New Era of GST Return

At the time GST was introduced, the forms introduced were GSTR1, GSTR2 and GSTR 3. The idea was to facilitate uploading of Sales invoice as well as purchase invoice both and to arrive at net tax calculation on the basis of offset of Input GST against output GST.

GSTR-1 was assigned for the purpose of uploading of output invoices, GSTR-2 for the purpose of view of purchase invoices and GSTR-3 which is supposed to be auto prepared through data taken from GSTR-1 as well as GSTR-2. This was also with an objective to facilitate information flow among both parties i.e. seller as well as purchaser both and counter the tax evasion practice as well.

However, the scheme as planned was not implemented well and hence department was unable to get the result as desired. The return mechanism as earlier decided went into multiple changes and GSTR-3 kept on hold. In place of GSTR 3, GSTR 3B came into picture which is an adhoc return to be prepared self. Also all other returns were followed by filing of GSTR -3B return which is contrary to the sequence earlier decided.

GST New Return System
w.e.f. 1st April 2020

In order to simply the GST return filing process and achieve the objective of transparency and cross reconciliation as well, the Government of India and GST Council has introduced a new system for filing GST Returns.

The new GST filing system is scheduled to be rolled out in a scheduled way starting from 1st April 2020(earlier proposed from October 2019).

The prototype of this new return system is already available on the GST Portal for taxpayers to have a hand on experience of the various features of this new system and can send their feedback in a structural template as provided in the GST portal.

Salient Features of the New GST Return System

  • The new GST Returns forms are viz;
    • GST RET-01(Normal)
    • GST RET-02(SAHAJ)
    • GST RET- 03(SUGAM).
  • In the new GST Return System, there will be three main components to the new returnone main return Form (GST RET) and two annexures (Form GST ANX-1 and Form GST ANX-2)
  • The selection of GST Return depends on types of taxpayer viz. Small Taxpayers OR Large Taxpayers.
  • Small Taxpayers are taxpayers whose aggregate turnover in Preceding Financial Year is up to Rs.5 Crores.
  • Large Taxpayers are taxpayers whose aggregate turnover in Preceding Financial Year is more than Rs.5 crores.
  • Option to file Quarterly return is available for taxpayers whose aggregate annual turnover in the previous financial year was up to Rs. 5 Crore.
  • The aggregate annual turnover of newly registered taxpayers will be considered as zero and they will have the option to file a quarterly return.
  • Option to file Nil return through SMS.
  • Invoice details can be uploaded by the supplier and the same can be viewed by the recipient on real time basis.
  • Along with New GST Returns, matching tool is available which will help the taxpayers to match their Input Tax Credit based on their form GST ANX-2 and purchase register.

 

Types & Frequency of New GST Return System

GST RET 1 (Normal Return)

  • Available to both taxpayers (i.e. Small and Large Taxpayers)
  • Monthly as well as Quarterly.
  • Supply Covered– All supplies viz B2B, B2C, RCM Transaction, Export and deemed
    export transaction, etc. (Intra and Inter State)
  • Monthly Return is optional for Small Taxpayers, but mandatory for large taxpayers.
  • Taxpayers are required to file their GST Return in form GST RET-1(Normal Return) on monthly /quarterly basis as the case may be which is based on form GST ANX-1 and form GST ANX-2.
    Periodicity of Return filing
    For Small Taxpayers– Monthly by 20th of the month succeeding the month to which tax liability pertains.
    For Large Taxpayers– Quarterly by 25th of the month succeeding the quarter to which tax liability pertains.
  • Tax Payment – Those taxpayers who opted for Quarterly return (Normal) need to pay their tax liabilities on monthly basis for first two months of each quarter through GST PMT-08, and in 3rdmonth, the tax payer can pay tax through RET-1.
    For monthly taxpayers, payment of tax is to be made on  monthly basis in form GST RET-1
  • SwitchingCan be switched to Sugam or Sahaj only ONCE during a year at the beginning of any quarter.
  • ITC on missing invoiceEligible to take credit on missing invoice.

GST RET 2 (SAHAJ)

  • Only available to Small Taxpayers, if not opted to file GST RET 1.
  • Quarterly Return
  • Supply CoveredTaxpayers opting to file Sahaj can declare outward supply under B2C Category and inward supplies attracting reverse charge only.
    Example: Local Kirana stores, Small Shopkeepers having transaction with end
    customers only.
    Note: E-commerce operators are not eligible to file Sahaj.
  • Taxpayers are required to file GST Return in form GST RET 2(Sahaj Return) on quarterly basis which is based on form GST ANX-1 and form GST ANX-2.
    Periodicity of Return Filing –
    Quarterly by 25th of the month succeeding the quarter to which tax liability pertains.
  • Tax PaymentTaxpayers need to pay their tax liabilities on monthly basis for first two months of each quarter through Form GST PMT-08, and in the third month, the taxpayer can pay tax through GST RET-2.
  • SwitchingCan be switched to Sugam or Normal (Quarterly) multiple times during a year but at beginning of any quarter only.
  • ITC on missing invoiceNot Eligible to take credit on missing invoice.

GST RET 3 (Sugam)

  • Only available to Small Taxpayers, if not opted GST RET 1.
  • Quarterly Return
  • Supply covered –Taxpayers opting to file sugam can declare outward supply under B2C and B2B and inward supplies attracting reverse charge only.
    Transaction related to Nil rated, exempted, or Non-GST Supplies are not required to declare in this return. These details are required to be furnished in the annual return.
    Example: Wholesaler cum retailer
    Note:E-Commerce Operators are not eligible to file Sugam Return.
  • Taxpayers are required to file their GST Return in Form GST RET-3(SUGAM Return) on quarterly basis which is based on form GST ANX- 1 and form GST ANX-2.
    Periodicity of Return Filing –
    Quarterly by 25th of the month succeeding the quarter to which tax liability pertains.
  • Tax PaymentTaxpayers need to pay their tax liabilities on monthly basis for first two months of each quarter through Form GST PMT-08, and in the third month, the taxpayer can pay tax through GST RET-3.
  • SwitchingCan be switched to Sahaj only ONCE during a year and to Normal (Quarterly) multiple times during a year. However, exercise can be exercised at the beginning of any quarter.
  • ITC on missing invoiceNot Eligible to take credit on missing invoice.

 

What is the need for Form GST PMT-08?

Form GST PMT-08

  • GST PMT-08 is the form for payment of tax under new tax return system.
  • Small taxpayers opting to file the return on quarterly basis are required to pay tax, either by cash or credit or both, on monthly basis on thetaxable supplies made during the month by filing FORM GST PMT – 08 for the first two months of each of the quarter.
  • And, in the third month, taxpayers can pay tax through GST RET-1/2/3.
  • This form requires three details to be filed by every registered person: Details of Sales, ITC and RCM liability
  • Tax must be paid by 20th of the month succeeding the month which the tax liability pertains to.

Note: This form is ONLY for small taxpayers who opted for Quarterly(Normal), SAHAJ or SUGAM

 

Form GST ANX-1

 “Annexure of Outward Supply”
 (Replacement of Form GSTR-1)

  • Three important details need to be declared in Form GST ANX-1.
  1. Outward Supplies
  2. Inward Supplies attracting reverse charge
  3. Details of Import of Goods & Services
  • Supplier will upload details of documents (invoice/debit note/credit note) any time during the month till filing of return and the recipient can view them and take action on real time basis.
  • Inward Supplies attracting reverse charge will be reported only by the recipient.
  • Option is available to include details omitted in the previous tax periods.


Form GST ANX-1A
Editing/Amendment of uploaded documents

  • The amendment of details of earlier tax period can be made in FORM GST ANX-1A before the due date of September return following the end of the financial year or the actual date of furnishing relevant annual return, whichever is earlier.

  • Documents rejected by the recipient shall be conveyed to the supplier only after filing of the return by the recipient.
  • Supplier may edit the rejected documents before filing any subsequent return. However, credit will be made available to recipient through the next Form GST ANX-2 for the recipient.
    The tax liability for such edited documents will be accounted for in the same tax period.

 

Form GST ANX-2- Annexure of Inward Supplies
 (Replacement of Form GSTR-2)

  • GST ANX-2 will contain details of inward supplies auto-populated mainly from the suppliers GST ANX-1.
  • It will also contain details auto-populated from Form GSTR-5 and GSTR-6.
  • The taxpayer (i.e. recipient) can take action on details of inward supplies contained in Form GST ANX-2, by accepting or rejecting the entries. The taxpayer can also keep the documents pending by making the entries accordingly.
  • Accepted documents would not be available for amendment at the corresponding supplier’s end.
  • Supplier may edit rejected documents before filing subsequent return However, credit will be available to recipient through next Form GST ANN-2. The tax liability will be accounted for in the same tax period.

 

Consequences of Non-Filing of GST Return

 

When a supplier uploads invoices in GST ANX-1 but does not file his GST return for two consecutive, the recipient will be able to view these invoices in his GST ANX-2, however, he will not be allowed to accept such invoices. The recipient can only reject or keep them pending.

This will create hardships for genuine recipients, who have already paid the tax portion to the supplier, but are unable to claim input tax credit due to a delay from the supplier’s side.

Some important Points regarding new GST Return

  • Do I need to file form GST ANX-1 separately?
    You do not need to file form GST ANX-1. You only need to upload details in form GST ANX-1.
    Form GST ANX-1 will be deemed filed along with the filing of return for the period.
  • How data in Form ANX-2 is being generated?
    The documents uploaded by supplier taxpayer in their form GST ANX-1 are reflected to the recipient on real time basis in his/her form GST ANX-2.
  • How ITC is available to the Recipient?
    The Input Tax Credit is available to the recipient taxpayer in respect of only those documents that have been reported by the supplier in his/her return and accepted by the recipient tax payer in his/her ANX-2.
  • Is there a facility to avail credit on missing invoices, not reported by the supplier in GST ANX-1, to the recipient?
    Yes, there is a facility available to the recipient taxpayers to avail credit on missing invoices (not reported by the supplier in their GST ANX-).
    However, this facility of availing credit on provisional basis is not available to taxpayers filing ‘Sahaj’ or ‘Sugam’ returns.
  • What if the supplier still fails to upload the missing invoices after a specified period?
    If the supplier still fails to upload the missing invoices after a specified period, the recipient will need to reverse this provisional ITC claimed, in his GST RET-1, and thereafter he will be liable to pay the tax amount on them. The specified period is T+2 (two months after the tax period) and T+1 (one quarter after the tax period) for monthly return filers and quarterly return filers respectively.
  • Is it possible to revise GST RET- 1 after filing the return?
    Form GST RET1 once filed, cannot be revised.However, amendment return in Form GST-RET-1A can be filed.

The new return mechanism will satisfy the principal intent of lawmaker to a large extent i.e. Effective cross reconciliation, real time data validation and mitigation of risk pertaining to GST evasion.

Also the return filing frequency is liberalized as per category of taxpayer which is a good step and the approach to make independent the process of invoice upload with return filing will obviously remove difficulties faced by taxpayers while making effective cross reconciliation.