GST Quarterly Returns proposed for Small Taxpayers

New GST return system was commissioned to begin from October 2020. However, it has been suspended with the existing return system of GSTR-1 and GSTR-3B being improved. 

In May 2019, a prototype of the offline tool of the new GST return system was shared on the GST Portal to give the users a look and feel of the tool. The look and feel of the offline tool would have been the same as that of the online portal. This article discusses the same at length.

Latest Update

14th March 2020*
The new GST return system will be implemented from October 2020.
The present return filing system (GSTR-1, 2A & 3B) will continue until September 2020.
*Subject to CBIC notification

What are the different terms used in the document of the proposal?

Uploaded Invoice

The invoices which are uploaded on the portal are called uploaded invoices. Uploaded invoices are the only valid documents to claim input tax credit. Uploaded invoices shall be continuously visible to the recipient.

Accepted or locked invoice

The invoices which are accepted by the recipient are called accepted or locked invoices. The recipient can avail credit to the extent of these invoices. The invoices which are neither rejected nor kept on pending shall be treated to be deemed acceptance.

Rejected Invoice

Where the GSTIN of the invoice is wrongly filled by the supplier, the invoice would appear on the viewing facility of the taxpayer who is not eligible to take the credit. In this case, the recipient shall report such invoices as rejected invoices.

Pending Invoice

This status of invoice will be pending because of any of the three following reasons 

• Supply has not been received. 
• A recipient is of the view that the invoice needs to be amended. 
• A recipient is not able to decide whether to take input credit for the time being.

Missing invoices

The invoices which are not uploaded by the supplier and recipient has claimed credit are called missing invoices. The missing invoices shall be reported by the supplier in the main return for any period with interest or penalty as applicable.

For example:

Purchase invoices received by the recipient in April 2019 on which input tax credit has been availed but not uploaded by the supplier shall be reported by the recipient not later than the return of June 2019 filed in July. Information about the missing invoice uploaded by the recipient shall be made available to the supplier.

Who are Small taxpayers and which GST returns must they file?

• Small taxpayers are those with a turnover of up to Rs. 5 crores in the last financial year. 
• They will be provided with an option to choose between the filing of quarterly or monthly main returns. 
• If a Quarterly filing is chosen, then they have three options: 
  • GSTR-Quarterly, 
  • GSTR-Sahaj, or 
  • GSTR-Sugam.

All about Quarterly Returns filing process

• Small taxpayers file returns quarterly but payment of taxes has to be made monthly in payment declaration form-cum-challan. 
• Small taxpayers will be given an option for continuous uploading of the invoices/documents. The cut-off date for a period will be 10th of the month following the tax period. 
• To assist the taxpayers for self-assessed liability and claiming input tax credit, a ‘viewing facility’ will be provided on the portal to recipients for all the uploaded invoices. 
• Only the uploaded invoices will be considered for claiming input tax credit by the recipients of the small taxpayers, in case of B2B supplies. This will help the recipients to avail input tax credit against the invoices uploaded by any taxpayer.  However, 6 months relief is given to recipients where they can self-declare ITC on the provisional basis. This will help assess their tax liability for the month. 
• Small taxpayers who opt to  file quarterly, can do so in any of the following three returns:  
• GSTR-Quarterly – If one has all types of supplies- including exports, SEZ supplies, B2C and/or B2B.
• GSTR-Sahaj – If one has only B2C outward supplies. 
• GSTR-Sugam – If one has both B2C and B2B outward supplies.   
• Small taxpayers will get an option to create a profile in the Quarterly return. Sahaj and Sugam returns are most common and simple pre-determined profiles for the quarterly returns. 
• Four or more digit HSN details will be required for the Quarterly returns, similar to old returns. 
• These quarterly returns will not have compliance requirement with regards to:
  • Missing and Pending invoices
  • Declaration of Non-GST Supply or Exempted supplies, and
  • Input tax credit on Capital goods
• Although, these details will be required to be filled in the Annual return. 
• If the small taxpayers want to include or resolve the issue of any missing or pending invoices, they can file the monthly return. There is no compulsion on only filing the quarterly returns during the financial year as taxpayers also get an option to switch to Monthly main returns in the middle of the year, but they must be careful while deciding this, as they can only switch once a year. 
• Small taxpayers will pay their taxes monthly. In the first and second month of every quarter, they will pay the taxes using a payment declaration form. 
• This payment declaration form will consist of self-assessed liability and input tax credit on the basis of self-declaration. 
• The full payment of the liability arising out of the uploaded invoices will be only allowed from the payment declaration form. Late payment of this liability will attract interest thereon. 
• The facility for opting into Quarterly return filing must be made at the beginning of the year. Make note that switching to filing monthly main returns is allowed only once during a year and that too can be exercised at the beginning of any quarter only.

Comparison with the current system

Proposed New Return System	Existing Return System
Quarterly Return limit has been extended upto 5 crore	Quarterly Return filing limit is 1.5 crore
Profile base return is possible.	No concept of Profile base return in present System.
Only Uploaded Invoices by Supplier would be valid document for availing ITC. Receiver can take credit of invoices which are not uploaded as well, He can report the invoices as missing and the supplier has to confirm the same and pay tax along with interest	There is no matching concept present in current system, it is written in law but recipient could take credit for all such Invoices in GSTR-3B even not reported by supplier on self declaration basis.
An IT tool/facility for matching of the Invoices downloaded in XL format will be available from the “Viewing facility”.	No IT tool for matching the Invoices is present.
If Turnover is less than 5 crore taxpayer can choose either of following:Sahaj (Only B2C)Sugam (Only B2B & B2C)Quarterly (All other Type of Supplies)	Only one Quarterly return facility in GSTR-1 is available If TO is upto 1.5 crore but GSTR-3B must be filed monthly.
Every taxpayer who will apply for quarterly return has to pay tax in self declaration form on a monthly basis for the first two months of the quarter.	Every Taxpayer who has applied for quarterly return has to pay tax on a monthly basis in the form of GSTR-3B.
For Nil Return when user has no purchase, no sales, no ITC to avail in any quarter of the Financial Year shall file one Nil return for every quarter.	When there is no Outward tax liability in this case the taxpayer will has to file NIL Return.
SMS Facility for filing of Return will be available for NIL/Quarterly Return.	SMS functionality is not present.
Taxpayer filing quarterly return shall report missing invoices in the next quarter.	NA

Detailed Format of Sahaj, Sugam and GSTR-Quarterly Returns

Payment Challan form

GSTR Sahaj

GSTR Sugam

GSTR-Quarterly

To conclude with, pending clarity on ITC availability in case of missing invoices, small taxpayers will have to bear less compliance cost due to this simplification of the quarterly returns.