GST return time bar: No filing after 3 years of due date, taxpayers advised to file pending return

GST return: Starting in early 2025, GST taxpayers will no longer be able to file monthly and annual GST returns three years after the original filing due date. According to an advisory from the Goods and Services Tax Network (GSTN), GST outward supply returns, returns related to payment of liability, annual returns, and tax collected at source will be considered time-barred three years after the due date of submission.

The new changes will be implemented on the GST portal in early 2025. Therefore, taxpayers are urged to review their records and submit any outstanding GST returns promptly to avoid any issues, an advisory by GSTN stated. 

"The said changes are going to be implemented in the GST portal from early next year (2025). Hence, the taxpayers are advised to reconcile their records and file their GST returns as soon as possible if not filed till now," GSTN said.

“As per the Finance Act,2023 (8 of 2023), dt. 31-03-2023, implemented w.e.f 01-10-2023 vide Notification No. 28/2023 – Central Tax dated 31th July, 2023, the taxpayers shall not be allowed file their GST returns after the expiry of a period of three years from the due date of furnishing the said return under Section 37 ( Outward Supply), Section 39 (payment of liability), Section 44 ( Annual Return) and Section 52 (Tax Collected at Source). These Sections cover GSTR-1, GSTR 3B, GSTR-4, GSTR-5, GSTR-5A, GSTR-6, GSTR 7, GSTR 8 and GSTR 9. The said changes are going to be implemented in the GST portal from early next year (2025). Hence, the taxpayers are advised to reconcile their records and file their GST Returns as soon as possible if not filed till now,” the GSTN said in a notification issued on October 29, 2024.

According to Rajat Mohan, Senior Partner at AMRG & Associates, the recent GSTN update implementing a three-year deadline for GST return filings signifies a crucial shift in compliance requirements. This change is part of a broader effort to promote timely compliance, ensure data accuracy, and potentially reduce the backlog of unfiled returns in the GST system. By limiting the timeframe for delayed filings, taxpayers are encouraged to review and correct their records promptly.

However, Mohan noted that this new policy may pose challenges for taxpayers with a history of unfiled returns, particularly those facing difficulties in organizing older records due to administrative or logistical constraints. He advised businesses to conduct a proactive review of their filing history and address any outstanding returns before the deadline, in order to avoid potential compliance issues and penalties that could arise once the portal enforces the three-year limit.

As per experts after the issuance of new advisory, it is important for taxpayers to be vigilant and promptly address any necessary adjustments before December 2024. This will help prevent any potential issues that may arise later on. Conducting a thorough reconciliation of GST credits, credit notes, sales reported in returns, and comparing them with financial records and auto-populated GSTR 2A/2B is essential for past transactions.

"For the future, taxpayers are advised to complete these activities promptly rather than deferring until the end of the 3-year period," said Saurabh Agarwal, Tax Partner, EY India.

"This advisory by GSTN shall impact those taxpayers who had not filed their GST returns for the past periods due to oversight, lack of documentation, or suspension of registration. The taxpayers shall compile or reconcile requisite information to prepare the GST returns and file the returns within three years from the respective return due date. The law mandates taxpayers to file the returns within three years from the due date, the current advisory seeks to implement the provisions as part of the GSTN portal by restricting the access of return filing after expiry of 3 years," Karthik Mani, Partner, Indirect Tax, BDO India. 

(With PTI inputs)