GST :Key features of Monthly Returns
GST Council in its 27th meeting held on 4th May, 2018 had approved the basic principles of GST return design. Now in its 28th meeting held on 21st July, 2018, GST Council approved the key features and new format of the GST returns. Here is an attempt to explain the basic features of new GST return forms:
All taxpayers excluding a few exceptions like
- small taxpayers,
- composition dealer,
- Input Service Distributor (ISD),
- Non resident registered person,
- persons liable to deduct tax at source under section 51 of CGST Act, 2017,
- persons liable to collect tax at source under section 52 of CGST Act, 2017,
shall file one monthly return instead of 2 returns being filed before.
- Monthly Return and due-date:
Return filing dates shall be spread over based on the turnover of the taxpayer which shall be calculated based on the reported turnover in the last year i.e. 2017-18, annualized for the full year.
It shall be possible for the taxpayer to check on the common portal whether he falls in the category of a small taxpayer.
A newly registered taxpayer shall be classified on the basis of self-declaration of the estimated turnover. The due date for filing of return by a large taxpayer shall be 20th of the next month.
- Small taxpayers:
Taxpayers who have a turnover up to Rs. 5 Cr. in the last financial year shall be considered small calculated in the manner explained in para 1 above.
These small taxpayers shall have facility to file quarterly return with monthly payment of taxes on self-declaration basis.
However, the facility would be optional and small taxpayer can also file monthly return like a large taxpayer.
- Continuous uploading and viewing:
There would be facility for continuous uploading of invoices by the supplier anytime during the month.
The uploaded invoice shall be continuously visible to the recipient.
Only uploaded invoice would be a valid document for availing input tax credit.
Invoices uploaded by the supplier by 10th of succeeding month shall be auto-populated in the liability table of the main return of the supplier.
The screen where it shall be visible to the recipient is hereafter called “viewing facility” (shown as “inward annexure” in the return document).
After the due date for the filing of return is over, the recipient shall also be able to see the return filing status of the supplier and thus be aware whether the tax liability on purchases made by him has been discharged by the supplier or not.
Viewing facility shall also show the trade name of the supplier.
- Due date for uploading invoices and action to be taken by the recipient:
Invoices uploaded by the supplier by 10th of the next month shall be posted continuously in the viewing facility of the recipient.
Taxes payable on the above invoices which can be availed as input tax credit shall be posted in the relevant field of the ITC table of the return of the recipient by 11th of the next month.
These invoices shall be available for availing input tax credit in the return filed by the recipient.
Invoices uploaded after 10th of next month by the supplier shall get posted in the relevant field of the return of the subsequent month of the recipient though viewing shall be continuous.
But both the invoices would be accounted towards the liability payable by the supplier in his return of the tax period of April.
Therefore, after the 11th of the next month the recipient shall be able to accept, reject or keep pending a particular invoice but the maximum limit of eligible input tax credit will be based on the invoices uploaded by the supplier upto 10th of the subsequent month.
In the transition phase of six months after the new system of return is implemented, the recipient would be able to avail input tax credit on self-declaration basis even on the invoices not uploaded by the supplier by 10th of the next month or thereafter using the facility of availing input tax credit on missing invoices.
- Invoice uploaded but return not filed:
It shall be treated as self-admitted liability by the supplier and recovery proceedings shall be initiated against him after allowing for a reasonable time for filing of the return and payment of tax.
- Unidirectional Flow of document:
Only the invoices or debit notes uploaded by the supplier on the common portal shall be the valid document for availing input tax credit by the recipient.
Invoices or debit notes which have not been uploaded by the supplier and on which recipient has availed input tax credit shall be hereafter called “missing invoices”.
Recovery from recipient: Where credit is availed on missing invoices by the recipient and such missing invoices are not uploaded by the supplier within the prescribed time period, input tax credit availed in relation to such invoices or debit notes shall be recovered from the recipient.
- Missing invoice reporting:
Missing invoices shall be reported by the supplier in the main return for any tax period with interest or penalty as applicable.
Reporting of missing invoices by recipient can be delayed up to two tax periods to allow recipient to follow up and get the missing invoice uploaded from the supplier.
- Payment of tax:
Liability declared in the return shall be discharged in full at the time of filing of the return by the supplier as is being done at present in the present return FORM GSTR 3B.
- Default in payment of tax by supplier:
There shall not be any automatic reversal of input tax credit at the recipient’s end where tax has not been paid by the supplier.
In case of default in payment of tax by the supplier, recovery shall be first made from the supplier and in some exceptional circumstances recovery of input tax credit from the recipient shall be made through a due process of service of notice and issue of order.
- Locking of invoices:
Locking of invoices means acceptance of entering into the transaction in the invoice.
Facility for locking of invoice by the recipient before filing of the return by him shall be available.
Deemed locking of invoices shall be presumed on the uploaded invoices which are either not rejected or kept pending by the recipient.
On filing of the return by recipient, all invoices shall deemed to be accepted except invoices kept pending or rejected.
- Pending invoices:
Pending invoices means such invoices which have been uploaded by the supplier but for which one of the three situations exist –
- first, the supply has not been received by the recipient,
- second, where the recipient is of the view that the invoice needs amendment,
- third, where recipient is not able to decide whether to take input tax credit for the time being.
Pending invoices shall be reported by the recipient and no input tax credit shall be availed by the recipient on such pending invoices.
To reduce the number of pending invoices which needs to be reported, a simplification in the procedure for availing input tax credit shall be carried.
Where the goods or services have been received by the recipient before filing of a return and invoice for the same has been uploaded by the supplier upto the due date i.e 10th of the next month, input tax credit for the same can be availed by the recipient in the return.
A pending invoice can be rejected by the recipient at a later date when he is able to decide on either of the three situations mentioned above.
- Unlocking of invoices: A wrongly locked invoice shall be unlocked online by the recipient himself.
- Amendment of invoices: Amendment of an invoice may be carried out by the supplier. Amendment is invoices are allowed when:
- where input tax credit has not been availed and
- the invoice has not been reported as locked by the recipient.
Once an invoice is locked by the recipient, no amendment of the same shall be allowed.
- Credit note or debit note for the same can still be issued by the supplier to change value, rate of tax, quantity or the tax payable. IT facility would ensure that:
- where a credit note is issued on an invoice which is kept pending, then both the credit note and the original invoice shall be linked in the system for availing credit so that excess credit is not taken by the recipient;
- where a credit note is issued on an invoice on which credit has already been availed e. the invoice is locked, the reduction in liability of supplier shall be subject to reduction in input tax credit of the recipient.
- Return format: The main return shall have two main tables, one for reporting supplies on which tax liability arises and one for availing input tax credit.
- Payment of multiple liability: Liability in the return arising out of invoices of different dates shall be summarized period However, one payment for the total tax liability on all tax invoices shall be allowed to be made. Interest shall be calculated on invoices reported late.
- Amendment return: To address the problem of human error e. wrong entries being made in the return, there would be a facility for filing of amendment return. Two amendment returns for each tax period within the time period specified in section 39(9) will be allowed to fill. Amendment of entries which flow from the annexure of the main return shall be allowed only with the amendment of the details filed in the annexure.
- Amendment of missing invoices: Amendment of missing invoices reported later by the supplier shall be carried out through the amendment return of the relevant tax period to which the invoice pertains.
It would be advisable to report all the invoices and then avail the facility for amending return so that invoices reported late can also be amended through the amendment return.
- Amendment of details other than that of invoice: All user entries of input tax credit table in the main return would be allowed to be amended. Change in the closing balance of the input tax credit shall be affected based on the declaration in the amendment return of the taxpayer. Thus, the opening and closing balances of intervening month(s) shall not get
- Payment due to amended liability: Payment would be allowed to be made through the amendment return as it will help save interest liability for the taxpayer. Input tax credit, if available in the electronic credit ledger can also be used for payment of the liability in the amendment
- Negative Liability: Negative liability arising from the amendment return shall be carried forward as negative liability in the regular return of the next tax
- Higher late fee for amendment return: For change in liability of more than 10% through an amendment return, a higher late fee may be prescribed to ensure that reporting is appropriate in the regular