GSTR2: To File Or Not To File?


The 23rd meeting of the GST council has a lot of people excited, given a large number of GST tax rates were reduced, a flat 5% rate has been set for most restaurants, etc.  While these are exciting to the end consumer, what is much more interesting and impactful to businesses are the new return filing dates and the extension of the GSTR3B form. Those changes command that certain decisions be made by companies – decisions that may seem simple on the surface but are more complex than many realize. 

First, let’s summarize the relevant recommendations made in the latest GST council meeting:

- Submission of the interim return form GSTR-3B extended through March, 2018, so for all of fiscal year 2017.   

- Each tax payer is to submit their GSTR-1 Returns on a new schedule.  That schedule is quarterly for tax payers under 1.5 crore turnover, and monthly for those over that limit. 

- GSTR-2 and 3 returns filing deadline will follow a separate, yet to be announced schedule, independent of the GSTR-1 filings. 

On the surface, the actions required by tax paying companies may seem straight forward:

- Keep submitting my estimated tax on the GSTR-3B by the 20th of each month following the period.

- Wait until the dates above approach to file my GSTR-1 return for each month.

- File my GSTR-2 and GSTR-3 returns when the government announces the new schedule.

With prior GST deadline extensions, tax payers had little option but to wait because the GSTN network simply was not ready to accept those returns.   This is not true now.  It is currently possible to file GSTR-2 returns, both through the government portal and via ASP solutions like Avalara’ TrustFile GST. This means that it is technically feasible for a company to file their GSTR-2 returns in advance of the deadlines to be announced.

Why companies should file their GSTR 2 now

·         Everyone will eventually be required to file a GSTR-2 and GSTR-3.  While the government has deferred late penalties for GST-3B filers to date, they have not deferred any interest penalties.  This means that if the tax estimated on GSTR-3B is less than what is finally determined on the final GSTR-3 for that period, then interest will have to paid on the difference.  

·         Once the deadline for a GSTR-1 has passed and all your counterparties have filed that return, there is nothing preventing you from seeing those results on your GSTR-2A report and processing your GSTR-2 return.  For already filed GSTR-3B returns, this will confirm the credits and tax paid on those interim returns.  If you missed out on liability or overstated your input tax credit, you can include those corrections in sections 3.x and 4 of the very next GSTR-3B to be filed, thus stopping the accumulation of interest penalties. 

·         For GSTR-3B returns yet to be filed, the very best way to determine what to report on those returns is to upload your Sales and Purchase transactions into a fully functional ASP returns processing solution like TrustFile GST.  That tool can then use those details to provide a much more accurate calculation for your GSTR-3B interim returns.

·         Getting your GSTR-2 data uploaded to the GSTN as soon as possible following the corresponding GSTR-1 deadlines means you can put prior returns cycles behind you sooner rather than later.   The value of this should not be discounted, especially for companies with many monthly sales and purchase invoices.  Again, a good ASP solution will allow you to easily manage multiple months’ data in parallel and provide visibility of your accumulating tax debts and credits across those periods.   This will be key to being able to confidently close the books on prior months.

·         Finally, one should not take the recent recommendations as a reason to relax.  The GSTR-1 returns for August, September, and October are all due before end of year, which at the time of this writing is only 6 weeks away.  That is not a large amount of time to process what for some is a small mountain of sales and purchase invoices. 

Those companies that actively manage their GST data from now through this transitional period by using proper tools such as Avalara TrustFile GST will spend less on penalties and be able to claim more credit earlier.   Do not wait for an arbitrary deadline to be announced.    Get ahead of the GST curve, establish your claimed ITC balances early, and enjoy the improved working capital cash flow and compliance confidence that results.

Avalara is an experienced application service provider (ASP) and partner of authorized GST Suvidha Providers (GSPs). To understand how our cloud-based application Avalara TrustFile GST can help you with automated data reconciliation and file GSTR 1 to 9, contact us through