Government looks at three models to replace existing GST return filing process; Nilkeni's model simpler, say experts

After the GST Council decided to do away with the system of filing three returns a month, the council is now looking at three models, one of which should replace the existing system. Two of the models have been suggested by Ajay Bhusan Pandey, chairman of GST Network, and another by Infosys chairman Nandan Nilekani.

While the details of GSTN chairman's models are sketchy, it necessarily talks about filing of one comprehensive summary return on a monthly basis dispensing away the transaction level monthly returns (GSTR-1,2 & 3). It suggests a revised and detailed GSTR 3B on a monthly basis and GSTR 1,2 & 3 on a quarterly basis, apart from an annual return (with reconciliations and matching taking place on an annual basis).

Information about Nilekani's model is more detailed and tax experts suggest that it is highly likely that the government may accept this model than the ones suggested by GSTN's Ajay Bhushan Pandey.

The Nilekani model talks about simplification of tax filing process by doing away with filing of returns, and instead requires only uploading and acceptance of invoices. It suggests replacing GSTR1 with simplified invoice upload;  the seller should be required to upload the invoice and buyer has to accept it.

It recommends uploading and acceptance of invoices as a continuous activity rather than a time-bound process with the acceptance to be a two-way process -- the seller accepting invoice uploaded by the buyer and vice versa.

The Nilekani model puts the onus of claiming of input tax credit (ITC) and invoice matching on tax payers. The ITC would be provided only for "matched" invoices with ITC getting uploaded when supplier has uploaded the invoice.  In case supplier does not upload, buyer can also upload. After upload by the buyer, the seller can accept invoices.

Nilekani also suggests that invoices should automatically flow from GSTN portals to e-way bill portal.

Tax experts are saying that the of three models, Nilekani's model look simpler.

"Nilekani's model, which requires invoice wise matching and validation of the return, which is auto-drafted by the GSTN portal, looks to be simple and is likely to reduce the compliance burden of the assessee," says Harpreet Singh, partner, indirect taxes, KPMG.

An official from Central Board of Excise and Customs (CBEC) told Business Today that though the Nilekani model looks simpler, it has to be borne in mind that Nilekani is a technology person, and even if his model is simpler it has to comply with all the GST rules.

Harpreet Singh of KPMG says that though they may require some changes in the rules to accommodate the Nilekani model, these are not impossible changes to make.