GST forms: Delink provisional credit from tax payment, say stakeholders

In the effort to evolve a consensus over provisional input tax credit for the goods and services tax (GST), stakeholders have asked the group of ministers (GoM) on the subject to de-link this from payment.

The panel will make a draft of all suggestions and give it to the GST Council, for the ultimate purpose of having a simpler, single form. 

The Confederation of Indian Industry (CII) has suggested provisional credit be given on the basis of acceptance of invoices by buyers, not linked to payment by suppliers.

Saloni Roy, senior director at consultants Deloitte India, said: "The worry in pursuing the matching concept is, where a purchaser has paid his supplier and the supplier has either not reported his supply or deposited tax, the purchaser is penalised with denial of credit.” Prakash Maheshwari, manager, Marg ERP, said the trade wants grant of provisional credit even if tax is not paid by the supplier. CII suggests an option be given to the recipient, in a case of default in payment of tax by the supplier, to pay the tax directly to the government. 

The government had suspended GSTR-2, the buyer tax return, and GSTR-3, the input-output return, and asked a committee headed by GST Network chairman A B Pandey to suggest simplification of the forms. Pandey  gave options to GoM.

Till the return forms are simplified, GSTR-1, the seller's return, and GSTR-3B, the summary input-output return, will be in place. Earlier, the government had said these would be there till June; it now says it would continue till the returns are simplified. Once the latter takes place, there will be only one return a month, against three at present. 

Earlier, the GoM, headed by Bihar deputy chief minister Sushil Modi, had zeroed on two models of simplification. One, prepared by Infosys chairman Nandan Nilekani, suggests the seller upload all invoices on the relevant website and the buyer acknowledges these. Based on this, the buyer would get credit for tax paid on inputs. No credit would be available if the buyer claims missing invoices.  

The other model talks of the seller uploading the return but also of provisional credit even if the invoice has not been uploaded. However, if the seller disputes that transaction, the credit will be reversed at a later stage. 

Modi had said there were different views on provisional credit, and whether it must be linked to tax payments made or not. 

Maheshwari said GSTR-3B, the summary input-output form, currently requires "unnecessary" details, such as whether the sale is done to registered or unregistered entities. These should not be there in the new returns, he said. 

CII says a minimum of details should be required in the returns. 

Other details like HSN quantity and line-wise entries should be deferred for the second phase of implementation, it suggests. 

Maheshwari said when goods are returned by buyers, the seller has to adjust it on the basis of the invoice. This should be replaced with adjustment on the basis of total sales and purchases, he suggests.