seller’s GSTR-1 for buyer-seller reconciliation which comes under GSTR-3.
Once the suppliers have filled up their information of sales made during a tax month in Form GSTR-1, it is now the task of recipients to file their receipts of goods or services in Form GSTR-2. This form is a culmination of all the details made by all the suppliers and is available for validation for the recipients.
It has to be filed by the 15th of the next month, i.e. 5 days after the filing of GSTR-1.
Since the details of the suppliers’ data are already available, this form is auto-populated from such details. The dealers will have to approve or amend the transactions one by one to get input tax credit eligibility.
What are to effects of being late or failure at filling GSTR-2?
The government has set up the new tax regime to restrain any kind of malpractices in relation to taxation.To build up a fair and understandable means of taxation,many reforms have been implemented and those who cause any discrepancies are liable to pay interests and late fees which is 18% per annum.
Not just discrepancies but the late payment of the returns is also considered misconduct and the dealer is liable to pay heavy penalties and fines.It has to be calculated by the tax payer on the amount of outstanding tax to be paid. Time period will be from the next day of filing (16th of the month) to the date of payment.
Late fee is Rs. 100 per day per Act. So it is 100 under CGST & 100 under SGST. Total will be Rs. 200/day. Maximum is Rs. 5,000. Although,there is no late fee on IGST.
Who has to fill GSTR-2?
One of the many queries is on whom the GSTR-2 is applicable to file. Every registered person is required to file GSTR-2 irrespective of whether there are any transactions during the month or not.
However, these registered persons do not have to file GSTR-2:
• Input Service Distributors
• Composition Dealers
• Non-resident taxable person
• Persons liable to collect TCS
• Persons liable to deduct TDS
• Suppliers of online information and database access or retrieval services (OIDAR), who have to pay tax themselves (as per Section 14 of the IGST Act).
What needs to be filled in GSTR-2?
This is a much-detailed form when compared to GSTR-1. Let’s have a look at the contents of the form.
• Name and address of the dealer
• 15-digit GSTIN of the dealer
• The return filing period – the month and the year for which the return is being filed.
• Details of all the incoming materials and services received by the dealer
• Changes made to details of incoming materials from previous periods
• Details of all imports made of capital goods or goods – since imports are considered as an inter-state movement of goods, accordingly IGST will be charged in this case.
• Changes made to the details of imports made during the previous periods
• Details of services received from persons resident outside India – This field relates to import of services. GST has to be paid on a reverse charge basis.
• Changes made to the details of services received from persons resident outside India of previous periods
• Details of debit notes or credit notes raised during the tax period
• Details of changes made to the debit or credit notes of previous periods
• Details of materials received from unregistered persons during the tax month
• Details of input tax credit received from an Input Service Distributor
• Details of credits arising out of tax deducted at source
• Details of credits arising out of tax credited at source
• Details of input tax credit received against an invoice
• Details of output tax liability arising due to reverse charge, even though no invoice was received
• Any amendments made to the above fields
• Details of tax paid
• Details of input tax credit reversals
• Amendments to the details of input tax credit reversals
Payment of the taxes has been made hassle free for the welfare of the people of the nation.Same is the case with the filling of the returns which can be done by following simple steps on the GST portal. All you need are the invoices of sales and purchases.
The government has taken up significant measure like online live training for filling up the returns and all the guidance anyone requires.