Even when there is no sale or purchase in a month for your business, it would still be required to file GST returns on time. Many taxpayers are under the misconception that if no business is conducted then return filing is not necessary, which is wrong. Under GST laws, you need to file a Nil Return at the end of every tax period when no transaction has taken place. Non-compliance with this may attract late fees, notices, and other unnecessary compliance hassles.

This guide will explain everything you need to know about GST Nil Returns: what they are, why they are mandatory, the step-by-step online filing process, and the penalties for delayed filing.

What is GST return

A GST return is a necessary statement filed by every registered taxpayer for each tax period. It provides a summary of outward supplies or sales, inward supplies or purchases, Input Tax Credit availed, and the tax payable or paid. In case there are no transactions in the month, the said return must still be filed. A period with zero business activity does not exempt an individual or business from filing.

So, whether business activities are carried out or not, GST returns are required to be filed.

Yes. Under GST, every registered person is required to furnish the returns prescribed, for every tax period, irrespective of the turnovers or volume of activities.

What is a GST Nil Return?

A GST Nil Return is filed when a registered taxpayer has no sales, no purchases, and no ITC or tax liability for a given month or quarter. Even in the absence of any business activity, the GST law requires the taxpayer to submit this return. Delaying the filing of a Nil Return also attracts late fees, just like in the case of a regular GST return.

Types of GST Nil Returns

Under the GST compliance framework, Nil Returns may be required for two important forms:

1. GSTR-1 (Outward Supplies Return)

Filed monthly or quarterly to report outward supplies. When there are no sales, a Nil GSTR-1 must still be submitted.

2. GSTR-3B (Monthly Summary Return)

A monthly self-declaration summarising sales, purchases, ITC, and tax liability. In case all figures are zero, a Nil GSTR-3B has to be filed. Failure to file them timely can bar subsequent filings and result in increasing late fees and compliance problems.

How to File Nil GSTR-3B Online

Filing a Nil GSTR-3B is straightforward and can be completed entirely on the GST Portal:

1. Sign in to the GST Portal and open the Returns Dashboard.
2. Select the month or tax period you want to file for.
3. Click on GSTR-3B – Prepare Online.
4. When the system asks if you wish to file a Nil Return, choose “Yes”.
5. Verify all details shown on the confirmation page.
6. Submit the return using either EVC (OTP) or DSC.

Your Nil GSTR-3B will be filed instantly once the submission is completed.

How to File Nil GSTR-1 Online

To submit a Nil GSTR-1, follow these steps:

1. Log in to the GST Portal and open the Returns Dashboard.
2. Choose the applicable month.
3. Click on GSTR-1 – Prepare Online.
4. Under Other Details, open B2C (Others).
5. Select the Place of Supply and enter zero in all relevant fields.
6. Click Save, then return to the main summary page.
7. Click Generate Summary.
8. Review the information and click Submit.
9. File the return using EVC or DSC.

Your Nil GSTR-1 for that period will then be successfully filed.

Penalties for Late Filing of Nil GST Returns

Nil returns are also liable for late fees if not filed in time. While the penalty earlier was ₹ 200 per day (₹ 100 CGST + ₹ 100 SGST), the CBIC later reduced these charges to make compliance easier.

Current Late Fee for Nil GSTR-1 & GSTR-3B

The late fee for Nil GSTR-1 and Nil GSTR-3B is ₹20 per day, ₹10 under CGST and ₹10 under SGST. This late fee amount keeps accruing every day until the defaulted return is filed. If there is any tax liability for that period of the taxpayer, then a higher late fee would be applicable as per the GST law.

Where these filings are not timely made, subsequent filings may be barred, and late fees, along with compliance matters, will mount.

Conclusion

Every registered taxpayer needs to file GST returns, whether there were sales, purchases, or any financial activity during the month. Even in completely inactive months, a Nil GST Return is to be necessarily filed. Delayed filling of GSTR-1 or GSTR-3B will attract late fees that keep on accumulating with each passing day and may also disrupt future return filings along with notices for compliance from the department. Timely filing not only protects you from penalties but also ensures your GST registration remains active and in good standing.

Nil Returns are overlooked by many businesses, assuming inactivity provides them with an exemption. However, according to the GST law, every tax period, whether on a monthly or quarterly basis, is subject to filings. Consistency with these filings is crucial for smooth operations, hassle-free audits, eligibility to claim ITC in the future, and for maintaining a clean compliance rating on the GST portal.

Setindiabiz makes this process easy for the businesses. We assist from scratch to the final filing of Nil GSTR-1 and GSTR-3B in a timely manner. One will be able to prevent delayed fees, return pendency, maintain active GST status, and overall compliance for such months where a business does not see any activities, with professionals by your side. Be it small startups or vast enterprises, expert compliance management protects the business from unnecessary penalties and keeps your GST profile flawless.

FAQ

What is a Nil GST Return?
A Nil GST Return is a return filed when a registered taxpayer has no sales, no purchases, and no tax liability for a particular month or quarter. Even if the business has not undertaken any activity at all, the GST law still requires the taxpayer to submit a Nil GSTR-1 and a Nil GSTR-3B. Filing these returns shows that the business had zero transactions during the period.

2. Is it mandatory to file a Nil GST Return even if my business had no transactions?
Yes, it is mandatory. Under GST law, every registered person must file the prescribed returns for every tax period regardless of whether any business activity took place. A period with no sales or purchases does not exempt a taxpayer from filing. Non-filing can lead to notices, penalties, and blockage of future return filings.

3. Which GST returns require Nil filing?
Nil filing is mainly required for GSTR-1 and GSTR-3B. GSTR-1 must be filed as Nil when there are no outward supplies, and GSTR-3B must be filed as Nil when there are no sales, no purchases, no ITC, and no tax liability. Even in a completely inactive month, both returns must still be submitted.

4. What is the late fee for not filing Nil GST Returns on time?
If Nil GSTR-1 or Nil GSTR-3B is filed late, a late fee of ₹20 per day is charged ₹10 under CGST and ₹10 under SGST. This fee accumulates every day until the return is filed, and the portal will not allow filing of subsequent returns until all pending returns are cleared.

5. What was the earlier penalty for Nil GST Returns?
Earlier, the late fee for Nil returns was ₹200 per day (₹100 CGST + ₹100 SGST). To ease the compliance burden, the government reduced this to ₹20 per day. This reduction helps taxpayers avoid excessively high penalties for months where the business remained inactive.

6. Is interest applicable for Nil GST Returns?
No, interest is not charged on Nil GST Returns because interest applies only when tax is payable. Since Nil returns have no tax liability, only late fees apply. However, late filing should still be avoided to prevent unnecessary penalties and compliance issues.

7. What happens if I don’t file Nil GST Returns for many months?
If Nil GST Returns remain unfiled for several months, the late fees accumulate and the GST portal blocks filing of future returns. This can lead to notices from the department, potential suspension or cancellation of GST registration, and serious compliance disruption. Long pendency also affects the business’s compliance rating.

8. Can I skip Nil GSTR-1 if I have no sales but have purchases?
No, GSTR-1 cannot be skipped. Even if the taxpayer has purchases but no sales, GSTR-1 must still be filed as Nil. Purchases are not reported in GSTR-1, so having inward supplies does not remove the requirement of filing a Nil GSTR-1.

9. Can Nil GSTR-3B be filed through SMS?
Yes, Nil GSTR-3B can be filed via SMS if certain conditions are met. The taxpayer must have no outward supplies, no inward supplies, no tax liability, no ITC, and no pending late fees. This facility provides a quick option for inactive taxpayers to stay compliant.

10. What is the step-by-step process to file Nil GSTR-3B?
To file Nil GSTR-3B, the taxpayer must log in to the GST portal, open the Returns Dashboard, select the relevant month, and click “Prepare Online” under GSTR-3B. When prompted, they should choose “Yes” for filing a Nil return, verify the auto-filled details, and complete the filing using EVC or DSC. The return gets submitted instantly upon successful verification.

11. How do I file Nil GSTR-1?
To file Nil GSTR-1, the taxpayer must log in to the GST portal, select the applicable tax period, and open the GSTR-1 form. All sections should be entered with zero values, after which the summary must be generated and submitted. The filing is completed through EVC or DSC, marking the Nil return as successfully filed.

12. What if I miss filing returns for more than 3 years?
If GST returns remain unfiled for more than three years, recent GSTN guidelines suggest that such returns may become permanently time-barred. This means the taxpayer may lose the ability to file those old returns altogether, affecting tax records, compliance rating, and legal standing.

13. Does non-filing of Nil Returns affect ITC claims?
Yes, non-filing affects ITC claims indirectly. Delayed GSTR-1 and GSTR-3B filings can lead to ITC mismatches, vendor reconciliation issues, and blockage of credits in future months. Proper filing ensures the taxpayer remains eligible to claim Input Tax Credit without disruption.

14. Does filing Nil Returns help maintain active GST status?
Yes, timely filing of Nil returns is essential for maintaining an active GST registration. It prevents suspension, avoids notices, ensures future returns can be filed smoothly, and maintains a clean compliance score on the GST portal. Regular filing also prevents unnecessary penalties.

15. Why do businesses receive notices even with zero activity?
Businesses often receive notices despite having no transactions because the GST law focuses on filing status, not turnover. If a taxpayer fails to file the required return, the system automatically generates notices, calculates penalties, and may block further filings even if no business was done.

16. Can late fees be waived for Nil GST Returns?
Late fees are waived only when the government announces an amnesty scheme or issues a special notification. Routine Nil return late fees cannot be waived. However, filing on time avoids accumulating unnecessary penalties.

17. How can professional filing help?
Professional filing ensures that all Nil returns are filed accurately and on time, preventing late fees, notice issues, and filing blockages. Compliance experts handle complete return submission, keep GST status active, and maintain a zero-pendency record making it especially useful for months where the business remained inactive.