After two years of Goods and Services Tax (GST) rollout, the GST Council decided that a new return system will be presented to taxpayers. They thus unveiled a transition plan for taxpayers under the goods and services tax to switch to new simpler return forms.
With the new forms coming into effect, there would subsist two categories of taxpayers -- large and small. Taxpayers with turnover up to Rs 5 crore would be taken as small taxpayers and taxpayers with turnover above Rs 5 crore would be taken to be large taxpayers. Though the new return filing system is going to affect the industry as a whole, this article discusses the major impact of the new return filing system on the large taxpayers only.
Change in the classification of existing large taxpayers
The proposed methodology of classification would turn out to be a big relief to taxpayers with turnover between Rs 1.5 crore and Rs 5 crore. As per the current classification such taxpayers come under the category of large taxpayer. However with the new return filing system coming into effect, such taxpayers would now be looked upon as small taxpayers. This would ease their compliance to a great extent as now they would have an option to file tax returns on a quarterly basis. The classification change was needed as majority of the taxpayers are small taxpayers. The burden to file monthly return on these small taxpayers led to non-compliance, which would now stand corrected.
A trial run of the new return filing mechanism called the GST 2.0 has commenced from July 2019. A full-scale launch is likely to begin in a phased manner starting October 2019 for the large taxpayers. For October and November, 2019, they would continue to file FORM GSTR-3B on monthly basis. The first FORM GST RET-01 would be filed by large taxpayers for the month of December, 2019 by January 20, 2020. However, the forms are much simpler than the current prevailing forms â GSTR-1 and GSTR-3B. The new forms are drafted in a way that would fulfill one of the major objectives of implementation of GST- matching of invoices of buyer and supplier.
The simplified return forms now contain only two main tables â one to report outward supplies and another for availing ITC-based invoices uploaded by the supplier. For availing ITC, invoices uploaded by the seller can be viewed and accepted or rejected by the buyer on a continuous basis. This largely auto-fills the return form based on the invoices uploaded by the buyer and seller. The new simplified process can be summarised as â âUPLOAD-LOCK-PAYâ.
The new system would provide a facility for continuous uploading of invoices by the supplier on real-time basis during the month except between 18
Continuous uploading and viewing th and 20 th of the month and such uploaded invoice will be continuously visible to the recipient. With the facility of continuous uploading, a possibility that the taxpayer may miss out certain invoices is greatly reduced. Earlier, the invoices were only visible to recipient only when the supplier filed the return. Amendment in tax filings
To address the problem of human error i.e. wrong entries being made in the return, the new system provides the facility of amendment in return also. Amendment return is different than a regular return. There would be a facility to file two amendment returns for each tax period. The amendment can be reported in the main return for any tax period.
Amendment of locked invoice
Any invoice once accepted by the recipient cannot be amended by the recipient unless the same is unlocked by the recipient. Earlier, there was no such requirement and the supplier was easily able to amend any invoice without recipient playing any role in the same.
Matching of invoices between seller and buyer
Since the new system allows the availment of credit only on the basis of the uploaded invoice, there would be easier matching of invoices between buyer and supplier. It is expected that the errors with respect to mismatch in the invoice as uploaded by supplier and as claimed by recipient would reduce now. Presently, it is a cumbersome and time-consuming process.
It is believed that the new return filing system could simplify GST compliance procedures and improve the âease of doing businessâ. However, the real impact of the same would be clearly visible once the new return filing system is implemented in full phase.
Rajat Mohan is Senior Partner at AMRG & Associates.