Are you struggling to file your GST returns? Has the complexity of the system and the sheer number of forms been slowing you down? You can now relax and look forward to a much simplified procedure. The GST council revealed a new system on May 24, 2018 designed to reduce the complexity of GST filing and excessive documentation.
Thus, the taxpayers having an annual turnover of upto 5 Crores have the option to either file annual return or quarterly return. However, a large taxpayer having an annual turnover of over Rs 5 Crores has to file monthly return.
Therefore, here is a step-by-step guide to help you understand the new GST Return procedure.
Features of Monthly Return
1. Single Monthly Return In Place of Multiple Returns
The supplier would have the facility of continuously uploading invoices anytime during the month under the new system. However, these invoices shall be continuously visible to the recipient. Moreover, these invoices would act as the only valid documents for the recipient to avail input tax credit.
So, the due date for uploading these invoices shall be 10th of succeeding month of the tax period.
2. Continuous Uploading and Invoice Viewing Facility
The supplier’s invoices shall be auto-populated in the liability table of his main return. And the recipient shall be able to view these invoices on a screen known as “viewing facility”. This facility is shown as “inward annexure” in the main return document.
Furthermore, the recipient shall be able to see the return filing status of the supplier . This facility shall be available to the recipient after the due date of filing such return by the supplier has passed. Likewise, the recipient will be able to keep a check on the tax liability discharged by the supplier against the purchases made by the recipient.
3. Due Date For Uploading Invoices
The due date for suppliers to upload invoices in the return shall be 10th day of the succeeding month of each tax period. Whereas, the due date for recipients to post taxes availed as ITC shall be 11th day of the succeeding month of each tax period.
These taxes availed as ITC by recipients are to be posted in the relevant ITC table of their return.
However, there can be cases when suppliers may upload invoices after the 10th day of the succeeding month of the tax period. Then the recipient shall post the invoices in the relevant field of their return of the subsequent month. Furthermore, the recipient shall be able to accept, reject or keep a particular invoice pending after the 11th day of the succeeding month of the tax period.
Also, the maximum ITC that recipients can avail in a given month will be based on the invoices uploaded by the supplier. These invoices include all the invoices uploaded upto the 10th day of the subsequent month.
Additionally, the recipient shall be able to avail ITC even on the invoices not uploaded by the supplier. Thus, he can avail such ITC by 10th of the next month on self-declaration basis. But this facility is available only in the first six months after the implementation of the new return system.
4. Only One Way To Avail ITC
The recipients can avail ITC based on the invoices or debit notes uploaded by the suppliers on the common portal. These invoices act as the only valid documents for availing ITC by recipients.
There are cases where credit is availed by recipients on missing invoices. And such missing invoices are not uploaded by suppliers within the prescribed time period. Missing Invoices are the invoices or the debit notes on which recipients have availed ITC but are not uploaded by the suppliers.
In such situations, ITC availed in relation to the missing invoices or debit notes shall be recovered from the recipient.
5. Reporting of Missing Invoices
The supplier needs to report missing invoices along with the applicable interest or penalty in the main return for any tax period. And the recipient also needs to report about such invoices. However, the recipient can delay such reporting only up to two tax periods. This is to allow the recipient to follow up and get the missing invoice uploaded from the supplier.
6. Matching of Invoices Through Offline Tool
An offline IT tool shall be provided to match invoices. The recipients can download the invoices in excel format from the viewing facility. These are the invoices uploaded by the suppliers. Now, the recipient can match such invoices with the invoices stored in his accounting software.
Furthermore, the recipient can filter the downloaded invoices within the tool based on:
- Date of invoice – to and from date
- GSTIN of the supplier
- Date on which supplier uploads the invoice on the Common Portal
There may be times when the supplier does not pay tax and the recipient claims ITC for it. So, there shall no automatic reversal of ITC at the recipient’s end in such cases. Instead, recovery of tax shall be first made from the supplier.
However, there might be some special circumstances where supplier does not make payment of tax. These cases include:
- taxpayer missing
- closure of business by the supplier
- supplier not having adequate assets
- connivance between recipient and the supplier
Thus, ITC is recovered from the recipient if suppliers do not pay tax due to any of the above reasons.
8. Facility to Lock Invoices
Locking of invoices means an acceptance by the recipient as well as the supplier to enter into a transaction as detailed in the invoice. Accordingly, the recipient shall be given the facility to lock the invoices before filing of return.
However, it may not be possible to lock individual invoices separately in case number of invoices are large. Thus, the uploaded invoices either not rejected or not kept pending by the recipient would be deemed as locked in such cases.
Therefore, all invoices shall be deemed to be accepted on filing of return by the recipient, except invoices kept pending or rejected.
Rejected invoices are the ones on which supplier fills wrong GSTIN of the recipient. These invoices would appear on the viewing facility of taxpayers who are not the actual recipients of such supplies. Hence, such recipients cannot claim ITC for these invoices .
Furthermore, it is quite easy to reject such invoices with the offline IT Tool. This tool shall create recipient and seller master list in order to match the correct GSTIN.
Supplier uploads the invoices on the portal. These invoices are considered pending if any of the following conditions exist:
- Supply has not been received by the recipient
- Where recipient believes that the invoice needs amendment
- If recipient is not able to decide whether to take input tax credit for the time being
Therefore, the recipient shall report all the pending invoices. Furthermore, no input tax credit shall be availed by the recipient on such invoices.
9. Invoices Deemed to be Locked
The recipients can view the invoices uploaded by the in the viewing facility. These invoices shall be deemed to be locked if the invoices have not been:
- Rejected by the recipients or
- Kept pending by the recipients
Furthermore, the recipients cannot reject or keep invoices pending after filing GST return for the relevant tax period. Also, suppliers shall not be allowed to amend the locked invoices against which recipients have availed the credit. However, the supplier can issue a credit or a debit note in order to make the said amendments in the invoices.
10. Amendment of Invoices
Suppliers can amend the invoices if they have not availed ITC against such invoices. Furthermore, the recipient should not lock these invoices. Thus, invoices locked by recipients cannot be amended.
However, suppliers can still make changes by issuing a credit note or a debit note for the same. These changes can be restricted to the value, rate of tax, quantity or the amount of tax payable.
The table for reporting supplies with the tax liability at various tax rates shall not capture HSN in the Main Return. However, the table would continue to capture supplies at different tax rates. But the details of HSN would be captured in a separate table at four digit or more in the regular monthly return.
12. Return Format
The format of the main return shall comprise of two main tables. One table would report supplies on which tax liability arises. And the other table would state details regarding input tax credit to be availed by the recipient.
Additionally, the return shall have an annexure of invoices which shall auto-populate the output liability table in the main return.
13. Single Payment Allowed for Multiple Tax Liabilities
The tax liability shall be summarized period wise in the Main Return. This liability refers to the one that arises out of invoices pertaining to different dates . However, a single payment shall be allowed to be made for the total tax liability on all tax invoices.
Say, a missing invoice of April needs to be reported in the month of September. This would be reported in the regular return of September. However, the taxpayer shall see tax liability for the month of September and April separately. This means the tax liability of April and September would appear separately in the regular return of September. Furthermore, one consolidated payment for tax shall be allowed to the taxpayer.
Additionally, interest on invoices reported late shall also be calculated. Therefore, interest would be levied on the invoice of April in the above example.
14. Amendment Return
The taxpayers can make wrong entries in the monthly return at times. Hence, they can file Amendment Returns to cater to such errors.
The Amendment returns are different from the regular returns. Furthermore, taxpayers need to file 2 amendment returns within the specified time period for each tax period. Thus, a taxpayer can amend the entries coming from the Main Return’s Annexure only when he amends the details filed in the annexure.
15. Amendment of Missing Invoices
A taxpayer can amend even the missing invoices reported later by the supplier. Thus, he needs to file amendment return for the relevant tax period in order to carry out such amendments.
Therefore, taxpayers should report all the invoices and then amend the return. This should be done to amend the invoices reported late through the amendment return.
For example, invoice of April if uploaded in September shall get amended with the amendment of return for the month of April only. Therefore its is advisable to report all the missing invoices before the opportunity to amend the return gets exhausted.
16. Amendment of Other Details Apart From Invoices
The taxpayer can also amend some other set of items apart from the invoice details. For instance, he can amend the user entries of input tax credit table in the main return.
Hence, the taxpayer need not amend ITC table in the subsequent returns if these modifications are carried out. These modifications are undertaken to keep the compliance load under control.
17. Payment of Taxes Due To Amended Invoices
The taxpayer can pay taxes for amended invoices only through the amendment return itself. This will help the taxpayer to save interest liability. Additionally, the taxpayer can use the ITC available in his electronic credit ledger to pay tax liability in the amendment return.
18. Negative Liability
Negative liability may arise from the amendment return of the taxpayer at times. Thus, this liability shall be carried forward as negative liability in the regular return of the next tax period.
19. Higher Late Fee for Liability Arising From Amendment Return
A change in liability of more than 10% may arise through an amendment return for the taxpayer. Thus, a higher late fee for such an increased liability may be prescribed. This is to ensure that reporting is appropriate in the regular return.
20. Monthly Accounting
Efforts have been made to make monthly accounting and assessment easy under the new GST return system. Thus, the taxpayer and the tax officer can now see certain liabilities at one screen on the common portal. These liabilities include :
- Monthly liabilities reported in the regular return for a tax period
- Liabilities from missing invoices uploaded/reported later
- Liability flowing from the amendment return
The exporters need to fill the table for export of goods in the main return. This table would also contain details of the Shipping Bill. Thus, the exporters can either fill this information at the time of filing returns or after filing returns.
Thus, filing of Shipping bill details in the return at a later date shall not be considered as filing an amendment return. A separate facility shall be provided to the exporters for uploading the shipping bill details at a later date.
22. Transmission of Data To IT System of Customs
The entire data shall be transmitted to the ICEGATE once the information of the Shipping Bill is completed. ICEGATE is the IT system of Customs administration. However, subsequent amendments in export/Shipping Bill table shall be carried out through a separate facility on the common portal. Thus, these modifications are not carried out through the procedure of filing of amendment return. Furthermore, this amended data would also be transmitted to ICEGATE.
23. Integrated Flow of Information
The credit on imports and supplies from SEZ shall be availed on self-declaration basis. This happens after the data flows online from ICEGATE or SEZ in the input tax credit of the return.
24. Protection of Recipients Against Suppliers
A control has been exercised with regards to uploading of invoices. This is done to protect the recipients against the actions of a new supplier or taxpayers who default payment of tax.
Thus, newly registered taxpayers are allowed to upload invoices only up to a threshold amount. Whereas, taxpayers defaulting tax payment are allowed to upload invoices only after the tax default is made good. This default pertains to either paying taxes beyond a time period and/or above the specified threshold.
Thus, the invoices against which supplier makes default shall not be populated in the viewing facility of the recipient. Consequently, the recipient would not be able to avail input tax credit on such invoices. He cannot avail ITC till the supplier makes good the default in the payment of tax for the past period.
25. Return Format Is Based On Taxpayer Profile
The taxpayer profile shall determine the monthly return format under the new system. Now, many kinds of supplies can be made under the GST law. Similarly, many types of inputs can be used to avail input tax credit.
However, most taxpayers have only a few types of supplies to make and few types of inputs to report. Thus, profiling of taxpayers can be undertaken. This can be achieved through a questionnaire. Therefore, a specific taxpayer profile can see only such parts of the return that are relevant to him.
26. Showing Rejected Or Pending Invoices in the Annual Return
There are times when the recipient does not intend to take input tax credit (such as ineligible ITC supplies) for certain invoices or supplies. Therefore, he rejects or keeps such invoices pending. So, the taxpayer will have to report these invoices separately in the Annual return.
27. Suspension of Registration
There are two circumstances when registration shall be suspended:
- when a registered person applies for cancellation of registration or
- if the law conditions concerning cancellation of registration are satisfied
Thus, a taxpayer need not file return from the date of suspension to the date of cancellation of registration if any of the above circumstances exist. Also, the taxpayer shall not be allowed to upload invoices for the period beyond the date of suspension.