New Turfs and Turns of GST Returns: Simplified Approach to understand simplified returns

Note on Simplified Returns and Return formats has been published on 30th July 2018. This write up is an attempt comprehend the underlying concepts of new regime of GST returns. The note also introduces a number of new terms like “Missing Invoices”, “Pending Invoices”, “Rejected Invoices”, “Locking or Deemed Locking of Invoice”, “Unlocking of Invoice”, Amending Invoice, Amending Return etc. which need to be understood to capture the spirit of new returns system

Q1 What class of taxpayers shall be required to file quarterly returns ?
Ans Small taxpayers shall be required to file quarterly returns .[Para 1 of Part B]
Q2 What is meant by small taxpayer ?
Ans Registered persons having turnover up to Rs. 5 crore is prceeding financial year are small taxpayers.[Para 1 of Part B]
Q3 How shall turnover for determination of small taxpayer be calculated ?
Ans Turnover shall be calculated on the basis of reported turnover for last year i.e. during 2017-18 [Para 1 of Part A]
Q4 Reported Turnover for 2017-18 related to period 1st July to 31st March, then how shall turnover for full financial year be calculated ?
Ans Turnover for 9 months shall be annualized over 12 months. Say if turnover for Ist July to 31st March is 4.5 crores, then for 2017-18, annualized turnover is 6 crore and hence the assesse is not a small taxpayer.[Para 1 of Part A]
Q5 How shall a newly registered  taxpayer be classified as small taxpayer ?
Ans A newly registered taxpayer shall be classified on the basis of self declaration of estimated turnover [Para 1 of Part A]
Q6 Whether it shall be possible for taxpayer to check on portal his category for determination of periodicity of returns ?
Ans Yes , it shall be possible for the taxpayer to check on the common portal whether he falls in the category of a small taxpayer. [Para 1 of Part A]
Q7 What shall be periodicity of discharge of liability by the small taxpayer ?
Ans Although small taxpayer shall be required to file the return quarterly but periodicity of tax payment is monthly. [Para 1 of Part B]
Q8 How a small taxpayer shall calculate his Input Tax Credit (ITC) for discharge of his tax liability on monthly basis ?
Ans ITC shall be availed by small taxpayer on self declaration basis.
Q9 What else category of persons shall not be required to file monthly returns ?
Ans 1. Small taxpayers

2. Composition Dealers

3. Input service distributor

4. Non resident registered person

5. Persons liable to deduct tax u/s 51

6. Persons liable to collect tax u/s 52

Q10 What categories of persons shall be required to file monthly returns
Ans All taxpayers except:

1. Small taxpayers

2. Composition Dealers

3. Input service distributor

4. Non resident registered person

5. Persons liable to deduct tax u/s 51

6. Persons liable to collect tax u/s 52

Shall be liable to file monthly returns.

Q11 Whether it is compulsory for small taxpayer to file quarterly return
Ans No, it is not compulsory for small taxpayer to file quarterly return [Para 2(ii) of Part A]. Filing of quarterly returns is optional
Q12 When can the option to file quarterly return be exercised ?
Ans Option to file quarterly return can be exercised by small taxpayer  taxpayers at the beginning of the year and generally thereafter they would continue to file the return during the year as per the option selected.

[Para 2 of Part B]

Q13 Whether periodicity option to file return can be changed ?
Ans During the course of the year option to change from monthly to quarterly or vice-versa shall be allowed only once

[Para 2 of Part B]

Q14 What is the timing of exercising change in periodicity option ?
Ans Option to change from monthly to quarterly or vice-versa shall be allowed only at the beginning of any quarter.

[Para 2 of Part B]

Q15 Why change in periodicity option is being allowed only once ?
Ans This is necessary to avoid confusion for the taxpayer and also to avoid complex validations in the IT system.

[Para 2 of Part B]

Q16 Whether single date shall be fixed for filing of returns ?
Ans Return filing dates shall be staggered based on the turnover of the taxpayer.

[Para 1 of Part A]

Q17 What shall be due date of filing return by large taxpayer ?
Ans The due date for filing of return by a large taxpayer shall be 20th of the next month.

[Para 1 of Part A]

Q18 What is meant by NIL Return ?
Ans Taxpayers 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. Hence the concept if NIL return has been envisaged with reference to quarter and not month.

[Para 2 of Part A]

Q19 How shall return for Ist and 2nd month of quarter be filed in case of NIL return ?
Ans In month one and two of the quarter, taxpayer shall report NIL transaction by sending a SMS. Hence whether monthly NIL return can  be filed at portal directly, has not been clarified.

[Para 2 of Part A]

Q20 How can quarterly NIL return be filed ?
Ans Quarterly NIL return can either filed at the portal directly or by sending SMS. What number and syntax for SMS shall be used has not been clarified as yet.

[Para 2 of Part A]

Q21 What shall be periodicity of uploading invoices ?
Ans Under present scheme of returns, the invoices are uploaded monthly or quarterly as per turnover of taxpayer.

However in new return scheme, There would be facility for  continuous uploading of invoices by the supplier anytime during the month

[Para 3 of Part A]

Q22 Whether uploaded invoices of suppler can be viewed by receipient ?
Ans Yes, uploaded invoice shall be continuously visible to the recipient.

[Para 3 of Part A]

Q23 What is viewing facility and “inward annexure” ?
Ans The screen where it shall be visible to the recipient is hereafter called “viewing facility” (shown as “inward annexure” in the return document).

[Para 3 of Part A]

Q24 Apart from unloaded invoices, what else can be viewed by recipient of supply ?
Ans 1. After the due date for the filing of return is over, the recipient shall also be able to see the return filing status of the supplier

2. Viewing facility shall also show the trade name of the supplier.

[Para 3 of Part A]

Q25 What is the significance of allowing view of return filing status of supplier to the recipient ?
Ans Viewing of return filing status of supplier has been allowed so that recipient be aware whether the tax liability on purchases made by him has been discharged by the supplier or not. [Para 3 of Part A]
Q26 Whether ITC be claimed against uploaded invoices ?
Ans Uploaded invoice would be a valid document for availing input tax credit. [Para 3 of Part A]

Only the invoices or debit notes uploaded by the supplier on the common portal shall be the valid document for availing input tax credit by the recipient. [Para 6 of Part A]

Q27 Till what time uploading of invoice is permitted ?
Ans Invoices uploaded by the supplier by 10th of succeeding month

shall be auto-populated in the liability table of the main return of the supplier. [Para 3 of Part A]

Q28 At what time input tax credit can be availed by recipient for invoices uploaded by the supplier ?
Ans Invoices for April uploaded till 10th May shall be available for claiming input tax credit by 11th May. These invoices shall be available for availing input tax credit in the return filed by the recipient. [Para 4 of Part A]
Q29 How shall recipient get credit for invoices uploaded by the supplier for April  after 10th May.
Ans Invoices uploaded after 10th of next month by the supplier shall get posted in the relevant field of the return of the subsequent month of the recipient.

For example, if invoice no. 1 of April is uploaded on 8 th of May and invoice no. 2 of April is uploaded on 15th of May by the supplier, the recipient shall be able to avail input tax credit for invoice no. 1 with the return of April filed on say 20th May and for invoice no. 2 he shall be able to avail input tax credit with the return filed for the month of May, filed on say 20th of June. [Para 4 of Part A]

Q30 If the recipient shall get credit for invoices uploaded by the supplier after 10th of subsequent month, in his return for subsequent month, whether the liability of supplier shall also get shifted to next month ?
Ans Supplier’s liability for invoices uploaded for previous month from 11th to 20th of next month shall not get shifted to next month and shall be liable for payment of tax along with other liabilities of previous month. [Para 4 of Part A]

Amendment of missing invoices reported later by the supplier shall be carried out through the amendment return of the relevant tax period to

which the invoice pertains. [Para 21 of Part A]

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. [Para 20 of Part A]

Therefore, it would be advisable to report all the invoices and

then avail the facility for amending return so that invoices reported late can also be amended through the amendment return.

For example, Invoice of April if uploaded in September shall get amended with the amendment of return for the month of April only and therefore trade is advised to report all the missing invoices before exhausting their opportunity to amend the return.

[Para 21 of Part A]

Q31 Whether there is any limit to availing input tax credit by the recipient of supply ?
Ans The maximum limit of eligible input tax credit will be based on the invoices uploaded by the supplier upto 10th of the subsequent month. [Para 4 of Part A]
Q32 How can recipient claim credit, if some invoices are not uploaded by the supplier ?
Ans During first six months, input tax credit can be claimed on the basis of self declaration. [Para 4 of Part A]

Subsequently, input tax credit shall be claimed by  providing summary information about “missing invoices” in the return of recipient. [Para 4 of Part A] The missing invoices need not be reported at the time of claiming credit. Their reporting can be deferred for next two tax periods. [Para 7 of Part A]

For example, purchase invoices received by recipient in April on which input tax credit has been availed but not uploaded by the supplier, shall be reported by the recipient not later than the return of June filed in

July.

Tax payers filing quarterly return shall report missing invoices in next quarter. But whether small recipient can claim input tax credit on the basis of quarterly reporting has not been clarified here in or else where.

However as per Para 3 of Part B, small taxpayers who would like to have facility of missing invoice may file monthly return

Missing Invoiceshave been defined in Para 6 of Part A, as Invoices or debit notes which have not been uploaded by the supplier and on

which recipient has availed input tax credit shall be called “missing invoices”.

Q33 How shall supplier pay tax in respect of missing invoices claimed towards Input tax credit by the recipient ?
Ans 1. Recipient to follow up and get the missing invoice uploaded from the supplier.

2. If invoices are not uploaded in T+2 (i.e. reportable month plus next two months, say invoices for April not reported till June), recipient shall report the invoices in his return for June. This information shall be made available to the supplier by the portal.

[Para 7 of Part A]

Q34 What actions for a month shall be taken by the recipient after 10th of the subsequent month ?
Ans 1. Accept an Invoice

2. Reject an Invoice

3. Keep pending an invoice

Q35 How to locate and match the missing invoices not uploaded by the supplier ?
Ans An IT tool/facility for matching of the invoices downloaded in XL format from the viewing facility, with the invoices stored in the accounting software by the taxpayer (recipient), shall be provided.

The IT tool/ facility shall have ability to filter invoices downloaded on the basis of –

i. Dates of invoice – to and from date;

ii. Date on which the invoice was uploaded by the supplier on the Common Portal;

iii. GSTIN of the supplier.

Q36 Who shall be liable to pay tax where credit is claimed on “missing invoices” ?
Ans Where credit is availed on missing invoices by the recipient and such missing invoices are not uploaded by the supplier within the prescribed time period, input tax credit availed in relation to such invoices or debit notes shall be recovered from the recipient. [Part A Para 6]

However, There shall not be any automatic reversal of input tax credit at the recipient’s end where tax has not been paid by the supplier. In case of default in payment of tax by the supplier, recovery shall be first made from the supplier and in some exceptional circumstances like missing taxpayer, closure of business by the supplier or supplier not having adequate assets or in cases of connivance between recipient and the supplier, etc. recovery of input tax credit from the recipient shall be made through a due process of service of notice and issue of order.[Part A Para 10]

Q37 Who shall be liable to pay tax on uploaded invoices, where credit has been claimed by the recipient but return is not filed by the supplier ?
Ans In cases where no return is filed after uploading of the invoices by the supplier, it shall be treated as self-admitted liability by the supplier

and recovery proceedings shall be initiated against him after allowing for a reasonable time for filing of the return and payment of tax. [Part A Para 5]

Q38 Whether Input tax credit to be availed by the recipient can be locked before filing of return so that there is no subsequent change by supplier before filing of return ?
Ans “Locking of invoices” means a handshake between the recipient and

supplier indicating acceptance of entering into the transaction reported in the invoice.

Facility for locking of invoices before filing of return shall be available.

[Para 11 of Part A]

Q39 Whether each invoice has to be individually accepted and locked ?
Ans It is not be possible to lock individual invoices where the number

of invoices is large and in such situation deemed locking of invoices shall be presumed on the uploaded invoices which are either not rejected or kept pending by the recipient. On filing of the return by recipient, all invoices shall deemed to be accepted except invoices kept pending or rejected. [Para 11 of Part A]

Invoices which have been uploaded by the supplier and made available in the viewing facility to the recipient but have not been rejected or have not been kept pending by the recipient shall be deemed to be locked after return for the relevant tax period has been filed by the recipient.[Para 13 of Part A]

Q40 Whether locked invoices can be amended by supplier ?
Ans Invoices on which credit has been availed by the recipient (i.e. locked invoices) will not be allowed to be amended by the supplier and in order to amend the reported particular of such invoices, a credit or a debit note will have to be issued by the supplier.[Para 14 of Part A]

Amendment of an invoice may be carried out by the supplier

where input tax credit has not been availed and the invoice has not been reported as locked by the recipient. Once an invoice is locked by the recipient, no amendment of the same shall be allowed. [Para 16 of Part A]

Q41 Whether wrongly locked invoice can be unlocked ?
Ans A wrongly locked invoice shall be unlocked online by the recipient himself subject to reversal of the input tax credit by him and online confirmation thereof.[Para 15 of Part A]
Q42 How to deal the input tax credit of invoice wrongly uploaded in the favor of the subject recipient instead of intended recipient ?
Ans Where the GSTIN of the recipient is wrongly filled by the supplier,

the invoice would appear on the viewing facility of a taxpayer who is not the recipient of such supplies and therefore input tax credit is not admissible to him. Recipient shall report such invoices as rejected invoices.

[Para 12 of Part A]

Q43 Whether matching of invoices to locate invoices to be rejected can be done ?
Ans To assist the process of rejecting invoices with ease, the matching IT tool shall have facility to create recipient and seller master list, from which

correct GSTIN can be matched.  [Para 12 of Part A]

Q44 Whether the recipient can postpone the Input tax credit on invoices uploaded by the supplier ?
Ans Three situations exist for pending invoices uploaded by the supplier :

First, the supply has not been received by the recipient,

Second, where the recipient is of the view that the invoice needs amendment,

Third, where recipient is not able to decide whether to take input tax credit for the time being.

These invoices are called pending invoices.

Pending invoices shall be reported by the recipient and no input tax credit

shall be availed by the recipient on such pending invoices.

[Para 13.1 of Part A]

Q45 Whether pending invoice can be rejected ?
Ans A pending invoice can be rejected by the recipient at a later date when he is able to decide on either of the three situations mentioned in para 13.1 above.
Q46 Whether the supplier can claim credit on the basis of uploaded invoice against which goods have not been received during the tax period ?
Ans As per present law, one is eligible to avail input tax credit only in respect of goods or services received during the tax period. For goods or services received after tax period, the credit is allowed in the tax period of receipt of goods or services.

However, where invoices are uploaded by the supplier till 10th day of subsequent month,  for goods or services received till 10th or even if goods or services are received after 10th but before date of filing of return, say 18th of subsequent month, the input tax credit shall be available

This is likely to make additional 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.

For example, input tax credit can be availed by the recipient on invoice issued in April and uploaded by the supplier by 10th May even if the

goods or services have been received by the recipient before 20th May i.e. the date on which he is filing his return for the month of April

[Para 13.2 of Part A]

Q47 How to deal credit note against pending invoice ?
Ans Where a credit note is issued on an invoice which is kept pending, then both the credit note and the original invoice shall be linked in the system for availing credit so that excess credit is not taken by the recipient;[Para 16(i) of Part A]
Q48 How to deal credit note against already locked invoice ?
Ans Where a credit note is issued on an invoice on which credit has already been availed i.e. the invoice is locked, the reduction in liability of supplier shall be subject to reduction in input tax credit of the recipient.[Para 16(ii) of Part A]
Q49 What type of return formats shall be followed ?
Ans The main return shall have two main tables,

  • one for reporting supplies on which tax liability arises and
  • one for availing input tax credit.

Return shall have annexure of invoices which shall auto-populate the output liability table in the main return.

Q50 What are the reporting outward supplies ?
Ans Outward Supplies :

3A Supplies made to consumers and un-registered persons (Net of debit notes, credit notes)
3B Supplies made to registered persons (other than those attracting reverse charge)
3C Exports with payment of tax
3D Exports without payment of tax
3E Supplies to SEZ units/developers with payment of tax
3F Supplies to SEZ Units/developers without payment of tax
3G Deemed Exports
Q 51 What are the inward supplies on which tax liability arises in the hands of supplier and input tax credit is available to the recipient ?
Ans
3H Inward supplies attracting reverse charge (to be reported by recipient, GSTIN wise, net of debit notes and credit notes)
3I Import of services
3J Import of Goods
3K Import of goods from SEZ units on a Bill of Entry
Q 52 Where are missing invoices required to be reported in return ?
Ans Missing invoices on which credit has been claimed in (T-2) tax period and supplier has not reported the same till filing of return for the current tax period are required to reported in Table 3L of Annexure to Main return
Q 53 What are inward supplies on which ITC is available and for which information is required to be given in annexure to main return ?
Ans
3A Supplies received from registered person including services received from SEZ Units (other than those attracting reverse charge)
3B Supplies received from SEZ Units on Bill of Entry
3C Import of Goods
4 ISD Credits
Q 54 Apart from auto populated information What other information is required to be furnished in Main return
Ans
3C.3 Advances received (net of refund vouchers)
3C.4 Advances Adjusted (net of refund vouchers)
3C.5 Adjustment of output tax liability on account of transition from composition to normal levy and any other liability
3D.1 Exempt and Nil rated supplies
3D.2 Non-GST supplies
3D.3 No supply (Schedule III, Section7)
3D.4 Outward supplies attracting reverse charge

(net of debit and credit notes)

4A.1 Pending Invoices against goods not received in earlier period (for first tax period)
4A.7 Supplies not uloaded by Supplier “Missing Invoices”
4B.1 Inward Supplies rejected by recipient
4B.2 Supplies not eligible for credit
4B.3 Credit notes received from suppliers (other

than those attracting reverse charge only)

4B.4 Supplies uploaded by suppliers on which credit has already been claimed in the previous tax periods
4B.5 Supplies not received till filing of return or kept pending for any other reason.
4B.6 Reversal of input tax credit (Rule 37, 39, 42 & 43)

(net of reclaimed ITC, if any)

4B.8 Other ITC [including Adjustment of ITC on account of transition from composition to normal (+/-)]
4C Net effect of amendment (+/-) (When an invoice is wrongly locked, this is relevant for correction. The recipient would reject the locked

invoice, ITC effect then would come here and thereafter amendment of invoice would be allowed by the supplier)

4D Input tax credit on capital goods (for reporting purposes only, not credited to electronic credit ledger)
Q:55 What type of return formats are applicable to small taxpayer
Ans 1. Full Quarterly return

2. Sehaj (Predetermined profile of Quarterly return for domestic B2C only outward supplies)

3. Sugam (Pre determined profile of Quarterly return for domestic B2B and B2C only outward supplies)

[Para 4, 5 of Part B]

Q56 What complainces are not required to be done by small taxpayers
Ans Small taxpayers shall not have compliance requirement for :

1. Missing Invoices as small taxpayers do not use these procedures in their inventory management. As per Para 10 of Part B, Small businesses have only a few supplies to receive and therefore they track their purchases well and may not need credit on missing invoices.

2. Pending Invoices as small taxpayers do not use these procedures in their inventory management. As the inventory size of these businesses is small they also do not need to keep invoices pending and generally avail credit forthwith.

3. Non GST, Exempted Supply need not be reported.

4. Details of ITC on capital  goods not required to be filed.

[Para 3 of  Part B]

This information shall be required to be filled in the Annual Return.

Q 57 What shall be the periodicity for payment of tax by small taxpayer and how they shall be assisted?
Ans Small taxpayers would continue to pay taxes on monthly basis and in the first and second month of every quarter, they would use a payment declaration form to make the payment.

In the payment declaration form, self-assessed liability and input tax credit on self-declared basis shall be declared.

To assist in tax payment and availing input tax credit, necessary liability arising out of uploaded invoices of outward liability and input tax credit flowing from viewing facility would be shown to the taxpayer.

The payment declaration form shall only allow full payment of the liability arising out of uploaded invoices. Late payment of tax liability including that in first and second month of the quarter shall attract interest liability.

[Para 7 of Part B]

Q 58 How HSN reporting shall be done in returns ?
Ans HSN wise details would need to be provided at 4 digit level or more in quarterly and monthly returns. The table for reporting supplies with the tax liability at various tax rates shall not capture HSN but would continue to capture supplies at different tax rates as is the present practice.

Table

 

 

 

HSN code for services shall be reported at six digit level or more irrespective of the turnover during the preceding financial year. [Instruction No. 11 to return at Page 15]

Amendment Returns

To address the problem of human error i.e. wrong entries being made in the return, there would be a facility for filing of amendment return. Amendment return is different than a regular return. 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. Amendment of entries which flow from the annexure of the main return shall be allowed only with the amendment of the details filed in the annexure.

Liability in the return arising out of invoices of different dates shall be summarized period wise. However, one payment for the total tax liability on all tax invoices shall be allowed to be made. For example, a missing invoice of April if needed reporting in September, would be reported in the regular return of September.

However, the liability for the month of September and April shall be shown  separately on the common portal to the taxpayer in the regular return of September but one consolidated payment would be required to be made.

Interest shall be calculated on invoices reported late i.e. in the present example on the invoice of April. After filing of the return, information relating to April invoice shall be clubbed with the information relating to April information.

Input tax credit, if available in the electronic credit ledger can also be used for payment of the liability in the amendment return. Negative liability arising from the amendment return shall be carried forward as negative liability in the regular return of the next tax period. For change in liability of more than 10% through an amendment return, a higher late fee may be prescribed to ensure that reporting is appropriate in the regular return.

Conclusion:

The GSTN has tried to introduce a simplified yet effective system to properly implement the system of returns which is being deferred due to its inherent problems. However, a lot of improvisations and clarifications are required till the new system is launched.

Proposed Simplified GST Returns & Return Formats: Synopsis

Checkout GST Delivery Challan Format here

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One Comment

  1. R.K.sharma says:

    Sir Greetings of the day,
    I m small taxpayer I wish to study & dowload the all related formats which used for GSt REturns. so that I can file my gst returns properly.

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