New GST return filing process: No provisional input credit, no invoice matching
The GST Council has finally given its nod to a simplified Goods and Services Tax (GST) return filing process. Though it may take over a year to for the final system of return filing be in place, the system looks much simpler than the one earlier envisaged and the one currently followed.
- May 4, 2018,
- Updated May 4, 2018 6:04 PM IST
The GST Council has finally given its nod to a simplified Goods and Services Tax (GST) return filing process. Though it may take over a year to for the final system of return filing be in place, the system looks much simpler than the one earlier envisaged and the one currently followed.
As per the design of the final system, all taxpayers excluding a few exceptions like composition dealer would file one monthly return. Return filing dates would be staggered based on the turnover of the registered person to manage load on the IT system. Composition dealers and dealers having nil transaction would have facility to file quarterly return. The new system does away with matching of invoices and the requirement of the buyers to upload invoices. The input tax credit would be available to buyer purely on the basis of the invoices uploaded by the seller.
The seller can continuously upload invoices while the buyer can continuously see it. The buyer has the option of 'accepting' the invoice uploaded by the former. Once the buyer has accepted the invoice seller cannot edit or delete the invoices.
Invoices for B2B transaction should have HSN at four digit level or more to achieve uniformity in the reporting system. The B2B dealers will have to fill invoice-wise details of the outward supply made by them, based on which the system will automatically calculate the tax liability. The input tax credit will be calculated automatically by the system based on invoices uploaded by the sellers.
The input tax credit though would be available only on payment of tax. If the tax is not paid and input tax credit has been availed, then the credit would be reversed, though not automatically as suggested by the model proposed by Nandan Nilkeni, Infosys Chairman and former UIDAI chief.
The statement issued by the finance ministry says that there would not be any automatic reversal of input tax credit from buyer on non-payment of tax by the seller. "In case of default in payment of tax by the seller, recovery would be made from the seller however reversal of credit from buyer should 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."Recovery of tax or reversal of input tax credit would be through a due process of issuing notice and order. The process would be online and automated to reduce the human interface.
This system may take 1-1.5 years to get implemented. In the transition period - during the first six months, the existing system would continue. In the second phase, the new return will have facility for invoice-wise data upload and also facility for claiming input tax credit on self declaration basis, as in case of GSTR 3B now.
In the second phase, the dealer will be constantly fed with information about gap between credit available to them as per invoices uploaded by their sellers and the provisional credit being claimed by them. After 6 months of this phase 2, the facility of provisional credit will get withdrawn and input tax credit will only be limited to the invoices uploaded by the sellers from whom the dealer has purchased goods.
The GST Council has finally given its nod to a simplified Goods and Services Tax (GST) return filing process. Though it may take over a year to for the final system of return filing be in place, the system looks much simpler than the one earlier envisaged and the one currently followed.
As per the design of the final system, all taxpayers excluding a few exceptions like composition dealer would file one monthly return. Return filing dates would be staggered based on the turnover of the registered person to manage load on the IT system. Composition dealers and dealers having nil transaction would have facility to file quarterly return. The new system does away with matching of invoices and the requirement of the buyers to upload invoices. The input tax credit would be available to buyer purely on the basis of the invoices uploaded by the seller.
The seller can continuously upload invoices while the buyer can continuously see it. The buyer has the option of 'accepting' the invoice uploaded by the former. Once the buyer has accepted the invoice seller cannot edit or delete the invoices.
Invoices for B2B transaction should have HSN at four digit level or more to achieve uniformity in the reporting system. The B2B dealers will have to fill invoice-wise details of the outward supply made by them, based on which the system will automatically calculate the tax liability. The input tax credit will be calculated automatically by the system based on invoices uploaded by the sellers.
The input tax credit though would be available only on payment of tax. If the tax is not paid and input tax credit has been availed, then the credit would be reversed, though not automatically as suggested by the model proposed by Nandan Nilkeni, Infosys Chairman and former UIDAI chief.
The statement issued by the finance ministry says that there would not be any automatic reversal of input tax credit from buyer on non-payment of tax by the seller. "In case of default in payment of tax by the seller, recovery would be made from the seller however reversal of credit from buyer should 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."Recovery of tax or reversal of input tax credit would be through a due process of issuing notice and order. The process would be online and automated to reduce the human interface.
This system may take 1-1.5 years to get implemented. In the transition period - during the first six months, the existing system would continue. In the second phase, the new return will have facility for invoice-wise data upload and also facility for claiming input tax credit on self declaration basis, as in case of GSTR 3B now.
In the second phase, the dealer will be constantly fed with information about gap between credit available to them as per invoices uploaded by their sellers and the provisional credit being claimed by them. After 6 months of this phase 2, the facility of provisional credit will get withdrawn and input tax credit will only be limited to the invoices uploaded by the sellers from whom the dealer has purchased goods.