On May 4, 2018, the GST Council held its 27th meeting and made some major decisions. The changes it adopted should take about one year to fully implement, and have major implications for how you do business in India. Some key GST changes include shifting ownership of GSTN, the IT network controlling implementation of the GST, to 100% government control and new filing rules for Indian businesses to follow. Unless your sales volume is nil, these GST updates affect how you do business. Several other matters were discussed, such as incentives for digital transactions and various subsidies for certain industries, but decisions on those matters were put off for future meetings. Stay on top of GST news and updates by bookmarking the QuickBooks GST Centre, where the latest developments are posted as they occur. The changes the Council adopted cover a lot of ground, but they can be broadly summarised under several major reforms.
Most GST taxpayers are now on the hook to file monthly returns. This can be done online, and your own due date should vary more or less randomly. This is to stagger the flow of returns and keep strain on the GSTN system manageable. The monthly filing requirement applies to almost all GST taxpayers, with the exception of those reporting nil sales. If that’s you, you have the option of skipping the monthly reports and filing quarterly.
Sellers can upload their invoices at any time, rather than in batches. This is expected to speed up and simplify the submission process, as well as to generate an online receipt that can be used as a proof-of-sale document by your vendors, who can then apply for the GST tax credit on their own schedule. Invoices are to be almost immediately viewable online, so you can continuously monitor your filing compliance and track payments. Buyers are exempt from the requirement to file what would now be duplicate invoices. If your sales are business to business, you still have to file using your four-digit HSN. The Council left this requirement as-is to ensure conformity in the process.
A Greatly Simplified Reporting Interface
When you file online, you have a vastly simpler and more intuitive system to work within. Once your invoices go live in the system, the GSTN automatically calculates your tax debt and assigns the charges to you without the need for human interference. This is expected to reduce errors and speed things up for you, the seller. The look and feel of the online portal is also getting a facelift, with an eye toward greater ease of navigation and an overall better user experience. There is also talk of adding a dedicated invoice uploading tool for sellers, which stands to really streamline the process.
No Automatic Reversal of Credits
The Council voted to eliminate automatic reversals of credit for buyers. In the event a seller doesn’t pay the taxes due, the GST authority is supposed to try recovering the funds from the delinquent account. A seller who skips paying the GST may land in tax court or have assets attached or seized to recover the money owed. Big warning: If the seller can’t be found, closes up shop, or doesn’t have enough money to cover the tax bill, the buyer might wind up footing some of the bill. This seems to be at the authority’s discretion, though the details of the process are not terribly clear yet.
Due Process for Recovery and Reversals
One good piece of news to offset the GST changes on reversal of credit is the introduction of due process for taxpayers. In the past, tax assessments were treated as strictly administrative matters, as if your business owed a fee or you committed a noncriminal infraction. This meant you could be assigned a tax bill, and if the appeals process didn’t go your way, too bad for you. With the new due process GST update, recovery actions have to go through a process that includes issuing notices and giving you a chance to respond. It’s expected this will mostly happen online, so India’s hundreds of millions of taxpayers don’t have to physically arrive in court whenever there’s a dispute with the revenue authorities.
Invoices above a certain amount are to be prevented from being “unloaded” by sellers. This practice, which represents a serious loss to revenue by shifting tax burdens away from the suppliers who owe it, can now be monitored and blocked. Established dealers are expected to have a relatively high threshold for this “soft block,” while newer registrants are starting out with a relatively tight cap.
These GST changes were adopted by the Council on May 4, 2018, but they’re going to take time to fully implement. The Council has agreed to a three-stage introduction plan that’s scheduled to run for about a year, starting immediately.
Stage I: Filing GSTR 3B and GSTR 1. GSTR 2 and 3 remain suspended, with a six-month review period.
Stage II: The new return with invoice-wise data upload comes online for a six-month period.
Stage III: Withdrawal of provisional tax credit and limiting input tax credit to invoices uploaded by suppliers.
Changes to the GST affect everyone in India. Whether you’re a buyer, seller, or both, keeping up to speed on the latest GST updates is in your best interest. As these changes are implemented, you can use QuickBooks to stay compliant as per the GST guidelines.