GST filing to get simpler! New single tax returns form to be rolled out in July

The new simplified returns filing format, approved by the GST Council last July, is finally ready to be rolled-out after being deferred twice. Under the new format, taxpayers will be required to file one monthly return, except small taxpayers and a few exceptions. Those with no purchases, no output tax liability and no input tax credit in any quarter of the financial year will have to file one 'Nil' return for the entire quarter while taxpayers with turnover of up to Rs 5 crore in the last fiscal can file quarterly return with monthly payment of taxes on self-declaration basis.

Government officials familiar with the matter told the Hindustan Times that the simplified form is now ready and could be launched by July, soon after the new government takes over. The format was first expected to be implemented by January 2019 and then on a pilot basis in April 2019 but the switch reportedly got delayed because the back-end, the GST network (GSTN), was not yet ready for it. It was also speculated that the new format was actually deferred on the Centre's concerns that any glitches in the rollout close to the general elections could disproportionately amplify public disgruntlement and fan anti-incumbency sentiments.

But with the election juggernaut coming to a stop next week, the stage seems set for the launch of the single monthly return system, which addresses complaints about the difficulties in filing multiple returns as well as the higher cost of compliance.

The three-stage plan reportedly envisages a six-month transition phase where businesses would continue to file two returns, GSTR 1 (for sales) and GSTR 3B, a summarised return form. Thereafter, they would move to a single filing on a new form. Sources told the daily that July will see a trial run of this second phase. For consumer-facing businesses, the simplified form would be about total sales while for B2B businesses, the form would incorporate invoice details. The third phase will involve invoice matching.

They added that the introduction of the new forms will reduce the annual compliance burden of traders from 24 GST returns (GSTRs) to just 12, apart from one return for the entire financial year. This is expected to benefit small and medium enterprises to be GST compliant. Actually, traders technically have to file 36 returns currently but the second form, GSTR 2, is not filed by the majority.

"The new return mechanism should help the industry as multiplicity of filings is avoided, with a single monthly return in place. However, it also means that greater control would need to be exercised on vendor's compliances as [after a transition period] input credit will be limited to the extent of GST amount reflected on the portal," Pratik Jain, partner and leader-indirect tax, PwC, told the daily. According to him, the reconciliation between the company's purchase records and that reported by the vendors would need to be performed on a regular basis and can't be the year-end exercise. "The government, on the other hand, would expect significant reduction in tax leakage once the new mechanism is fully implemented," he added.

Experts also point out that the single return would not only allow the trader to verify, before filing the returns, whether the vendor has uploaded the invoices but also address the issue of mismatch in the data reported to the authorities. Significantly, the new format would ensure that very large part of the return is automatically filled based on the invoices uploaded by the buyer and the seller, thereby making the entire process less cumbersome. The single return format furthermore is expected to bolster the tax authorities' efforts to curb evasion and detect false claims.

With PTI inputs

Also read: I-T dept again defers GST, GAAR reporting in tax audit report till March 2020

Also read: B2B invoices will have to be generated on govt portal by Sept to check GST evasion