Table of contents:

• Introduction
• Key Information Included in GSTR-5
• Eligibility and Requirements for Filing GSTR-5
• Step-by-Step Guide to Filing GSTR-5 Return
• Key Deadlines and Penalties Associated with GSTR-5
• Amendments and Corrections in GSTR-5
• Common Errors in GSTR-5 Filing and How to Avoid Them
• Conclusion and Compliance Tips for Non-Resident Taxpayers
• FAQs

Introduction

The GSTR-5 Return is a tax filing mandated under the GST regime specifically for non-resident taxable persons (NRTPs) conducting business in India. This type of taxpayer is defined as someone without a permanent place of business in India who supplies goods or services within the country. By filing the GSTR-5, non-resident businesses ensure their Indian operations are transparent and compliant with GST requirements.

Key insights:

• Purpose: To record sales, purchases, tax collection, and claim input tax credits.
• Who Must File: Any non-resident business supplying taxable goods or services in India.
• Filing Requirement: A monthly return that captures all taxable activities within the filing period.

Key Information Included in GSTR-5

• Inward and Outward Supplies Overview: GSTR-5 requires detailed reporting of inward and outward supplies. This includes a summary of all goods and services sold within India and purchases from Indian suppliers.
• Tax Payments and Adjustments: The form also includes sections for tax liabilities and adjustments. NRTPs need to report the total GST amount due and any adjustments or advances received.
• TDS Declarations and Documentation: If Tax Deducted at Source (TDS) is applicable, NRTPs must include this in their GSTR-5 filing. Proper documentation is essential to support the TDS amounts and avoid discrepancies.

Eligibility and Requirements for Filing GSTR-5

To determine if you need to file GSTR-5, check if your business falls under the category of a non-resident taxable person. NRTPs typically include companies or individuals who operate in India temporarily, conducting taxable transactions without a permanent business setup.

Who Must File:

• Foreign Service Providers: Consultants, contractors, or advisors who provide taxable services within India.
• E-commerce Vendors: Non-resident businesses selling products or services to Indian customers.
• Short-Term Projects or Events: Companies conducting limited-time events, exhibitions, or trade fairs in India.

Compliance Requirement:

• Non-filing or late filing of GSTR-5 can result in hefty penalties and potential restrictions on future business activities in India.
• Penalties for Non-Filing: The Indian GST regime imposes daily late fees (₹200 per day), and failure to file can result in additional compliance scrutiny.

Always check eligibility to ensure your business aligns with the non-resident taxpayer criteria. Failing to do so can lead to non-compliance, affecting your business reputation in India.

Step-by-Step Guide to Filing GSTR-5 Return

The GSTR-5 return filing process can be completed online through the Indian GST portal. This section provides a detailed walkthrough for non-residents on how to file GSTR-5 accurately, including necessary documents and procedural tips.

1. Log In to the GST Portal:
   • Go to the official GST portal.
   • Use your temporary GSTIN (Goods and Services Tax Identification Number) and password.
2. Select GSTR-5 Form:
   • Under ‘Returns,’ locate and select the GSTR-5 form.
   • Ensure you’re on the correct tax period (month) for the filing to avoid errors.
3. Input Business Details:
   • Enter details for outward supplies (sales) and inward supplies (purchases). This includes invoice numbers, customer names, amounts, and GST charged.
   • Non-residents should be cautious with these details, as mistakes can lead to errors in tax calculation.
4. Claim Input Tax Credit (ITC):
   • Report the eligible input tax credit to offset against the tax collected.
   • The Indian government allows non-residents limited ITC claims, so verify eligibility before claiming.
5. Review and Submit:
   • Check the form for any missing or incorrect details.
   • Submit the form and pay the tax due through the online payment options on the GST portal.
6. Download the Acknowledgment:
   • After filing, download the acknowledgment for your records.
   • This document serves as proof of compliance, which is essential for future audits or clarifications.

Important: Alongside monthly filings, NRTPs need to file an annual summary. This is required for consolidated reporting of all transactions over the financial year. 

Key Deadlines and Penalties Associated with GSTR-5

Meeting the GSTR-5 filing deadlines is crucial. Non-resident taxpayers must file their returns by the 20th of the month following the taxable period. Missing this deadline incurs penalties and can lead to increased scrutiny from Indian tax authorities.

Important Deadlines:

• Monthly Due Date: GSTR-5 is due by the 20th of the subsequent month.
• Penalties for Late Filing: ₹200 per day of delay, with a cap depending on total tax liability.

Late filing impacts business credibility and incurs financial costs. Set up reminders or appoint a compliance officer to avoid missing deadlines.

Amendments and Corrections in GSTR-5

Mistakes in the GSTR-5 can be amended, but with limitations. The GST system allows amendments to minor details, but major data corrections require a formal request or resubmission through the help of GST authorities.

Fields Eligible for Amendment:

• Taxable Value Adjustments: If you need to correct amounts or tax rates.
• Tax Amount Errors: Minor changes to tax amounts can be amended without penalty.

Process:

1. Log in to the GST Portal and access the previous filing period.
2. Make Necessary Changes in eligible fields, ensuring accuracy.
3. Save and Re-submit the amended return.

Note: Major amendments, such as invoice alterations or transaction reversals, may not be permitted online and require contacting GST support.

Common Errors in GSTR-5 Filing and How to Avoid Them

Errors in GSTR-5 filing are common among non-resident taxpayers unfamiliar with Indian tax laws. Here are some frequent mistakes and best practices for avoiding them.

Common Mistakes:

1. Inaccurate Invoice Details: Incorrect invoice numbers or customer names.
2. Failure to Claim ITC Correctly: Non-residents often overlook eligible input tax credits.
3. Missed Deadlines: Due dates are crucial in GSTR-5 filing.

How to Avoid:

• Cross-Check All Entries: Ensure all invoice numbers and transaction details match your records.
• Maintain a Filing Calendar: Set up reminders for due dates and keep copies of submitted returns.
• Use the Checklist: Get a  compliance checklist for quick reference before filing each month or Ask your accountant to follow the same for accuracy.

Conclusion and Compliance Tips for Non-Resident Taxpayers

In summary, filing GSTR-5 is a critical task for non-resident taxpayers operating in India. The process demands attention to detail, adherence to deadlines, and accurate reporting. Here are some final compliance tips:

• Keep All Records: Retain copies of every filed GSTR-5 for audit and future reference.
• Set Up Reminders: To meet the monthly deadlines, use digital reminders.
• Regularly Check for Updates: Indian tax regulations can change, so staying informed is crucial.

For more information and official guidelines, refer to the GST India portal or the India GST Handbook for Non-Residents.

FAQs

Author: Anirban Sinha

A product manager with a writer’s heart, Anirban leverages his 6 years of experience to empower MSMEs in the business and technology sectors. His time at Tata nexarc honed his skills in crafting informative content tailored to MSME needs. Whether wielding words for business or developing innovative products for both Tata Nexarc and MSMEs, his passion for clear communication and a deep understanding of their challenges shine through.