GST Council Recommendations for Filing of New Return

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Tally Solutions, Nov-22-2019

31st Council Meeting and the gist of GST Council Recommendations

In the 31st GST Council Meet, it was decided that a New Return System under GST would be introduced for taxpayers. This return system will contain simplified return forms, for ease of filing across taxpayers registered under GST. Under this New Return System, there will be one main return GST RET-1 and 2 annexures GST ANX-1 and GST ANX-2. This return will need to be filed on a monthly basis, except for small taxpayers who can opt to file the same quarterly. Small taxpayers are taxpayers with a turnover up to Rs 5 crore in the preceding financial year.

Emphasis on three-stage transition process to new return filing system

The New GST Return System has been launched on a trial basis from July 2019, and the full-fledged system will be put into place from April 2020 (earlier: October 2019). This transition plan will be carried out in a phased manner. The trial phase will be for users to familiarise themselves with the annexure forms of the new return system.

The transition plan that was previously announced was as follows:

From July to September, during the trial phase, taxpayers will continue to file their GSTR-1 and GSTR-3B returns as per the current system in place. From October 2019, GST ANX-1 will need to be filed by large taxpayers, which will replace the GSTR-1 return. However, GSTR-3B will still need to be filed up to November 2019. In the case of small taxpayers. they will need to pay taxes using PMT-08, which will replace their GSTR-3B return.

From December 2019, large taxpayers will have to start filing GST RET-01, the main return under the new return system. For small taxpayers, their first GST RET-01 will need to be filed for the quarter of October-December 2019.

Key elements of New return filing schema

  • One monthly return:
    • Every registered taxable person shall file only one monthly return with exception to composition taxable person
    • The turn over based criteria for determining the periodicity of returns shall continue in the new return schema as well so as to manage the load on the IT system
    • Composition taxable person’s having nil transaction shall have the facility to file quarterly return under the new return schema
  • The unilateral flow of invoices:
    • There will be one-way flow in invoices uploaded by the seller on anytime basis during the month which would be the valid document to avail input tax credit by the buyer
    • All the uploaded invoices during the month would be made visible for the buyers
    • No need for uploading purchase invoices
    • All B2B invoices shall carry information regarding HSN at the four-digit level or more to achieve uniformity in the reporting system
  • Crispier IT interface and simple design:
    • For every B2B invoice wise level details furnished by the taxpayer, the system will automatically calculate the tax liability on it
    • And the new return schema will also be capable to calculate the Input tax credit based on the information furnished by the sellers
    • Taxpayer shall be also given user friendly IT interface and offline IT tool to upload the invoices
  • New Return schema don’t entertain auto reversal of credit:
    • The new return schema doesn’t have the provision for reversal of input tax credit from buyer on non-payment of tax by the seller
    • Instead after the implementation of new schema, any default in payment of tax by the seller would be recovered from the seller only
    • However, a reversal of credit from buyer shall also be an option available with the revenue authorities to address exceptional situations like missing dealer, closure of business by supplier or supplier not having adequate assets etc.
  • New set of principles for recovery and reversal:
    • Recovery of tax or reversal of input tax credit shall be through a due process of issuing notice and order
    • The process would be online and automated to reduce the human interface
  • A check on supplier:
    • Any invoice unloaded by the seller to pass the input tax credit, who has defaulted in payment of tax above the threshold amount as may be prescribed then in respect of such invoice, the credit will be blocked to him so as to avoid the misuse of input tax credit facility
    • Proposed usage of Analytical tools to identify such transactions at the earliest and prevent loss of revenue
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