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Introduction:

A Nil GST return can be filed when there are no outward supplies during the respective month or quarter. This form primarily enables taxpayers to claim input tax credit on their returns. According to GST law, filing a return for the period, even with no transactions, is mandatory for every taxpayer.

Under GST regulations, it is mandatory for every taxpayer to file a tax return for each tax period. Specifically, GSTR-1, a monthly return, must be submitted by taxpayers. Nonetheless, a common query among taxpayers pertains to whether they need to file a nil GST return for a period devoid of transactions.

Nil GST Return:

• Businesses report their outgoing supplies through the monthly GSTR-1 filing. Even in months devoid of commercial activity, regular taxpayers registered under GST are obligated to file a Nil GST return. Essentially, it serves as a reporting mechanism for all sales transactions conducted by businesses. Filing a GSTR-1 Nil return online is a quick process, requiring only a few minutes to complete.
• Furthermore, the primary aim of filing a nil GST return is to notify the Income Tax Return department that taxes were not paid due to not meeting the taxable income criteria. Businesses file nil GST returns or GSTR-1 when no sales transactions occurred in the given month.
• Under the current GST system, taxpayers have to file a nil GST return for both GSTR-1 and GSTR-3B. Failure to do so will result in taxpayer penalties.
• GSTR-1:Taxpayers file GSTR-1 to report details on outward supplies of goods and services, consolidating debit-credit notes and invoices generated during sales transactions within a tax period. It is mandatory for all GST-registered taxpayers to file GSTR-1. Additionally, registered sellers and suppliers are required to report any minor changes to sale invoices in their GSTR-1 returns.

Conditions to file GSTR:

• Taxpayers have to file GSTR-1 if the following conditions are fulfilled.
• A taxpayer, whether registered as a taxpayer or taxpayer, Special Economic Zone Development/Unit (SEZ Unit), or SEZ Developer, must have a valid GSTIN to file GSTR-1.
• The taxpayer must have chosen the frequency for filing nil GST returns, either monthly or quarterly, through the GST portal.

Guide to Filing a GSTR-1 Nil Return:

• Every taxpayer registered under GST must file a blank GST return, even if they do not earn income through sales in any month or quarter. Additionally, the GSTR-1 report contains information such as advances received, credits and debits issued, adjusted advances, and documents collected and what etc. Below we show the process of filing NIL return under GSTR-1:
• Step 1: Go to GST registration portal and login using your valid credentials. Once logged in, go to the dashboard page and click on ‘Return Dashboard’.
• Step 2: After selecting ‘Return Dashboard,’ a screen will appear where you can opt for ‘Prepare Online’ and specify the filing period.
• Step 3: Select ‘Prepare Online’ to get GSTR-1 return summary. Verify that all fields are marked zero or null.
• Step 3: Click on ‘Prepare Online’ to get the GSTR-1 return summary. Verify that all the fields in the GSTR-1 return are marked zero or zero.
• Step 4: Once all the entries are accepted, tick the box that indicates the same, and continue to click ‘Submit’.
• Step 5: Click on the ‘Proceed’ button to confirm the GSTR-1 filing in the confirmation window. Please note that once you’ve clicked the continue button, you won’t be able to make any changes to the entered information. Therefore, it’s essential to ensure the accuracy of the GSTR-1 data beforehand.
• Step 6: After submitting the final return, you must digitally sign the GSTR-1 using either EVC verification or a class 2 digital signature to complete the nil return filing process.

Importance  to File a Nil Return:

• Business owners with an annual income exceeding Rs. 2,50,000 are required to file a GSTR-1 income tax return. Nonetheless, even business owners earning less than Rs. 2,50,000 annually are encouraged to file income tax returns. This practice assists the income tax department in monitoring your business’s monthly or quarterly income.
• A nil GST return is a proof of income for the Income Tax Department. Additionally, taxpayers can apply for refund by filing GSTR-1 NIL.
• The taxpayer must file nil returns under GSTR 1 even if there is no business activity. Failure to file GST returns on time will result in a penalty of Rs.100 per day.
• The need to file a nil return under GST arises when a registered person or business hasn’t generated taxable income through outward supplies in a given month, prompting the filing of a nil GST return. Additionally, taxpayers are required to input various details in GSTR-3B and GSTR-1 returns. However, individuals with no sales are not obligated to provide the same level of detail as regular taxpayers on the GSTN Network.

Penalty for Late Filing of Nil Return:

Previously, taxpayers faced penalties for late filing of nil GST returns at a rate of Rs.200 per day. However, following a notice from the Central Board of Direct Taxes, this penalty amount has been reduced. Currently, taxpayers are obligated to pay Rs.20 per day as late fees for nil GST returns.

Final Word:

Immediate response, maintaining a consistent history of nil GST returns has post-filing benefits. A taxpayer with a commendable record with zero GST bills can enjoy favorable terms such as simplified loan approvals, lower taxes and smoother business processes. The ease of registration shows the trust and confidence of the taxpayer.