The previous GST Council meeting
approved the simplified process and format for GST returns. The new GST returns are now released for stakeholder feedback and comments.
The new returns are designed for businesses who are registered as regular taxpayers. For the other taxpayers such as Composition Dealer, ISD, TDS deductor, E-commerce operator etc. these returns do not apply.
Here is a brief overview of proposed GST returns
Questionnaire to determine taxpayer profile
In order to ease the filing process, a questionnaire is prepared and a default response set. The questionnaire consists of transaction types that are generally applicable to a regular business. The taxpayers can select the transaction types applicable to them and details for only those sections need to be provided by the taxpayer. The questionnaire will help to set the profile of taxpayer and enable focussing on only relevant sections.
The questionnaire lists about 13 sections covering outward and inward supplies. The responses can be edited in subsequent months to include additional sections or exclude existing ones from the profile.
Further, to make it simpler for smaller taxpayers, pre-defined profiles are created. Thus instead of filling out the questionnaire, the taxpayer can directly choose the GST return format, which is linked to the pre-defined profile.
Options to select the Return
Based on the turnover, a taxpayer is classified into a large or a small taxpayer. Taxpayers having the turnover above 5 crores are considered to be large. The large taxpayer will need to file one return a month, referred to as Main Return.
The Main Return will be largely auto-populated based on the information provided in Annexures for outward and inward supplies. The questionnaire explained above will determine the sections applicable.
Small taxpayers, being a significant percentage of all registered taxpayers, have been given many options to choose from. They can either opt for monthly or quarterly filing. Within quarterly, there is an option to chose GST Return types based on pre-defined profiles.
Return and its Annexures
In the current scenario, taxpayers are providing details of outward supplies in GSTR 1. Computation of tax liability and ITC, on self-declared basis is submitted through GSTR 3B.
As per the new process, taxpayers will need to upload the details of outward supplies and certain inward supplies as part of Annexure. This can be done on a continuous basis, i.e. as and when an invoice is booked or accounted for by the taxpayer. An auto-drafted Annexure, which will primarily include the B2B purchase transactions and other tax credits will be made available by the GST system.
The Main Return will be generated by the GST system based on the information available in Annexures and some sections will be kept editable for the taxpayer to fill or update if required. For tax liability, the outward supply information as uploaded till 20th of the subsequent month will be considered, while for claiming ITC the invoices uploaded by the counterparties till 10th of the subsequent month will be allowed to be considered.
Amendment in Filed Returns
Allowing the filed returns to be amended is a significant change compared to the current process. Maximum two times a return for a particular month can be amended.
It is worth noting that the impact of the amendment will be reflected for viewing purpose in the original month to which the information pertains to and in the current month for impact on tax liability.
Following the approach for a regular return, even for Amendment Return, there will be a questionnaire to be filled which will determine the sections the taxpayer intends to amend.
Accounting and tracking ITC
One of the fundamental principles of the new approach has always been to allow ITC based on the information based by the supplier. This is embedded in the returns filing process. Taxpayers will also have an option to claim ITC on account of missing invoices in the Main Return. The taxpayer can claim ITC on such invoices at an aggregate level. If in stipulated time the supplier does not upload invoices, the receiver will need to specify the invoice details for the same.
The current rules allow ITC can be claimed only for those invoices where goods are received by end of the month. This has been extended to the time till the Main Return is not filed i.e. 20th of the subsequent month.
Keeping a track of invoices where ITC can be claimed and when not, even if it forms part of auto-drafted Annexure is something taxpayers need to be aware of.
While these are some of the key highlights of the new GST returns, there are some others such as reporting of reverse charge transactions, ITC on capital goods, reversal of ITC, locking and unlocking of invoices, which we'll cover in our subsequent blogs.
The new return formats are available here
and comments can be provided till Aug 31, 2018.
We recommend all our readers and stakeholders to provide their feedback to the Government so that the objective of simplifying the returns and process can be achieved.
We'll be posting our detailed impact analysis in subsequent blogs. Stay tuned for updates.
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