GST Council unveils features of new return filing process; one monthly return for taxpayers

New Delhi, May 5 (KNN) The GST Council has finally unveiled a new simplified return filing process that would require a taxpayer to file one monthly return. However, the whole process would take 1 year to replace the current system with the new system of GST return filing process.

As per the design of the final system, all taxpayers excluding a few exceptions like composition dealer would file one monthly return and Composition dealers and dealers having nil transaction would have facility to file quarterly return.

The Return filing dates would be staggered based on the turnover of the registered person to manage load on the IT system.

With no matching of invoices and the requirement of the buyers to upload invoices, the input tax credit would be available to buyers purely on invoices basis uploaded by the seller.

The new return filing process would reduce the compliance burden for taxpayers as invoices to be uploaded by seller only and buyers has an option of accepting the invoices. Once the buyer has accepted the invoice seller cannot edit or delete the invoices.

In addition, invoices for B2B transactions shall need to use HSN at four digit levels or more to achieve uniformity in the reporting system.

Further, B2B dealers will have to fill invoice-wise details of the outward supply made by them, based on which the system will automatically calculate the tax liability. The input tax credit will be calculated automatically by the system based on invoices uploaded by the sellers.

Also there is no provision of automatic reversal of input tax credit from buyer on non-payment of taxes. The input tax credit though would be available only on payment of tax. If the tax is not paid and input tax credit has been availed, then the credit would be reversed, but not automatically.

A statement released by Finance Ministry stated  "In case of default in payment of tax by the seller, recovery would be made from the seller however reversal of credit from buyer should also be an option available with the revenue authorities to address exceptional situations like missing dealer, closure of business by supplier or supplier not having adequate assets etc."

Recovery of tax or reversal of input tax credit would be through a due process of issuing notice and order. The process would be online and automated to reduce the human interface.

The Council introduced 3 phases of transition process. In the first phase the existing system would continue for 6 months.

In the second phase, the new return will have facility for invoice-wise data upload and also facility for claiming input tax credit on self declaration basis, as in case of GSTR 3B now.

In the second phase, the dealer will be constantly fed with information about gap between credit available to them as per invoices uploaded by their sellers and the provisional credit being claimed by them. 

After 6 months of this phase 2, the facility of provisional credit will get withdrawn and input tax credit will only be limited to the invoices uploaded by the sellers from whom the dealer has purchased goods.