The new Goods and Services Tax (GST) rules bring new reporting requirements into play. Under the new rules, all registered businesses have to submit GST returns. But the exact requirements vary based on the volume of business you do, the structure of your business, and a few other factors.
Do You Need to Register Your Business?
As a general rule of thumb, if you’re a sole proprietor, you don’t need to register your business, but if your business is a partnership firm, a limited liability partnership, or a private or public company, you typically need to register. That said, general business registration is different from GST registration. As of July 2017, if your annual turnover exceeds ₹20 lakh, you need to have a GST registration, regardless of your business structure. In the northeastern states, the threshold is ₹10 lakh.
GST Registration Numbers
Once you register for the GST, you receive a 15-digit code. Hold on to this number because you need it for your returns. The code consists of a two-digit state code, a 10-digit permanent account number, and three additional numbers.
Filing Monthly Returns
Once your business is registered, you have to file three monthly returns, but luckily, their due dates are staggered. The first return includes the following details:
GST identification number
Dates related to the return
GST taxes you paid
The total of advances received for future sales
- A list of any changes made to your outward sales invoices
This return is due 10 days after the end of the tax period in question. Typically, that means it’s due the 10th of the following month.
The second monthly GST return isn’t due until 15 days after the tax period, and you don’t have to report any details. Rather, this form comes to you already filled out, and it includes details related to purchases you’ve made to your vendors as well as any taxes you’ve paid. You simply need to look over this form and correct any inaccuracies.
Finally, the third monthly GST form takes the details from the first and second returns and assesses your total tax liability. As an example, if the first return indicates that you owe ₹500 but the second return says you deserve an input credit of ₹50, the third return will assess your tax liability at ₹450. Input credits refer to GST you have paid to other businesses. Note that these returns are not mailed to you. Instead, you access them on the GST portal.
Filing Quarterly GST Returns
If your business is too small to cope with monthly returns, you can opt for the composition scheme. To qualify, you can only sell goods. You can’t be a service provider such as a lawyer, a consultant, or a plumber. Your annual sales must also be less than ₹50 lakh. Under these rules, you only have to file a quarterly GST return, but unfortunately, you can’t claim input credits. Because of that, you may want to consider monthly returns, even if they’re not required in your situation.
If you take this route, you file a GSTR-4, which needs to detail your sales and the GST paid in the last quarter. This return is due on the 18th day after the end of the quarter.
To get help with your GST accounting, consider a cloud-based accounting system such as QuickBooks that can help you set rates, track sales, and handle a variety of other accounting tasks.