Recent notifications from CBIC dated 10th November 2020 tend to implement several amendments pertaining to returns to be filed by the registered persons. Being most of the taxpayers are choked with GST – annual returns, ITR filing, day-to-day business chores, etc. This article summarizes the amendments notified in a lucid way.

For the better purpose of understanding, we have discussed the amendments one by one pertaining to each return – GSTR-1, GSTR-3B.

Illustration of an isolated hand giving the Goods and Services Tax acronym GST

GSTR 3B – Introduction of quarterly returns (Optional Scheme) and special payment procedures w.e.f. 01-01-2021.

Amendment has been made in s 39 (1) & (7) of CGST Act, allowing the Government to notify a certain class of registered persons to furnish the return quarterly (Which is only an Optional Scheme) and also prescribed the manner of payment for such quarterly filers. Such notified registered persons and manner prescribed for payment are being discussed as follows:

1. Notified Class of Registered Persons (84/2020-Central Tax)

Persons having an aggregate turnover of up to Rs. 5 crore /- in the preceding financial year may opt for filing the quarterly returns instead of monthly returns.

Further, when the aggregate turnover exceeds Rs. 5 crore in the present financial year where he had opted for quarterly filing, he would be treated as ineligible for exercising such option from the next quarter. (i.e. he may continue quarterly filing for the present quarter in which the turnover exceeds the threshold Rs. 5 crore)

2. Exercising the option for filing quarterly returns

The registered person may opt for a quarterly return in the common portal. The period for exercising such an option would be between the 1st day of the second month of the preceding quarter till the last day of the first month of the quarter for which the option is being exercised.

For the initial stage following deeming option has been prescribed (i.e) unless the contrary has been opted expressly in the common portal from 05th December 2020 to 31st January 2021, the option in column (3) of below table would automatically be deemed to have opted:

Sl. No

(1)

Class of registered person

(2)

Deemed Option

(3)

1 Registered persons having an aggregate turnover of up to 1.5 crore rupees, who have furnished FORM GSTR1 on a quarterly basis in the current financial year Quarterly return
2 Registered persons having an aggregate turnover of up to 1.5 crore rupees, who have furnished FORM GSTR1 on monthly basis in the current financial year Monthly return
3 Registered persons having aggregate turnover more than 1.5 crore rupees and up to 5 crore rupees in the preceding financial year Quarterly return

3. The prescribed manner for payment (85/2020-Central Tax)

Being the returns are filed on a quarterly basis, the followings procedure has to be followed by the registered persons who opted for the same –

a. For the 1st month of the quarter ensure that the balance in electronic cash ledger and electronic credit ledger put together are adequate for the tax liability for the said period.

b. For the 2nd month of the quarter ensure that the balance in electronic cash ledger and electronic credit ledger put together are adequate for the tax liability for the cumulative periods i.e. 1st and 2nd

c. If the balances are not adequate as provided above and then, such registered person has to deposit in his electronic cash ledger (vide PMT-06) –

i. if he had opted for quarterly filing in the preceding quarter – 35% of the tax liability paid through debiting electronic cash ledger in the return for the immediately preceding quarter.

ii. If he had furnished monthly returns for the preceding period – 100% of the tax liability paid through debiting electronic cash ledger in the return for the immediately preceding month.

Note: Registered persons are not allowed to opt for this special procedure unless he had furnished his returns from the first day of the tax period in which he was registered till the last day of the tax period preceding the month from which the special procedure is being opted for.

4. Due date for filing quarterly 3B (82/2020-Central Tax)

The due dates for the quarterly return filers have been categorised based on States as follows –

Sl. No (1) Class of registered person          (2) Due Date              (3)
1 Registered persons whose principal place of business is in the States of Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana, Andhra Pradesh, the Union territories of Daman and Diu and Dadra and Nagar Haveli, Puducherry, Andaman and Nicobar Islands or Lakshadweep. 22nd day of the month succeeding such quarter.
2 Registered persons whose principal place of business is in the States of Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand or Odisha, the Union territories of Jammu and Kashmir, Ladakh, Chandigarh or Delhi. 24th day of the month succeeding such quarter.

GSTR 1 – for registered persons who opted for filing quarterly GSTR-3B

Those registered persons who opted for quarterly filing of GSTR-3B as discussed above may furnish the details of their outward supplies during the quarter as follows:

For 1st and 2nd month of the quarter, he may furnish the details of his outward supplies to registered persons in “Invoice Furnishing Facility” (herein referred to as IFF) electronically in the common portal.

Furnishing of details in IFF can be made from 1st day of the succeeding month to the 13th of the said month. For instance, the details of January can be uploaded in IFF during the period 1st February to 13th February.

Such details can be up to a cumulative value of Rs. 50 lakh in each of the months.

The details of outward supplies furnished using IFF for the first and second months of a quarter shall not be furnished I Form-GSTR-1 for the said quarter.

Conclusion

From the above discussions following could be summarized as follows:

The threshold limit to opt for quarterly filing of R-1 and 3B are different i.e. Rs. 1.5 crore for R1 and Rs.  5 crore for 3B. There is no amendment to such extent with regard to the threshold for quarterly filing of R1. Therefore, a person with a turnover of Rs. 3 crore can file 3B quarterly but not R1 as per the present amendment.

Even though 3B is being filed quarterly the registered person should ensure to maintain the adequate balance in electronic credit ledger and/or electronic cash ledger for the tax liability of concerned periods as discussed.

Furnishing IFF is an addition to the monthly GSTR-1 furnished by the registered person, since the quarterly filing option amended in only for return under s 39 i.e. 3B where the statement of outward supplies GSTR-1 is filed under s 37 of CGST Act. (Required clarification from the Government in this regard – Confusion exists for those tax payers whose turnover is between Rs.1.5 crore toRs. 5 crore)

Moreover, only transactions with registered persons can be uploaded in IFF and not B2C.

And also, allowing to upload the details of outward supplies in IFF only from 1st day of the succeeding month does not encourage the real-time updation whereas details in Form GSTR-1 can be done in real-time.

The government should clarify the gap between the quarterly filing options between R1 & 3B and also should clarify expressly that IFF is in addition to Form GSTR-1 for those taxpayers whose turnover are in-between Rs. 1.5 crore to Rs. 5 crore i.e. eligible to file quarterly 3B and not to R1 and also to look upon the factor whether real-time updation can be made in IFF.

Even though the amendment intends to ease the return filing cumbersome to small taxpayers the actual benefit of this scheme would pass on when the payment requirement also deferred as quarterly instead of monthly. At present most of the small taxpayers may not tend to opt for this new scheme as there are no material benefits being accrued to them.

The discussions regarding GSTR-2B which is also being implemented w.e.f 01.01.2021 has been made in the other part of this article. To continue reading the same, kindly refer the following link –  https://taxguru.in/goods-and-service-tax/forthcoming-amendments-gst-returns-part-2.html

For any clarification, suggestion/feedback in this regard, kindly get in touch at arjun@hiregange.com

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2 Comments

  1. CA Nitin Nayak says:

    For taxpayers with option of quarterly filing of GSTR 1, the council has approved uploading of sales data thru IFF scheme. The limit is 50lac per month. If you calculate, 50lac x 12 the turnover of that taxpayer will be 6cr, then isn’t it logical that this taxpayer won’t be eligible for quarterly filing of GSTR 1. They should remove this Capping. Did they do this on purpose or do they always like to look stupid.

    1. CA Spudarjunan S says:

      Agreed that there are language issues for interpretation while prescribing the limit for IFF. As rightly noted by you, technically the limit of 50 lakhs has to be cumulative for both the months, otherwise the taxpayer can be a person whose T.O. can exceed the threshold.
      Since the GST law being system-driven, such extended scope would have been given to have additional capacity to the system also.
      As per the scheme and its conditions – the limit has to be calculated cumulatively for both the months. However, the Government requires clarifying the same.

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