GSTR-1 and GSTR-2 are monthly GST returns used in India to report transaction data, with the primary difference being that GSTR-1 details outward supplies (sales) and GSTR-2 details inward supplies (purchases). GSTR-1 is filed by suppliers to report tax liabilities, while GSTR-2 (largely replaced by auto-populated GSTR-2A/2B) was used by buyers to reconcile Input Tax Credit (ITC).
Just as the GSTR-1 mentioned above deals with outward supplies, the GSTR-2 deals with inward purchases of taxable goods, services or both. GSTR-2 is a monthly inward supply report, which can also include reverse charge transactions.
It provides taxpayers with a transparent and up-to-date record of the purchases made in a particular period. GSTR 2 Overview: GSTR 2 was initially proposed as a return for taxpayers to report their inward supplies and claim ITC.
GSTR-2 contains details of all the purchases transactions of a registered dealer for a month. It also includes purchases on which reverse charge applies. The GSTR-2 filed by a registered dealer would have been used by the government to check with the sellers' GSTR-1 for buyer-seller reconciliation.
Types of GST in India
CGST (Central Goods and Services Tax) SGST (State Goods and Services. IGST (Integrated Goods and Services Tax) UTGST (Union Territory Goods and Services Tax)
Maximum marginal rate is the highest rate of tax at any income level. This means for those with incomes between Rs 2 crore and Rs 5 crore, 39% will be the highest applicable tax rate, and for those with incomes above Rs 5 crore, it will be 42.74% — the highest tax rate since 1992.
These terms represent different components of the Goods and Services Tax (GST), India's unified tax system on goods and services. CGST (Central GST) and SGST (State GST) are levied on transactions within a single state, whereas IGST (Integrated GST) applies to inter-state sales or imports.
It was meant to enable automatic matching with the supplier's GSTR-1 and validate ITC eligibility. However, GSTR-2 has been suspended from active use since September 2017, with GSTR-3B taking over many of its functions.
The GSTR 2 has been created to get inward supply details and help the taxpayers verify what the suppliers are reporting. While its filing is suspended for the time being, yet the return is important for the overall functioning of the GST system and also influences the manner of data matching and validation of ITC.
Commencement and Duration of the Five-year period
This requirement will be satisfied where the premises have been leased for a continuous period of at least 5 years[2] between when they were built and when they were sold.
How to Use Different Kinds of Returns?
GST 2.0 is a restructured tax framework introduced by the GST Council, featuring a simplified two-rate system of 5% and 18%, with exemptions for essentials. It replaces the earlier multi-slab structure and introduces a 40% rate for sin and luxury goods.
The following category of tax persons are exempted from payment of 1% of GST in Cash 1. Registered taxpayers who have paid income tax above Rs 1.00 in Income Tax during the last two years continuously 2. Taxpayers who have zero-rated supplies without payment of duty and claimed refund of more than Rs 1.00 lac 3.
GSTR 2 - Purchase Return
GSTR-2 is a purchase return that is required to be filed by every GST registered person. Tax payers are to enter details relevant to their inward supplies in the GSTR 2 purchase return.
NRIs are not eligible for the simpler ITR-1 form and must file using ITR-2 or ITR-3 depending on their specific financial situation. Choosing the correct form ensures compliance with Indian tax laws and avoids penalties or delays.
GSTR-2 is the monthly GST return to be filed by taxable person registered under GST. GSTR-2 will include the details of all inward supplies made in the given period.
GST in India has four components – CGST, SGST, IGST, and UTGST. The charge depends upon whether the transaction is intra-state or inter-state. The Central Government charges CGST, while the State Governments and Union Territories levy SGST and UTGST respectively, on intra-state supplies.
GST is leviable only if aggregate turnover is more than 20 lacs. (Rs. 10 lacs in 11 special category States). For computing aggregate supplies turnover of all supplies made by you would be added.
The GSTR-2 was suspended in September 2017 due to complexities in reconciliation and filing. It required matching buyer and seller invoices, which led to errors and delays.
GSTR-1 contains details of all outward supplies made by the supplier. Contents: GSTR-2A contains various sections, including details of invoices, debit notes, credit notes, TCS, TDS, and amendments related to outward supplies made by the supplier to the recipient.
The GST Reform Bill (popularly called GST 2.0), cleared by the GST Council, will roll out from September 22, 2025, just ahead of the festive season. This marks the biggest overhaul since GST was first introduced in 2017.
Billing of IGST: In the case of an inter-state transaction, the seller must bill IGST on the invoice. The buyer then pays this amount, and the seller remits it to the central government.
Calculation: Base Price: ₹50,000. GST Amount: ₹50,000 × 18% = ₹9,000. Total Amount: ₹50,000 + ₹9,000 = ₹59,000.
India has four types of GST: Integrated Goods and Services Tax (IGST), State Goods and Services Tax (SGST), Central Goods and Services Tax (CGST), and Union Territory Goods and Services Tax (UTGST).