Significant changes along with challenges associated with simplified return filing process

The GST Council in its 28th meeting on 21st July 2018, Saturday, provided details on the simplified return filing process and steps to make the cumbersome process easier. Under the Chairmanship of Piyush Goyal, Union Minister for Railways, Coal, Finance & Corporate Affairs the GST Council approved the new GST return formats and associated changes in law.

In this article we will concise our discussion only too few key Changes/Challenges, on priority basis, pertaining to draft simplified return formats, by GST Council, placed on public forum for feedback and suggestion from various group of stakeholders.

Very first prevalent change/challenge that the every registered person will face while preparing data only for its very first return, after implementation of simplified return format, is reporting of credit on the supplies not claimed in FORM GSTR-3B due to non-receipt of such supplies shall be reported. However it is only one time exercise as in subsequent returns this data fields will be auto populated based on inward supplies not received during previous tax periods on which Input Tax Credit was keep pending. For decipher such unclaimed Input Tax Credit we required reconciliation between Input Tax Credit claimed in GSTR-3B and amount reflected as available Input Tax Credit in GSTR-2A, which is a challenging task itself. On the other hand if we fail to report any part of such unclaimed ITC accurately will be result as losing unclaimed ITC forever as subsequent returns this data field will be auto populated. Thus it will be one and only way to carry forward unclaimed ITC pertaining to erstwhile return format in to new return format.

On the other hand, registered persons may think to report unclaimed ITC on estimate basis which either may be on lower side than actual unclaimed ITC or may be on higher side than actual unclaimed ITC. In both scenario registered persons will be only in loss-loss position as if‑

  • Registered person reporting lower amount as unclaimed ITC will be lead to lose the chance to claim balance amount as ITC as in subsequent returns this data fields will be auto populated based on inward supplies not received during previous tax periods on which Input Tax Credit was keep pending.
  • Registered person reporting higher amount as unclaimed ITC will be resulting in receiving Show Cause Notice and initiation of proceeding from Indirect Tax Department as available ITC reflected in GSTR-2A is lower than ITC claimed in GSTR-3B along with ITC claimed in first return on account of on the supplies not claimed due to non-receipt of such supplies.

Thus all the registered persons are require to pay cent attention while reporting an amount as credit on the supplies not claimed in FORM GSTR-3B due to non-receipt of such supplies. For figuring out accurate amount and to avoid Show Cause Notice and initiation of proceedings, they can avail services/consultancy of CA and/or Tax advisors.

Second major changes is related to availement of ITC, currently as per section 16 of CGST Act, registered person shall be entitled to the credit of any input tax in respect of any supply of goods/services provided he is in possession of a tax invoice/Debit Note and he has received the goods/services, till the end of tax period, along with two other conditions. However under proposed Simplified Returns and Return Formats the recipient shall be eligible for availing ITC provided

  • Invoice for the inward supply has been uploaded by the supplier up to the 10th day of the next month.
  • Recipient has received goods or services before 20th day of the next month.

For example, input tax credit can be availed by the Mr. Amit (recipient) on invoice issued in July 2018 and uploaded by the Mr. Anil (supplier) by 10th August 2018 even if the goods or services have been received by the recipient before 20th August 2018 i.e. the date on which he is filing his return for the month of July 2018.

This is likely to provide additional 20 days for credit available to the recipient as goods or services received after 1st of next month but before 20th become eligible for availing input tax credit.

Third major changes is related to original returns, Currently registered persons other than certain registered person* with an annual aggregate turnover of less than Rs.1.5 crores have option to file quarterly GSTR-1 with monthly payment facility and registered persons other than certain registered person* with an annual aggregate turnover of greater than Rs.1.5 crores shall file monthly GSTR-1 with monthly payment facility.

On the other hand in under proposed Simplified Returns and Return Formats, registered persons other than certain registered person* have been categorized in to two groups.

  • Large taxpayer- Registered persons who have a turnover more than Rs. 5 Cr. in the last financial year shall file one monthly return. Return filing dates shall be staggered based on the turnover of the taxpayer which shall be calculated based on the reported turnover in the last year i.e. 2017-18. However in any particular quarter registered persons who have no purchases, no output tax liability and no input tax credit to avail in any quarter of the financial year shall file one NIL return for the entire quarter. In month one and two of the quarter, such taxpayer shall report NIL transaction by sending a SMS. Facility for filing quarterly return shall also be available by an SMS.
  • Small registered persons- Registered persons who have a turnover up to Rs. 5 Cr. in the last fmancial year would have option to file one of four forms, namely – Monthly return, Quarterly return, Sahaj or Sugam.

*Composition dealer, Input Service Distributor (ISD), Nonresident registered person, persons liable to deduct tax at source under section 51 of CGST Act, 2017, persons liable to collect tax at source under section 52 of CGST Act, 2017)

Forth, but not last, major changes is related to revise return, currently there is no facility to revise the original return filed for any tax period. Currently amendment/addition related to original returns are routed to original return of subsequent tax periods. But now there would be a facility to file two amendment returns for each tax period within the time period specified in section 39(9) of the CGST Act, 2017. Activities covered through credit/debit note need be reported in the original return of subsequent tax period instead amendment return. Credit note or debit note for the reported invoice in filed return can still be issued by the supplier to change value, rate of tax, quantity or the tax payable. Moreover Filing the details of the Shipping bill in the return already filed at a later date shall not be considered as filing of an amendment return. A separate facility for uploading shipping bill details at a later date shall be provided to the exporters

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