What is the purpose of Filing Return in GST?

Goods and Services Tax (GST) was introduced in India in 2017, replacing multiple indirect taxes. The implementation of GST has streamlined the taxation process and has made it more transparent. Under GST, businesses are required to file returns periodically to the government. In this blog, we will discuss the purpose of filing returns in GST.

The primary purpose of filing returns in GST is to provide information to the government regarding the business's taxable transactions during a particular period. The returns filed by businesses act as a link between them and the government. It is through these returns that the government can keep a check on the taxes paid and the tax liability of the business.

Filing returns also helps businesses claim input tax credit (ITC). ITC is the credit that businesses can claim for the taxes paid on their purchases. The ITC claimed can be set off against the tax liability of the business. However, to claim ITC, it is mandatory to file returns.

Filing returns also helps businesses maintain their compliance with the GST law. The returns filed by businesses act as proof of their compliance with the law. Non-filing or delayed filing of returns can attract penalties and can also result in the cancellation of the GST registration of the business.

Another purpose of filing returns in GST is to facilitate the reconciliation of data between the business and the government. The returns filed by businesses are matched with the returns filed by their suppliers. If there are any discrepancies, they can be rectified before the finalization of the tax liability.

In conclusion, filing returns in GST is a crucial aspect of compliance for businesses. It not only helps them claim ITC but also helps them maintain their compliance with the law. It is, therefore, essential for businesses to file their returns on time and accurately to avoid any penalties or cancellation of their GST registration.