The introduction of Goods and Service Tax (GST) would be very significant step in the field of indirect tax reforms in India. The Finance Minister announced that GST will be implemented from 1st July 2017. The earlier proposed timeline for the implementation of GST was 1st April, 2017.

The benefit of introduction of GST are many – it amalgamates a large number of indirect taxes into a single tax called GST, seamless flow of input tax credit, cost of product would come down in long run, common national market etc. On the other side challenges are also expected to arise, may be – during the phase of transition from current tax regime to the new tax regime, compliance, etc. Out of many one of the challenges would be filing of returns. The same is discussed herein below.

The compliance of filing of return under GST is going to be a challenging task. Every registered taxable person, interstate supplier, TDS deductor, Input Service Distributor, non-resident taxable person is liable to file their returns under GST. Before filing of a return a registered taxable person is under obligation to pay to the credit of appropriate Government the tax due as per such return not later than the date on which the registered taxable person is required to furnish such return.

There are twelve types of return proposed under GST. The prototype of such return is also made available in GSTN for the sake of understanding and comment. GSTR-1 is a monthly return to be filed by regular taxpayer for uploading outward supply details to be uploaded in GSTN by 10th day of succeeding month. GSTR-2 is a monthly return for uploading inward supply details by 15th day of succeeding month. The inward supplies would be auto-populated in GSTR-2 of the recipient based on the GSTR-1 uploaded by the suppliers. The inward supplies as uploaded by supplier is required to be matched /corrected and finalized by recipient by 17th day of the succeeding month in order to file a monthly return in GSTR-3 by 20th day of succeeding month.

The compounding taxpayer is required to file return in GSTR-4, foreign non-resident taxpayer is required to file return in GSTR-5, input service distributor (ISD) taxpayer is required to file return in GSTR-6, tax deductor in GST-7 and Annual return is required to be filed in GSTR-8 by 31st December following the end of the financial year. E-commerce entities are required to file return in GSTR-9, Government entities in GSTR-10, Annual return for compounding dealer in GSTR-11 and Final return in GSTR-12.

The above types of return is enumerated in the table below for easy reference:

Type of return For the purpose of
GSTR-1 uploading outward supplies of goods and/or services effected during a tax period
GSTR-2 uploading the detail of inward supplies of taxable goods and/or services. The details would get auto populated based on the GSTR-1 filed by suppliers.
GSTR-3 Monthly return on the basis of outward supplies and inward supplies
GSTR-4 quarterly return for compounding taxpayer
GSTR-5 Non-resident foreign taxpayer
GSTR-6 Input service distributor
GSTR-7 Tax deducted at source
GSTR-8 Annual Return
GSTR-9 E-commerce entities
GSTR-10 Government entities
GSTR-11 Annual return by compounding  taxpayers
GSTR-12 Final returns

 (Source: www.gst.gov.in)

Assuming, a registered taxable person is required to file returns in GSTR-1, 2, 3, 6, 7, 8, then in a year total returns that are required to be filed per State would be 61. If a dealer is having branches across India, say in 28 States, then 60 returns multiply by 28 (states) would be 1680 returns and 28 annual returns for 28 states together it would sum up to 1,708 returns in a year. This is going to be a very big task for all registered taxable person especially big corporates. The major impact of the compliance of filing of return under GST would be on the service sector. As of now, the service industries are filing return under centralized service tax registration format in which two half yearly returns in Form ST-3 are filed by them. Now, under GST they will have to file 1,708 numbers of returns if they have branches in 28 states across India.

The Association of Indian Revenue Services (IRS) officers of Customs and Central Excise has expressed that the multiple returns for service providers will increase compliance cost. “Service providers in the banking, insurance, logistics, IT & ITES and aviation sectors are operating under a single centralized registration of service tax at present. That means, at present, they have to file 3 Service Tax returns in one year. In GST era, they will have to file 61 returns per state, per year, after taking registration in each state in which they have presence. So, a major Bank like SBI, which has branches in all 35 states and Union Territories, will end up filing over 2,000 returns annually. This does not seem to be in the spirit of ease of doing business, as it will lead to severe rise in compliance costs,” it said. (Source: http://gstindiaupdates.com).

Looking in to the compliance requirement under GST the companies at present having more than one registration within a state for any reason say for the purpose of area based exemption, different business vertical etc. should seriously think upon and look for the possibility to enroll in to GSTN with one GSTIN. Lesser number of GSTIN means lesser compliance. If it is really required to have more than one registration in a state because of the reason that the business process is different, then there is provision in the draft GST law to have more than one number for different business vertical, but at the cost of compliance, assessment etc. which would demand additional manpower for compliance.

In order to ease registered taxable person in filing of their return a provision of Tax Return Preparer is given in the draft Model GST law. A registered taxable person may authorize an approved Tax Return Preparer to furnish their return and such other tasks as may be required in connection with filing of return. However, the responsibility of correctness of any particulars furnished in the return by the Tax Return Preparer shall continue to rest with the registered taxable person on whose behalf such return and details are filed.

Additionally, taxpayer can also avail facility of third party service provider called GST Suvidha Provider or GSP which are envisaged to provide innovative and convenient methods to taxpayers and other stakeholders in interacting with the GST Systems from registration of entity to uploading of invoice details to filing of returns. The Good and Service Tax Network has recently finalized 34 companies as the GST Suvidha Providers (GSPs), which will offer support and services to help tax payers and businesses in compliance.

Though the facility of the Tax Return Preparer and GST Suvidha Provider would be available in GST the responsibility of correctness of any particulars furnished in the return continue to rest with the registered taxable person. As such if there is any mismatch in the inward supplies with that of outward supplies uploaded by the supplier the correction/addition/deletion of mismatch data shall have to be carried out by taxpayer internally in co-ordination with their suppliers. This is for the reason the Tax Return Preparer or GST Suvidha Provider may not interact with each of the suppliers of the taxpayers to reconcile and correct the figures shown in their return. Hence, the compliance of filing of return under GST is going to be challenge for the tax payers.

(The above article is authored by Ganeshan Kalyani and he can be reached via email on gganeshan.k@gmail.com. This article is for academy purpose only)

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One response to “Compliance of filing of return under Goods and Service Tax (GST)”

  1. Ravi kumar says:

    thanks to taxguru team
    sir it will better for us to know if you give 2 example case how to file regarding gst

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