Consequences of Not-Filing of GSTR-1 on time: Every registered taxpayer must submit accurate and timely returns under the Goods and Services Tax (GST). The GST Return must be filed on time, as there are severe repercussions for both the registered taxpayer and the recipient of supplies who miss the deadline. Forms GSTR-1 and GSTR-3B are two crucial GST returns that are crucial to the GST compliance landscape. Outward supplies of goods or services are covered in detail by Form GSTR-1, while Form GSTR-3B is a summary return that contains details about tax liability, input tax credit, and payable tax amount.
Form GSTR-1 is a monthly or quarterly return that lists all outward supplies made by a registered person (IFF requires quarterly filing, but it is optional). It contains information about zero-rated and deemed exports, taxable outward interstate supplies made to registered people, taxable outward interstate supplies made to unregistered people, and more.
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GSTR-1 failure can have the following effects:
1. Ineligibility to claim Input Tax Credit (ITC)
The recipient of goods or services cannot claim ITC for the relevant period in their GSTR-3B return if the supplier does not submit GSTR-1 by the deadline. This results in an additional tax burden for the recipient because they are unable to use the tax paid on purchases to offset their output tax liability. The recipient of your supplies won’t be able to claim ITC on the invoices you’ve given them if you don’t submit your GSTR-1 on time. Due to the fact that they will be required to pay the full tax on the goods or services they have bought from you, this can significantly affect their cash flow.
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2. Non-compliance with GST Regulations
A violation of the GST regulations is considered to be failing to submit GSTR-1 within the required time frame. This may result in fines, penalties, and other legal repercussions, including the potential cancellation of the GST registration. Due to the loss of the ability to collect or submit GST claims, this could have a disastrous effect on the company. You won’t be able to conduct any GST-registered business activities in India if your GST registration is cancelled.
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3. Late Fees
Late fees are charged for every day that the return is late, and can be significant. The current late fee is Rs. 50 per day per Act, for a maximum of Rs. 5,000 per Act. The late fees for GSTR-1 are cumulative, so the longer you delay filing your return, the more you will have to pay in late fees. Although the GST Portal is not levying the late fee now but who knows when it will start levying the same.
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4. Discrepancies in GSTR-2A and GSTR-2B
Transactions will not be reflected in the recipient’s GSTR-2A and GSTR-2B if GSTR-1 is not filed. As a result, the recipient might have trouble reconciling their purchase information with the supplier’s, which could result in disagreements.
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5. Penalties
The penalties for failing to file GSTR-1 are significant, and they can increase if you have a history of non-compliance.
Maintaining GST compliance depends on timely and accurately submitting GSTR-1 and GSTR-3B forms. Inadequate or late filing of these returns may have a number of negative effects, including ineligibility for Input Tax Credit claims, trouble with reconciliation, fines, limitations on the creation of e-way bills, blocking of the GSTR-1 filing facility, and even the suspension or cancellation of GST registration.
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Taxpayers must put the timely and accurate filing of GSTR-1 and GSTR-3B at the top of their priority list in order to ensure smooth business operations and avoid legal and financial difficulties. Along with preventing fines, following GST regulations promotes accountability and transparency within the GST ecosystem.
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