GSTR 7

Good and Service Tax (GST) is an important taxation requirement in India for business owners as well as organisations. While for small businesses, GSTR 4 is required, businesses that deduct tax known as Tax Deducted at Source (TDS) have to file GSTR 7 returns. 

In this article, we will cover GSTR 7 meaning and the GSTR 7 filing process in detail. 

What is GSTR 7?

GSTR 7 is a monthly return that individuals or entities registered under GST for deducting tax at source have to file. GSTR 7 includes all the details of the TDS deducted, the TDS payable, and any TDS refunds claimed during a particular month. It is also a legal obligation for the tax deductor to declare their TDS liability for a given period.

The purpose of GSTR-7 is to ensure transparency and compliance in the TDS mechanism under GST. 
 

Importance of GSTR7

GSTR 7 is important for various reasons as mentioned below:

• To comply with regulations: Filing GSTR 7 ensures that you are in compliance with the provisions of section 51 of the Central Goods and Services Tax (CGST) Act, 2017, and related regulations.
• Input Tax Credit (ITC) Reconciliation: For the deductees, the details of TDS as reflected in GSTR 7 are crucial for reconciling the TDS amount with their input tax credit (ITC) claims. Filing of GSTR-7 facilitates the deductees in availing the correct ITC against their GST liabilities.
• Transparency and Documentation: GSTR 7 leads to the transparent declaration of TDS liabilities, TDS deducted, and other related details, ensuring proper documentation and record-keeping of TDS transactions as per the GST laws.
   

Who is required to file GSTR 7?

The key eligibility for filing GSTR 7 is engaging in transactions where TDS is applicable under GST regulations. Any registered taxpayer under the GST regime who deducts TDS is required to file a GSTR 7 return. 

This includes:
●    Government departments or establishments
●    Local authorities
●    Governmental agencies
●    Entities specified by the central or state governments based on the GST Council’s recommendations

The GSTR 7 category also extends to certain public sector undertakings, societies established by the central or state governments, and bodies set up by the Parliament or state legislatures with significant government equity. 

They need to deduct TDS from any payment made to a supplier of taxable goods or services if the total value of such a transaction exceeds Rs. 2.5 Lakhs. Here, The deductors must deduct TDS at 2% (CGST 1% + SGST 1%) in case of intrastate supply, or 2% (IGST) in case of interstate supplies.
 

Due Dates for GSTR 7

The due date for GSTR 7 filing is the 10th of the month following the month in which TDS was deducted. For instance, if TDS was deducted in January, the GSTR 7 for that month should be filed by the 10th of February. 

Let's understand the TDS deduction and GST with a practical example:

A supplier XYZ supplies goods worth INR 3,00,000 to a buyer ABC. The applicable GST rate is 18% (9% CGST + 9% SGST).

Calculation:

• Value of supply (excluding GST): INR 3,00,000
• CGST (9% of INR 3,00,000): INR 27,000
• SGST (9% of INR 3,00,000): INR 27,000
• Total invoice value: INR 3,54,000 (INR 3,00,000 + INR 27,000 + INR 27,000)
• TDS (2% of INR 3,00,000): INR 6,000 (1% CGST + 1% SGST)
• CGST TDS: INR 3,000
• SGST TDS: INR 3,000

Thus, ABC will deduct INR 6,000 as TDS from the payment to XYZ and file it in GSTR 7.
 

What is the format of GSTR 7?

GSTR 7 format has a total of 8 sections which will cover to help you with the GSTR 7 return filing process:

GSTIN: The taxpayer's GSTIN is auto-populated in this section.
Legal Name of the Deductor: This auto-filled section would have the taxpayer's name as registered in the GST portal.
Details of the Tax Deducted at Source: This section has information on the TDS deducted, including the GSTIN of the deductee and the amount of TDS (central/state/integrated).
Changes to Details of TDS for Any Earlier Tax Period: This section is about any corrections to be made to previously submitted TDS details.
Tax Deduction at Source and Paid: Taxpayers need to report the tax amounts deducted and paid to the government in this section.
Interest, Late Fee Payable, and Paid: Details of any applicable interest or late fees on the TDS amount have to be mentioned here.
Refund Claimed from Electronic Cash Ledger: Taxpayers seeking a refund of TDS from their electronic cash ledger are required to provide details in this section.
Debit Entries in Electronic Cash Ledger for TDS/Interest Payment: After submitting the return and payment of TDS and interest (if any), this section is auto-filled. 

Requirements for Filing GSTR 7

You will need the following to file GSTR 7:

• GSTIN and Login Credentials
• TDS Details
• TDS Liability Information
• TDS Refund Details 
• Issued TDS Certificate
• Digital Signature Certificate (DSC) or Electronic Verification Code (EVC)
• Transaction Records and Invoices
• Any other documents or records related to TDS deductions, TDS liability, TDS refund, and TDS certificate issuance that may be required for accurate filing of GST.
   

How to file GSTR 7?

Let’s have a look at the GSTR 7 filing process. 

Begin and Progress to the GSTR-7 Form Page

Start by logging into the GST Portal with your valid credentials (Username and Password). Once logged in, go to the 'Services' > 'Returns' dashboard, and select the financial year and the return filing period for which you need to file GSTR-7.

Inputting Details Across Different Tiles

Now enter details of the TDS deducted, including:

●    The GSTIN of the deductee 
●    The amount of TDS (central/state/integrated).

If there need to be corrections to previously submitted TDS details, you can make amendments here.

Payment of Tax

You need to provide the details of the tax liability and any interest or penalties applicable here. After that, you have to make payments through the electronic cash ledger. 

Filing Form GSTR 7 using DSC or EVC

After entering all the required information, verify the details to ensure accuracy. Once done, digitally sign the GSTR 7 form using a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC).

Checking Debit Entries in the Electronic Cash Ledger for Tax Payment

Post submission, you can check the debit entries in the electronic cash ledger to ensure that the payment has been successful.

Downloading the Filed Return

Once the GSTR-7 form is filed, you can download the acknowledgement and the filed return for your records.
 

Late Fees And Penalty For Delayed Filing Of GSTR 7

You have to pay a late fee for failing to file GSTR 7 by the due date.  The late fees amount is Rs. 100 per day under the Central Goods and Services Tax and Rs. 100 per day under the State Goods and Services Tax (SGST), totalling Rs. 200 per day.

Also, the maximum late fee for delayed filing should not exceed Rs. 5,000.

This late fee accrues daily from the due date until the date of actual filing. In addition to the late fee, an interest charge is levied on the outstanding amount of TDS, which is 18% per annum.

Conclusion

GSTR 7 annual return is important for businesses that deduct TDS under the GST regime.  The due date falls on the 10th of every month. It is crucial to file the GSTR 7 Form by the due date to avoid penalties and interest charges.