Key points on return filing and availing of credit as approved by GST Council in 27th Meeting
1.Unidirectional Flow of invoices
There shall be unidirectional flow of invoices uploaded by the seller on anytime basis during the month which would be the valid document to avail of input tax credit by the buyer. Buyer would also be able to continuously see the uploaded invoices during the month. In view of one directional flow, i.e., only supplier will upload details of invoices of outward supplies and there shall not be any need to upload the purchase invoices by the recipient. This new design is unlike the to-and-fro movement in the earlier system where purchase invoices were also uploaded by the recipient during reconciliation of credits which could be accepted/rejected by the supplier. After full implementation of new design there will be no need for invoice matching as input credit will be given only on invoices uploaded by the seller and confirmed by the buyer.
2.Availing of ITC through Upload-Lock-Pay process & no automatic reversal of credit
Invoices can be uploaded continuously by the seller (unidirectional) and can be continuously viewed and locked by the buyer for availing of input tax credit.Simply put, the process would be “UPLOAD – LOCK – PAY” for most taxpayers and when implemented the availing of ITC on provisional basis would be withdrawn.
Unlike the existing system laid down in the GST law there shall not be any automatic reversal of input tax credit from buyer due to non-payment of tax by the seller. Under the new design, in case of default in payment of tax by the seller, recovery shall be made from the seller, however, reversal of credit from buyer shall also be an option available with the revenue authorities to address exceptional situations like missing dealer, closure of business by supplier or supplier not having adequate assets, etc.
3.Facility to file returns through sms for NIL return filers
NIL return filers (no purchase and no sale) shall be given facility to file return by sending SMS. This step would enable such persons to file their returns at a click of button on their mobiles without need of logging into GSTN website which would also take load off the website and help of being operational without any glitches.
4.Quarterly filing of return
The Council approved of quarterly filing of return for the small taxpayers having turnover below Rs. 5 Crore as an optional facility. Quarterly return shall be similar to main return with monthly payment facility. Currently the facility to file quarterly return, i.e., GSTR-1 is available in respect of assesses having turnover below Rs. 1.50 crore. The payment of GST would continue to be on monthly basis under the new system.
5.Simplified returns for small traders
For small traders making only B2C supply or making B2B + B2C supply simplified returns have been designed called as ‘Sahaj’ and ‘Sugam’. In these returns details of information required to be filled are lesser than that in the regular return. This is a new development of 28th meeting, as such separate return for small traders was not envisaged in the 27th GST Council meeting. Further in view of term ‘traders’ used in the press release it appears that this benefit would be available only to traders of goods and manufacturers/suppliers of services may not be able to use these return forms. Further, what constitutes ‘small trader’ is not explained in press release. Therefore, we need to wait till the return forms are finally notified.
6.Simple format with two main tables
The new return is stated to be simple with two main tables – One for reporting outward supplies and another for availing of input tax credit based on invoices uploaded by the supplier. The current return formats, viz, GSTR-1, GSTR-2 and GSTR-3 are quite complex with multiple tables which makes the task of taxpayers as well as professionals tough. The simple format will benefit all the taxpayers, specially the small ones.
7.Provision of amendment in return
Currently facility for revision of GST return is not available which results in lot of hardship to taxpayers in cases where any errors or omissions creep in while filing the GST returns. New return design provides facility of amendment to invoice and also other details filed in the return. Amendment shall be carried out by filing of a return called amendment return. Payment would be allowed to be made through the amendment return as it will help in saving interest liability for the taxpayers.
|Stage 1 (Existing return system to continue upto October, 2018)||The stage refers to the present system of filing of return GSTR 3B and GSTR-1. GSTR-2 and GSTR-3 shall continue.|
|Stage 2 (New Return system to start with facility of provisional credits (Oct, 2018 to April, 2019))
|The new return will have facility for invoice-wise data uploading and also facility for claiming input tax credit on self-declaration basis, as in case of GSTR-3B now. During this stage 2, the dealer will be constantly fed with information about gap between credit available to them as per invoices uploaded by their sellers and the provisional credit being claimed by them.|
|Stage 3 (Facility of provisional credit be withdrawn (From April, 2019))
|After 6 months of stage 2, the facility of provisional credit will be withdrawn and input tax credit will only be limited to the invoices uploaded by the sellers from whom the dealer has purchased goods.|
It has been stated in the Press Release issued post 28th GST Council meeting that 93% of the taxpayers have a turnover of less than Rs. 5 Crores and these taxpayers would benefit substantially from the simplification measures proposed improving their ease of doing business. Even the large taxpayers would find the design of new return quite-user friendly. However, how much simplification will actually be there will be known only after notification of the new return formats. Based upon the timelines given it is expected that the new design will be fully operational from April, 2019 onwards and from such date facility of provisional credit would be withdrawn and Input Tax Credit would be allowed through Upload-Lock-Pay process. However, before implementation of new design, amendment would be required to the CGST Act, 2017 and the CGST Rules, 2017 and respective State GST Acts/Rules which have also been approved by the GST Council in its 28th meeting.