August 7th Tuesday, the Lok Sabha passed 4 new bills in an attempt to GST procedures with a focus on empowering the MSME(Micro, Small and Medium Enterprises) sector. The government is also targeting to plug loopholes in existing laws and lightening ROC compliances requirements described as ‘complex’ by many a business owners. The new return filing system is expected to be put in place by the revenue department by January 2019 and would actively replace the current GSTR-3B and GSTR-1 returns.
In addition to these, an attempt has been made for the empowerment of digital payments such as UPI with incentives via cashback offers. The Lok Sabha also facilitated changes in GST return filing forms and also helping in reducing the frequency of return filings for businesses. The bills passed by the Lok Sabha are
• Central GST(Amendment) Bill, 2018
• Integrated GST (Amendment) Bill, 2018
• Union Territory GST (Amendment) Bill, 2018
• GST (Compensation to States ) Amendment Bill, 2018
This article will focus on the proposed changes in the GST forms.
Filing returns and payment of taxes had become a little tedious and complex. Aimed at addressing this issue and to bring about simplicity, the government has decided to bring in Sahaj and Sugam the simplified GST forms to achieve ease of going about business.
The finance Minister Piyush Goyal was quoted as being intent on empowering the MSME sector and said: “The proposed new return filing system envisages quarterly filing of return and tax payment for small taxpayers along with minimum paperwork". The government also aims at simplifying the procedures for MSME registration by incorporation of the comprehensive SPICe forms.
Along with these changes, the government has also modified the due date for final GST sales returns to 11th of the succeeding month. (applicable for companies with turnovers exceeding 1.5 Crore Rupees.) The single return process will continue to have dates of filling vary based on the turnover of the company.
The simplified GST return filing forms have prospects for:
1. Reducing Confusion among Taxpayers
The government plans to introduce a modular approach in which the aim is to introduce many business types into a simple form. Various modules in one common return will facilitate the filing process for eg. One for traders and one for exporters. The one form approach will help taxpayers pick and choose their type of business module and go to a section which remains relevant to other traders. According to the finance minister “This kind of a modular approach will help significantly in improving the compliance process too”.
2. Decreasing the number of returns from 36 to 12 a year.
Return filings frequency will drop and single return procedures will be introduced per monthly basis to help facilitate the compliance process.
Barring a few exceptions like composition dealers, all taxpayers shall file one monthly return. Return filing dates would be stacked on the basis of the turnover of the designated individual to manage load on the IT system. The facility of filing quarterly returns can be availed by composition dealers and dealers having no transactions.
4.Unidirectional Flow of Invoices
Invoices can be uploaded at any time of the month in a unidirectional manner by sellers. These invoices can serve as valid documents to avail input tax credit by the buyer and buyer also has the provision of being able to see uploaded invoices during the month continuously.
5. Simple Return Design and Easy IT interface
Invoice-wise descriptions of outward supply made by B2B dealers have to be maintained and the system will be able to calculate the tax liability automatically. Taxpayers will also be facilitated with a user-friendly interface and offline tools to upload invoices. Input tax credit will be calculated by an automated process as well.
6. No automatic reversal of credit
In the case of non-payment of tax by the seller, automatic reversal of input tax credit from buyer has been prohibited. Options have been put in place to make recovery of defaults in payment of tax by the retailer. In addition to this, however, special provisions have been made to address exceptional situations like the closure of Business, missing dealer or supplier lacking assets to return due payment.
7. Process for recovery and reversal
Issuing of notice and order will be done in an online and automated process to reduce the human interface.
8. Supplier Side Control
Sellers who have defaulted in payment of taxes above a certain threshold will be blocked from raising invoices to avoid misuse of input tax credit facility. Safeguards like these will be deployed for new dealers as well as addition, analytical tools would be employed to prevent loss of revenue.
Transition to the new system will be achieved in three stages.
Stage 1: Filing of return GSTR 3 B and GSTR 1.
Stage 1 cannot exceed 6 months
Stage 2: Invoice wise data upload facility and claiming input tax credit on self-declaration basis
Stage 3: Deployment of the new forms and single return system
Thus, the proposed changes in the GST forms come as a relief to the MSME sector traders in simplifying compliance requirements for filing tax returns.