GSTR-1 and GSTR-2 are two of the GST return forms that need to be filed online each month by every registered taxpayers in India. The basic difference between GSTR 1 and GSTR 2 is that the former contains the details of the outward supplies (sales) made by a particular taxpayer in a given month, while the later will be used to furnish the details of inward supplies made by that person/business in that month.
Both GSTR 1 and GSTR 2 forms are required to be filed manually either directly on the GST portal or through a valid GST software. It is mandatory for taxpayers to get a GSTN registration to be able to fill their tax returns. It is mandatory for each taxpayer to file both the GSTR 1 and GSTR 2 forms in order to be able to pay his/her taxes through the GSTR 3 form.
Let’s find out more about these forms and how are they different from each other.
What is GSTR-1?
GSTR-1 is the first tax return form that needs to be filed by every registered taxpayer in India. This is a monthly return or statement of the outward supplies (sales) of goods and services made by a particular taxpayer in a given month. The form can be filled online on the official portal or through a good GST returns software.
GSTR-1 will contain the details of all the supplies or sales made by a person in a particular month. It will also include the details of the credit/debit notes, bills, sales amount, input credit (if any), turnover, etc. The sales details provided by a seller in his GSTR-1 will be sent to the relevant buyer for his confirmation. Once the details are matched, the returns will be accepted from both the parties.
GSTR-1 will be filed by the 10th of every month, except for some cases.
Composition scheme taxpayers, E-commerce operators, Non-resident foreign taxpayers and input service distributors are not required to file GSTR 1 return, as separate return forms are available for them.
GSTR-1 can be regarded as the most important GST return form as the compliance of the entire tax structure depends on it.
What is GSTR-2 and how is it different?
The GSTR-1 and GSTR-2 forms are used for different purposes, and they are quite different from each other.
GSTR-2 is a monthly return statement that contains the details of the purchases (inward supplies) made by a taxpayer in a given month. It will be furnished manually by a taxpayer by using the information provided by his supplier in their GSTR 1 form.
So, a supplier is required to file his GSTR 1 on time in order for the recipient (buyer) to be able to file his GSTR 2 on time.
GSTR-2 is required to be filed latest by the 15th of a given month, except for special conditions. The authorities have given extra 5 days (from the last date of GSTR-1 filing) to buyer to get their affairs in order and file the return on time.
It would be easier to file GSTR-2 as compared to GSTR 1 because most of the information in this form will be fetched directly from the GSTR 1 of the supplier.
GSTR-2 will also contain the details of the imports (from outside India) made by the buyer in the particular month. The buyer can also provide in this form the details of the credits (ITC) that he/she is eligible for that month.
The GSTR 2 form should be filed by all the registered taxpayers, except for the composition scheme and other exceptional cases.
Both the GSTR-1 and GSTR-2 forms are very important in order to maintain a transparent and compliant tax system in the country. A taxpayer cannot file his GSTR-3 (to provide tax details and to pay the tax for a month) without filing these two returns first.
It is also mandatory to file all the GST returns on time, as per the schedule given on the GSTN website, otherwise heavy penalty may be levied.