India: GST Returns Update

After being deferred twice, the new simplified Goods and Services Tax return is ready to be rolled-out.

India: GST Update

The original plan had been for the new format to be implemented by January 2019. This new format was to be introduced on a pilot basis in April 2019 and mandatory filing would begin from July 2019. This was deferred because the systems were not finalised and ready for this change.

At present GST registered businesses have up to three returns to file per month:

  1.  GSTR-1 (details of outward supplies i.e. sales)
  2. GSTR-2 (details of inward supplies i.e. purchases)
  3. GSTR-3 (summary of sales, purchases and GST liability)

For most businesses, the new system will require just one GST return per month and will replace the current filing requirements. A demo tool was released in late May for the new and simplified return filing form. With this tool, users will be able to upload invoices and upload purchase registers etc.

An annexure of outward supplies (GST ANX-1) and an annexure of inward supplies (GST ANX-2) will be filed as part of these returns.

Suppliers are required to file a detailed GSTR-1. After the supplier has filled out a GSTR-1 form, the taxpayers GSTR-2A form should be auto populated. If there are details of purchases from unregistered dealers and some purchases are not reflected in the GSTR-2A form, these will have to be entered in the taxpayers GSTR-2 form.

Businesses which make supplies to only consumers (B2C) will have to file a GSTR-2 (Sahaj). This includes details such as:

  • Details of outward and inward supplies attracting reverse charge;
  • A summary of inward supplies for claiming input tax credit.
  • Businesses that make supplies to both business (B2B) and consumers (B2C) will have to file GSTR-3 (Sugam). This will include:
  • A summary of supplies made and the tax liability
  • A summary of inward supplies for claiming ITC
  • Details of interest due and tax payment

Those with no purchases, no output tax liability and no input tax credit in any quarter of the financial year will have to file one ‘Nil’ return for the entire quarter.

Taxpayers with a turnover of up to Rs 5 crore per annum can file quarterly returns with monthly GST remittances on a self-declaration basis. This new process aims to eliminate the complaints surrounding the difficulties in filing multiple returns as well as the high cost of compliance.

The plan is for a three-stage rollout with a transition period of six months. During this transition period, businesses will file two returns, GSTR 1 (for sales) and GSTR 3B (a summarised sales return form).

For most businesses, the introduction of the new forms will reduce the annual compliance burden from 24 GST returns (GSTR-1 and GSTR-3) to just 13 (including the annual return). After this new single return system is implemented, it will allow traders to verify whether the vendor has uploaded the invoices before filing returns. It will also address the issue of mismatch in the data reported to the authorities.

If you're looking for more details on how GST Returns can impact your business in India, get in touch with us below.

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