GST Council in a Bid to make Annual Return, “Easy-Peasy”

The Annual Return is the next phase in the implementation of GST. It is only based on these Annual Returns that the next phase i.e. the assessment phase shall start. The due date is 31st December 2018 however for the financial year 2017-2018 it was extended to 31st March 2018 (by Order No. 01/2018-Central Tax dated 11.12.2018) and then further extended to 30th June 2018 (by press release dated 22nd December, 2018, notification is awaited).

Since the issue of the forms in early September, there was lot of chattering on the way the forms were drafted and the confusions created by the instructions. The chaos got even spurred up when the forms were not available on the port for filing a month before the due date. After a host of representation being made by the trade and industry and professional bodies like the Institute of Chartered Accountants of India, the GST Council has made recommendations to amend, clarify certain areas of the Annual Returns (Form GSTR-9, Form GSTR-9A) and Audit Report (Form GSTR-9C).

The following is the summary with impact:

1. “supplies as declared in returns filed during the year” replaced by “supplies made during the Year”:

Under the forms originally issued, the tax payer was required to file GSTR 9, GSTR 9A by keying in information as was already declared by him in the monthly returns (GSTR 1 for output supply related information and GSTR 3B for inward supply related information).

No new liability / ITC could be created using the annual return. If there was a mistake in the monthly returns, the annual return would also carry over such mistake and thus making it difficult for the tax payers who have committed errors in monthly return and are willing to rectify.

What’s the proposed change?

GST Council has proposed to replace “supplies as declared in returns filed during the year” replaced by “supplies made during the Year”. As a result, the information in the Annual Return need not be in consonance with the monthly returns. In the Annual Return, the taxpayer will now allowed to file the “correct” details of inward and outward supplies whether or not declared in the monthly returns.

2. Clarification on payment of additional liability:

Any error / omission / correction in the monthly returns could be made only in the returns of the subsequent months until September 2018 or filing of Annual Return whichever is earlier making it difficult for those tax payers who missed the deadline of September 2018.

What’s the proposed change?

Taxpayer will now be allowed to pay any additional liability that arises due to non declaration in the monthly returns and now declared in the annual return. Such payment shall be paid in cash through Form GST DRC-03. However the tax payer will have to shell out money even if there is input tax credit available.

3. Extension of Last Date for Input Tax Credit:

As per provision of section 16(4) of the CGST Act, 2017 the last date of availment of Input tax Credit for the financial year 2017-18 was 30th September 2018. Being the first year, lot of representations was made by trade and industry to enable the tax payers to rectify any omission on account of Input tax Credit not availed.

What’s the proposed change?

Input Tax Credit in relation of the FY 2017-18 can now be availed till the due date for furnishing of Form GSTR3B for the month of March, 2019 (i.e., 20th April, 2019). However for this proposal to be effective, the provisions of CGST Act, 2017 need to be passed by both houses of the Parliament along with assent of the President. Further the state SGST Act, 2017 also need to be passed by all the State Assemblies.

4. Rationalising HSN wise inward summary:

In the Annual Return, the tax payers were required to give HSN wise summary of all the goods/services purchased by them. Most of the tax payers had either not configured their software for this kind of report or the configured software does not give correct report. There was a need to re visit the purchases for the 9 months period. Thus giving HSN wise inward summary was a nightmare for most of the tax payers.

What’s the proposed change?

The HSN wise summary is now required to be given only for principal inputs whose value independently amounts for 10% or more of the total value of the Inward supplies.

5. Auto Population of information:

A major concern relating to annual return was that many tables were containing information relating to the monthly returns, however such information was not auto populated and the tax payer was required to redo the data for the entire nine months (July 2017 to March 2018) which did not provide gain more than the pain.

What’s the proposed change?

All invoices pertaining to previous financial year (irrespective of the month in which such invoice is reported in Form GSTR-1) would be auto-populated in Form GSTR-9.

6. Filing of all returns before:

No such condition was prevalent earlier.

What’s the proposed change?

All Returns in Form GSTR-1 and Form GSTR3B have to be filed before filing of Form GSTR-9 and Form GSTR-9C. Similarly, Form GSTR-4 (Composition Scheme) must be filed before filing Form GSTR-9A. Further returns for the period July, 2017 to September, 2018 can now be filed by 31.03.2019 without any late fees.

Conclusion:

The 31st GST Council Meeting was no less than Santa Clause for the trade and industry as many welcome amendments / clarifications have been proposed in the Annual Return.