1. Introduction
1.1. A return is a statement of specified particulars relating to business activity undertaken by the taxable person during a prescribed period. Return is a very critical aspect of any tax administration since it is the formal mode for submission of information important for administration of tax in a structured and time bound manner. Return provides a framework for working out the tax that becomes payable in the prescribed period applying the legal principles laid down in the tax law to the transactions during the period. A taxable person has a legal obligation:
(i) to declare his tax liability for a given period in the return;
(ii) furnish details about the taxes paid in accordance with that return; and
(iii) file correct and complete return within stipulated time frame.
1.2. The submission and processing of return is an important link between the taxpayer and tax administration as it is an important tool for:
(i) Compliance verification program of tax administration;
(ii) Providing necessary inputs for taking policy decision;
(iii) Management of audit and anti-evasion programs of tax administration;
(iv) (Finalization of the tax liabilities of the taxpayer within stipulated period of limitation.
1.3. GST is a self-assessed destination based taxation system. It is a transaction based tax and the unit for calculation of tax liability is individual transaction, both outward as well as inward. This document explains the legal provisions with respect to returns, the underlying principles and the processes involved. Returns in GST are totally electronic without any requirement of physical submission. The effort has been to make it as transaction based as possible so that once the tax payer gives the details of transactions, most part of the return is auto generated from details of underlying individual transactions. There shall be one common return for IGST, CGST and SGST that shall be submitted on the GST Common Portal and tax departments will pull the return data relevant to them from the portal for further processing and analysis.
Who needs to file Return in GST regime?
1.4. Every registered taxable person is required to file a return for the prescribed tax period. A return needs to be filed even if there is no business activity (i.e. Nil Return) during the said tax period of return. Persons who have crossed 90% of the threshold for liability to pay taxes are liable to register but are not required to file a return till they cross the threshold for payment of taxes.
1.5. UN agencies etc. will have unique GST ID and will file a purchase statement as return for the month (in simpler form) during which they make purchases ad claim refunds. They would not be required to file regular return. They would submit their purchase statements (without purchase invoices) as per the periodicity prescribed for claim of refund.
1.6. Government entities/ PSUs, etc. not dealing in GST supplies or persons exclusively dealing in exempted/ Nil rated/ non-GST goods or services would neither be required to obtain registration nor required to file returns under the GST law. However, State tax authorities may assign Departmental ID to such government departments/ PSUs/ other persons. They will ask the suppliers to quote the Department ID in the supply invoices for all inter-State purchases being made to them. Such supplies will be at par with B2C supplies and will be governed by relevant provisions relating to B2C supplies. They shall provide the details of their purchases made during a period as and when sought by the tax authorities that will be uploaded on the GST common portal for compliance verification purposes.
2. Periodicity of Return Filing
2.1. Common periodicity of returns for a class of taxpayers would be enforced. There will be different frequency for filing of returns for different class of taxpayers, after payment of due tax, either prior to or at the time of filing return. The return can be filed without payment of self-assessed tax as per the return but such return would be treated as an invalid return and would not be taken into consideration for matching of invoices and for inter-governmental fund settlement among States and the Centre. The periodicity of return for different categories of taxpayers is as follows:
| Sr. No. | Return / Ledger | For | To be filed by |
| 1 | GSTR 1 | Outward supplies made by taxpayer (other than compounding taxpayer and ISD) | 10th of the next month |
| 2 | GSTR 2 | Inward supplies received by a taxpayer (other than a compounding taxpayer and ISD) | 15thof the next month |
| 3 | GSTR 3 | Monthly return (other than compounding taxpayer and ISD) | 20thof the next month |
| 4 | GSTR 4 | Quarterly return for compounding Taxpayer | 18thof the month next to quarter |
| 5 | GSTR 5 | Periodic return by Non-Resident Foreign Taxpayer | Seven days from last day of registration 13th of the next month |
| 6 | GSTR 6 | Return for Input Service Distributor (ISD) | |
| 7 | GSTR 7 | Return for Tax Deducted at Source | 10th of the next month |
| 8 | GSTR 8 | Annual Return | By 31stDecember of next FY |
2.2. Other important points relating to periodicity of return filing are as under:-
(i) Normal/Regular taxpayers (including casual taxpayers) would have to file details of outward supplies (GSTR-1), details of inward supplies (GSTR-2) and monthly Return (GSTR-3) for each registration.
(ii) Normal/ Regular taxpayers with multiple registrations (for business verticals) within a State would have to file GSTR-1, GSTR-2 and GSTR-3 for each of the registrations separately.
(iii) Compounding taxpayers would have to file a quarterly return in GSTR-4.
(iv) Taxpayers otherwise eligible for the composition scheme can opt out of composition and file monthly returns and thereby make their supplies eligible for ITC in hands of the purchasers. In such a case, they will have to file GSTR 1-3 irrespective of their turnover.
(v) Casual taxpayers would have to file GSTR-1, GSTR-2 and GSTR-3 returns for the period for which they have obtained registration. The registration of Casual taxpayers will be done in the same manner as that of Normal/ Regular taxpayers but with payment of advance tax.
(vi) Non-Resident Taxpayers (foreigners) would be required to file GSTR-5 return for the period for which they have obtained registration within a period of seven days after the date of expiry of registration. In case registration period is for more than one month, monthly return(s) would be filed and thereafter return for remaining period would be filed within a period of seven days as stated earlier.
(vii) Annual return (GSTR-8) will be filed by all normal/ regular and composition taxpayers. It will be based on financial records.
(viii) Cut-off date for filing of details of outward supplies (GSTR-1), inward supplies (GSTR-2) and monthly return (GSTR-3) would be 10th, 15th and 20th day respectively of the succeeding month for all monthly filers.
(ix) Cut-off date for filing of Quarterly return (GSTR-4) by compounding taxpayer would be 18th day of the first month of the succeeding quarter.
(x) Cut-off date for filing of Input Service Distributor return (GSTR-6) would be 13th day of the succeeding month.
(xi) Cut-off date for filing of TDS (Tax Deducted at Source) return (GSTR-7) by Tax Deductor would be 10thday of the succeeding month.
(xii) For Annual return, the cut-off date would be 31st December following the end of the financial year for which it is filed.
(xiii) The filing of return would be only through online mode although the facility of offline generation and preparation of returns would be provided. The returns prepared in offline mode would have to be uploaded before due date.
3. Monthly Return
3.1. The return for any normal tax payer under GST consists of three parts, viz statement of outward supplies, statement of inward supplies and the return. The basic information in the GST ecosystem emanates from the statement of outward supplies i.e. GSTR-1. GSTR-1 captures the transaction level details of the outward supplies of a tax payer. GSTR-1 of all suppliers forms the basis for the statement of details of the inward supplies of all suppliers as somebody’s outward supply’s is somebody else’s inward supply. Therefore, the statement of inward supplies i.e. GSTR-2 is auto drafted from the GSTR-1 of all the suppliers. Once the outward and inward supplies of every tax payer is frozen, the tax liability is calculated and paid in the return i.e. GSTR-3. Therefore, GSTR-1 to 3 collectively form the return under GST. It is only for operational conveniences that they have been split into three parts with staggered date of filing. Unless all GSTR-1 are filed, auto generation of GSTR-2 is not possible and only after all GSTR-1 and GSTR-2 have been finalized can GSTR-3 be auto generated. This logical sequence defines the workflow for filing of returns in GST.
3.2. In addition, there are separate formats for certain specific category of taxpayers viz. Input Service Distributors, non-resident taxpayers (foreigners) and Tax Deductors keeping in view certain specific characteristics of their transactions. The components of each of these return is being discussed hereunder:
Statement of Outward Supplies
3.3. As explained above, GSTR-1 is a statement of outward supplies and primarily consists of details of invoices pertaining to outward supplies of the tax payer for the month as provided in section 25 of the draft model bill. To meet the objective of matching of input tax credit, it is essential that all B2B transactions are captured at invoice level. For B2C transactions, since the recipient shall not claim input tax credit, the same can be captured at consolidated level. However, keeping in view the importance of destination-based nature of the tax, it has been mandated that invoice level details of interstate B2C transaction of value above Rs.2.5 lakh shall be captured.
recipient is available on record, both in case of goods as well as services, other than a few exceptions, the place of supply is broadly the location of recipient and in all such cases, if the State of place of supply is different from the State where supplier is registered, it has to be treated as inter-state supply. If the address of recipient does not exist on record, the place of supply shall become the state in which the supplier is registered, making it an intra-state supply.
3.4. This form would capture the following information:
1. Basic details of the Taxpayer i.e. Name along with GSTIN
2. Period to which the Return pertains
3. Gross Turnover of the Taxpayer in the previous Financial Year. This informationwould be submitted by the taxpayers only in the first year and will be autopopulated in subsequent years.
4. Final invoice-level supply information pertaining to the tax period separately for goods and services:
i. For all B2B supplies (whether inter-state or intra-state), invoice level specified details will be uploaded.
ii. For all inter-state B2C supplies (including to non-registered Government entities, Consumer / person dealing in exempted / NIL rated / non GST goods or services), the suppliers will upload invoice level details in respect of every invoice whose value is more than Rs. 2,50,000/-. For invoices below this value, summary of supplies made for every State as the place of supply shall be filed. In this context, it is important to note that where address of the
iii. The recommendation of the Committee on IGST and GST on Imports with respect to the details about HSN code for goods and Accounting code for services to be captured in an invoice have been accepted with certain modifications. The details proposed by this Committee are as follows:‑
a. HSN code (4-digit) for Goods and Accounting Codes for Services will be mandatory initially for all taxpayers with turnover in the preceding financial year above Rs. 5 Crore(For the first year of operations of GST, self-declaration of turnover of previous financial year will be taken as the basis as all India turnover data will not be available in the first year. From the 2nd year onwards, turnover of previous financial year under GST will be used for satisfying this condition).
b. For taxpayers with turnover between Rs 1.5 Crore and Rs 5 Crore in the preceding financial year, HSN codes may be specified only at 2-digit chapter level as an optional exercise to start with. From second year of GST operations, mentioning 2-digit chapter level HSN Code will be mandatory for all taxpayers with turnover in previous financial year between Rs. 1.5 Crore and Rs. 5.0 Crore.
c. Any taxpayer, irrespective of his turnover, may use HSN code at 6- digit or 8-digit level if he so desires.
d. To start with, compounding dealers may not be required to specify HSN at 2-digit level also.
e. Prescribed Accounting code will be mandatory for those services for which Place of Supply Rules are dependent on nature of services to apply the destination principle, irrespective of turnover.
f. HSN Codes at 8-digit level and Accounting Codes for services will be mandatory in case of exports and imports.
iv. The above parameters with respect to HSN code for goods and Accounting Code for services will apply for submitting the information in return relating to relevant invoice level information for B2B supplies (both intra-state and inter-state) and inter-state B2C supplies (where taxable value per invoice is more than Rs. 2.5 lakhs). It is proposed that in the return form the description of goods and services may not be required to be submitted by the taxpayer as the same will be identified through the submission of HSN code for goods and Accounting Code for services. In order to differentiate between the HSN code and the Service Accounting Code (SAC), the latter will be prefixed with “s”. The taxpayers who have turnover below the limit of Rs. 1.5 Crore will have to mention the description of goods/service, as the case maybe, wherever applicable.
v. For all Intra-State B2C supplies (including to non-registered Government entities, consumer / person dealing in exempted / NIL rated / non GST goods or services), consolidated sales (supply) details will be uploaded. However a dealer may at his option furnish invoice wise information in respect of exempted and nil rated supplies also.
vi. The supply information will also have details relating to the Place of Supply in order to identify the destination state as per the Place of Supply Rules where it is different from the location of the recipient.
vii. Details relating to supplies attracting Reverse charge will also be submitted
5. Details relating to advance received against a supply to be made in future will be submitted in accordance with clause (2) of sections 12 and 13 of the draft model bill.
6. Details relating to taxes already paid on advance receipts for which invoices are issued in the current tax period will be submitted.
7. Details relating to supplies exported (including deemed exports) both on payment of IGST as well as without payment of IGST would be submitted.
8. There will be a separate table for submitting the details of revisions in relation to the outward supply invoices pertaining to previous tax periods. This will include the details of Credit/Debit Note issued by the suppliers and the differential value impact and the concomitant tax payable or refund/tax credit sought.
9. There will be a separate table for effecting modifications/correcting errors in the returns submitted earlier.
10. There will be a separate table for submitting details in relation to NIL rated, Exempted and Non GST outward supplies to ( both inter-state and intra-state) to registered taxpayers and consumers.
3.5. Section 25 (1) of the draft model bill mandates that the statement of outward supplies should be finalized submitted by 10th of the succeeding month to ensure that the statement of inward supplies can be auto populated soon after 10th of the month. The taxpayers can upload the invoice level details on a continuous basis and the same would be visible to even the corresponding purchasing taxpayers.
3.6. The GSTN ecosystem provides multiple ways to upload the invoice level details depending on the convenience and the size of tax payer. The most rudimentary route to upload the invoice level details would be the web interface of GST Common Portal. GSTN would also provide a utility to either enter the details offline and upload it in one go or export it from the system of taxpayer and upload it to GSTN servers. Various popular accounting software providers and also in the process of integrating their system with GSTN system to allow direct upload of GSTR-1 from their accounts to GSTN. GSTN is also developing a GST Service Provider (GSP) framework where GSPs can develop their own utilities to perform different functions and register them with GSTN for allowing online operations through their utility directly. All these would ensure that the burden of uploading invoice details is minimized and at the same time sufficiently reduce the possibility of errors creeping in due to data entry mistakes.
Statement of Inward Supplies
3.7. Section 26 of the draft model bill provides for the statement of inward supplies. The statement of inward supplies is a statement that primarily determines the Input Tax Credit (ITC) eligible to be claimed by a tax payer in a given tax period. Like statement of outward supplies, even this statement is a transaction based statement. Since every inward supply of a tax payer is an outward supply of some other tax payer, this statement can be auto drafted by the system from the statements of outward supplies filed by all the tax payers in the GST system. Based on this principle, the GSTR-2 is auto populated after the last date of filing of the statement of outward supplies based on the details of outward supplies filed on the system.
3.8. Since the GSTR-2 is a claim made by the tax payer for his ITC, although his GSTR2 has been auto populated, he is allowed to change them, delete them or even add his own claims based on invoices where he has received goods and / or services but, for some reason, his supplier has failed to upload it on the system.
3.9. This return form would capture the following information:
1. Basic details of the Taxpayer i.e. Name along with GSTIN
2. Period to which the Return pertains
3. Final invoice-level inward supply information pertaining to the tax period for goods and services separately
4. The information submitted in GSTR-1 by the counterparty supplier of the taxpayer will be auto populated in the concerned tables of GSTR-2. The same may be modified i.e. added or deleted by the Taxpayer while filing the GSTR-2. The recipient would be permitted to add invoices (not uploaded by the counterparty supplier) if he is in possession of invoices and has received the goods or services.
5. There will be separate tables for submitting details relating to import of Goods/Capital Goods from outside India and for the services received from outside India.
6. The details of inward supplies would be auto-populated in the ITC ledger of the taxpayer on submission of his return. The taxpayer will select the invoice details regarding the in-eligibility and eligibility of ITC in relation to these inward supplies and the quantum available in a particular tax period.
7. There will be a separate table for submitting details in relation to ITC received on an invoice on which partial credit has been availed earlier.
8. In respect of inputs, there can be two situations. If inputs are received in one lot, the ITC will be given in the return period in which the purchase is recorded in the books of accounts. In case inputs covered under one invoice are received in more than one instance/lot, as per section 16 (1) of the draft model bill, the ITC will be given in the return period in which the last purchase is recorded in the books ofaccounts. A note in this regard has been incorporated in the Return form for the guidance of the taxpayer.
9. There will be a separate table for submitting the details of revisions in relation to inward supply invoices pertaining to previous tax periods (including post purchase discounts received). This will include the details of Credit/Debit Note issued by the suppliers and the differential value impact and concomitant tax payable or refund/tax credit sought.
10. There will be a separate table for effecting modifications/correcting errors in the returns submitted earlier.
11. There will be a separate table for submitting details in relation to NIL rated, Exempted and Non GST inward Supplies ( Both Inter-State and Intra-State) including those received from compounding taxpayers and unregistered dealers.
12. There will be a separate table for the ISD credit received by the taxpayer.
13. There would be a separate table for TDS Credit received by the taxpayer.
3.10. Auto Population in this return from GSTR-1 will be done on or after llthof the succeeding month. Addition or Deletion of the invoice by the taxpayer will be permitted between llthand 15thof the succeeding month. As per section 26 (1), GSTR-2 can be filed any time after 10thand on or before 15th. Filing of GSTR-2 after 15th will attract late fee.
3.11. Based on the GSTR-2, if there are any changes as compared to what was auto generated the corresponding supplier would be allowed to change his GSTR-1 accordingly. If the GSTR-1 is changed by the supplier by 17ththe same will be taken for generation of the monthly return. Adjustments would be permitted on 16thand 17thof the succeeding month.
Monthly Return
3.12. Section 27 of the draft model bill deals with returns under GST. Monthly return shall be completely auto generated from the information furnished in GSTR-1 and GSTR2. The only additional information additionally furnished in the return relates to the utilization of ITC and debit of cash ledger for payment of taxes. The GST Monthly Return form would capture the following information:
1. Basic details of the Taxpayer i.e. Name and Address along with GSTIN
2. Period to which the Return pertains
3. Turnover Details including Gross Turnover, Export Turnover, Exempted Domestic Turnover, Nil Rated Domestic Turnover, Non GST Turnover and Net Taxable Turnover
4. Final aggregate level outward and inward supply information. These details will be auto populated from GSTR-1 andGSTR-2.
5. There will be separate tables for calculating tax amounts on outward and inward supplies based on the information contained in various tables in the GSTR-3 return.
6. There will be a separate table for capturing the TDS credit received and which has been credited to his cash ledger (the deductee).
7. Tax liability under CGST, SGST, IGST and Additional Tax.
8. Details regarding revision of invoices relating to outward and inward supplies
9. Details of other liabilities (i.e. Interest, Penalty, Fee, others etc.).
10. Information about ITC ledger, Cash ledger and Liability ledger (these are running electronic ledgers maintained on the dashboard of taxpayer by GSTN). These would be updated in real time on an activity in connection with these ledgers by the taxpayer. Both the ITC ledger and the cash ledger will be utilized by the taxpayer for discharging the tax liabilities of the returns and others. Details in these ledgers will get auto populated from previous tax period return (irrespective of mode of filing return i.e. online / offline utility)
11. Details of ITC utilized against tax liability of CGST,SGST and IGST on supplies of goods and services.
12.Net tax payable under CGST, SGST and IGST.
13. Details of the payment of tax under various tax heads of CGST, SGST and IGST separately would be populated from the debit entry in Credit/Cash ledger.GST Law may have provision for maintaining four head wise account for CGST, SGST, IGST and Additional tax and at associated minor heads for interest, penalty, fee and others. Excess payment, if any, will be carried forward to the next return period. The taxpayer will have the option of claiming refund of excess payment through the return for which appropriate field will be provided in the return form. The return form would display all bank account numbers mentioned in the registration, out of which one will be selected by the taxpayer to which the refund will be credited.
14. Details of other payments – Interest/Penalties/Fee/Others, etc. This will be auto populated from the Debit entry in Cash ledger irrespective of mode of filing i.e. online / offline utility.
15. Details of ITC balance (CGST, SGST and IGST) at the end of the tax period will be auto-populated in the ITC ledger irrespective of mode of filing return. In case of net exporter or taxpayers dealing with inverted duty structure or similar other cases, where input tax credit is greater than output tax due on supply, the taxpayer would be eligible for refund. The return would have a field to enable the tax payer to claim the refund or to carry forward the ITC balance (CGST, SGST and IGST). The return form should display all bank account numbers mentioned in the registration, out of which one will be selected by the taxpayer to which the refund will be credited.
16. Details of cash balance (CGST, SGST and IGST) in personal ledger at the end of the tax period (this will be auto-populated irrespective of mode of filing return).
17. Information regarding quantity of goods (as per Unique Quantity Code) supplied will not be contained in the monthly return. However, the same would be submitted by the taxpayer in the annual return. The format of the annual return would have a suitable field for this purpose.
3.13. A return related liability would mean the tax liability for the transactions (including credit/debit notes) of the return period and the additional liability arising out of any ITC reversal or late inclusion of the supply in the return period. Arrears pertaining to audit/reassessment/enforcement outcomes would be handled separately, and not mixed with the return related liabilities and payments. The payments made on this account, however, would be reflected in the return.
3.14. The return would be permitted to be filed both on online and offline mode. In case of offline mode, payment by debit to cash/ ITC ledger can be done at an earlier date also and such debit entry number would be verified at the time of uploading of the return. In online mode, both debiting and filing can be done simultaneously. Section 26 (1) mandates that the return would be filed by 20thof the succeeding month. Late filing would be permitted on payment of late fees only.
3.15. Most of the tax payers shall be required to file return in GSTR-3 backed by information in GSTR-1 and GSTR-2. However, there are certain specified category of tax payers for whom a simplified return is specified owing the nature of their activities. They are tax payers under composition scheme, non-resident foreign tax payers, ISD and TDS deductors. These special returns are explained below.
Quarterly Return for Taxpayers under composition scheme
3.16. After crossing the threshold exemption limit, the taxpayers may opt for composition scheme wherein they would be required to pay taxes at fixed rate on their turnover as per section 8 of the model law. Such taxpayers can neither avail ITC nor can their purchasers claim ITC on purchases made from them. Therefore a simpler return can be prescribed for such payers and they would be required to file a simplified quarterly return in the format GSTR-4.
3.17. In this return the taxpayer is only required to indicate the total value of supplies made during the period of return and the tax paid at the composition rate alongwith the details of payment of tax in the return. The composition taxpayer will also need to declare invoice-level purchase information for the purchases from normal taxpayers, which will be auto-drafted from supply invoice information uploaded by counter-party taxpayers. Suppliers making interstate supplies shall not be allowed composition benefit but composition taxpayers can receive interstate supplies.
3.18. The composition taxpayers will also be required to submit details of the goods and services imported from outside India. The composition taxpayers would be allowed to export supplies outside India. Composition taxpayers shall normally make purchases from registered taxpayers but if they make any purchase from unregistered taxpayers, it shall attract tax on reverse charge. As per section 27 (1) of the draft model bill, the return for composition taxpayers shall have to be filed for every quarter on 18th of the month after the end of the quarter.
Non-Resident Foreign Taxpayers
3.19. Non-Resident foreign taxpayers are those suppliers who do not have a business establishment in India and have come for a short period to make supplies in India. They would normally import their products and make local supplies. Therefore, they will be allowed to avail ITC only on IGST paid on imports. However, other taxpayers will be eligible to take credit on supplies made by them. Such taxpayers would be required to file return in form GSTR-5 for the period for which they have obtained registration within a period of seven days after the date of expiry of registration. In case registration period is for more than one month, monthly return(s) would be filed and thereafter return for remaining period would be filed within a period of seven days as stated earlier.
Input Service Distributor Return
3.20. Input Service Distributors (ISD), as a specified category, only distribute credit on tax invoices received centrally on services to units that actually use those services in the course of their business. Since they do not normally have a net tax liability, a simplified return has been specified in form GSTR-6. This return form would capture the following information:
1. Basic details of the Taxpayer i.e. Name along with GSTIN
2. Period to which the Return pertains
3. Final invoice-level inward supply information pertaining to the tax period separately for goods and services on which the ITC is being claimed. This will be auto populated on the basis of GSTR-1 filed by the Counterparty Supplier of the taxpayer. The same may be modified i.e. added or deleted by the Taxpayer while filing the ISD return. The recipient would be permitted to add invoices (not uploaded by the counterparty supplier) if he is in possession of invoices and have received the services.
4. Details of the Invoices along with the GSTIN of the receiver of the credit i.e. to whom the ISD is distributing credit.
5. There will be separate ISD Ledger in the return that will detail the Opening Balance of ITC (to be auto- populated on the basis of previous return), credit for ITC services received, debit for ITC reversal and ITC distributed and Closing Balance.
3.21. As per section 27 (6) this return would be filed by 13thof the succeeding month. Late filing would be permitted on payment of late fees only.
Tax Deduction at Source Return
3.22. Section 37 of the draft model bill mandates some specified recipients to deduct tax at source on certain supplies while making payment for such supplies. They shall deduct an amount at a specified percentage of the payment being made and credit it to the Government as tax paid on behalf of the supplier. The supplier shall be allowed to take credit of such tax deducted and paid. Since these taxpayers shall not be making outward supplies but are only deducting tax on their inward supplies and paying it on behalf of their suppliers, a simplified return form in GSTR-7 is prescribed for them. This return would capture the following information:
1. Basic details of the Taxpayer i.e. Name along with GSTIN
2. Period to which the Return pertains
3. Details of GSTIN of the Supplier along with the invoices against which the Tax has been deducted. This will also contain the details of tax deducted against each major head i.e. CGST, SGST and IGST.
4. Details of other payments – Interest/Penalties/Fee/Others, etc. (This will be auto populated from the Debit entry in Cash ledger)
3.23. As per section 27 (5) of the draft model bill, this return would be filed by 10th of
the succeeding month. Late filing would be permitted on payment of late fees only.
4. Steps for Return Filing
4.1. For the purpose of reaping the benefit of the fact that various returns will be filed across the country on the same platform and therefore, information entered once by one taxpayer need not be entered again by any other taxpayer, there is a need to sequence the events in a particular fashion. This section outlines the sequence in which the statements/returns are expected to be filed.
Filing of GSTR-1
4.2. The taxpayer will upload the final GSTR-1 form either directly through data entry at the GST Common Portal or by uploading the file containing the details through an offline utility or through third party applications or software by1Othday of month succeeding the month during which supplies has been made. The increase or decrease in supply invoices would be allowed, only on the basis of the details uploaded by the counter-party purchaser in GSTR-2upto 17thday of the month. In other words, the supplier would not be allowed to include any missing invoices on his own after 10thday of the month.
4.3. GSTN will facilitate periodic regular upload of such information to minimize last minute load on the system. GSPs are expected to develop client applications that will facilitate easy filing of GSTR-1.
Auto-generation of GSTR-2
4.4. GST Common Portal will auto-draft the provisional GSTR-2 of taxpayer based on the supply invoice details reported by the counter-party taxpayers (suppliers) on a near real-time basis. While every taxpayer will be able to see the invoices uploaded by their suppliers, they will be able to finalise their GSTR-2 only after the last date of filing GSTR1. After filing of GSTR-1, the taxpayers will be able to view/download their provisional GSTR-2 for further steps.
Finalisation and filing of GSTR-2
4.5. Purchasing taxpayers will accept/reject/modify invoices in the auto-drafted provisional GSTR-2. A taxpayer will have the option to download his provisional purchase statement from the Portal and update/modify it off-line. Purchasing taxpayer will also be able to add additional purchase invoice details in his GSTR-2 which have not been uploaded by counter-party taxpayer (supplier) as described above, provided he is in possession of valid invoice issued by counter-party taxpayer and he has actually received such supplies. The taxpayer would, indicate the eligibility/ partial eligibility for ITC in those cases where either he is not entitled or he is entitled for partial ITC. The taxpayers can then file their GSTR-2 either online or through offline utility or through third party applications or software.
Reconciliation of outward and inward supplies
4.6. Taxpayers will have the option to do reconciliation of inward supplies with counter-party taxpayers (suppliers) during the period of 7 days from filing of GSTR-1 with their counter-party taxpayers for any missing supply invoices in theGSTR-1 of the counter-party taxpayers, and prompt them to accept the same as uploaded by the purchasing taxpayer. Where a purchasing taxpayer has added an invoice and the corresponding supplying taxpayer accepts the addition, it will amend his GSTR-1 accordingly.
Finalisation of Return
4.7. Finalisation of GSTR-1 and GSTR-2 would enable taxpayers in finalizing their return for the month. The GST Common portal would auto-generate the GSTR-3 for the taxpayer. GSTR-3 would show the amount that will credited/debited to the ITC ledger of the taxpayer and the amount of ITC available for payment of taxes. The taxpayer will fill in the details of ITC that he intends to utilise for payment of taxes. Any balance amount will have to be paid by the taxpayer as cash. The return would also show the late fee and interest payable, if any.
Payment of Taxes and submission of return
4.8. GST follows a system of ledgers for ITC and cash. ITC availed by the taxpayer shall be credited to the ledger on filing of return and ITC utilised by the taxpayer for payment of taxes shall be debited to the ledger on filing of the return. Any payment made through challan gets credited to the ledger and does not automatically get offset against any tax liability. Payment of taxes has to be done by debiting the cash ledger and the taxpayer can opt to debit the cash ledger while submitting the return.
4.9. The tax payer will submit the return with the payment of the amount of cash payable as per the return. The two activities can also be done separately and the taxpayer can make the payment in advance and credit his cash ledger. On filing of return, the ITC ledger will be credited with the amount of ITC available in the return, will be
debited by the amount of ITC availed for payment of taxes in the return and the cash ledger will be debited by the amount payable by the cash.
Acknowledgement
4.10. On submission of return, an Acknowledgement Number will be generated. In case of submission of a return which has been prepared by using offline tools, acknowledgement of submission will take some time as GSTN System will need to first verify details like the carry forward cash as per personal ledger, ITC, tax payment details etc. In such cases, initially a Transaction ID confirming receipt of data will be conveyed to the taxpayer, (as also envisaged in case of filing of short paid / non -paid return).Final acknowledgement of receipt of return will be generated after validation of data is completed, which will also lock-in the Transaction ID.
4.11. The acknowledgement of e-return would contain the following details:
(i) Return acknowledgement number (unique number generated by the GSTN), Date and Time
(ii) Transaction ID No., Date and Time
(iii) GSTIN of taxpayer
(iv) Relevant tax period details
(v) Gross Supplies, Taxable Supplies and Tax paid / refund claimed(CGST, SGST, IGST and Additional tax separately) during the Return period
5. Where will the taxpayer file Return?
5.1. A registered Tax Payer shall file GST Return on GST Common Portal either:
(i) by himself logging on to the GST Common Portal using his own user ID and password;
(ii) Through his authorized representative using the user Id and password (allotted to the authorized representative by the tax authorities), as chosen at the time of registration, logging on to the GST Common Portal.
5.2. The filing may be done either directly or by using third party apps or software
which will interact with GST System using APIs or through Facilitation Centre (FC).
5.3. At the time of registration, every taxpayer has to enrol with GST Common Portal (GSTN). A unique User-ID and Password will be generated and intimated to the taxpayer. This User-ID and Password shall be used by him for filing the tax return on the Common Portal as well.
Tax Return Preparers
5.4. The draft model bill in section 34 provides for a formal role for Tax Return Preparers (TRP). A taxable person may prepare and submit his returns himself or can use services of a TRP. The process for filing return through TRP is given below:
(i) A TRP will have to be chosen by the taxpayer out of TRPs registered with respective State tax authorities/CBEC. (taxpayer will have the option to change TRP any time);
(ii) The TRPs registered with tax authorities will be provided separate user ID and password;
(iii) Using his own user Id and password, the TRP will prepare the return in prescribed format on the basis of the information furnished to him by the taxable person. The legal responsibility of the correctness of information contained in the return prepared by the TRP will rest with the taxable person only and the TRP shall not be liable for any errors or incorrect information;
(iv) The TRP will be able to upload all types of return, based on the information provided by the taxpayer who has authorized him to do so at the portal; The system will generate an email and SMS having basic data of return and send the same to the taxpayer;
(v) The taxpayer can accept the correctness of the return and submit the same by just clicking on the link provided in the e-mail. In case he does not respond to the e-mail, return will be considered as not submitted;
(vi) In case taxpayer wants to respond to the SMS, he may do so by replying YES and mention the OTP sent alongwith the SMS. In case he does not respond to the SMS, return will be considered as not submitted;
Facilitation Centres
5.5. The return can also be submitted by the taxpayer through any Facilitation Centre (FC) notified by the Tax authorities and selected by the taxpayer at GST System. The taxpayer shall make available the requisite documents to the facilitation centre. Facilitation Centre (FC) shall be responsible for the uploading of all types of return given to it by the taxable person. After uploading the data on the common portal using the ID and Password of FC, the GSTN system will generate an email/SMS for the taxpayer.
5.6. Registration of TRP/FC will be done by CBEC / respective State tax authorities and the registration data will be shared with GSTN to enable applicants/taxpayers to choose one from the available list of registered TRPs/FCs.
GST Common Portal
5.7. The Common Portal shall act as a channel for most of the communication between the taxpayer and tax administration. The Common Portal will provide the taxpayer with a dashboard that will give a snapshot of all the activities of the taxpayer and details of what is required from him.
5.8. The common portal will display the electronic form to be used for filing the return. The Common portal will also provide an offline utility for entering the details offline and uploading the information in one go. In case of offline filing, the validations will be done after filing of the information and the taxpayers will be intimate accordingly. The taxpayers can use their Digital Signature Certificate for validating the return filed by them. However, to ensure that e-verification can be provided even to taxpayers who don’t have DSC, separate mechanism like EVC using Adhar or net banking credentials is being worked out. Overall, the effort will be to avoid any kind of paper interface.
5.9. Along with the return, taxpayer is not required to submit any other document. The documents as required for scrutiny or audit shall be made available by the taxpayer to the audit party deputed by CBEC/State tax authorities/CAG.
5.10. The Common Portal will also maintain and display the ledger of the Tax Payer providing information about the tax deposited, input tax credit availed/taken, input tax credit utilized, tax liability created, balance ITC carried forward, tax payments made by debiting the ledgers under respective major tax heads, refund granted and balance in respective cash ledger and credit ledger carried. The information of Interest on delayed payments, Penalty for legal defaults, Tax Demand as per adjudication/appellate orders, etc. would also be provided. The ledger will also give the status of the tax dues or excess payment on any given date.
6. Contents of transaction level information
6.1. Section 23 of the draft model bill mandates issue of invoice for every supply at the time of supply in case of supply of goods or at prescribed time in case of supply of services. As explained earlier, invoices will form the basis of the returns to be filed under GST. The following invoice level information would be captured in the statements pertaining to return:
Invoices pertaining to B2 B transactions
6.2. For all invoices pertaining to all intra/inter-state B2B supplies and supplies made to entities with UID, following details shall be submitted as part of statement of outward supplies and inward supplies, wherever relevant:
(i) Goods and Services Tax Identification Number (GSTIN)/Unique ID issued to UN organizations/Embassies
(ii) Invoice Number, Date and value
(iii) HSN code for each item line (for Goods)/Accounting code for each item line (for services)
(iv) Taxable Value
(v) Tax Rate (CGST & SGST or IGST)
(vii) Tax Amounts (CGST & SGST or IGST)
(viii) Place of Supply (State)
6.3. An Invoice may have two items having different tax rates or different HSN codes in case of B2B supplies. If the invoice contains more than one tax rate/one HSN Code, the taxpayer would have to submit line-wise information separately for each HSN Code/each tax rate.
Invoices pertaining to B2 C transactions
6.4. In respect of invoices for interstate supplies whose taxable value is more than Rs. 2.5 lakhs, details of invoices shall have to be submitted in the following format for proper tracking of flow of funds to the destination State:
(i) Invoice Number, Date and value
(ii) HSN Code for goods / Accounting code for services
(iii) Taxable Value
(iv) Tax Rate
(v) Tax Amount
(vi) Buyer’s address (State Code)
(vii) Departmental ID allotted by State Government to Government entities/ PSUs, etc. not dealing in GST supplies or to persons dealing in exempted/ Nil rated/ non-GST goods or services
(viii) Place of Supply (State) if different than S. No. (vi) above
6.5. For invoices relating to interstate supplies to unregistered persons whose taxable value is upto Rs 2.5 lakhs, only state-wise and tax rate-wise aggregated taxable value of all such invoices will be submitted,. In case of intrastate supplies to unregistered persons, tax rate-wise aggregated taxable value of all such invoices will be submitted.
Invoice pertaining to Export and deemed export supply
6.6. For export related supplies, it is intended that the transaction level information shall be submitted in the following format to ensure linkages with the IT systems of Customs.
(i) Invoice Number, Date and value
(ii) 8-digit HSN Code for goods/ Accounting Code of Services for each line item (as HSN Code / Accounting code is mandatory in case of exports)
(iii) Taxable Value
(iv) Tax Rate
(v) Tax Amounts (IGST, CGST & SGST) (in case exports on payment of GST).
(vi) Shipping Bill/ Bill of Export Number
Details pertaining to exempted including Nil rated supply
6.7. Aggregate value of all exempted, including Nil rated outward and inward supplies made by the taxpayer during the return period would be submitted. Although this has no tax significance in direct sense but capturing this information would be important for tallying the total supply turnover and the total taxable turnover during the tax period.
Bills of Entry relating to Import
6.8. For import related transaction, following details pertaining to inward supplies shall be submitted. These details would be verified from Bill of Entry data available at ICES / ICEGATE.
(i) Bill of Entry Number, Date and value
(ii) Assessable Value for IGST
(iii) 8-digit HSN Code for goods
(iv) IGST rate
(v) IGST Amount
(vi) Importer’s address (for transfer of IGST)[Will get auto populated in case of registered taxpayer. In case of others, it will have to be provided by them]
Credit Note and Debit Note
6.9. There are various situations in which the taxpayers may need to issue credit and debit notes. Credit and debit notes may be issued in case of price and quantity variations, sale/purchase returns or post sale discounts. Section 24 of the draft model bill recognises credit and debit note issued for an outward supply by the supplier and the recipient of the supply shall show it as a receipt of the credit or debit note. It has been made mandatory that every credit or debit note shall have to relate to an invoice issued by the supplier earlier.
6.10. Following information relating to credit or debit note will have to be submitted as part of the return.
(i) Debit / Credit Note Number
(ii) Original Invoice Number and Date
(iii) Taxable Value, Tax Rate and Tax Amount (CGST & SGST or IGST) ( that is being modified )
6.11. Section 24 of the draft model bill requires that Credit or Debit note for any tax invoice should be issued before 30th September of the financial year succeeding financial year in which the invoice has been submitted and the credit/debit note will be reflected in the monthly return in which such notes have been issued. This will ensure that matching and auto-reversal pertaining to credit or debit note can happen before last date of filing the annual return of the financial year in which the invoice was issued. In case of supplier issuing credit note, since the tax liability stands reduced, it is essential that only the reduced tax amount has been passed on to the recipient.
Post sales discount
6.12. Section 15 of the model GST bill deals with valuation of taxable supply and clause (h) of sub-section (2) allows only those discounts to reduced from the value of supply that can established as per the agreement of supply and is known at or before the time of supply. It also requires that such discounts should be specifically linked to relevant invoices and therefore, excludes any lump-sum discount. The adjustments for post sales discount will be completed before filing of annual return. The credit/debit note will be reflected in the monthly return in which the said adjustment is made.
Advances received against a supply to be made in future
6.13. Section 12 and 13 of the draft model bill deals with the time of supply of goods and services respectively and determine when tax shall become payable. Sub-section (2) of both sections provide that tax shall become payable when advance payment is received against any supply even if the recipient has not received goods or services or even if supplier has not actually supplied goods or services. Therefore, in case of an advance received, the supplier will have to pay tax and therefore it needs to be captured in the statement of outward supplies. This will have to be settled finally when the supply is made and final invoice is issued when the recipient will be allowed to claim ITC. So, accordingly, if the tax is to be paid on the basis of advance payment received against a future supply of goods and/or services, then the following details would be required to be provided:
(i) GSTIN/UID/GDI/Name of customer
(ii) State Code
(iii) HSN Code for goods / Accounting code for services
(iv) Amount of advance received
(v) Tax Rate (CGST and SGST or IGST and Additional Tax)
(vi) Tax Amount (CGST and SGST or IGST and Additional Tax)
TDS
6.14. Persons who are mandated to deduct tax at source as per section 37 from the payments made to their supplier for supplies made to them will have to submit details of deductions made so that the taxpayers on whose behalf deductions have been made are able to claim credit for the same.
6.15. In their TDS return, the TDS deductors will give following details for every transaction:
(i) GSTIN/GDI of deductor
(ii) GSTIN of deductee/supplier
(iii) Invoice no. with date(iv) TDS Certificate no. with date and value
(iv) Taxable value
(v) Rate of TDS for IGST, CGST and SGST as applicable
(vi) Amount of IGST, CGST and SGST as applicable, deducted as TDS
6.16. As explained earlier, these details will be available with the GST common portal by 10th of the month and the same will be auto-populated in the returns of the taxpayers on whose behalf the deductions have been made. These deductees will claim the credit for these deductions in their return and their cash ledgers will be credited by the amount of deduction made by the deductors.
ISD
6.17. ISDs, who will only be distributing credit onwards to their subsidiaries or sister concerns will be giving details of the inward supplies and will be distributing credit through issue of documents that have been deemed to be a tax invoice as per explanation under section 23 of the draft Model Bill. These entities will be giving following details for the invoices issued by them for distributing the credit.
(i) Details of ISD i.e. GSTIN, name and address
(ii) Details of recipient i.e. GSTIN, name and address
(iii) Details of the inward supply invoices on the basis of which Input Tax Credit is claimed.
(iv) Invoice / Document no. with date
(v) Amount of IGST, CGST, SGST Credit, as applicable, being distributed.
6.18. Based on the invoices issued by the suppliers to the ISD, the inward supply details of the ISD shall be auto-populated and based on the invoices issued by them, the subsidiaries will be availing the credit.
Matching of Input Tax Credit and Auto-reversal
7.1. Matching of ITC and auto-reversal is one of the core features of GST. The primary reason for having this feature arises from the fact that one of the most important design specification of GST is that it should allow full credit of taxes paid across State boundaries, making it a truly national tax while keeping the federal structure intact. Operationally, it allows a taxpayer registered in one State can take credit of IGST paid to a taxpayer registered in another State against SGST payable by him in his State and vice versa. This requires that whenever a taxpayer takes credit of IGST paid against SGST payable, the Centre transfers an equivalent amount to the relevant State and whenever a taxpayer takes credit of SGST paid against IGST payable, the relevant State transfers an equivalent amount to the relevant Centre.
7.2. For smooth operation of such a fund transfer mechanism, which is essential for smooth flow of credit, it is important that a system is in place which ensures that whenever a taxpayer takes credit of any tax paid on his inputs, the tax amount has either already been collected or gets collected in due course. It is also essential that such a system runs without any manual intervention. Matching of input tax credit and auto-reversal provides exactly that mechanism.
Provisional acceptance of ITC
7.3. The first aspect that the framework recognises is that ITC is a matter of the claim of the taxpayer availing it and the taxpayer has to be initially allowed the ITC he has claimed. Therefore, as provided in section 28.the ITC claimed by a taxpayer is allowed every taxpayer to on provisional basis and he is allowed to utilise it for payment of tax declared in his return
7.4. Therefore, even before the ITC claim of the taxpayer is matched and finally allowed, it can be availed for payment of taxes in the return. However, the taxpayer cannot utilise the credit for payment of any other liability like demand created as a result of audit.
Matching Process
7.5. After the due date for filing of return, the invoices for ITC claims of taxpayers will be matched with corresponding outward supplies as per section 29 of the draft model bill. If the recipient has claimed ITC based on the details auto-populated in his GSTR-2 without any modifications, it will be presumed that the ITC has been matched if the corresponding supplier has discharged his tax liability, that is, his return is a valid return.
7.6. The invoices for ITC claims will be matched for duplicates and with the tax paid on the invoices of corresponding outward supplies. For the purpose of matching, invoice number, invoice date, taxable value, tax rate and tax amount shall be matched. If the details match, that is, if the other fields are same and the tax amount in the ITC claim is less than or equal to the tax amount in the invoice for the corresponding outward supply, the input tax credit claim will be finally accepted and final acceptance of the credit will be communicated to the taxpayer as provided in section 29 (2).
7.7. Where the claim of ITC is found to be duplicate, the person making the claim alone shall be intimated and where there is a mismatch, both the supplier and recipient shall be intimated.
Auto-reversal
7.8. Although, the system shall do a de-duplication check when taxpayers file their returns, where offline utilities have been used or third party apps or software has been used, there is a possibility of having duplicate claims. If the claim is found to be duplicate, an amount equal to the ITC claimed on account of the duplicate claim will be added to his output liability in the next return and shall become payable with interest for one month.
7.9. If there is a mismatch found in the ITC claim of the taxpayer, that is, if he has uploaded an invoice that has not been declared by the corresponding supplier or if he has modified an invoice to claim more credit than the tax declared by the supplier, the supplier may accept the liability in his next return and pay the tax alongwith interest payable on delayed payment of the tax. In such a case, in the next cycle, the ITC claim shall match with the invoice for corresponding outward supply and the ITC claim of the recipient shall get accepted. If the supplier fails to own up the tax liability in his next return, an amount equal to the ITC claimed on account of the mismatched claim will be added to his output liability in the next return and shall become payable with interest for two months.
Reclaim of reversal
7.10. Once claim of ITC on an invoice has been auto-reversed, the recipient cannot claim it again unless the supplier uploads that invoice in his return. After auto-reversal, if at any stage, but before 30th September of the next financial year, the supplier uploads the invoice for corresponding outward supply, the invoice shall automatically appear in the return of the recipient and the recipient shall be eligible to claim ITC on that invoice. The interest paid by him on auto-reversal shall also be credited back to his cash ledger. If any taxpayer claims ITC on an invoice that has been auto-reversed in the past without the corresponding supplier uploading that invoice, such ITC shall be auto-reversed in the next month itself and a higher interest shall be payable on such auto-reversal.
7.11. The above process outlines the process for invoices and the same process would apply for debit notes as well. Debit notes are in the nature of increase in value of supply and therefore increase the tax payable for supplies and increase the ITC available with the recipient which, in effect, is same as that in case of invoices. Therefore, wherever there is a mismatch, in both cases, the ITC of recipient is subjected to auto reversal.
Matching and auto reversal of Credit Notes
7.12. In case of Credit Note, however, the nature of transaction and its impact is different. When a supplier issues a credit note, the value of supply and the tax liability reduces in his hands. Simultaneously, the recipient should reduce the ITC claim by an equivalent amount. Thus, in case of mismatch, if the recipient does not reduce his ITC claim, the reduction of tax liability in the hands of the supplier should be reversed. The process followed in case of credit notes is also same except for this one basic difference.
7.13. Even in case of credit notes, the claims would be first checked for duplicates and duplicate claims shall be communicated to the supplier. If there is a mismatch, i.e. the recipient has not reduced the ITC claim at least by an equivalent amount, both of them will be intimated. If the recipient reduces the ITC claim accordingly, along with the payment of tax and interest, the credit note will be considered as matched. In case the recipient does not take any such corrective action, the amount of tax liability reduced by the supplier will be added to his tax liability in the subsequent returns and shall become payable along with interest for two months.
7.14. Even in the case of credit note, the supplier shall automatically be given the benefit of the credit note if the recipient acknowledges it and reduces his ITC claim at any print and provisions similar to that for invoice and debit notes apply to credit notes as well.
8. Revision of Return
8.1. Since the return framework in GST is predominantly transaction based, any changes required to be done at any stage shall also have to be done at the transaction level rather than at the aggregate level of return. Therefore, in GST, no revision of returns is allowed.
8.2. Instead, as provided in Section 25 (2) and 26 (3), if taxpayers find that there is an error in the invoices uploaded by them, they can correct the details of invoices in the return of the month when they were noticed, by providing necessary details in tables meant for amendment of details already furnished in statements of outward and inward supplies. In case the invoices were wrongly uploaded, it is presumed that they would not have got matched and the ITC on such invoice would not have been claimed. This system allows such invoices to be corrected through amendment tables. However, in case of matched invoices, the corrections shall have to be done through credit/debit notes.
8.3. All unreported invoices of previous tax period would be reflected in the return for the month in which they are proposed to be included. The interest, if applicable will be auto populated.
8.4. All under-reported invoices and ITC revision that have been matched, will have to be corrected using credit/debit note and such credit / debit note would be reflected in the return for the month in which such adjustment is carried out. The credit/debit note will have provision to record original invoice, date etc. to enable the system to link the same with the original invoice as also to calculate the interest, if applicable. Its format will be like the invoice.
8.5. There would be separate tables in the returns for reflecting those adjustments for which credit/debit notes are not required to be issued/issued. The interest, if applicable will be auto populated.
9. Non-filing, late-filing and short-filing of return
Non-Filers & Late-Filers
9.1. In case of failure by the taxpayer to submit periodic returns, a defaulter list will be generated by the IT system by comparing the return filers with the registrant database. Such defaulter list will be provided to the respective GST Authorities for necessary enforcement and follow up action.
9.2. GST Common Portal will auto generate and send the notice to all non-filers in the form of email and SMS. The details of non-filers shall be made available on the dash board of jurisdictional officers.
Short-Filers
9.3. As per the requirement of the IGST model, return should be allowed to be filed only on payment of due tax as self-assessed and declared in the return. However, returns would be allowed to be uploaded even in case of short payment for the limited purpose of having the information about self-assessed tax liability even though not paid. The invoice matching and inter-governmental fund settlement would, however, take place only after the full tax has been paid. Return without full payment of tax will be allowed to be uploaded but it will be treated as an invalid return and this return will not be used for matching of invoices and settlement of funds.
9.4. Any invalid return (including the one not supported by full payment) will merely be recorded with unique transaction ID, but not accepted in the system, and that aspect will be made known to the taxpayer at the time of communicating the ID itself.
10. Return for Casual Taxpayers:
10.1. Casual Taxpayers should file GSTR-1, GSTR-2 and GSTR-3for the period for which they have obtained registration within a period of seven days after the date of expiry of registration. In case registration period is for more than one month, monthly return(s) would be filed and thereafter return for remaining period would be filed within a period of seven days as stated earlier.
11. First and Final Return
11.1. In the normal course, any person doing business would be taking registration as and when he becomes liable for registration. It has also been prescribed that a person shall be liable to get registered when he crosses 90% of the threshold for becoming liable to pay tax and therefore, in normal cases, a person would already be registered by the time he becomes liable to pay tax. However, the section 19 (1) of the draft model law allows taxpayers to register within thirty days from becoming liable to register. In some cases it may happen that even if the tax payer has applied for registration within thirty days from the day he become liable to register, he may become liable to pay tax even before he has been granted registration. In addition, he could have received taxable supplies within those thirty days on which he may choose to take input tax credit.
11.2. For the period before he gets his GSTIN, the returns cannot be filed electronically on the GST common portal. To enable the taxpayer to declare the taxable supplies made by him before grant of registration and to allow him to take credit of taxes paid on his input during that period, section 27A of the draft model bill allows for filing a first return. The format for this return including the statement of outward and inward supplies associated with it is the same as that for regular return but this return will have to be filed and processed manually.
11.3. On cancellation of registration either on closure of business or where the taxpayer is no longer liable to pay tax, the input tax credit for inputs held in stock and inputs contained in finished and semi-finished goods will have to be reversed as per section 21 (7) of the draft model bill. Similarly, as per the same section, input tax credit on capital goods as per the residual value will have to be reversed. To enable the tax payer to discharge these liabilities, the draft model bill provides for a Final Return in Section 31. This return has to be filed within three months of cancellation of registration.
12 .Annual Return
12.1. All the Normal taxpayers would be required to submit Annual Return. This return to be filed annually is intended to provide 360 degree view about the activities of the taxpayer. This statement would provide a reconciliation of the returns with the audited financial statements of the taxpayer.
12.2. This return is a detailed return and captures the details of all the income and expenditure of the taxpayer and regroups them in accordance with the monthly returns filed by the taxpayer. This return also provides for the reconciliation of the monthly tax payments and will provide the opportunity to make good for any short reporting of activities undertaken supply wise. The said return would also capture the details of pending arrears against the taxpayer and the current status of the orders leading to such arrears. The details of all the refund claims pending with the tax authorities would also be captured. Since this return captures the minutest details of income and expenditure of the taxpayer, the gross profit/loss arrived on the basis of the details submitted in this statement should tally with the gross profit/loss indicated in the Profit and Loss Account of the dealer. Accordingly, this return is to be submitted along with the audited copies of the Annual Accounts of the dealer and would be filed by 31stDecember following the end of the financial year for which it is filed.
12.3. A separate reconciliation statement, duly certified by a Chartered Accountant, will have to be filed by those taxpayers who are required to get their accounts audited under section 44AB of Income Tax Act 1961. Currently this limit is Rs 1 Crore.
12.4. Consolidated statement of purchases and supplies based on monthly returns filed by the taxpayer can be made available to taxpayers by GSTN common portal as a facilitation measure for enabling him to prepare annual return.
13. Processing of Return
13.1. After the GST Return has been uploaded onto the GST Common Portal, the Portal will undertake the following activities:
(i) Acknowledge the receipt of the return filed by the taxpayer after conducting required validations.
(ii) Acknowledgement number would be issued as per procedure detailed above.
(iii) Once a return is acknowledged, forward that GST Return to tax authorities of Central and appropriate State Govt. through the established IT interface.
(iv) The ITC claim will be confirmed to purchasing taxpayer in case of matched invoices after 20th of the month succeeding the month of the tax period month provided counterparty supplying taxpayer has submitted the valid return (and paid self-assessed tax as per return).
(v) Communicate to the taxpayers through SMS/e-Mail, about the macro-results of the matching. The details will be in the taxpayers’ dashboard/ledger which can be viewed after log-in at the Portal.
(vi) Auto-populate the ITC reversals due to mismatching of invoices in the taxpayer’s account in the return for the 2nd month after filing of return for a particular month.
(vii) Aggregation of cross-credit utilization of IGST and SGST for each State and generation of settlement instructions based on IGST model and as finalized by the Payments Committee. This has to be with dealer-wise details as the concerned tax administration’s follow on activities will be dependent on that detailing.
13.2. GST return and the associated statements will have a large amount of information for post return tax analysis. The return will throw out various exceptions that require closer scrutiny. Since all statements of outward supplies of medium and large suppliers are HSN/SAC based, it will give ample scope for commodity analysis in addition to rudimentary input-output analysis. In addition, annual returns will have detailed commodity level information including quantity details. Commodity based trends in tax collection will be available for all sectors from all parts of the country.
13.3. GST being a destination based consumption tax it would give an ample scope of correlating tax collection data with other macroeconomic and various micro parameters. Being fully computerised system with uniform PAN based system structure across the country it will allow robust interface with other tax systems like Income tax and Customs.
13.4. Using data analysis techniques, it is expected that the tax departments will select targeted outliers and take up for detailed scrutiny and determination of taxes short paid or not paid, if any. This would ensure that even in the process relating to scrutiny, audit and assessment, any manual intervention will be limited to select outliers identified on the basis of detailed statistical analysis.
Legal Provisions relating to Return and Matching of ITC
Chapter VII-Tax Invoice, Debit and Credit Notes
Section 23.Tax invoice
A registered taxable person supplying,-
(i) Taxable goods shall issue, at the time of supply, a tax invoice showing the description, quantity and value of goods, the tax charged thereon and such other particulars as may be prescribed;
(ii) taxable services shall issue a tax invoice, within the prescribed time, showing the description, the tax charged thereon and such other particulars as may be prescribed:
(1) Provided that a registered taxable person may issue a revised invoice against the invoice already issued during the period starting from the effective date of registration till the date of issuance of certificate of registration to him:
Provided further that a registered taxable person supplying non-taxable goods and/or services or paying tax under the provisions of section8 shall issue, instead of a tax invoice, a bill of supply containing such particulars as may be prescribed.
(2) Explanation.- The expression “tax invoice” shall be deemed to include a document issued by an Input Service Distributor under section 17, and shall also include any supplementary or revised invoice issued by the supplier in respect of a supply made earlier.
Section 23 A. Amount of tax to be indicated in tax invoice and other documents
Notwithstanding anything contained in this Act or any other law for the time being in force, where any supply is made for a consideration, every person who is liable to pay tax for such supply shall prominently indicate in all documents relating to assessment, tax invoice and other like documents, the amount of tax which will form part of the price at which such supply is made.
Section 24. Credit and debit notes
(1) Where a tax invoice has been issued for supply of any goods and/or services and the taxable value and/or tax charged in that tax invoice is found to exceed the taxable value and/or tax payable in respect of such supply, the taxable person, who has supplied such goods and/or services, may issue to the recipient a credit note containing such particulars as may be prescribed on or before the thirtieth day of September following the end of the financial year in which such supply was made, or the date of filing of the relevant annual return, whichever is earlier:
Provided that no credit note shall be issued by the said person if the incidence of tax and interest on such supply has been passed by him to any other person.
(2) Where a tax invoice has been issued for supply of any goods and/or services and the taxable value and/or tax charged in that tax invoice is found to be less than the taxable value and/or tax payable in respect of such supply, the taxable person, who has supplied such goods and/or services, shall issue to the recipient a debit note containing such particulars as may be prescribed on or before the thirtieth day of September following the end of the financial year in which such supply was made, or the date of filing of the relevant annual return, whichever is earlier.
(3) Any registered taxable person who issues or receives a credit or debit note in relation to a supply of goods and/or services shall declare the details of such credit or debit note, as the case may be, in the return for the month during which such credit or debit note has been issued or received or in the return for any subsequent month but not later than September following the end of financial year in which such supply was made, or the date of filing of the relevant annual return, whichever is earlier, and the tax liability shall be adjusted in the manner specified in this Act.
Chapter VIII-Returns
Section 25. Furnishing details of outward supplies
(1) Every registered taxable person, other than an input service distributor and a person paying tax under the provisions of section 8 or section 37, shall furnish, electronically, in such form and manner as may be prescribed, the details of outward supplies of goods and/or services effected, during a tax period on or before the tenth day of the month succeeding the said tax period and such details shall be communicated to the recipient of the said supplies within the time and in the manner as may be prescribed:
Provided that the Board / Commissioner may, for valid and sufficient reasons, by notification, extend the time limit for furnishing such details:
Provided further that any extension of time limit by the Board/Commissioner of State Goods and Services Tax shall be deemed to be approved by the Commissioner of State Goods and Services Tax/Board:
Explanation.- For the purposes of this section, the expression “details of outward supplies” shall include details relating to zero-rated supplies, inter-state supplies, return of goods received in relation to/ in pursuance of an inward supply, exports, debit notes, credit notes and supplementary invoices issued during the said tax period.
(2) Any registered taxable person, who has furnished the details under sub-section (1) for any tax period and which have remained unmatched under section 29, shall, upon discovery of any error or omission therein, rectify such error or omission in the tax period during which such error or omission is noticed in such manner as may be prescribed, and shall pay the tax and interest, if any, in case there is a short payment of tax on account of such error or omission, in the return to be furnished for such tax period:
Provided that no rectification of error or omission in respect of the details furnished under sub-section (1) shall be allowed after filing of the return under section 27 for the month of September following the end of the financial year to which such details pertain, or filing of the relevant annual return, whichever is earlier.
Section 26. Furnishing details of inward supplies
(1) Every registered taxable person, other than an input service distributor and a person paying tax under the provisions of section 8 or section 37, shall verify, validate, modify or, if required, delete the details relating to outward supplies and credit or debit notes communicated under sub-section (1) of section 25 to prepare the details of his inward supplies and credit or debit notes and may include therein, the details of inward supplies and credit or debit notes received by him in respect of such supplies that have not been declared by the supplier under sub-section (1) of section 25.
(2) Every registered taxable person shall furnish, electronically, the details of inward supplies of taxable goods and/or services, including inward supplies of services on which the tax is payable on reverse charge basis under this Act and inward supplies of goods and/or services taxable under the IGST Act, and credit or debit notes received in respect of such supplies during a tax period on or before the fifteenth day of the month succeeding the tax period in such form and manner as may be prescribed:
Provided that the Board/Commissioner may, for valid and sufficient reasons, by notification, extend the time limit for furnishing such details:
Provided further that any extension of time limit by the Board/Commissioner of State Goods and Services Tax shall be deemed to be approved by the Commissioner of State Goods and Services Tax/Board.
(3) Any registered taxable person, who has furnished the details under sub-section
(2) for any tax period and which have remained unmatched under section 29, shall, upon discovery of any error or omission therein, rectify such error or omission in the tax period during which such error or omission is noticed in such manner as may be prescribed, and shall pay the tax and interest, if any, in case there is a short payment of tax on account of such error or omission, in the return to be furnished for such tax period:
Provided that no rectification of error or omission in respect of the details furnished under sub-section (2) shall be allowed after filing of the return under section 27 for the month of September following the end of the financial year to which such details pertain, or filing of the relevant annual return, whichever is earlier.
Section 27. Returns
(1) Every registered taxable person shall, for every calendar month or part thereof, furnish, in such form and in such manner as may be prescribed, a return, electronically, of inward and outward supplies of goods and/or services, input tax credit availed, tax payable, tax paid and other particulars as may be prescribed within twenty days after the end of such month:
Provided that a registered taxable person paying tax under the provisions of section 8 of this Act shall furnish a return for each quarteror part thereof, electronically, in such form and in such manner as may be prescribed, within eighteen days after the end of such quarter:
(2) Provided further that a registered taxable person shall not be allowed to furnish return for a tax period if valid return for any previous tax period has not been furnished by him.
Every registered taxable person, who is required to furnish a return under subsection (1), shall pay to the credit of the appropriate Government the tax due as per such return not later than the last date on which he is required to furnish such return.
(3) A return furnished under sub-section (1) by a registered taxable person without payment of full tax due as per such return shall not be treated as a valid return for allowing input tax credit in respect of supplies made by such person.
(4) Every registered taxable person shall furnish a return for every tax period under sub-section (1), whether or not any supplies of goods and/or services have been effected during such tax period.
(5) Every registered taxable person required to deduct tax at source shall furnish a return, electronically, in such form and in such manner as may be prescribed, for the month in which such deductions have been made along with the payment of tax so deducted, within ten days after the end of such month.
(6) Every Input Service Distributor shall, for every calendar month or part thereof, furnish a return, electronically, in such form and in such manner as may be prescribed, within thirteen days after the end of such month.
(7) Subject to the provisions of sections 25 and 26, if any taxable person after furnishing a return under sub-section (1) discovers any omission or incorrect particulars therein, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify such omission or incorrect particulars in the return to be filed for the month or quarter, as the case may be, during which such omission or incorrect particulars are noticed, subject to payment of interest, where applicable and as specified in the Act:
Provided that no such rectification of any omission or incorrect particulars shall be allowed after the due date for filing of return for the month of September or second quarter, as the case may be, following the end of the financial year, or the actual date of filing of relevant annual return, whichever is earlier.
Section 27A. First Return
(1) Every registered taxable person paying tax under the provisions of section 7 shall furnish the first return containing the details of:
(a) outward supplies under section 25 from the date on which he became liable to registration till the end of the month in which the registration has been granted;
(b) inward supplies under section 26 from the effective date of registration till the end of the month in which the registration has been granted:
Provided that a registered taxable person paying tax under the provisions of section 8 shall furnish the first return for the period starting from the date on which he becomes a registered taxable person till the end of the quarter in which the registration has been granted.
(2) Provisions of section 25, 26 and 27, other than the provision pertaining to tax period, shall apply mutatis mutandis to the said person furnishing return under subsection (1).
Section 28. Claim of input tax credit and provisional acceptance thereof
Every taxable person shall, subject to such conditions and restrictions as may be prescribed in this behalf, be entitled to take credit of input tax, as self-assessed, in his return and such amount shall be credited, on a provisional basis, to his electronic credit ledger to be maintained in the manner as may be prescribed:
Provided that a taxable person who has not furnished a valid return under section 27 of the Act shall not be allowed to utilize such credit till he discharges his self-assessed tax liability.
Section 29. Matching, reversal and reclaim of input tax credit
(1) The details of every inward supply furnished by a taxable person (hereinafter referred to in this section as the ‘recipient’) for a tax period shall, in the manner and within the time prescribed, be matched‑
(a) with the corresponding details of outward supply furnished by the corresponding taxable person (hereinafter referred to in this section as the ‘supplier’) in his valid return for the same tax period or any preceding tax period,
(b) with the additional duty of customs paid under section 3 of the Customs Tariff Act, 1975 (51 of 1975) in respect of goods imported by him, and
(c) for duplication of claims of input tax credit.
(2) The claim of input tax credit in respect of invoices and/or debit notes relating to inward supply that match with the details of corresponding outward supply or with the additional duty of customs paid shall, subject to the provisions of section 16, be finally accepted and such acceptance shall be communicated, in the manner as may be prescribed, to the recipient.
(3) Where the input tax credit claimed by a recipient in respect of an inward supply is in excess of the tax declared by the supplier for the same supply or the outward supply is not declared by the supplier in his valid returns, the discrepancy shall be communicated to both such persons in the manner as may be prescribed.
(4) The duplication of claims of input tax credit shall be communicated to the recipient in the manner as may be prescribed.
(5) The amount in respect of which any discrepancy is communicated under sub-section
(3) and which is not rectified by the supplier in his valid return for the month in which discrepancy is communicated shall be added to the output tax liability of the recipient, in the manner as may be prescribed, in his return for the month succeeding the month in which the discrepancy is communicated.
(6) The amount claimed as input tax credit that is found to be in excess on account of duplication of claims shall be added to the output tax liability of the recipient in his return for the month in which the duplication is communicated.
(7) The recipient shall be eligible to reduce, from his output tax liability, the amount added under sub-section (5) if the supplier declares the details of the invoice and/or debit note in his valid return within the time specified in sub-section (7) of section 27.
(8) A recipient in whose output tax liability any amount has been added under subsection (5) or, as the case may be, under sub-section (6), shall be liable to pay interest at the rate specified under sub-section (1) of section 36 on the amount so added from the date of availing of credit till the corresponding additions are made under the said subsections.
(9) Where any reduction in output tax liability is accepted under sub-section (7), the interest paid under sub-section (8) shall be refunded to the recipient by crediting the amount in the corresponding head of his electronic cash ledger in the manner as may be prescribed:
Provided that the amount of interest to be credited in any case shall not exceed the amount of interest paid by the supplier.
(10) The amount reduced from the output tax liability in contravention of the provisions of sub-section (7) shall be added to the output tax liability of the recipient in his return for the month in which such contravention takes place and such recipient shall be liable to pay interest on the amount so added at the rate specified in sub-section (3) of section 36.
Section 29 A. Matching, reversal and reclaim of reduction in output tax liability
(1) The details of every credit note relating to outward supply furnished by a taxable person (hereinafter referred to in this section as the ‘supplier’) for a tax period shall, in the manner and within the time prescribed, be matched ‑
(a) with the corresponding reduction in the claim for input tax credit by the corresponding taxable person (hereinafter referred to in this section as the ‘recipient’) in his valid return for the same tax period or any subsequent tax period, and
(b) for duplication of claims for reduction in output tax liability.
(2) The claim for reduction in output tax liability by the supplier that matches with the corresponding reduction in the claim for input tax credit by the recipient shall be finally accepted and communicated, in the manner as may be prescribed, to the supplier.
(3) Where the reduction of output tax liability in respect of outward supplies exceeds the corresponding reduction in the claim for input tax credit or the corresponding credit note is not declared by the recipient in his valid returns, the discrepancy shall be communicated to both such persons in the manner as may be prescribed.
(4) The duplication of claims for reduction in output tax liability shall be communicated to the supplier in the manner as may be prescribed.
(5) The amount in respect of which any discrepancy is communicated under sub-section (3) and which is not rectified by the recipient in his valid return for the month in which discrepancy is communicated shall be added to the output tax liability of the supplier, in the manner as may be prescribed, in his return for the month succeeding the month in which the discrepancy is communicated.
(6) The amount in respect of any reduction in output tax liability that is found to be on account of duplication of claims shall be added to the output tax liability of the supplier in his return for the month in which such duplication is communicated.
(7) The supplier shall be eligible to reduce, from his output tax liability, the amount added under sub-section (5) if the recipient declares the details of the credit note in his valid return within the time specified in sub-section (7) of section 27.
(8) A supplier in whose output tax liability any amount has been added under subsection (5) or, as the case may be, under sub-section (6), shall be liable to pay interest at the rate specified under sub-section (1) of section 36 in respect of the amount so added from the date of such claim for reduction in the output tax liability till the corresponding additions are made under the said sub-sections.
(9) Where any reduction in output tax liability is accepted under sub-section (7), the interest paid under sub-section (8) shall be refunded to the supplier by crediting the amount in the corresponding head of his electronic cash ledger in the manner as may be prescribed:
Provided that the amount of interest to be credited in any case shall not exceed the amount of interest paid by the recipient.
(10) The amount reduced from output tax liability in contravention of the provision of sub-section (7) shall be added to the output tax liability of the supplier in his return for the month in which such contravention takes place and such supplier shall be liable to pay interest on the amount so added at the rate specified in sub-section (3) of section 36.
Section 30. Annual return
(1) Every registered taxable person, other than an input service distributor, a deductor under section 37, a casual taxable person and a non-resident taxable person, shall furnish an annual return for every financial year electronically in such form and in such manner as may be prescribed on or before the thirty first day of December following the end of such financial year.
(2) Every taxable person who is required to get his accounts audited under subsection (4) of section 42 shall furnish, electronically, the annual return along with the audited copy of the annual accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the year with the audited annual financial statement, and such other particulars as may be prescribed.
Section 31. Final return
Every registered taxable person who applies for cancellation of registration shall furnish a final return within three months of the date of cancellation or date of cancellation order, whichever is later, in such form and in such manner as may be prescribed.
Section 32. Notice to return defaulters
Where a registered taxable person fails to furnish a return under section 27 or section 31, a notice shall be issued requiring him to furnish such return within such time and in such form and manner as may be prescribed.
Section 33. Levy of late fee
(1) Any registered taxable person who fails to furnish the details of outward or inward supplies required under section 25 or section 26, as the case may be, or returns required under section 27 or section 31 by the due date shall be liable to a late fee of rupees one hundred for every day during which such failure continues subject to a maximum of rupees five thousand.
(2) Any registered taxable person who fails to furnish the return required under section 30 by the due date shall be liable to a late fee of rupees one hundred for every day during which such failure continues subject to a maximum of an amount calculated at a quarter percent of his aggregate turnover.
Section 34. Tax Return Preparers
(1) The appropriate Government may, by rules, prescribe the manner of approval of Tax Return Preparers, their eligibility conditions, duties and obligations, manner of removal and such other conditions as may be relevant for their functioning as a Tax Return Preparer.
(2) A registered taxable person may, in the manner prescribed, authorise an approved Tax Return Preparer to furnish the details of outward supplies under section 25, the details of inward supplies under section 26 and the return under section 27, 30 or section 31, as the case may be, and such other tasks as may be prescribed.
(3) Notwithstanding anything contained in sub-section (2), the responsibility for correctness of any particulars furnished in the return and/or other details filed by the Tax Return Preparer shall continue to rest with the registered taxable person on whose behalf such return and details are filed.
Return Formats
These formats are based on the report of the Joint Committee on the business process relating to return as approved by the Empowered Committee of State Finance Ministers. The changes required in the formats as per the decisions taken on the consultations made are yet to be made in the formats. Similarly, changes required due to provisions of the draft Model GST Bills as approved by the Empowered Committee have also not yet been carried out in these formats. However, these formats give a fair understanding of the concepts and idea behind returns in GST.
GSRT-1: OUTWARD SUPPLIES MADE BY THE TAXPAYER
GSRT-2: INWARD SUPPLIES MADE BY THE TAXPAYER
GSTR-4: QUARTERLY RETURN FOR COMPOUNDING DEALER
GSTR-5: RETURN FOR NON RESIDENT TAXPAYERS
GSTR-6: RETURN FOR INPUT SERVICE DISTRIBUTOR
