In this article, we will discuss the changes in reporting of outward supplies and tax liabilities by comparing the old vs new GST return system. The changes and additions in the new return system are elaborated below.
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
Under the old return filing system
GSTR-1 return should be filed for reporting outward supplies and declaring tax liability on the same. Input Tax Credit (ITC) on imports has to be claimed in GSTR-3B under eligible ITC. The taxpayer has to file monthly GSTR-1 if his annual turnover is more than Rs.1.5 crore. Otherwise, the taxpayer can file a quarterly GSTR-1. This return includes
|1||Supplies made to registered persons other than reverse charge mechanism (RCM) supplies and supplies through e-commerce operator|
|2||Supplies made under reverse charge mechanism|
|3||Supplies made through e-commerce operator|
|4||Interstate supplies to unregistered persons where invoice value is more than Rs.2.5 lakh|
|5||Zero rated supplies and deemed exports|
|6||Nil rated, exempted and non GST outward supplies|
|7||Amendments to taxable outward supply|
|8||Advances received/adjusted during the tax period|
|9||HSN-wise summary of outward supplies|
|10||Documents issued during the tax period|
Under the new return filing system
GST ANX-1 should be filed for reporting sales and declaring tax liability on the sales. Imports are also to be reported in GST ANX-1 and ITC on imports will be auto populated in GST RET-1. In the new return system, taxpayers are categorised into large taxpayer (whose annual turnover is more than Rs.5 crore) and the small taxpayer (whose annual turnover is upto Rs.5 crore). A large taxpayer has to file monthly GST ANX-1, whereas the small taxpayer can file his GST ANX-1 monthly or quarterly at his option. This return includes
|1||Supplies made to consumers and unregistered persons|
|2||Supplies made to registered persons (Other than RCM supplies)|
|3||Exports with/without payment of tax|
|4||Supplies to SEZ units/developers with/ without payment of tax|
|6||Inward supplies attracting reverse charge|
|7||Import of goods/services|
|8||Import of goods from SEZ units/developers on a bill of entry|
|9||Missing invoices which are to be uploaded by recipients|
|10||Details of the supplies made through e-commerce operators|
|11||Amendments to various supplies|
Comparison – old vs new GST return system
The form GST ANX-1 under the new return system is similar to GSTR-1 under the old return system. There are some changes under the new return system when compared to old return system. Some of them are
- Reporting of Supplies Under RCM:
In the old return system, B2B outward supplies under the RCM are to be reported in GSTR-1. The requirement of the same has been removed under the new system, as recipients have to report inward supplies liable under RCM at the invoice level in their GST ANX-1. However, the supplier has to show the aggregate figure in his GST RET-1.
- HSN Summary Reporting:
Under the old return system, the Harmonized System Nomenclature (HSN) code summary needs to be reported separately. But in the new return system, the supplier has to report the HSN codes at the invoice level (based on his turnover). In this way, the taxpayer will get the HSN data via his GST ANX-2 wherever the supplier was required to declare HSN.
- Reporting of Imports:
Under the old return filing system, ITC on imports alone has to be reported in GSTR-3B. However, under the new return filing system, the taxpayer has to report imports of goods and services in GST ANX-1.
- Reporting of B2C Large Sales:
Under the new GST return system, the requirement of reporting B2C large Sales (interstate sales to unregistered persons having invoice value of more than Rs.2.5 lakh) has been removed. Since all B2C sales will be reported invoice-wise under the new GST returns system.
- Reporting of Documents Issued:
Under the new return system, there is no requirement for reporting of documents (along with serial numbers) like invoices, debit/ credit notes, receipt/ payment/ refund vouchers, delivery challans which were issued during the tax period.
Additions under the new system
- Continuous Upload of Invoice:
An interface has been introduced which allows a supplier to continuously upload the invoices in his GST ANX-1. Monthly return filers have to upload the B2B invoices by the 10th of next month and they can upload B2C invoices till 18th of next month. Quarterly return filers have to upload their invoices by the 23rd of the month after the quarter.
- Missing Invoice and Provisional ITC:
If a supplier does not upload the invoice in his GST ANX-1 within the due date, it will not reflect in recipient GST ANX-2, thereby the recipient cannot claim ITC. This invoice is called a missing invoice. However, the recipient can claim provisional ITC in his GST RET-1.
- Reporting of Missing Invoice and Reversal of Provisional ITC:
The recipient has to be in continuous follow up with the supplier for the upload of the missing invoice within a specified period (T+2 or T+1 for monthly or quarterly return filers respectively). If the supplier fails to upload the missing invoice within the specified period, the recipient should report missing invoices in Table No: 3L of GST ANX-1. The recipient has to reverse the provisional ITC which was claimed earlier in GST RET-1.
- Amendment Return:
Amendment return enables taxpayers to amend the details reported in GST RET-1/ANX-1. The taxpayer can file two amendment returns for a tax period. A taxpayer can also pay the tax liability through amendment return. The amendment of a missing invoice, reported later by the supplier, can be done through the amendment return.
- Shifting of Documents:
In some situations, where a taxpayer has entered the correct document but in the wrong table, a facility to shift a document from one table to other tables will be provided.
Expected hardships faced by the taxpayer
As the government is focusing on a more transparent system, the new GST return system puts more onus on the taxpayer.
- The new GST return system mainly focuses on the invoice level matching of transactions; a taxpayer has to spend more time to adhere to the same. Some businessmen are of the view that they are unable to focus on business as they have to cope up with the frequent changes under GST.
- The supplier has to ensure uploading invoices precisely in GST ANX-1. Uploading of erroneous invoice or not uploading at all will lead to additional work for both supplier and recipient. The recipient is to be in continuous follow up with the supplier for amendment of erroneous invoice or upload of missing invoices.
- As the concept of missing invoices was introduced, the recipient has to report missing invoices in Table No: 3L of GST ANX-1 if the supplier fails to upload invoice within T+2 or T+1. This will be an additional and tedious task for the recipient because of the negligence of the supplier.
- After reporting the missing invoice in GST ANX-1, the recipient has to reverse the provisional ITC in GST RET-1, which was claimed earlier. By reversing the provisional ITC, now the recipient has to pay the tax amount. This will impact the business between the supplier and the recipient.
It has been more than two years since the implementation of GST. During these two years, taxpayers faced issues while adhering to the law and filing returns. Some issues have been resolved by the government yet, some issues are cumbersome for a taxpayer to understand and comply with.
To avoid these types of issues, the government provided a prototype returns for the new GST return system. The government is of the view that by using these prototype returns, taxpayers and professionals will get the look and feel of how the new return system works. But under these prototype returns, all the features are not enabled. Hence, taxpayers and professionals have to wait until the new GST returns system is implemented to get a complete understanding of forms.
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