How to File GSTR 2 on GST Portal?

GSTR-2 has been suspended from 2017 onwards; however, knowing how to file GSTR-2 on the GST portal can help taxpayers in case the GST Council reintroduces it. Form GSTR-2 and Form GSTR-3 have been replaced by Form GSTR-3B.

GSTR-2 Form used to be the return filing form containing detailed information about inward supplies. Learn about the filing process for a seamless experience if the government reintroduces it.

Process to File GSTR-2

Here is the process to follow to file GSTR-2:

Step 1: Visit the official GST portal and log in using your credentials.

Step 2: Navigate to the ‘Services’ tab and select ‘Returns’.

Step 3: Choose the month from the drop-down menu for which you are filing GSTR-2 returns.

Step 4: Under GSTR-2, select ‘Prepare Online’.

Step 5: Fill in all the 11 tiles with relevant details. Notably, details that are not auto-populated in GSTR-2A or need amendment should be filled in this section.

Significance of Filing

Here is the importance of GSTR-2:

●  GSTR-2 captured information about inward supplies including purchases and services availed for a specific tax period.

●  Taxpayers used this return to claim an input tax credit (ITC) by matching it with purchase information in the supplier's GSTR-1. It thus helped optimise ITC for reduced tax liability.

● Reconciling data between GSTR-2 and GSTR-2A helped taxpayers identify discrepancies such as incorrect or missing invoices.

● GSTR-2 return filing helped the government prevent tax evasion, ensure tax compliance and facilitate transparency in the Indian financial ecosystem.

● By filing GSTR-2 returns within the due date, taxpayers avoided penalties and ensured smooth cash flow.

Notably, GSTR-2 was suspended in 2017 at the government's discretion. However, knowing the importance of the form can help taxpayers if the government reintroduces it.

What Is Buyer-Seller Reconciliation?

Buyer-seller reconciliation is the invoice matching process wherein the seller's taxable sales and the buyer's taxable purchases are matched. Input Tax Credit (ITC) is available when purchase details filed in GSTR-2 returns match with the sales (outward supplies) filed in the seller's GSTR-1.

As a result, reconciliation is crucial for accurate ITC claims and smooth cash flow. Notably, after the suspension of GSTR-2, you can find the relevant details in GSTR-3B.

For instance, Mr X purchases 100 pens at ₹500 from Y Stationery. Mr X needs to declare the same in GSTR-2 (presently GSTR-3B) and Y Stationery needs to show it in GSTR-1. A mismatch in the two amounts will result in an inaccurate ITC claim.

Currently, the reconciliation is undertaken by matching GSTR-2B and GSTR-3B. Taxpayers, however, might need to refer to GSTR-2A to match the details.  After GSTR-2 suspension, the majority of the details are auto-populated from GSTR-1 for a seamless return filing process.

GSTR-2 Deadline Before Suspension

The GST Act declared the due date for filing GSTR-2 returns as the 15th of the following month. It further mandated a 5-day gap between GSTR-1 and GSTR-2 filing to allow rectification of errors and discrepancies. Nevertheless, the GST Act did not declare any return filing date for businesses on a quarterly basis.

GSTR-2 Non-filing Consequence

Here are the consequences of non-filing or late filing of GSTR-2:

● Taxpayers cannot file returns in Form GSTR-3.

● Cascading effect on tax with applicable fines and penalties

Notably, GSTR-3 has been suspended in addition to GSTR-2 since 2017. However, late filing of GSTR-3B (replaced form for GSTR-3) attracts interest at the rate of 18% per annum. It additionally attracts a late fee of ₹200 per day (₹100 for CGST and ₹100 for SGST) up to a maximum of ₹5,000 (no late fee applicable for IGST).

Exempted Entities for Filing GSTR-2

All registered persons under the tax authorities have to file GSTR-2. However, the following list of entities are exemptions:

● Input Service Distributors (ISD)

●  Non-resident Taxable Persons

●  Composition Dealers

●  Persons liable to collect TCS (Tax Collected at Source)

●  TDS (Tax Deducted at Source) deductors

●   Suppliers of online information and database access or retrieval services (OIDAR) are liable to pay taxes themselves as per Section 14 of the IGST Act.

Notably, you cannot claim ITC on the supply of non-business goods and services (personal supplies) followed by exempt supplies.

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How to Revise GSTR-2?

The unified portal does not allow you to revise GSTR-2 once filed. If there are errors in filing returns, you can only rectify the same in the next month’s returns. For instance, if there are mistakes in GSTR-2 for July 2017, you can make corrections in GSTR-2 for August 2017.

GSTR-2 Invoicing Details

Here are the invoicing details for GSTR-2:

3, 4A - Inward Supplies Received from Registered Persons including Reverse Charge Supplies

Here are the steps to incorporate missing inward supplies or details of mismatched invoices from registered dealers including inward supplies under the reverse charge mechanism:

Step 1: Click on the ‘Add Missing Invoice Details’ option to incorporate information from forms like GSTR-2A.

Step 2: Fill in details such as supplier’s GSTIN, invoice date, invoice number and total value of the invoice. Choose the state in which you sell the goods or services and select the invoice type such as B2B, SEZ supplies with or without payment or deemed exports.

Step 3: Click on the ‘Add Details’ option.

5 - Input Imports/ Capital Goods and Supplies Received from SEZ

Follow the steps below to enter details of import of inputs or capital goods received from SEZ (Special Economic Zone):

Step 1: Click on the ‘Add BOE’ option.

Step 2: Fill in details such as port code (code of the place from where you import), bill of entry number, value and date.

Step 3: Ensure to tick the checkbox if your import is from SEZ.

Step 4: Fill in the taxable value based on the applicable tax rate on the imported product.

Step 5: Choose if the tax is eligible for input tax credit.

Step 6: Complete the process by clicking on ‘Save’.

4C - Import of Service

Here are the steps to fill in this section:

Step 1: Click on ‘Add Details’.

Step 2: Fill in the invoice date, number, and value and select the point of sale from the drop-down menu.

Step 3: Note the applicable tax rate to fill the taxable value.

Step 4: Check if the tax is ITC eligible and click on the ‘Save’ option.

6C - Debit/ Credit Notes for Supplies from a Registered Person

You need to follow the steps mentioned below to include details of missing debit notes and mismatched credit notes (in GSTR-2A) that you received from a registered dealer to avoid duplication of invoices:

Step 1: Click on ‘Add Credit Note/Debit Note’.

Step 2: Fill in the concerned supplier’s GSTIN (Goods and Services Tax Identification Number), note type, number, value and date. In addition, fill in the original invoice date and number followed by the supply type (inter-state or intra-state).

Step 3: Ensure you fill in the reason for issuing the note such as post-sale discount, sales return, invoice correction and others.

Step 4: Complete the process by clicking ‘Save’.

4B - Inward Supplies from an Unregistered Supplier

Fill in the following details in the process mentioned below:

Step 1: Click ‘Add Details’.

Step 2: Fill in the name of the supplier, invoice value, date and number.

Step 3: From the drop-down list, choose a point of sale.

Step 4: Ensure you choose the supply type accurately such as intra-state or inter-state as the tax rates vary based on your chosen option. Save the details entered to complete the process.

6C - Debit Notes/ Credit Notes for Unregistered Supplier

You need to mention debit or credit note issues for inward supplies or purchases from unregistered dealers in the following steps:

Step 1: Click on ‘Add Credit Note/ Debit Note’.

Step 2: Mention the note type, number, value, date, original invoice number and date, type of supply such as intrastate supplies or interstate supplies, reason for note issuance and taxable amount at the applicable tax rate.

Step 3: Click on ‘Save’.

Other Details

Here are additional details pertaining to GSTR-2 invoicing details:

7 - Supplies from Composition Taxable Person and Other Exempt/Nil-rated/Non-GST Supplies

Enter the details following the steps mentioned below:

Step 1: Click on the ‘Edit’ option.

Step 2: Fill in the necessary values as prompted.

Step 3: Click on the ‘Save’ option to complete.

10A -Advance Amount Paid for Reverse Charge Supplies

Here is the step-by-step process to fill in this section:

Step 1: Click on ‘Add Details’.

Step 2: Fill in the point of sale and taxable value at the applicable GST rate.

Step 3: Click on the ‘Save’ option to complete this section.

10B - Adjustment of Advance Amount Paid earlier for Reverse Charge Supplies

You need to use this section to make adjustments to details made in 10A in the earlier returns. Ensure you save the details after making subsequent amendments for accurate proceeds.

13 - HSN Summary of Inward Supplies

Fill in this section to provide HSN Code-wise details of inward supplies:

Step 1: Click on ‘Add Details’.

Step 2: Fill in the HSN Code, description, and Unique Quantity Code (UQC) of purchases, in addition to the total value, quantity, and taxable value of goods and services. Ensure to fill in IGST, CGST and SGST/UTGST at applicable rates.

Step 3: Click on ‘Save’.

11 - Input Tax Credit Reversal/ Reclaim

Taxpayers can claim ITC (Input Tax Credit) on inward supplies to reduce their output tax liability if applicable. However, if they claim ITC when necessary conditions are not satisfied, ITC is reversed. Such ITC reversal details (after annual return filing) need to be entered in this section. Ensure you save the details after filling in for accurate GSTR-2 filing and invoicing.

Conclusion

To answer how to file GSTR-2 on the GST portal, it is essential to mention that you do not have to file it at present as it was suspended in 2017. However, if the government reintroduces it you can seamlessly follow the process to fill out the form containing inward supplies details for a complete supply chain solution.

At present ensure you file Form GSTR-3B which is the replacement of GSTR-2 and GSTR-3 for accurate GST return filing and tax compliance in the connected finance ecosystem. This results in vendor delight and effective vendor management.

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