India's GST Council Endorses Streamlined Return Filing System

The Goods and Services Tax (GST) Council, during its 31st meeting, decided to implement a new GST return system to assist taxpayers. In May 2019, an offline tool prototype was made available on the GST Portal, offering users a preview of its interface. Both the online and offline versions of this tool were designed to have a consistent appearance.

Latest Updates

June 24, 2022 The 47th GST Council meeting, chaired by Union Finance Minister Nirmala Sitharaman on June 28-29, 2022, in Chandigarh, proposed revisions to rates aimed at increasing revenue and correcting inverted tax structures, while also reducing the GST exemption list. E-commerce suppliers and composition scheme taxpayers were granted compliance relief.

December 29, 2021 The 46th GST Council meeting, held on December 31, 2021, in New Delhi, and led by Union Finance Minister Nirmala Sitharaman, decided to postpone the GST rate increase to 12% for textile products.

September 1, 2021 The 45th GST Council meeting took place on September 17, 2021. Key agenda items included extending tax concessions for COVID-19 essentials, addressing the matter of GST compensation to states, and rectifying the inverted tax structure.

May 28, 2021 The 43rd GST Council meeting on May 28, 2021, approved the re-introduction of the GST amnesty scheme and rationalized late fees for all taxpayers, especially small ones. Additionally, IGST was exempted on the import of COVID-19 treatment equipment and relief materials until August 31, 2021.

Summary of Different GST Returns

Similar to income tax forms ITR-1 (Sahaj) and ITR-4 (Sugam), GST will now feature Sahaj and Sugam forms. Regular taxpayers with an annual turnover of up to Rs 5 crores (an increase from the previous Rs 1.5 crores) can now opt to file quarterly GST returns using either the ‘SAHAJ’ or ‘SUGAM’ forms.

Small taxpayers who exclusively make B2C (Business to Consumer) supplies are eligible to file Sahaj returns. Taxpayers involved in B2B (Business to Business) supplies, or a combination of B2C and B2B supplies, with a turnover of Rs 5 crore or less, have the option to file ‘Sugam’ Returns on a quarterly basis.

These quarterly returns are largely similar to monthly returns but require less information compared to regular returns. Even for small taxpayers choosing the quarterly scheme, taxes must be self-assessed and paid monthly.

Monthly returns are mandatory for taxpayers whose turnover exceeds Rs 5 crores. Their return process has also been simplified, now featuring two main tables: one for reporting outward supplies and another for claiming Input Tax Credit (ITC) based on invoices uploaded by the supplier. To claim ITC, buyers can continuously view, accept, or reject invoices uploaded by their suppliers. This system largely auto-fills the return form using invoice data provided by both buyers and sellers. The streamlined process can be summarized as ‘UPLOAD-LOCK-PAY’.

Taxpayers can customize their profiles based on the types of supplies they make and receive. The return form will then only display fields relevant to their specific profile. Furthermore, taxpayers without any purchases or sales during a period can submit NIL returns via SMS. The new return system also allows taxpayers to correct invoice errors and other details previously filed by submitting an amended return. Payments can also be made through these amendment returns, helping to reduce interest liabilities. All taxpayers, except those classified as small taxpayers, are required to file monthly GST returns.

Monthly GST Returns: Due on 20th of the Following Month

This does not apply to composition dealers, Input Service Distributors (ISD), Non-Resident taxpayers, or individuals responsible for collecting or deducting tax at source. Return filing dates will be staggered, depending on the taxpayer's turnover. This turnover is calculated from the reported turnover of the previous year (e.g., 2017-18), annualized for the full year based on a self-declared estimated turnover. A questionnaire will be available on the GST portal to help taxpayers determine their category.

Quarterly GST Returns

For NIL Filers: These are taxpayers with no output tax liability and no Input Tax Credit. They must report NIL transaction statements/declarations via SMS during the first and second months of each quarter. For taxpayers with a turnover up to Rs 5 crores in the preceding financial year, monthly tax payments are still required.

Continuous Invoice Uploading and Viewing

Invoices uploaded by the 10th of the subsequent month are automatically populated into the liability table of the main return for the relevant tax month. Suppliers can upload invoices at any time, making them viewable by recipients.

For example: If Invoice No. 1 for April is uploaded on May 8th and Invoice No. 2 for April is uploaded on May 15th by the supplier, the recipient can claim Input Tax Credit for Invoice No. 1 with the April return filed around May 20th. For Invoice No. 2, ITC can be claimed with the May return, typically filed around June 20th.

Consequences of Uploaded Invoice Without Return Filing

If an invoice is uploaded but the corresponding return is not filed, it will be considered a self-admitted liability by the supplier. Proceedings will be initiated against the supplier after a reasonable show-cause notice.

Reporting Missing Invoices

If a supplier fails to upload invoices or documents, recipients can delay reporting these missing invoices for up to two tax periods. This allows the recipient time to follow up with the supplier to ensure the missing invoice is uploaded.

For example: Purchase invoices received by a recipient in April, for which Input Tax Credit has been claimed but not uploaded by the supplier, must be reported by the recipient no later than the June return, filed in July. Information regarding these missing invoices uploaded by the recipient will be shared with the supplier. Taxpayers filing quarterly returns should report missing invoices in the subsequent quarter.

Invoice Amendment Process

Once a recipient locks an invoice, no amendments to it are permitted. Therefore, a supplier can amend an invoice only if Input Tax Credit has not been claimed by the recipient and the invoice has not been marked as locked.

Amendment Returns

A facility will be provided for filing amendment returns to correct erroneous entries in the original return. Taxpayers will be allowed to file two amendment returns for each tax period. Payments can be made via these amendment returns, which helps in mitigating interest liabilities.

Tax Payment Procedures

Monthly Return Filers: The liability declared in the return must be fully discharged when the main return is filed by the supplier, similar to the current GSTR 3B process.

Quarterly Return Filers: During the first and second months of each quarter, these filers will use a payment declaration form. This form will require declarations of self-assessed liability and Input Tax Credit, based on self-declared information. However, this payment will only cover the liability arising from uploaded invoices.

Export Declarations

The table for export of goods in the return will include Shipping Bill details. A registered person can provide this information either at the time of filing the return or at a later date. Submitting Shipping Bill details in the return at a later stage will not be considered an amendment return.

Reporting Ineligible ITC in Annual Returns Only

Details of purchases involving ineligible Input Tax Credit should be declared only in the annual returns. Previously, taxpayers with turnovers between Rs 1.5 crores and Rs 5 crores were required to file monthly GST returns using GSTR-1 and GSTR-3B, which involved more extensive tables and data. The Council's initiative aims to enhance the ease of doing business for all taxpayers.