Understanding GSTR-2 Filling

Goods And Services Tax, whether you like it or not, is a structured approach in detailing the transactions that happen in India and further, reporting them on a line item basis. There are supposedly 8.4 million assessees registered with GST, 6.2 million are already registered in the GST portal. These assessees are expected to file roughly 8 billion transactions in a month.

This calls for a much robust Information Technology architecture. Apart from this, the transactions have to be reported properly, so that information keeps flowing smoothly and input tax credits are availed whenever required.

The journey of a free flow of credit and uploading transaction wise information starts from Form GSTR-1. It has the details of all outward supplies made by the suppliers. Similarly, details of all inward supplies of goods or services received during a month have to be filed in a Form GSTR-2.

The end result is that all inputs and outputs for a particular dealer are kept handy in the Electronic Cash Ledger. Although the above forms have to be verified and accepted by the counter party, i.e. the transactions have to be approved by both supplier and recipient. Once all transactions are approved, then electronic cash ledger is generated, and the amount payable or available as credit is displayed.

Learn more about invoice matching in GST.

What Is GSTR-2 ?

Once the suppliers have filled up their information of sales made during a tax month in Form GSTR-1, it is now the task of recipients to file their receipts of goods or services in Form GSTR-2. This form is a culmination of all the details made by all the suppliers and is available for validation for the recipients.

It has to be filed by the 15th of the next month, i.e. 5 days after the filing of GSTR-1.

Since the details of the suppliers’ data are already available, this form is auto-populated from such details. The dealers will have to approve or amend the transactions one by one to get input tax credit eligibility.

There will be a penalty if GSTR-2 in not filed on time. Read about GST Penalties.

Who needs to file GSTR-2?

GSTR-2 has to be filed by all the dealers who are registered under the GST Act. Those who had filed GSTR-1 shall be required to file GSTR-2 as well. Likewise, input service distributors and dealers registered under the compounding scheme shall not be required to file GSTR-2.

Even E-Commerce Operators, Tax deductors, and Non-resident dealers need not file GSTR-2. They have a separate, respective forms to file.

What needs to be filed in GSTR-2?

This is a much-detailed form when compared to GSTR-1. Let’s have a look at the contents of the form.

• Name and address of the dealer – this field shall be auto-populated after logging in to the GSTN portal.
• 15-digit GSTIN of the dealer – this field shall be auto-populated after logging in to the GSTN portal.
• The return filing period – the month and the year for which the return is being filed.
• Details of all the incoming materials and services received by the dealer – this field is auto-populated with the details of GSTR-1. This is a key part of the form that displays the purchases of the dealer made during the tax month. There can be differences in the list of invoices, which can be corrected by the dealer filing the return. Such dealer can fill in the extra or additional details manually. The corresponding supplier will have a notification to that effect, and the same will be reflected in GSTR-1A, which the supplier has to accept accordingly.
• Changes made to details of incoming materials from previous periods – similar to the above, where there are changes made to the details of incoming supplies relating to previous periods. Dealers have to fill this manually. Moreover, the suppliers have to accept such changes in the relevant GSTR-1A.
• Details of all imports made of capital goods or goods – since imports are considered as an inter-state movement of goods, accordingly IGST will be charged in this case.
• Changes made to the details of imports made during the previous periods – any changes thereof relating to the previous periods have to be reported in this field.
• Details of services received from persons resident outside India – This field relates to import of services. GST has to be paid on a reverse charge basis.
• Changes made to the details of services received from persons resident outside India of previous periods – any changes with respect to imports of services made during a previous period has to be updated here.
• Details of debit notes or credit notes raised during the tax period – the details mentioned herein shall be available for validation in respective counter party forms.
• Details of changes made to the debit or credit notes of previous periods – the changes made to the debit or credit notes of the previous months are to be mentioned here. Any such change will directly impact the reverse charge taxes.
• Details of materials received from unregistered persons during the tax month – this is a common field for mentioning all kinds of supplies that have been received from unregistered persons, both intra-state and inter-state. The supplies that are received shall include materials received from an unregistered person, composition dealer and remaining non-GST, exempted or zero-rated supplies.
• Details of input tax credit received from an Input Service Distributor – Input service distributor is required to file GSTR-5, the details of which shall be auto populated in this heading. This type of credit arises when head office disburses credits to its branch offices. As a result, the branch office can claim credit related to the same.
• Details of credits arising out of tax deducted at source – where the dealer transacts in specified contracts, resulting in tax being deducted at source, the details of the same has to be mentioned here. The field is auto-populated from GSTR-7 filed by the person deducting tax.
• Details of credits arising out of tax credited at source – under the GST law, E-Commerce operators are required to collect tax at source while making payment to its merchants. Further, these E-Commerce operators are required to file GSTR-8, the details of which are auto populated in this field.
• Details of input tax credit received against an invoice – an invoice against which input tax credit was claimed, but the supplier, due to certain reasons did not file the same, can be filled up in this field.
• Details of output tax liability arising due to reverse charge, even though no invoice was received – as per the GST provisions, even though an invoice is not received but due to the provisions of time of supply, the GST implication comes earlier, then such details of tax liability arising out of such transactions have to be mentioned here.
• Any amendments made to the above fields
• Details of tax paid – this heading includes tax paid for the reporting period, tax paid on account of reverse charge and tax paid for the previous periods as well.
• Details of input tax credit reversals – in the event of credit being reversed due to any reasons, this field will be filled in. The reasons are available as a drop down to choose from.
• Amendments to the details of input tax credit reversals – any changes made with respect to above field has to be mentioned here.

Format of GSTR-2

This is the official format of GSTR-2 announced by GSTN.

Common errors in filing purchase transactions

Even after carefully filing the forms, there are certain errors or omissions that might creep up while filing the final returns. These can be inadvertently made while filling up the form. Some common errors that can come up can result due to an omission of invoices both by the purchaser or the receiver.

The purchaser might record an invoice that is missing in the purchase ledger of the recipient. As such, the supplier shall ask the recipient to accept the additional invoice after proving its validity. The recipient has to accept the same in GSTR-2A. Until such acceptance, provisional credit shall be granted to the supplier.

The supplier might mention wrong, incorrect details such as incorrect GSTIN of the purchaser. The purchaser shall have the option to modify the invoice to such extent or even delete the same. The supplier in GSTR-1A will then accept such changes.

Other common mismatch events are incorrect amounts filed by both the parties. The option to modify or delete such mismatched invoices are available with both the supplier and purchaser in their respective forms.

Where a purchaser finds an invoice that is not available in accounts, i.e. goods are in transit, and the invoice for the same has not been received, the purchaser will have the option to keep the same pending for the tax month. There can also be a mismatch of HSN/SAC codes for the goods or services mentioned by both the parties. In both cases, the counter party can modify the invoice information.

GSTR-2 Filing in ProfitBooks

How To File GSTR-2 Online?

Apart from filing GSTR-2 directly on GSTN portal, you can use third party softwares which are simpler to use. Most of these software accept data from your existing accounting software and help you upload it to GSTN portal. Almost all the GSPs have come up with their return filing solution.

However, matching purchase records and doing reconciliation manually will be extremely time consuming and prone to errors.