In terms of Section 44(1) of the CGST Act, 2017, every registered person, other than an Input Service Distributor, a person paying tax under Section 51 (TDS deductor) or Section 52 (TCS collector), a casual taxable person and a non-resident taxable person, shall furnish an Annual Return for every financial year on or before the 31st day of December following the end of such financial year. The Government vide Notification No. 39/2018 – Central Tax dated September 4, 2018 has notified the format of Annual Return Form GSTR-9 (for normal taxpayers) and Form GSTR-9A (for composition taxpayers).
Considering the complexity of Form GSTR-9 under the given time frame of 3 months for due date of 31st December, following suggestions are compiled by Mr. Bimal Jain, Chairman, Indirect Tax Committee, PHD Chamber of Commerce towards making Annual Return format simplified for all taxpayers along with highlighting key issues demanding extension of due date for filing Annual Return, which have been submitted to the Government for their kind consideration:
I. Table 5: Clarity on Meaning of terms ‘Exempted’, ‘NIL Rated’, ‘Non-GST supply’
Part D, E and F of Table 5 i.e. ‘Details of outward supplies on which tax is not payable as declared in returns filed during the FY’ requires separate disclosure as to the following:
|Part of Table 5 of Form GSTR-9
||Exempted outward supply
||Nil-Rated outward supply
||Non-GST outward supply
- Exempt supplies already include Nil-rated supplies – Definition of ‘exempt supply’ under Section 2(47) of the CGST Act, 2017 is given as under:
“exempt supply” means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply”
Thus, when definition of exempt supply itself includes Nil rated supplies, separate mention of the same under Part E above will add to confusions.
- Clarity on meaning of non-GST supply – As seen supra that definition of exempt supply includes non-taxable supply i.e. a supply of goods or services or both which is not leviable to tax under this Act [Section 2(78) of the CGST Act, 2017], hence, scope of non-GST supplies is not understood. This confusion persists in current format of GSTR-3B as well which requires separate reporting of non-GST outward supplies apart from exempted outward supply, which includes non-taxable supplies, Nil rated supplies and exempted supply. Thus, clarity on items included in non-GST supplies is required.
II. Table 6: No need for bifurcation of ITC into inputs, input services and capital goods
Table 6 of Form GSTR-9 while capturing details of ITC availed as declared in returns filed during the FY, also asks for details of such ITC on inward supplies bifurcated between credits availed on inputs, input services and capital goods which is not required in the present monthly return Form GSTR-3B.
- Dispensing bifurcation of ITC for first year – Since there is no difference in treatment of ITC on goods and services, such bifurcation of total ITC on inward supplies between credits availed on inputs, input services and capital goods may be dispensed with for the first year as the assesses might not have maintained and/ or recorded such data due to non-requirement in Form GSTR-3B.
III. Table 8: Extending date of reconciliation of ITC with Form GSTR-2A till 31st March 2019
Table 8 of Form GSTR-9 (‘Other ITC related information’) requires reconciliation of ITC details filed by the tax payer in Form GSTR-3B with system generated Form GSTR-2A. But, it may happen that many taxpayers have availed credit in Form GSTR-3B based on invoices of suppliers which may or may not match with Form GSTR-2A which was not even available in initial period of GST introduction.
Further, in terms of Section 16(4) of the CGST Act, 2017, ITC in respect of invoices/ debit notes of a FY shall not be available after the due date of furnishing of return for September month following the end of financial year or furnishing of relevant annual return, whichever is earlier. In other words, taxpayers are required to complete the reconciliation process with their vendors latest by September 30, 2018 (Due date for filing GSTR 3B for the month of September 2018 is October 20, 2018), being the last day for claiming credit pertaining to the last FY.
- Technical glitches of GSTN portal – But it needs to be appreciated that owing to shortcomings of the GSTN portal, the envisaged system of ITC matching & mis-matching through Form GSTR-2 and GSTR-3 got indefinitely suspended and therefore, the matching mechanism could not be brought into action.
- Extension of due dates for filing GSTR-1 till October 31, 2018/ December 31, 2018 – Recently the Govt. vide Notification No. 44/2018 – Central Tax dated September 10, 2018 has extended due date for filing of GSTR-1 for the assesses having aggregate turnover more than 1.5 crores to October 31, 2018 for the period July 2017 to September 2018. Further, vide Notification No. 45/2018 , Notification No. 46/2018 & Notification No. 47/2018– Central Tax dated September 10, 2018, due date of GSTR-1 and GSTR-3B for taxpayers who are migrating to GST as per procedure specified in Notification No. 31/2018 – Central tax dated August 6, 2018 was extended till December 31, 2018 for the period July 2017 to November 2018. In such cases, GSTR-2A of recipients will be generated only in the months of November 2018 (when Inward supplies coming from regular taxpayers) or January 2019 (when inward supplies coming from such recently migrated taxpayers). Hence, reconciliation cannot be completed in the month of September 2018.
- For computing last date to avail ITC, reference has to be made to GSTR-3 return and not GSTR-3B – Section 16(4) of the CGST Act, 2017 specifically refers to the return under Section 39 (GSTR-3) and the Annual Return but does not stipulate or refer to any return under Section 168 (GSTR-3B). Thus, the last date for availing ITC of any invoice/debit note for a financial year, say 2017-18, would be the earlier of the due dates for filing the GSTR-3 for September 2018 and the Annual Return for the year 2017-18. Since, filing of Form GSTR-3 is suspended, the last date within which input tax credit for invoices/debit notes of 2017-18 can be taken is the date of filing of the Annual Return for 2017-18, i.e., 31st December 2018.
- Extending date of ITC reconciliation from last date of September 30 – Considering the challenging task of completing reconciliation of ITC with vendors by September 30, 2018, the government may consider the case for extending this date of September 30. Else, suitable modification in Form GSTR-9 may be carried to allow ITC for invoices pertaining to FY 2017-18 till the date of filing of Annual Return.
IV. Due date for filing Annual Return in Form GSTR-9 need to be extended till March 31, 2019
- Considering the various reasons/ issues arising in matching & mismatching of ITC and completing the process of reconciliation thereof till September 30, 2018 as discussed supra, due date for filing the Annual Return for the FY 2017-18 needs to be extended till March 31, 2019 giving time to both taxpayers as well as the portal to accommodate such huge filings.
V. Table 8: Rows to mention other reasons for mismatch in ITC
Basic design of Table 8 of Form GSTR-9 captures difference in ITC as reflecting in Form GSTR-2A viz-a-viz the ITC as furnished in Form GSTR-3B. However, the table covers few difference areas only.
- Separate rows for disclosing other reasons – Suitable rows may be inserted to enable taxpayers to disclose other reasons, if any, for any difference in ITC i.e. GSTR-2A Vs. GSTR-3B.
VI. Table 8: ITC reversed during the FY and reclaimed in next FY
In terms of second proviso to Section 16(2) of the CGST Act, 2017, reversal of ITC is required to be made where the recipient fails to pay to the supplier the amount towards value of supply along with tax payable thereon. However, on the payment of consideration, ITC can be reclaimed. In case 180 days reversal happened in 2017-18 and reclaimed in 2018-19, how to disclose, disallow or reclaim such credit.
- Clarity required for disclosure of ITC reversed but reclaimed in 2018-19 – It may happen that ITC reversal happened in 2017-18 and reclaimed in 2018-19. Clarity may be provided as how to disclose such credit.
VII. Table 18: HSN wise summary of inward supplies should not be asked for
Table 18 of Form GSTR-9 requires the details of HSN wise summary of inward supplies received by the taxpayer. It may be noted that neither of the present return forms viz. Form GSTR-3B and GSTR-1 captures such details. Only Form GSTR-1 requires supplier to provide HSN wise summary of outward supplies. It is most unlikely that the system of taxpayers maintains records HSN wise of Inward supply data.
- Removing Table 18 of Form GSTR-9 – Requirement to furnish details of HSN wise summary of inward supplies may be dispensed with completely as the assesses might not have maintained such data due to non-requirement in Form GSTR-3B. Further, small suppliers having aggregate turnover upto INR 1.5 crores are not even required to mention HSN on their invoices. In such cases, it will be herculean task for the recipients of such suppliers to determine HSN of their inward supplies for furnishing in Form GSTR-9.
VIII. Change in nature of registration from composition to normal in mid of FY
It may happen that a taxpayer initially registered as normal taxpayer in the beginning of FY but switched to composition scheme in the mid of the FY 2017-18 or vice versa. But, there are separate forms of Annual Return for normal (GSTR 9) and composition taxpayer (GSTR 9A).
- Facility to select period of Annual Return – Option for selection of period for which taxpayer is filing Annual Return be provided in Form GSTR-9 to enable filing for part of the FY.
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