A small taxpayer can file returns either quarterly or monthly under the new GST Return system. However, the small taxpayer can choose such option at the beginning of the year. Then, the taxpayer can continue to file return during the year as per the option chosen. Furthermore, the taxpayer can even change from monthly to quarterly return or vice-versa. However, the taxpayers can choose to change only once. And this change can be done at the beginning of the quarter.
Now, the taxpayer gets this one time option in order to avoid any confusion. Furthermore, this option is given to avoid complex validations in the IT System.
Thus, a small taxpayer needs to comply with the following procedure if he chooses to file GST quarterly returns.
1. Types of Returns
A small taxpayer having turnover of upto Rs. 5 Cr. can choose to file quarterly returns. However, he needs to deal with one of the following return forms:
- Quarterly return
- Sahaj Return
- Sugam Return
Quarterly return is just like the monthly return. Except that it has been simplified further and shall not have compliance requirements as in the case of Monthly Returns. These requirements relate to:
- Missing and pending invoices as small taxpayers do not use these procedures in their inventory management
- Supplies such as non-GST supply, exempted supply etc as they do not create any liability
- Details of input tax credit (ITC) on capital goods shall also not be required to be filled. This information shall be required to be filled in the Annual Return.
Furthermore, the small taxpayers need to file monthly return if they choose to use the facility of missing and pending invoices.
Now, there are two other simplified quarterly returns in addition to the Quarterly Return. These are Sahaj and Sugam Returns. Thus, these returns are a part of the taxpayer profile filing quarterly returns. These returns are designed to capture domestic sales and purchases. This is because such sales and purchases form a large part of the tax base. The Sahaj Return deals with B2C Outward Supplies. Whereas the Sugam Return deals with B2B and B2C Outward Supplies.
It is mandatory for the suppliers to upload invoices so that the recipients can avail input tax credit. Therefore, the suppliers would be allowed to upload invoices continuously in the normal course under the new GST return system. Furthermore, the suppliers need to upload these invoices by the 10th of the following month.
Thus, these invoices would act as the only valid documents for the recipients to avail input tax credit in the next month.
3. Monthly Payment of Taxes Through A Payment Declaration Form
The small taxpayers would continue to pay taxes on a monthly basis under the new return system. This is despite the fact that they have the option to file quarterly returns. Thus, the small taxpayers would use a payment declaration form (GST PMT-08) to make payment of GST for the first and the second month of every quarter. The small taxpayer can use this form to declare his self-assessed tax liability and self-declared input tax credit. But this form shall only allow full payment of the liability arising out of the uploaded invoices.
Furthermore, the small taxpayers can see the following details that helps them to pay tax and avail input tax credit:
- liability arising out of uploaded invoices of outward supplies
- input tax credit flowing from viewing facility
However, any late payment of tax liability including that of the first and second month of the quarter shall attract interest.
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4. Simplified Returns Would Lead To Lower Compliance Cost
The compliance cost for small taxpayers would come down. This is because the returns would be simplified under the new system. The payment declaration form used to declare tax liability and ITC is not a return. It would not lead to initiation of any legal action even if the taxpayer makes minor errors.
The HSN wise details would need to be provided at 4 digits level or more in the quarterly return under the new system.
6. No Requirement of Pending and Missing Invoices
There is no compliance requirement of missing and pending invoices in case of Quarterly Return. This is because small businesses do not use such procedures to manage their inventory. They are able to track their purchases quite well since small businesses have only a few supplies to receive.
Hence, these businesses may not need credit on missing invoices. Also, they do not need to keep their invoices pending as their inventory size is quite small. Therefore quarterly return shall not have the compliance requirement of missing and pending invoices.