GSTR-2 also includes purchases on which reverse charge applies. However, since it is currently not in use from the September 2017 tax period onwards, it has lost its significance. Instead, the taxpayers must report their eligible ITC in the form GSTR-2 while checking with their GSTR-2 and GSTR2A.
For example, Ajay buys 100 pens worth Rs. 500 from Vijay Stationery. Vijay Stationery must show Rs. 500 sales in his GSTR-1. Ajay must show the same Rs. 500 purchase in GSTR-2 (currently GSTR-3B) to claim ITC. Unless the amounts match, Ajay will not be able to claim ITC. At present, this reconciliation or matching is done between GSTR-2B and GSTR-3B. Sometimes, the taxpayer may have to refer to the GSTR-2A.
Meaning
If you change the information on your GSTR-2A and file it as GSTR-2. The vendor will be notified and given a chance to amend their return using a GSTR 2.
To file the GSTR-2:
- You must be a registered taxpayer under the GST with a 15-digit PAN-based GSTIN.
- You must neither be a composition vendor nor have a Unique Identification Number (UIN). You should also not be one of those non-resident foreign taxpayers.
- You need the data on your GSTR-2A from your GST portal. To cross-verify this data, you need to keep detailed invoices for all of your transactions, including intra-state as well as inter-state transactions, and business-to-business ). This also includes purchase transactions associated with exempted and non-GST supplies and stock transfers between your business locations in different states.
- You either need an OTP from your registered phone to verify your return using an EVC (electronic verification code) or a digital signature certificate (of class 2 or higher). You can also file your GST Returns using an Aadhar-based e-sign.
What is GST?
The Goods and Services Tax is a successor to VAT used in India on the supply of goods and services. GST is a digitalized form of VAT where you can also track the goods & services. Both VAT and GST have the same taxation slabs.
The implementation of GST has brought about a fundamental shift in the financial relations between the Central Government and the State Governments in India. GST is a unified tax system that replaced multiple indirect taxes levied by both the Central and State Governments.
What is GSTR-2?
GSTR 2 gives complete information on Inward Supply, for example, purchases for a given tax period. Every registered person is required to file GSTR 2, the data of which is used by the government to check the seller GSTR 1 data for buyer-seller reconciliation
Salient Features of GST
- One Nation, One Tax. GST is considered the greatest tax change in the historical backdrop of free India and is being anticipated as One Nation, One Tax. Businesses are idealistic that GST will make uniform expenses all through the nation.
- Dual Structure. Dual GST is the system where both the center and state levy taxes. It means that both governments earn revenue on every goods and service supply. The dual GST meaning thus refers to side-by-side tax application by the state on center on transactions. A dual GST example is in India.
- Destination-based Tax. Destination-based tax or consumption tax is levied where goods and services are consumed. So as per current tax rules, the SGST collected will generally accrue to the State where the consumer of the goods or services sold resides and not to the State where the goods are produced.
- Input Tax Credit (ITC). ‘Input Tax Credit’ or ‘ITC’ means the Goods and Services Tax (GST) paid by a taxable person on any purchase of goods and/or services that are used or will be used for business. ITC value can be reduced from the GST payable on the sales by the taxable person only after fulfilling some conditions.
- Threshold Exemption. The threshold limit of aggregate turnover for exemption from registration and payment of GST for suppliers of services has been fixed at ₹ 20 Lakh. The said limit shall be ₹ 10 Lakh in the States of Manipur, Mizoram, Nagaland and Tripura
Conclusion
Unfortunately, I cannot provide a conclusion for GSTR 2 as it has been suspended by the Indian government. It was a monthly return that needed to be filed by businesses registered under the GST regime but has been replaced by a new return filing system. However, businesses need to stay updated with the latest guidelines and regulations related to GST to ensure compliance and avoid any penalties
GST and types of GST play a crucial role in the Indian economy. The three types of GST, CGST, SGST, and IGST, are designed to create a unified tax structure, reduce the cascading of taxes. It ensure that the tax burden is fairly shared between the Central and State Governments.
This Blog is written by Kratika Pal.
