GST with ClearTax in 2019

GST in 2019 was a year of reforms. We saw a lot of changes to the system, both good and bad. It was a year that saw the annual return of the first year being extended yet again. It was pushed to 2020 for the taxpayers’ good and yet somewhat due to lack of preparedness of the portal.

Many would have heard a noise about the dipping GST revenue, or the Centre not keeping its promise of compensating some states. But many other significant reforms need a highlight too.

Let’s quickly dive into the five major GST developments in 2019.

Gearing up for a transition to the new return regime

The regular filers of GSTR-1 and GSTR-3B will soon have to prepare themselves for yet another change. They will begin to submit ANX-1, take actions in ANX-2 and file RET-1/2/3 from April 2020. The forms and procedure along with the trial version in offline utility were made available in 2019.

ClearTax pioneered in bringing all the new GST returns updates straight to your desk. We benefitted CAs and the business fraternity by coming up with the knowledge-based e-learning certification course. ClearTax is also an early entrant into developing a GST return filing product for all the forms in new GST returns. It has advanced tools to conduct frequent invoice matching, tracking of ITC claims and vendor communications. Additionally, intelligent validations are present that are needed for easily complying with new returns filing.

Restriction on ITC claims rocked the businesses

A major development that hit the business sentiments of taxpayers was the decision to restrict the claiming of the tax credit (ITC) in GSTR-3B. From October 2019 onwards, the businesses could claim ITC only to the extent of tax credits reflecting in GSTR-2A and an additional 20% of the same as a provisional credit. That means a taxpayer could claim only 120% of the ITC amount reflected in GSTR-2A.
Earlier, the taxpayers could claim any amount as ITC in their GSTR-3B, provided by the end of the year, they must have reconciled these amounts with GSTR-2A and reverse the balance.

The restriction is now further tightened to 10% as per recently concluded 38th GST Council meeting in December 2019. With growing importance to curb fake invoicing and fake ITC claim, the taxpayers have the to onus to ensure compliance. They must further strengthen their accounting systems and ensure proper recording and communications systems are in place to monitor the same.

Blocking of e-way bills for non-filing of GSTR-1 and 3B panicked businesses

Another announcement that took the nation into a tizzy was the blocking of e-way bills for non-filers of GST returns. In order to encourage more filing of GSTR-1 and GSTR-3B returns among businesses, the GST Council took a bold step. It disabled taxpayers from generating e-way bill, in case of non-filing of two or more consecutive GSTR-3B on GST portal, by such taxpayers with effect from 1 December 2019.

It hampered the smooth flow of business across the nation for some time. But the GST Council recently extended the due date for GSTR-1 to 10 January 2020, now all past returns can be filed by this date without payment of late fees. Providing all taxpayers with a golden opportunity of becoming compliant without paying any late fees.

New limits for GST registration gave leeway to many businesses

A number of changes were introduced for the GST registration procedure. The primary one being the increase in the threshold limit for registering under GST. All the suppliers of goods having annual turnover of below Rs 40 lakhs may not choose to register under GST. Also, several States and Union Territories opted for a change in the threshold limits.

Another major decision was to link Aadhaar with the registration of taxpayers under GST. Additionally, the possibility of making the 12-digit unique identification number mandatory for claiming refunds are in talks.

Scope of Composition Scheme expanded

The composition scheme was extended to service providers after a long row. A new composition scheme was introduced to service providers having an annual turnover of up to Rs 50 lakhs only with a nominal tax payment on a turnover basis at 6%.

The process of filing taxes under the scheme was further simplified with a single page form in CMP-08 since April 2019. In contrast, the return in GSTR-4 was pushed for annual compliance.

An integrated GST Refunds system came into being

An ‘Online Refund Processing and Single Disbursement’ finally saw the light of the day. It facilitates taxpayers to file refund applications online as well as help the tax officers to process the applications online itself. Further, the communication between the taxpayers and the tax officers is entirely online. It increases the transparency in the system and ensured faster disposal of the GST refunds that were stuck for a long time.

The new system was made effective from 25 September 2019 on the GST portal. Moreover, the disbursal of the GST refunds is now under a single authority. As per the decision, all administrative control over 90 per cent of taxpayers having an annual turnover below Rs. 1.5 crore is vested with the State tax administration. The administrative control for the rest lies with the Central tax administration. Further, all administrative control over taxpayers having annual turnover above Rs.1.5 crore has been divided equally for the Central and State tax administration.

In spite of the various system glitches and issues – the year has been of significant reform. Several due dates were extended and forms were changed and there’s lots more in store for 2020. A slowing economy and falling GST revenues will keep up the pressure on the government and consequently on the taxpayers.

ClearTax has been your partner in addressing these challenges and helping you comply smoothly. 

Did you know we won the 2019 ET BFSI Excellence Awards for providing the Best GST Solutions!

Here’s to a fruitful and prosperous 2020!

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