BUSY is a simple, yet powerful GST / VAT compliant Business Accounting Software that has everything you need to grow your business.
GSTR-2 is a crucial GST Return form that needs to be filed by registered taxpayers in India as part of the Goods and Services Tax (GST) system. It contains details of all the inward supplies of goods and services received by the taxpayer during a particular tax period. Filing GSTR-2 is important to claim input tax credit and reconcile the details of inward supplies with those of the suppliers. However, the process of filing GSTR-2 can be complex and time-consuming, especially for first-time filers.
Every GST-registered person is obliged to submit GSTR-2, a purchase return. The GSTR 2 purchase return requires taxpayers to provide information pertinent to their inward supplies. This guide to GSTR-2 aims to provide a comprehensive overview of the form and help taxpayers understand the process of filing it correctly and on time.
GSTR-2 is a monthly tax return that includes all of your purchases for the previous month. The data from registered vendors’ sales returns (GSTR-1) will be available on the GSTN portal as GSTR-2A for use in your GSTR-2 when you make purchases from them. You can review this data before filing your return, amend it as needed, and add any information that wasn’t automatically filled in. The seller will be informed and allowed to modify their return using a GSTR-1A form if you change the information on your GSTR-2A and file it as a GSTR-2.
Before the 15th of the next month, the specifics of the purchases made during a given month must be filed. For instance, if you need to submit a GSTR2 form for March, you must do it by April 15th. Similarly, the GSTR2 for May must be completed by the 15th, and so on.
Every person or organisation registered for GST must submit a GSTR 2 for each purchase they make. There are a few exceptions to this rule, though. The following entities are exempt from submitting a GSTR 2 return:
You must maintain a thorough record of all your transactions, including those involving non-GST supply, to submit a GSTR 2 return. You will also be required to provide your GSTIN and validate your identification during the return filing process using an OTP on your registered number or the Aadhaar-based sign-in option.
GSTR-2 return filing process also requires an individual to meet a specific set of requirements and have a particular set of documents on their person, just like it does in the case of any other registration process involving the government. The following state the requirements:
We will not cover this topic in detail here. To learn how to do this, check out our detailed guide on how to file GSTR-2.
GSTR-2 form requires thirteen important fields to be filled. These are discussed below:
Individuals will incur a late fee each day they postpone the filing procedure if they fail to submit their GSTR-2 by the deadline or for a specific month. It works because the registered taxpayer will receive a fee of Rs. 100 per day, with Rs. 5,000 maximum.
Buyer-seller reconciliation is a process where the data submitted by buyers and sellers under the Goods and Services Tax (GST) system is matched. This ensures that the purchases recorded by buyers align with the sales reported by sellers. The reconciliation helps in identifying discrepancies, preventing tax evasion, and ensuring accurate input tax credit (ITC) claims. By comparing the returns filed in forms like GSTR-1 (by sellers) and GSTR-2A/2B (by buyers), businesses can verify the correctness of the tax credits they are claiming. This process enhances transparency and compliance within the GST framework, fostering trust between trading parties and the tax authorities.
GSTR-2 was originally introduced as a monthly return for taxpayers under the Goods and Services Tax (GST) regime in India. It was intended to be filed by the 15th day of the following month. For instance, the GSTR-2 for April was due by May 15th. This schedule allowed buyers to reconcile their purchase data with the sales reported by their suppliers in GSTR-1. However, due to various implementation challenges and feedback from stakeholders, the filing of GSTR-2 was suspended multiple times. As of now, GSTR-2 is not operational, and the government has shifted focus to other mechanisms for data reconciliation and input tax credit validation. It’s essential for businesses to stay updated with the latest GST notifications to ensure compliance with current filing requirements.
If GSTR-2 was mandatory and a taxpayer failed to file it, several consequences could ensue. Non-filing could lead to penalties and interest charges imposed by the tax authorities. Additionally, the inability to file GSTR-2 might disrupt the reconciliation process between buyers and sellers, potentially resulting in discrepancies in input tax credit (ITC) claims. This could lead to the denial or disallowance of ITC, increasing the tax liability for the business. Repeated non-compliance might also attract scrutiny from tax auditors, leading to more extensive examinations and penalties. Furthermore, timely filing of GSTR-2 was crucial for maintaining accurate financial records and ensuring smooth GST operations within the business.
GSTR-2 was intended to be filed by all registered taxpayers under the Goods and Services Tax (GST) regime in India. This included businesses engaged in the supply of goods or services and required to file regular GST returns. Specifically, those who regularly claim input tax credit (ITC) were expected to file GSTR-2 to reconcile their purchase data with the sales data submitted by their suppliers in GSTR-1. This ensured that the ITC claims were accurate and matched the actual purchases. Additionally, businesses with a significant volume of transactions and those involved in inter-state trade were among the primary filers of GSTR-2. The objective was to enhance transparency, prevent tax evasion, and streamline the GST compliance process for all registered entities.
To revise GSTR-2, taxpayers needed to follow a specific procedure under the GST framework. First, access the GST portal and log in using valid credentials. Navigate to the return filing section and select GSTR-2 for the relevant period. Review the initially submitted data and identify the discrepancies or errors that require correction. Make the necessary amendments in the purchase details, ensuring that the revised information aligns with the supplier’s GSTR-1 filings. After making the changes, validate the form to check for any errors or missing information. Once satisfied, submit the revised GSTR-2 and obtain an acknowledgment. It’s crucial to adhere to the deadlines for revisions to avoid penalties. Additionally, maintaining accurate records and regularly reconciling with suppliers can minimize the need for frequent revisions.
GSTR-2A is an auto-drafted statement available to GST-registered buyers, reflecting the details of inward supplies (purchases) made from various suppliers. It is generated based on the data submitted by suppliers in their GSTR-1 returns. GSTR 2A is a read-only document that helps buyers verify and reconcile their purchase information against the sales data reported by sellers. It includes details such as invoice numbers, dates, taxable amounts, and applicable taxes. Although GSTR-2A is not a return to be filed, it plays a crucial role in ensuring the accuracy of input tax credit (ITC) claims. Buyers can use GSTR-2A to identify discrepancies, rectify errors, and ensure compliance with GST regulations by aligning their records with those of their suppliers.
GSTR-2B is an auto-drafted, static statement available to GST-registered buyers, providing a detailed summary of eligible input tax credit (ITC). Introduced to simplify the ITC reconciliation process, GSTR-2B is generated based on the data submitted by suppliers in their GSTR-1 returns. Unlike GSTR-2A, GSTR-2B is available in a structured format, making it easier for buyers to view and claim ITC accurately. It highlights eligible credits, blocked credits, and discrepancies, aiding businesses in verifying their purchase data. GSTR-2B remains unchanged for a specific period, providing a stable reference for ITC claims. This statement enhances transparency and reduces errors in ITC claims, ensuring that businesses can efficiently manage their tax credits in compliance with GST regulations.
The form GSTR-2 encompassed comprehensive details of inward supplies (purchases) made by a GST-registered taxpayer. Key contents included:
These components collectively facilitated the reconciliation of purchase data with suppliers’ sales records, ensuring accurate tax compliance and streamlined input tax credit management for businesses.
Filing GSTR-2 is an important requirement under the GST regime for claiming input tax credit and reconciling the details of inward supplies with those of the suppliers. While the process can be complex, with the help of this guide, taxpayers can navigate it smoothly and ensure timely and accurate filing. It is crucial to file GSTR-2 on time to avoid penalties and to maintain compliance with GST regulations. By following the guidelines and best practices outlined in this guide, taxpayers can file GSTR-2 with confidence and ease.
BUSY is a simple, yet powerful GST / VAT compliant Business Accounting Software that has everything you need to grow your business.