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GST Council Approves Simplified Return Filing

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The 27th GST council, in its meeting held today on 4 May 2018, has taken the key decision on simplifying the return filing process. The Sushil Kumar-led Group of Ministers deliberated the alternatives with industry and stakeholders and presented the recommendations to the Council for their approval.

The Council has given go-ahead for new filing process and it will be rolled out in 3 phases.

Transitional Phase 1: From now till Sept 2018

For the next 6 months from now, the existing returns i.e. GSTR 1 and GSTR 3B will continue. In this period, GSTN will be designing and developing the IT system for the new returns.

Transitional Phase 2: Oct 2018 to March 2019

Taxpayers will start following the new process. The B2B sales invoices will be uploaded on GST system. Amount of ITC will be declared by taxpayer based on self-computation. While the provisional claim of ITC will be allowed during the transition period, information will be made available to the taxpayer about differences, if any.

Go Live Phase 3: April 2019 onward

The upload of invoices and other details will continue as per the new return format. The ITC claim, however, will be strictly based on the invoices uploaded by the supplier for the buyer. There will be no option for the buyer to upload any additional invoices.

Overall, the new filing process intends to reduce to and fro communication between the suppliers and buyers through returns. The suppliers can upload their invoices on a continuous basis on GST system and the buyers will get a real-time view. The unidirectional flow for upload of invoices makes the process simpler for all taxpayers.

The new return format will be drafted by the Law committee and some specific aspects were highlighted by the Council

  1. One monthly return for all taxpayers with return filing dates staggered based on the turnover of the taxpayer.
  2. Composition dealers and taxpayers having no transactions will file returns on a quarterly basis
  3. B2B sales invoices to be reported at invoice level along with 4 digit HSN code. So it seems the current requirement of combining line items at rate-level will no longer be needed.
  4. During Transitional phase 2, the return will have a section to specify the self-declared ITC

While we all await the new return formats, it is anticipated that the content of return will be reduced and simplified with the objective of easing the reporting burden for taxpayers.

Under the new filing process, there won't be any auto-reversal of credit for the buyer in case the supplier does not pay taxes. Further, several other mechanisms to safeguard interests of taxpayers and Government and to prevent fraudulent transactions will be put in place. For instance, in case of defaults, the taxes will be recovered first from seller and reversal of credit for buyers will be considered in case of situations like missing seller, closure of business by supplier or supplier not having adequate assets etc.

The GST collections for April 2018 were remarkable. After a record high collection of over Rs. 1 lakh crore, we believe return simplification will result in better compliance and hence consistent revenue collection for the Government.  

The Council has also announced incentive to taxpayers for encouraging digital payments. A concession of 2% with a ceiling of Rs.100 per transaction will be provided to taxpayers who are making payments in digital mode, subject to the conditions specified.

Phase wise implementation of new returns will make the transition process easier and the taxpayers, consultants and software providers will have sufficient time to adapt to the changes.

The press release on 27th GST Council recommendations is available here. We will keep you posted on developments related to simplification of the return process.

IRIS Business is a leading GST Suvidha Provider (GSP) providing easy and efficient solutions for GST and E-way bill compliance. For further details please write to support@irisgst.com or visit our site https://irisgst.com

Any views or opinions represented above are personal and belong solely to the author and may not represent those of IRIS unless explicitly stated.

About Manoj Jain

Manoj Jain, a CA and CS, has been working with IRIS for over 8 years and is currently one of the key subject matter experts for IRIS’ GST compliance offerings. He also has been guiding the clients for GST law related matters. Before GST he was handling US compliance analyzing US financial statements and reviewing XBRL filings for US and India market. He enjoys listening to music and traveling.

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