GSTR-10 Explained: Applicability, Due Dates and Penalties

What is GSTR-10 and Its Purpose?

GSTR-10 is a final, one-time return that a registered person must file when their GST registration is either canceled or surrendered. This return is a crucial step for a clean exit from the GST system. Its primary purpose is to ensure that all outstanding tax liabilities, particularly those related to the Input Tax Credit (ITC) on the closing stock, are settled with the government. Filing this return correctly and on time is essential for a proper and lawful closure of a business’s GST obligations.

Who Must File GSTR-10?

Filing GSTR-10 is mandatory for all registered taxable persons whose GST registration has been canceled or surrendered. However, the following categories of taxpayers are exempt from this requirement:

• Input Service Distributors (ISD): Businesses that receive invoices for input services and distribute the ITC to their branches.
• Composition Scheme Taxpayers: Small taxpayers who have opted for the composition scheme under Section 10 of the Central Goods and Services Tax (CGST) Act, 2017.
• Non-Resident Taxable Persons (NRTP): Taxpayers who are not residents of India but undertake taxable supplies.
• Persons Deducting TDS: Entities required to deduct Tax Deducted at Source (TDS) under Section 51 of the CGST Act, 2017.
• Persons Collecting TCS: E-commerce operators required to collect Tax Collected at Source (TCS) under Section 52 of the CGST Act, 2017.

GSTR-10 Filing Due Date and Late Fees

The GSTR-10 return must be filed within three months from the date of the GST registration cancellation or the date of the cancellation order, whichever is later. For instance If your GST registration was canceled on January 1, 2025 and you received the official cancellation order on January 5, 2025, the due date for filing GSTR-10 would be April 5, 2025.

Penalty for Late Filing: If GSTR-10 is not filed within the specified due date, a tax officer will issue a notice requiring the taxpayer to file the return within 15 days. If the taxpayer still fails to comply, the tax officer can proceed with a final assessment and pass an order for the cancellation, including the amount of tax payable along with interest and a penalty. The late fee is ₹100 per day for CGST and ₹100 per day for SGST, which means a total of ₹200 per day of delay.

Key Details to Report in GSTR-10

The GSTR-10 form is divided into several sections, with some details being auto-populated based on your GST registration data. The key sections where information must be manually furnished are:

1. Effective Date of Surrender/Cancellation: The date from which the GST registration is considered canceled, as mentioned in the cancellation order.
2. Reference and Date of Cancellation Order: The unique identification number and date of the order issued by the GST authorities.
3. Particulars of Closing Stock: This is the most critical section. You must provide details of any closing stock held on the date your business ceased operations. The ITC availed on this stock must be reversed and paid back to the government. This includes:
   • Inputs held in stock.
   • Inputs contained in semi-finished or finished goods.
   • Capital goods or machinery.
4. Tax Payable and Paid: Details of the ITC reversal or any other tax payable, along with the amounts paid from your electronic cash and credit ledgers.
5. Interest and Late Fee: A detailed breakdown of any interest and late fees payable or paid.
6. Verification: A final step where the taxpayer digitally signs the return using a Digital Signature Certificate (DSC) or Aadhaar-based signature verification.

How to Handle Closing Stock and ITC Reversal

The accurate reporting of closing stock is vital to avoid future disputes. Here’s a breakdown of the specific rules:

• Inputs (with invoices): If you have invoices for the inputs held in stock or in semi-finished/finished goods, the ITC to be reversed is calculated directly based on the credit originally availed on those invoices.
• Inputs (without invoices): If invoices are unavailable, the value of the inputs and the ITC must be estimated based on the prevailing market value. This estimation must be certified by a practicing Chartered Accountant or Cost Accountant and the certificate must be uploaded along with the GSTR-10, as per CGST Rule 44(3).
• Capital Goods: The value of the ITC to be reversed on capital goods or machinery is calculated using a specific formula. The ITC is reduced by a fixed percentage—1/60th of the original value for every month or part of a month from the invoice date, considering a useful life of five years.

FAQs

Q1: What is the difference between a final return (GSTR-10) and an annual return (GSTR-9)?

An annual return (GSTR-9) is filed once a year by all regular taxpayers to reconcile their annual GST liability. A final return (GSTR-10) is a one-time return filed only by taxpayers whose GST registration has been canceled or surrendered to close their tax account.

Q2: Can I file a Nil GSTR-10 return?

Yes, you can file a Nil GSTR-10 return if you have no closing stock on which Input Tax Credit was availed and no other liabilities to report.

Q3: Is filing GSTR-10 mandatory even if I have no stock?

Yes, GSTR-10 is a mandatory final return for all non-exempt taxpayers whose registration has been canceled. Even with no stock or tax liability, the return must be filed to formally close the registration.

Conclusion

Filing the GSTR-10 return is the final and non-negotiable step in the GST registration cancellation process. It serves as a comprehensive statement of a taxpayer’s closing liabilities and is essential for a clean and legal closure. By understanding the due dates, the applicability and the specific requirements for reporting closing stock and ITC reversal, taxpayers can ensure full compliance. Timely and accurate filing of GSTR-10 helps in avoiding penalties, fines and the hassle of further legal proceedings, allowing for a smooth and conclusive exit from the GST regime.

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