How to File Nil GST Returns When You Have No Transactions

How to File Nil GST Returns. As a GST registered business, you are required to file GST returns even if you had no business transactions or tax liability in a given period. This is known as filing a nil GST return. Many taxpayers wonder why they need to go through the process of filing returns when they had no sales or purchases.

The reason is that under GST law, filing returns is mandatory for all registered taxpayers, regardless of whether any business activity took place or not. Failing to file nil returns can attract late fees and penalties.

Also Read-What Is the Eligibility and Due Dates for Filing GST Return?

In this article, we’ll explain in detail the process of filing nil returns under GST, the consequences of not filing, and some tips to make the process smoother. Let’s dive in.

What is a Nil GST Return?

A Nil GST Return Is a Return that You File for A Tax Period in Which You Had:

• No outward supplies (sales)
• No inward supplies (purchases) on which reverse charge is applicable
• No tax liability
• No input tax credit to claim or reverse

Essentially, it’s a return stating that no business transactions attracting GST took place in that period. Even if your business was dormant or inactive, you still need to file nil returns to remain GST compliant.

Which GST Returns Can Be Filed as Nil?

Under the current return filing system, nil returns need to be filed for both GSTR-1 and GSTR-3B.

GSTR-1 is a monthly or quarterly return containing details of all your outward supplies. GSTR-3B is a self-declared monthly summary return. If you are registered under the regular GST scheme (turnover above Rs 5 crore), you need to file both GSTR-1 and 3B each month, even if they are nil returns. Those with turnover up to Rs 5 crore can opt for the Quarterly Return Monthly Payment (QRMP) scheme and file quarterly GSTR-1 and monthly GSTR-3B.

Composition dealers need to file nil GSTR-4 quarterly if they had no transactions. Nil GSTR-5 and 5A need to be filed by non-resident taxable persons and online information database access retrieval services respectively.

Due Dates for Filing Nil Returns.

The due dates for filing nil returns are the same as for regular returns:

• GSTR-1 (monthly): 11th of next month
• GSTR-1 (quarterly): 13th of month following quarter end
• GSTR-3B: 20th of next month for most states, 22nd or 24th for some
• GSTR-4: 18th of month following quarter end
• GSTR-5 & 5A: 20th of next month

It’s important to file your nil returns by the due dates to avoid late fees. Speaking of which, let’s look at the consequences of not filing nil returns on time.

Consequences of Not Filing Nil Returns.

Just because you had no transactions doesn’t mean you can skip filing returns. Not filing nil returns can lead to:

1. Late Fees.

Late fees of Rs 50 per day of delay will be levied for GSTR-1 and GSTR-3B, subject to a maximum of Rs 5,000, if some tax liability is there. For nil returns, the late fee is Rs 20 per day, subject to a maximum of Rs 5,000. The late fees will keep accumulating each day until you file the return.

2. Notice from Department.

If you don’t file returns for 2 or more tax periods, the GST department can send you a notice asking for reasons for non-filing. If you still don’t file the returns, it can lead to cancellation of your GST registration.

3. Cancellation of GST Registration.

If you fail to file GST returns for a continuous period of 6 months or more, the proper officer can cancel your GST registration after giving you a reasonable opportunity of being heard. Cancellation of registration means your GST number becomes invalid and you are no longer allowed to collect GST or claim input tax credit.

4. Blocking of E-Way Bill Generation.

Non-filing of 2 or more returns can also lead to your e-way bill generation facility being blocked on the e-way bill portal. This means you won’t be able to generate e-way bills for movement of goods, disrupting your business operations.

5. Negative Impact on GST Compliance Rating.

GST compliance rating is a score assigned to you based on your record of filing returns and paying taxes on time. Not filing nil returns can bring down your compliance rating, which is displayed to all your customers and vendors.As you can see, not filing nil returns can have serious repercussions for your business. So let’s now look at how exactly you can file nil returns for GSTR-1 and GSTR-3B.

How to File Nil GSTR-1 Return?

Here are the steps to file a nil GSTR-1 return on the GST portal:

1. Log in to the GST portal with your credentials.
2. Go to Services > Returns > Returns Dashboard.
3. Select the Financial Year and Return Filing Period (Month or Quarter) for which you want to file nil return.
4. Click on the GSTR-1 tile and click the ‘Prepare Online’ button.
5. On the GSTR-1 page, select the ‘Nil Rated Supplies’ tile under ‘Other Outward Supplies’.
6. Enter 0 (zero) under ‘Taxable Value’ and select the appropriate supply type. Also select the state code as the place of supply.
7. Click the ‘Save’ button and then go back to the main GSTR-1 page.
8. Click on ‘Generate GSTR-1 Summary’ to preview the nil return.
9. Verify the summary and click on ‘Submit’ to file the nil GSTR-1.
10. Select the Authorized Signatory and file the return using DSC or EVC.

That’s it – your nil GSTR-1 return will be filed. Make sure you download and save the filed return for your records.

How to File Nil GSTR-3B Return?

The process of filing Nil GSTR-3B is even simpler:

1. Log in to the GST portal and go to Services > Returns > Returns Dashboard.
2. Select the Financial Year and Month for which you want to file nil GSTR-3B.
3. Click on the GSTR-3B tile and click ‘Prepare Online’.
4. On the GSTR-3B page, select the option ‘Yes’ for ‘Do you want to file Nil return?’. This will auto-populate all values as zero.
5. Click on ‘Save GSTR-3B’ to save the nil return.
6. Click on ‘Submit’ to submit the return.
7. Select the Authorized Signatory and file the return using DSC or EVC.

Your nil GSTR-3B will be filed instantly. Again, make sure to download a copy of the filed return for your records.

Some Tips for Filing Nil GST Returns.

Here are some handy tips to make your nil return filing process smoother:

• Put nil return filing dates in your calendar and set reminders so you don’t forget to file by the due date.
• File your nil returns as soon as the month or quarter ends, instead of waiting for the due date. This way you avoid last minute technical glitches.
• Make sure your DSC and EVC are working before the due date. If your DSC has expired, get it renewed in advance.
• Check that your GST portal login credentials are working. If you have forgotten your password, reset it well before the due date.
• Keep your mobile number and email ID updated on the GST portal, as OTPs and important notifications are sent there.
• Download and save copies of all your filed nil returns securely. You may need them for reference or in case of any departmental notice.
• Even if you have no transactions, keep your GST registration active by filing nil returns. Don’t ignore notices from the department asking you to file returns.
• If you are planning to close your business or GST registration, file an application for cancellation of registration. Don’t simply stop filing returns.

In Summary, filing nil GST returns is a mandatory compliance requirement for all registered taxpayers, even if no business activity took place in a tax period. Failing to file nil returns can lead to late fees, notices, cancellation of registration and blocking of e-way bill generation.

The process of filing nil returns for GSTR-1 and GSTR-3B is quite simple and can be completed online in a few minutes. By filing your nil returns on time, you can stay compliant with GST laws, avoid penalties and maintain a good compliance rating.

Remember, having no business activity is still not an excuse for having no GST compliance! File your nil returns diligently and keep your GST record clean. Hopefully this detailed guide has clarified all your doubts about nil GST return filing. If you still have any questions, consult a Comment below and or visit the official GST portal for more information.

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C.K. Gupta

Hello, I am C.K. Gupta Founder of Taxgst.in, a seasoned finance professional with a Master of Commerce degree and over 20 years of experience in accounting and finance. My extensive career has been dedicated to mastering the intricacies of financial management, tax consultancy, and strategic planning. Throughout my professional journey, I have honed my skills in financial analysis, tax planning, and compliance, ensuring that all practices adhere to the latest financial regulations. My expertise also extends to auditing, where I focus on maintaining accuracy and integrity in financial reporting. I am passionate about using my knowledge to provide insightful and reliable financial advice, helping businesses optimize their financial strategies and achieve their economic goals. At Taxgst.in, I aim to share valuable insights that assist our readers in navigating the complex world of taxes and finance with ease.