GST

GSTR-2: Return Filing, Format, Eligibility and Rules

The advent of GST has significantly simplified the tax filing procedure, rendering it more effortless than before. The digitization approach introduced in the GST Regime has enhanced the tax revenue collection by the government. At the same time, it has also made it easier for nimble taxpayers to file their returns by simplifying tax computation for them and thereby diminishing the likelihood of errors. To further streamline the return filing process, the authorities have introduced a range of forms to be filed by taxpayers as per their eligibility. One such form is the GSTR-2 Form, designed for taxpayers to provide an overview of the inward purchases of goods and services. However, this form has been suspended since September 2017 due to the amendments made to the GST Law. In fact, GSTR-3B has been introduced to replace GSTR-2 and GSTR-3. In this article, we will delve into the multifaceted nature of the GSTR-2 Form.

What is GSTR-2?

Before delving into the procedural details, we should first understand what GSTR-2 is. Every registered taxpayer, other than those exempted, is required to give the details of inward supplies of goods and services. These details were furnished by filing the Form GSTR-2.

GSTR-2 gives a comprehensive overview of the Inward Supply. In simpler words, it is the overview of the purchases made during a specific tax period. Each registered taxpayer is obligated to fill out GSTR-2, and this data provided by the taxpayer is then utilized by the government to cross-check with the seller’s GSTR-1 data for the purpose of buyer-seller reconciliation.

Buyer-Seller Reconciliation

Reconciliation between buyers and sellers is also referred to as invoice matching. It is a procedure wherein the taxable sales entered by the seller are aligned with the taxable sales entered by the buyer. It is an essential process as the eligibility for Input Tax Credit (ITC) on purchases depends upon the correspondence of the details of the purchase submitted by the buyer in GSTR-2 with the details of the sales submitted by the seller in GSTR-1. Currently, this reconciliation is required to be done between GSTR-2B and GSTR-3B.

Significance of GSTR-2

Prior to August 2017, all taxpayers who were registered under the GST Regime were obligated to furnish particulars of their inward supplies, i.e. purchases and Input Tax Credit (ITC), by filing Form GSTR-2. Thus, GSTR-2 is comprised of a comprehensive record of a registered taxpayer’s purchase transactions for a given month, including the purchases on which reverse charge applies. However, since September 2017, GSTR-2 has been made inoperative, and it has lost its importance. As an alternative, now the registered taxpayers are required to declare their eligible ITC using Form GSTR-3B.

Due Date for Filing GSTR-2

As per the rules and regulations, the due date for filing GSTR-2 was the 15^th of the subsequent month. Further, a grace period of 5 days existed between the filing of GSTR-1 and GSTR-2 to rectify any errors and inconsistencies.

Impact of Delay in Filing GSTR-2

Failure to file the GSTR-2 return within the due date used to have implications on the subsequent return, i.e. due to the failure, the form of GSTR-3 could not be submitted. This resulted in a delay in filing the GST Returns, which led to fines and penalties. However, this form is no longer operational.

Penalty for delay in filing GSTR-2

If there was a delay in filing GSTR-2, then the taxpayer would be liable to pay interest and late fees, which were as follows:

Aspect	Details
Interest Rate	18% per annum
Interest Calculation	Calculated by the taxpayer on the outstanding amount
Time Period	From the day after the due date until the date of payment
Late Fee	Rs. 100/day under CGSTRs. 100/day under SGST Total=Rs. 200/day
Maximum Late Fee	Late fee is subject to Rs. 5000
Late fee for IGST	No Late Fee

Who was required to file GSTR-2?

Every registered taxpayer was mandated to file GSTR-2, irrespective of whether any transactions occurred during the particular month or not.

However, certain registered entities were exempted from the mandate of filing the GSTR-2, which were as follows:

• Input Service Distributors
• Composition Dealers
• Non-Resident Taxable Persons
• Individuals liable for Tax Collection at Source (TCS)
• Individuals liable for Tax Deduction at Source (TDS)
• Suppliers of online information and database access or retrieval services (OIDAR), who are directly liable to pay tax themselves, in accordance with Section 14 of the IGST Act.

Prerequisites for Filing GSTR-2

In order to fill the GSTR-2, there are certain conditions that must be complied with, such as:

1. The taxpayer must be registered under the GST Regime and must have a 15-digit long PAN-based GSTIN.
2. The registered taxpayer must not be a composition vendor and must not have a Unique Identification Number (UIN).
3. The taxpayer must not be a Non-Resident Foreign Taxpayer registered under GST.

Content of GSTR-2

The information encompassed in GSTR-2 pertaining to inward supplies of goods and services included:

• Comprehensive details of invoices received from registered entities for both inter-state and intra-state transactions, which were subject to reverse charge.
• Details of import of goods and services procured.
• Record of debit and credit notes received from suppliers.
• A summary of inward supplies, categorized by Harmonized System of Nomenclature (HSN) codes.
• Details of Input Service Distributor (ISD) received and Input Tax Credit (ITC) Reversal.

The information provided by the supplier was accessible in Part A of the form GSTR-2A to the recipient, and these particulars were open for verification as soon as the supplier submitted form GSTR-1. The recipient was, however, allowed to accept, reject, or modify the information received as pending by the 15^th of the same month.

Details to be included in GSTR-2

The GSTR-2 Form is categorized into various headings; the details of these are provided below:

Heading	Details to be provided
GSTN	The taxpayer is required to provide his Pan-based 15-digit Identification Number.
Name of the taxpayer	The taxpayer is required to enter the legal name or the trade name, if any.
Inward Supplies from Registered Taxable Persons, other than supplies attracting reverse charge	The purchases made by the registered taxpayer are auto-filled by taking up the details mentioned by the respective registered seller in GSTR-1, but you, as a taxpayer, are allowed to accept, reject, or modify these details provided. This also contains details pertaining to the GST Rate and the amount of GST.
Inward Supplies on which tax is to be paid on reverse charge	In case the supplier is not in the same locale as you, you are required to provide the place of supply (POS) from where you have received the goods and services.Here, the details of the inward supplies received from a registered supplier that attract reverse charges may be provided.The details of the inward supplies procured from an unregistered supplier, which attract a reverse charge, may also be provided here.]The details of the services imported from the vendors from overseas may also be entered here.
Inputs received from the Overseas or from Special Economic Zones units (SEZ) in a Bill of Entry	The details pertaining to the capital goods that have been imported from outside India or/and supplied by an SAZ may be reported here rate-wise.The recipient of the goods and services is required to furnish the Bill of Entry Information, which must bear the port code and bill of entry number.
Amendments made to the information regarding the inward supplies furnished in returns for earlier tax periods	The taxpayer may use this table to correct or update the information pertaining to details of inward supplies that have already been recorded during earlier tax months, the information pertaining to the import of goods or goods received from the Special Economic Zone1, or the details relating to original debit notes and credit notes.
Supplies received from the composite taxpayer and other exempt/Nil rated/Non-GST supplies received	Here, the details relating to the Inter-State and Intra-State purchases made may be furnished along with the details of Exempt Supply, Rated Supply, and Non-GST Supply.
Input Service Distributor (ISD) Credit Received	The Input Tax Credit (ITC) details received from a registered Input Service Distributor (ISD), along with the details of the invoice received by you and credit notes issued by your Input Service Distributor (ISD), are to be entered here.
TDS and TCS Credits received	Part A requires the details of the tax deducted at source by your respective customer while making the payment in order for you to claim a tax credit against the same. In case the customer has already filled out Form GSTR-7, those details will be auto-filled here.Part B will be auto-filled when the E-commerce Operator, who sells goods and services online on your behalf, will fill out Form GSTR-8.
Consolidated Statement of Advances paid	In case of any tax paid earlier but no invoice was raised until now, those details may be furnished here. Details of any advance paid for reverse charge supplies received in the current tax period may be furnished here.
Input Tax Credit Reversal / Reclaim	Here, the taxpayer is required to furnish the details of the Input Tax Credit that cannot be claimed in this particular month due to the rules; for instance, ITC cannot be claimed on an invoice for goods and services that have not been used for business purposes or say you have failed to make the payment to your supplier within 180 days of the date of issue of the tax invoice, as mandated by the GST rules.
Addition and discounting of the amount in output tax for disparity and other reasons	This table relates to the additional tax liability that may arise. In case you have made an excess claim for Input Tax Credit (ITC)In case you have furnished any incorrect information regarding Credit Notes. In case there has been a mismatch of the invoices or debit notes.In case there lies a negative tax liability from previous tax periods, which is to be adjusted.
HSN summary of inward supplies	You are required to provide a summary of the goods purchased by you on the basis of HSN classification.

It is noteworthy that these 13 Tables deal with various comprehensive aspects; not all businesses are mandated to provide these details.

Conclusion

GSTR-2 is an important document within the GST framework, as it especially gives a comprehensive overview of the Inward Supply, i.e. the overview of the purchases made during a specific tax period. It simplifies the taxation process and streamlines the compliances for these composite taxpayers. Throughout this article, we have delved into the various aspects of GSTR-2, its structure, and other key components that must be kept in mind for these taxpayers registered under GST. However, if you are still caught in the web of intricate web taxation, you may take expert advice or hire professional help.

If you wish to know more regarding GST Returns, then you may contact Enterslice.

FAQs

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