GSTR-10 Return Filing: Applicability, Due Date, Penalty

Goods and Services Tax (GST) is a multi-layered and destination-based comprehensive indirect tax that finally substitutes most other indirect taxes in India, which are VAT, service tax, excise duties, etc. The GST came into effect on July 1, 2017, intending to ease taxation through the establishment of a single national market. The main aspect of compliance under GST is the timely filing of GST returns. They are the official returns that registered taxpayers file with the tax authority, mentioning their income, sales, purchases, input tax credit, and liability; these GST returns are of utmost importance for the government to keep track of tax revenues and facilitate the seamless flow of input tax credits downstream to the supply chain. Different categories of taxpayers-regular, composition scheme holders, etc. will be required to file different returns, such as GSTR-1, GSTR-3B, GSTR-4, and GSTR-9, on a monthly, quarterly, or annual basis. Now, anything that is proper and timely returns with GST is necessary so that penalties can be escaped, credits can be applied for, and compliance can be maintained legally. The advent of digital platforms and the GST portal made the whole process of filing transparent and more accessible, which makes them accountable and therefore promotes various sectors and improves their operations.

What is GSTR-10?

A conclusive return is GSTR-10, which is a compulsion for submission by every taxpayer who got their Goods and Services Tax registration either canceled or surrendered. It summarises at that time the stock held at the time of cancellation while at the same time providing input tax credit on those goods. GSTR-10 is needed to ensure that all tax needs are fulfilled before the cancellation of the GST registration. Such a return must be made within three months from the date of cancellation or issuance of cancellation order, whichever is later. GSTR-10 may attract penalties and legal repercussions for failing to submit.

Applicability and Criteria for GSTR-10

GSTR-10 is purely meant for taxpayers whose GST registrations have been canceled or voluntarily surrendered under the GST mechanism. It does not refer to any category of registered taxpayers who are still active or who have switched from previous tax regimes to GST.

1. Who will have to file GSTR-10?

• The normal taxpayers falling under the standard scheme have either canceled or voluntarily surrendered their GST registration.
• Taxpayer who voluntarily filed for the cancellation of registration.
• Taxpayers whose registration has been canceled by the tax authorities due to noncompliance or inactivity or for other reasons.

2. Who is not required to file GSTR-10?

• Taxpayers under the composition scheme who file GSTR-4 or CMP-08, as applicable.
• Non-resident taxable persons.
• Input service distributors (ISDs).
• Tax deducted at source under Section 51.
• Tax collected at source under Section 52, including by e-commerce entities.

Last Date to File

GSTR-10 has to be filed within 3 months from the date of cancellation of GST registration or the date of the cancellation order, whichever is later.

What is GSTR-10 for?

GSTR-10 will be a final return for stock lying and ITC claimed at the time of cancellation. This will enable the tax authorities to check for any outstanding liabilities while fulfilling compliance requirements.

Due Date For Filing GSTR-10

The time limit for submitting GSTR-10 (Final Return) is supposed to be three months as the later of two of these dates that is, the date of GST registration cancellation or order of cancellation by the GST department.

Leaving that aside, this period is designed in such a way that the taxpayer gets time to fulfill all final compliance requirements after the cessation of business operations or activities under GST.

If a taxpayer cancels on January 1st and receives a cancellation order from the department on January 25th, the GSTR-10 would be due on April 25th because that date falls three months after the date of the cancellation order, which is later than the cancellation application date.

This is to be timely filed because GSTR-10 (Final Return) becomes an important compliance requirement under the new GST laws for any body whose registration for GST is cancelled or surrendered. It maximizes the possibility of early dissolving of GST obligations and thus avoids creating further complicated situations.

1. Compliance with the Law: According to the GST Act, filing GSTR-10 is obligatory. Timely submission shows the taxpayer having completed all obligations under registration and properly exiting the tax system.
2. Avoidance of Late Fees and Penalties: A person who fails to file GSTR-10 on time attracts a late penalty of ₹200 per day (₹100 for CGST and ₹100 for SGST) with a maximum of ₹5000. This financial penalty can be saved by filing it on time.
3. Avoid Notices and Legal Consequences: Henceforth, a non-filing of Form GSTR-3A may result in the issue of notification by the GST department regarding defaults. Continuous non-compliance on the part of a taxpayer may give rise to best judgment assessment under Section 62 along with any other legal proceedings.
4. Close ITC Liability: GSTR-10 declares stock and facilitates liquidation of Input Tax Credit (ITC); any delay affects the reconciliation process, which may lead to complications in compliance.
5. The Filing of Returns Creates Future Links with the Tax Authorities: Filing returns on time demonstrates a taxpayer’s commitment to compliance and thereby reduces scrutiny improvement during audits.

Consequences of Late Filing or Non-Compliance of GSTR-10

Non-filing of GSTR-10 during the prescribed time frame is likely to evoke several legal and financial consequences under the GST regime. The government considers this issue extremely serious as it concerns such returns, which essentially settle final liabilities and complete taxpayer obligations following the cancellation of GST registration.

1. Late Fees and Financial Penalties: As per Section 47 of the CGST Act, a late fee amount of 200 per day shall be charged (Rs 100 for CGST and Rs 100 for SGST). This fee keeps getting counted until the return is submitted, having a maximum ceiling of Rs 5,000. Even if there is no tax liability to account for, this late fee remains.
2. Notice in Form GSTR-3A: If GSTR-10 is not filed by a taxpayer within the due date, the GST officer may issue a notice in Form GSTR-3A, requiring such return to be filed within 15 days. Further actions, however, may follow if the notice is ignored.
3. Best Judgment Assessment (Section 62 of CSGT Act): A tax officer is empowered to assess a taxpayer via the best judgment method once the taxpayer has been put on notice of an impending return failure. This means the officer shall assess the taxpayer’s liabilities above all the information available before him. Such an assessment may not reflect actual liabilities, thus giving room for excess demand.
4. Legal and Compliance Issues: Non-compliance can maintain un-updated registration records until GSTR-10 is filed. This state of affairs can generate further notices, plus heightened audit scrutiny, and if the taxpayer chooses to open another business and obtain a new GST registration in the future, it might prove to be quite the hassle.
5. Not Allowing Refunds or Final ITC Claims: GSTR-10 failure can keep taxpayers from claiming their final adjustment on ITC or producing the outstanding refund because of inadequate tax paperwork.
6. Delegate a Negative Impact on Compliance Rating: The compliance rating under the GST is still under-construction; however, the failure to file returns may work against a taxpayer in gaining goodwill, not only from the tax authorities but also from other stakeholders.

Why is Filing GSTR-10 Necessary?

GSTR-10 Filing is also known as the Final Return. It is a necessary procedure as per Goods and Services Tax (GST) law for taxpayers who canceled or surrendered their registration. It keeps all the liabilities ready for this process, which is essential for officially being out of the GST loop. The filing of GSTR-10 is the last step in the legal, moral, and proper disconnection from the GST system. This ensures that compliance is fully rounded out without any carrying issues from either taxpayer or tax authority.

1. Legal Requirement Under GST Law – As per Section 45 of the CGST Act, GSTR-10 is an obligatory filing. The law stipulates that any tax paying individual who cancels his/her registration must file this return within a prescribed period. Else, notices, assessments, and possibly legal penalties could follow.
2. Winding up of GST Compliances – Filing GSTR-10 effectively signifies the formal closure of all obligations under GST. In case this return is not filed, the cancellation process shall be deemed incomplete, which may expose the taxpayer to further legal liabilities and compliance requirements even after the business has ceased operations.
3. Declaration for Stock and Input Tax Credit (ITC) – Details that need to be filled by a taxpayer in his GSTR-10 return include: Closing stock at the time of cancellation and ITC claimed on those stocks. It is this data that taxes require before they can confirm that taxpayers do not carry forward undeserved credits ,remedying and settling tax liabilities correctly before leaving the system.
4. Prevention of Penalties and Notices – Timely filing of returns helps avoid late fees (₹200 per day) and notices in Form GSTR-3A, as well as best judgment assessments under Section 62. Adherence to deadlines would mitigate the legal complications and additional resource burden.
5. Closure of Records with Tax Authorities – GSTR-10 confirms the tax authorities that it has indeed been fulfilled by the taxpayer, therefore ensuring closure from administration, cutting the chances of investigating or auditing around this cancelled GSTIN.
6. Significance during Business Transition or Subsequent Registration – An open GSTR-10 filing can restrict the gaining of new GST registrations, hurt corporate integrity and compliance ratings, and place hurdles to transitioning to new business ventures or entities Tip: Timely submission of GSTR-10 itself establishes a sound compliance record, which is useful in future business engagements.
7. Supporting Integrity of the Tax System – Filing by GSTR-10 has the taxpayers boost the accuracy and transparency of the GST system. This would enable the government to follow up the final tax credits and stocks at the end to prevent revenue loss and misuse of ITC.

Conclusion

Returns filed under GSTR-10 stand for an important compliance exercise for the taxpayer whose GST registration has either been revoked or surrendered. This return simply closes out the tax liability by furnishing relevant details of the closing stock and settles remaining input tax credit (ITC) obligations. Late filing of this return does not only entail obligatory legal action but also has far-reaching consequences like penalties, legal notices, and assessments based on the best judgments of tax authorities. It guarantees that therefore taxpayers can smoothly exit from the GST framework while keeping their compliance history intact and maintaining transparency in the tax system. GSTR filing at such an early stage also sounds professional for the conduct of business and further helps make transitions for any future business and registration smooth. On the contrary, failure can only create unnecessary inconveniences, cash penalties, and administrative delays. Therefore, it is crucial to understand and follow the main requirements of GSTR-10, which ensures the complete discharge of GST liabilities while maintaining a healthy relationship with tax authorities.