These businesses either report nil tax returns or utilize their input tax credits to offset their liability.

GSTN's advice comes in the context of close to a million GST-registered businesses filing 'nil' returns on the last day of the last return filing cycle on 20 April, slowing down the system. The authorities' effort is to further streamline the indirect tax's IT system's performance because of the growing tax collections and tax base.

GSTN said in an advisory that about 45% of the two million monthly 'summary of transactions' filed by businesses on 20 April were either 'nil' returns or where there was no cash outgo (used tax credits.)

"These returns could easily have been filed earlier. Further, it is suggested that taxpayers may use the SMS filing option to file 'nil' returns as it would be quicker and more convenient to file 'nil' returns and will also help to reduce the queue in the GST system," said the advisory from GSTN.

Taxpayers are therefore advised to file their GSTR-3B form (the monthly summary of transactions) well in advance to avoid the last-day rush, the advisory said. The facility of filing nil returns with text messages was first offered in June 2020 and was later offered to small businesses filing quarterly returns in October of that year. Businesses using this facility do not require to log in to the GSTN's portal. Their statement of self-assessed tax can be filed and validated with just two text messages.

Experts said this facility is a boon to the entire ecosystem as it is user-friendly, convenient and time-saving, but it seems most businesses are not using it. "This may be due to a lack of awareness or lack of confidence in the system. More awareness programmes could be launched, especially in smaller cities," said Priyanka Sachdeva, a partner at accounting firm AMRG & Associates. The facility reduces the queue on the GST system and helps fellow taxpayers, Sachdeva said.

The finance ministry had said on 1 April that 20 April had also witnessed the highest ever tax collection on a single day ever. On that day, ₹68,228 crore was paid through 980,000 transactions. Centre and states had collected a record ₹1.87 trillion in April, mainly due to a surge in year-end inventory clearance.

Given the rising tax collections and growing tax base, streamlining the IT system's functioning is critical. According to official data, there are close to 14 million GST-registered businesses, and the number of tax returns filed by businesses had seen a steady rise since 2017 when GST was rolled out.