About 93 per cent of the goods and services taxpayers will be relieved of monthly return filing from the next fiscal year once the new simplified return system comes into effect from April 2020. The new return system will not only make compliance easier for businesses, but also plug leaks with respect to input tax credit claims.
Those with an annual turnover of less than Rs 5 crore will have the option of filing quarterly returns, but will need to pay taxes on a monthly basis. Those with an annual turnover of over Rs 5 crore will need to file monthly returns.
“About 70 per cent of taxpayers will get covered under quarterly return filing, taking the pressure off them. With 22 per cent having nil turnover, it leaves just 7 per cent taxpayers to file monthly returns,” said Prakash Kumar, chief executive officer, Goods and Services Tax Network (GSTN), the technology backbone of India’s indirect tax regime.
The new return system requiring fewer details was earlier expected to be introduced from October, but the GST Council in its last meeting held in Goa decided to postpone it to April 1, 2020, to give time to taxpayers to adapt to the new system. Sahaj and Sugam are the two returns which could be filed by small taxpayers, having a turnover of Rs 5 crore or less, depending on whether they have business-to-consumer (B2C) or business-to-business transactions or a mix of both.
Of the 70 per cent taxpayers eligible for quarterly return filing (Return 1, Sugam, and Sahaj), around 28 per cent taxpayers are those that deal with only B2C supplies.
In the current system, taxpayers are required to file GSTR-1 for outward supplies and GSTR-3B, which is summary return for sales and input tax credit. Taxpayers with turnover of up to Rs 1.5 crore are allowed to file GSTR-1 on a quarterly basis, but have to file GSTR-3B on monthly basis.
The last date for quarterly return filers will be the 25th of a month, whereas for monthly filers it will be 20th of every month.
Besides, a buyer will not be able to claim input tax credit if the seller or supplier misses uploading the invoice. This will essentially plug the existing gap, which allowed buyers to claim input tax credit even for missing invoices, which was leading to higher input tax credit claims versus actual taxes paid on inputs.
In the existing system of return filing, the buyer is allowed to edit the invoice and send it back to the supplier, who, in turn, accepts or rejects the edited invoice, creating complexity in the return filing mechanism. “The new system will be a unidirectional one, which will not allow the buyer to make any changes in the invoice filed by the supplier. He will be allowed to only accept or reject and be sent back for amendments,” said Kumar.
GSTN is currently conducting outreach programmes to make the industry familiar with the new return system. It has already covered 19 cities so far, with more than 3,000 participants.