First and Final Return :
In the normal course, any person doing business would be taking registration as and when he becomes liable for registration. It has also been prescribed that a person shall be liable to get registered when he crosses 90% of the threshold for becoming liable to pay tax and therefore, in normal cases, a person would already be registered by the time he becomes liable to pay tax. However, the section 19 (1) of the draft model law allows taxpayers to register within thirty days from becoming liable to register. In some cases it may happen that even if the tax payer has applied for registration within thirty days from the day he become liable to register, he may become liable to pay tax even before he has been granted registration. In addition, he could have received taxable supplies within those thirty days on which he may choose to take input tax credit.
For the period before he gets his GSTIN, the returns cannot be filed electronically on the GST common portal. To enable the taxpayer to declare the taxable supplies made by him before grant of registration and to allow him to take credit of taxes paid on his input during that period, section 27A of the draft model bill allows for filing a first return. The format for this return including the statement of outward and inward supplies associated with it is the same as that for regular return but this return will have to be filed and processed manually.
On cancellation of registration either on closure of business or where the taxpayer is no longer liable to pay tax, the input tax credit for inputs held in stock and inputs contained in finished and semi-finished goods will have to be reversed as per section 21 (7) of the draft model bill. Similarly, as per the same section, input tax credit on capital goods as per the residual value will have to be reversed. To enable the tax payer to discharge these liabilities, the draft model bill provides for a Final Return in Section 31. This return has to be filed within three months of cancellation of registration.