Since the implementation of the Goods and Services Tax in 2017, businesses across India have had to adapt to a host of changes. They were also introduced to an array of different forms, each serving a specific purpose under the GST framework. GSTR 2 is one such form. Thus, when running a business, it is essential to know about this document and its importance for an enterprise.
In this article
What is GSTR 2?
Every business in India registered under the Goods and Services Tax needs to file GSTR 2 monthly. It notes the purchases that an enterprise has made in a particular month. GSTR 2 contains invoice details of all supplies it has received or all purchase transactions made, including those that invite reverse charges.
What is the Relevance of GSTR 2A with GSTR 2?
Businesspersons can refer to GSTR 2A when filing GSTR 2. The former is an auto-generated document available to every registered enterprise. It’s based on information gathered from GSTR 1 and 5, which sellers file detailing their sales.
Taxpayers can also modify the information presented in GSTR 2A if it is discrepant. Following that, its sellers will receive a notification concerning the amendment made. Thereby, such sellers need to rectify any mismatching information, if legitimate.
GSTR 1 & 2 must agree. If the details are inconsistent, such a business cannot claim Input Tax Credit (ITC) benefits on its purchases.
Who is Eligible to File GSTR 2?
As mentioned earlier, every enterprise registered under GST should file this document. Only the following persons do not need to do so –
- Composition dealers
- Non-resident taxable entities
- Input Service Distributors
- Entities that deduct TDS
- Persons that collect TCS
- Online Information and Database Access or Retrieval Services (OIDAR) suppliers
What Preconditions to Ensure When Filing GSTR 2?
Taxpayers need to ensure these following prerequisites when submitting this document on the GST portal –
- They should be registered under GST.
- Businesspersons need to verify details mentioned in GSTR 2A.
- It’s essential to keep in handy invoices regarding all purchase transactions, be it intra-state or inter-state. It is also necessary to ensure detailed invoices of purchases exempt from GST or involving supplies on which GST is not applicable.
- Taxpayers should verify their identity through either OTP, which one will receive on their registered phone number, a digital signature, or Aadhaar card.
How to File GSTR 2?
This document contains 13 headings in total, which a taxpayer needs to fill out when filing GSTR 2. These are discussed below –
1. GSTIN – Here, one needs to fill out their business’s 15-digit Goods and Services Taxpayer Identification Number. GSTIN is a unique number that is allotted to each relevant entity, once they are registered under GST.
2. Taxpayer’s name – It is meant for the business’s legal name and its trade name if any.
3. A registered taxable individual’s Inward Supplies barring those supplies that attract a reverse charge – It contains invoice details of all purchase transactions and inward supplies under this heading, apart from the ones that invite a reverse charge. This heading is auto-populated from GSTR 2A.
4. Inward supplies on which tax is to be paid on reverse charge – It shall contain invoice details of all purchase transactions on which an enterprise has paid tax directly to the government. Its format of presentation includes –
- Inward supplies received from a registered supplier (attracting reverse charge)
- Inward supplies received from an unregistered supplier
- Import of services
5. Capital goods and inputs received from SEZ units or overseas on a bill of entry – During GSTR 2 filing, taxpayers should fill up the following section with rate-wise information of all imports made in a tax period.
6. Amendments to information regarding inward supplies that were supplied in returns for previous periods of taxation – A taxpayer can rectify any error in GSTR 2 from a previous tax period in this section.
7. Supplies availed from composition taxable persons, and other GST supplies received that are exempt/nil rated – It shall be furnished with details of inter- and intra-state purchases relating to the mentioned purchase transactions or entity.
8. ISD credit – It contains information regarding ITC that an enterprise gets from Input Service Distributor.
9. TCS/TDS credit – If a taxpayer engages in transactions involving TDS or sells goods online via an ecommerce platform, then such information should go in this section.
10. Advances paid and adjusted on account of receipt of supply presented in a consolidated statement – In case a taxpayer has already paid advance taxes on their supplies, but received corresponding invoices in the current tax period, such details should be furnished here.
11. Reversal/Reclaim of input tax credits – In this section, one is supposed to mention details of the Input Tax Credit (ITC) that they are not liable to claim owing to relevant stipulations.
12. Reduction/addition of sum in output tax in case of mismatch or other cases – In case a business needs to pay the additional tax due to rectifications in the previous month’s GSTR 3, or there’s tax liability reduction involved, they shall furnish such relevant information here.
13. HSN summary of inward supplies – Tax filers need to mention the HSN codes of all inward supplies in this section.
The GSTR 2 due date for a specific month is set at the 15th of its following month. Businesses need to submit their GSTR 2 by then to avoid incurring a penalty in the form of interest and late fees. One has to pay 18% p.a. interest on the outstanding tax for late payment and a fine of Rs. 200/day. It is crucial to take note of all the details above, pertaining to GSTR 2 filing, to ensure that there are no discrepancies with the same.