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GSTR-5 for Non-Resident Taxable Persons: Filing, Compliance, and Consequences

Updated: May 20


GSTR-5 for Non-Resident Taxable Persons: Filing, Compliance, and Consequences

In the globalised world we live in, businesses often transcend borders, engaging in trade and commerce across different countries. India, with its burgeoning economy and vibrant market, attracts a significant amount of business from non-resident entities. However, like any other country, India has tax regulations that non-resident taxable persons must adhere to. One such regulation is the filing of the GSTR-5 return.

 

Table of content

 

What is GSTR-5?

GSTR-5 is a return form under the Goods and Services Tax (GST) regime of India. It is specifically designed for non-resident taxable persons who engage in taxable supplies in India but do not have a fixed place of business in the country. The purpose of GSTR-5 is to report the details of outward supplies, inward supplies, taxes paid, and taxes refunded by these non-resident entities.


Who Needs to File GSTR-5?

GSTR-5 is a specific return form under India's Goods and Services Tax (GST) regime. It's designed for non-resident taxable persons who conduct business activities in India but don't have a fixed place of business in the country. The purpose of GSTR-5 is to provide a structured format for these non-resident entities to report their transactions and fulfil their tax obligations under GST law.


Who is a Non-Resident Foreign Taxpayer?

A non-resident foreign taxpayer refers to an individual, company, or entity that is not a resident of India but is engaged in taxable activities in the country. These entities do not have a fixed place of business in India but are required to comply with Indian tax regulations, including the GST law.


Components of GSTR-5:

1. Basic Information: The form begins with providing basic details such as the legal name of the non-resident taxable person, the period for which the return is being filed, and the GSTIN (Goods and Services Tax Identification Number) allocated to them.


2. Details of Outward Supplies: Non-resident taxable persons are required to furnish the details of all outward supplies made during the tax period covered by the return. This includes the invoice-wise details of supplies made to registered taxpayers in India, supplies made to unregistered taxpayers, and exports out of India.


3. Details of Inward Supplies: The return also requires information on the inward supplies received during the tax period. This includes supplies attracting reverse charge mechanisms and imports into India.


4. Tax Liability: Non-resident taxable persons must declare the total tax liability arising from their supplies in India. This includes the integrated GST (IGST) payable on supplies made during the tax period.


5. Tax Payments and Refunds: GSTR-5 also provides for the declaration of taxes paid during the tax period and any refund claimed by the non-resident entity.


Rules and Compliance:

1. Timely Filing: GSTR-5 must be filed by the 20th of the succeeding month from the tax period for which the return is being filed. For example, the GSTR-5 for the month of January must be filed by the 20th of February.


2. Accuracy and Completeness: Non-resident taxable persons must ensure that the information furnished in GSTR-5 is accurate and complete. Any discrepancies or omissions may lead to penalties or legal implications.


3. Input Tax Credit (ITC): Unlike regular taxpayers, non-resident entities cannot claim input tax credit on their inward supplies. Hence, they need to ensure that they accurately report their tax liability without considering any ITC.


4. Mandatory Registration: Non-resident taxable persons must obtain GST registration before commencing business activities in India. They can do so by applying for registration through the GST portal.


How to file your GSTR-5 return online

To file your GSTR-5 return online, follow these steps:


1. Log in to the GST portal: Visit the official GST portal and log in using your User ID and password. Navigate to Services > Returns > Return Dashboard.


2. Select the return period: Choose the appropriate financial year and month for which you are filing the return from the drop-down menu. Click on Search.


3. Prepare online: Click on "Prepare Online" to begin entering the required details.


4. Generate GSTR-5 summary: After entering the details, click on "Generate GSTR-5 Summary" at the bottom of the page. Review the summary of your entries.


5. Enter details: Fill in the necessary details in the provided boxes, including information on the import of goods, outward supplies made, invoices, credit/debit notes, and any amendments.


6. Preview: Once all details are filled in, click on "Preview" to download the summary page. Review the information carefully.


7. Check tax liability: Navigate to tabs 10A and 10B to view details of tax liability.


8. Submit: If satisfied with the information provided, tick the E-Acknowledgement checkbox and click on "Submit" to freeze the data.


9. Pay tax: Pay the total taxable value as displayed on your screen.


10. File GSTR-5: Finally, click on "File GSTR-5" to complete the filing process. You will then be able to view the status of your GSTR-5 return.


Consequences of Late Filing 

Late Fee for Late Filing: If a non-resident taxable person fails to file GSTR-5 within the due date, they are liable to pay a late fee of  Rs. 200 per day (Rs. 100 under CGST Act + Rs. 100 under SGST/UTGST Act) of delay, subject to a maximum of Rs. 5,000.


Interest on Late Payment: In addition to the late fee, interest is levied on the outstanding tax liability from the due date of filing to the date of payment. The interest rate is specified by the government and is currently set at 18% per annum.


Consequences of Continued Non-compliance: Continued non-compliance with GST filing requirements, including late filing of GSTR-5, can lead to further penalties and legal consequences. It may result in the issuance of notices, imposition of stricter penalties, and even cancellation of registration in severe cases.


Conclusion:

GSTR-5 serves as a vital tool for the Indian government to track and monitor the transactions of non-resident taxable persons operating within the country. By ensuring the timely and accurate filing of this return, non-resident entities not only fulfil their compliance obligations but also contribute to the seamless functioning of the GST regime. Understanding the intricacies of GSTR-5 is essential for non-resident entities to avoid any legal hassles and maintain smooth business operations in India.


FAQ

Q1. Can amendments be made in GSTR-5 after filing?

Yes, amendments can be made in GSTR-5 after filing in the subsequent return periods. However, it's crucial to ensure accuracy and compliance with GST regulations.


Q2. Is there any provision for rectifying errors in GSTR-5?

Yes, errors in GSTR-5 can be rectified in the subsequent return periods by filing an amendment return with the correct information.


Q3. What documents are required to file GSTR-5?

Documents such as invoices, debit notes, credit notes, and records of inward supplies attracting reverse charges are required to file GSTR-5.


Q4. Who needs to file GSTR-5?

Non-resident taxable persons who conduct business in India and do not have a fixed place of business here are required to file GSTR-5.


Q5. How is GST calculated?

GST is calculated as a percentage of the taxable value of the goods or services being supplied. The applicable GST rate depends on the nature of the goods or services and is specified by the government.


Q6. What is GST registration?

GST registration is the process by which a taxpayer gets registered under the GST law and obtains a unique GSTIN (Goods and Services Tax Identification Number). It is mandatory for businesses with a certain turnover threshold.




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