Before the introduction of the hard limit, the Indian GST system allowed for some flexibility: a declaration for the previous period could be submitted late, paying a late fee, but retaining the right to a tax deduction and correct accounting of the transaction. The three-year limitation period removes this flexibility completely.
The mechanism works simply and without exceptions: the GSTN portal technically does not accept a declaration if more than three years have passed since the end of the reporting period. Not a penalty for being late, but a complete blocking of the opportunity to submit a document.
The practical consequence for a business is not an abstract compliance risk, but a direct loss of money. If the declaration is not submitted on time, the company loses the right to an incoming tax deduction for this period forever. For transactions with a significant volume of purchases, this may mean non-refundable VAT on amounts that would have been offset if the declaration had been submitted on time.
For Russian companies with subsidiaries, joint ventures or direct registrations as taxpayers in India, the risk is particularly noticeable where local accounting is delayed or outsourced without proper control from the Russian headquarters. Three years is a period that at first glance seems like a significant margin, but in practice it easily expires if the control of Indian tax reporting is not built into a regular process, but is checked on a case-by-case basis.
Checking the status of all declarations for the last three years with a local accountant or tax consultant is a task that should be closed in the near future, rather than postponed until the next period expires. Special attention is paid to the periods for which reporting was conducted in a transitional phase, when the company might not yet have established a stable Indian tax accounting process.
