As per the recent news from GSTN, GST Portal is rolling out significant new updates to make your tax life easier, all in an effort to simplify the taxation system and reduce the compliance burden on taxpayers. Though the changes will increase significant time and resource cost for compliances but will definitely reduce the complexities in availing genuine ITC to the taxpayer. We believe the following revisions are the first milestone in the journey of upcoming hardlocking of the GST Returns (specifically GSTR-3B). These changes, effective starting with the October tax period, introduce greater flexibility and clarity.
The key updates includes:
I) Keep Specified Records Pending only for one tax period (reducing ITC)
Now, the taxpayer can keep the following records pending for only one tax period ( i.e. one month for monthly filers and one quarter for quarterly filers):
a) Credit Notes (included upward amendment)
b) Downward amendment of CN (if original CN was rejected)
c) B2B Invoice Amendment (downward) / DN if original invoice accepted
d) E-commerce Invoice Amendment (downward) / DN if original invoice accepted
The tax period will be calculated not on the basis of invoice Date/ CN Date/ DN Date but on the basis of the Tax period in which the document is reported by supplier in its GSTR-1 /GSTR-1A.
II) ITC Reversal to be mentioned at invoice level
The taxpayers will mention the amount of ITC Availed (earlier) and ITC to be reversed against each invoice in GSTR-2B (IMS).
It has been clarified clearly that the taxpayer is not required to reverse the ITC on a credit note reported by the supplier against which the taxpayer has already reversed the ITC or not availed the ITC at first place.
We believe that such reversals will reduce significant number of litigations whereby genuine reversals of ITC by Taxpayers in GSTR-3B were difficult to explain and prove to tax officers during assessment and audit proceedings. Absence of such system till date has been a bone of contention in assessment proceedings due to absence of Invoice level details of ITC Reversals.
III) Communicating remarks on each invoice to vendor through GST portal (coming Soon)
Now a new utility will be incorporated soon in GSTR-2B (IMS) whereby the taxpayer can save any comment against any invoice/Credit Note and such remarks will be saved in the GSTN Portal. These remarks will not only visible to GSTR-2B of the taxpayer and also visible to the suppler of the taxpayer. This will be in line with the vision of the GST Framework envisaged in 2017 Launch whereby not only such communication between the tax payers was to be developed but also the rating system of the GST registered suppliers was to be evolved.
In conclusion, we consider these new changes in return filing system towards the right direction and believe this step as one the baby step in the prolonged journey in reducing litigations but will look forward to the future steps to be taken the GST council to reduce compliance complications and compliance cost.
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