GST return filing time limit soon: No filing to be allowed after 3 years of due date

The Goods and Services Tax Network (GSTN) has issued a new advisory informing taxpayers that the GST portal will soon implement a change that prohibits filing specific GST returns after three years have elapsed since the due date. GSTN also mentioned that these changes, which involve restricting GST return submissions after three years, will take effect in the GST portal starting early next year (2025). Therefore, you are encouraged to review your tax records and submit any outstanding GST returns promptly if there are any that remain unfiled.

“As per the Finance Act,2023 (8 of 2023), dt. 31-03-2023, implemented w.e.f 01-10-2023 vide Notification No. 28/2023 – Central Tax dated 31th July, 2023, the taxpayers shall not be allowed file their GST returns after the expiry of a period of three years from the due date of furnishing the said return under Section 37 ( Outward Supply), Section 39 (payment of liability), Section 44 ( Annual Return) and Section 52 (Tax Collected at Source). These Sections cover GSTR-1, GSTR 3B, GSTR-4, GSTR-5, GSTR-5A, GSTR-6, GSTR 7, GSTR 8 and GSTR 9. The said changes are going to be implemented in the GST portal from early next year (2025). Hence, the taxpayers are advised to reconcile their records and file their GST Returns as soon as possible if not filed till now,” said GSTN in an advisory dated October 29, 2024.

What will happen if you fail to act regarding this advisory?

Chartered Accountant Bimal Jain, founder, A2Z Taxcorp LLP, says that you will be considered a defaulter of GST law if you don’t file the mandated GST returns.
“This advisory is relevant for those taxpayers who wish to file any belated GST return and it relates to a period of three years from the due date of furnishing the said return. The GST department is being generous in giving taxpayers some more time to file their pending GST returns as this present advisory is in respect to an amendment implemented last year on October 1, 2023. This is a good advisory by GSTN and will help taxpayers save the trouble of GST tax demand notices, and other hassles that occur when a mandatory GST return is not submitted,” says Jain.

Jain says that a potential issue for taxpayers who fail to submit a late GST return and get time-barred by the GST portal is that the GST department might begin a best judgment assessment.

“The GST department will source its information through its own sources, third party, your books of accounts and others and then pass a best judgement assessment order to the best of their abilities. Now this assessment can be a problem for taxpayers also. For example: after the best judgement assessment is over if the department finds that the taxpayer has any pending GST which is yet to be deposited then a tax demand notice will be issued,” says Jain.

Impact of this advisory

Saurabh Agarwal, Tax Partner, EY India: From taxpayer’s perspective, they should be mindful of the same and ensure that past adjustment (if any) are made at the earliest possible i.e. up to Dec 2024 in order to ensure that there are no issues arising late on account of the same. This would entail undertaking detailed reconciliation of the GST credits, credit notes and sales reported in the returns with the financial records/ books of accounts and auto populated GSTR 2A/2B (as the case may be) for the past transactions. For the future, taxpayers are advised to complete these activities promptly rather than deferring until the end of the 3-year period. Therefore, It is anticipated that these modifications will not only facilitate the portal's seamless operation but also encourage timely adherence to compliance requirements.

Agarwal further adds that the advisory rightly points out that taxpayers must undertake the requisite reconciliation and make the necessary changes in the return till the time permits. "If the option is blocked, then it may lead to unnecessary demands from tax authorities in pursuance of the audit proceedings or otherwise for these periods, and consequently lead to litigation as well. However, it is important to be noted that considering this mandatory limitation followed up with adequate intimation, may also limit the power of the High Courts to grant relief to make retrospective changes," he says.

Karthik Mani, Partner, Indirect Tax, BDO India: This advisory by GSTN shall impact those taxpayers who had not filed their GST returns for the past periods due to oversight, lack of documentation, or suspension of registration. The taxpayers shall compile or reconcile requisite information to prepare the GST returns and file the returns within three years from the respective return due date. The law mandates taxpayers to file the returns within three years from the due date, the current advisory seeks to implement the provisions as part of the GSTN portal by restricting the access of return filing after expiry of 3 years. Considering the taxpayers are filing the returns pertaining to past periods, it is advisable to ensure accuracy by performing reconciliations with books of accounts and Input tax credits appearing in form GSTR-2B. Submission of unreconciled information for the past period returns would result in inquiries from tax authorities which may lead to tax demands with interest and penalty.

Chartered Accountant Hardik Kakadiya, President, Chartered Accountants Association Surat: The restriction on disabling filing of GST returns after 3 years was an already passed in previous budget and an accepted law, which is now reiterated by GSTN causing some anxiety amongst taxpayers. But, GSTN has its own way of creating panic amongst the taxpayer. While on one hand it releases such advisory on the portal, but on the other hand when the format of newly launched amnesty scheme are launched, but hasn't been implemented on GSTN, which is its actual work. Surprisingly, in India a major part of the law made by legislature is bent by the unwritten code of law created by Portals.

Source:- Economic Times