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Advantages/Disadvantages of the Simplified Return Forms

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The GST Council will introduce new simplified return forms from April 2020 to simplify the entire taxation process for small taxpayers which forms a major chunk of the taxpayer base. Let’s take a look at the pros and cons associated with this simplified return forms.

Latest Update!

Update as on 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

Update as on 20th September 2019

As per the decision taken on 20 September 2019 at the 37th GST Council Meeting, the implementation of the new GST return system for all taxpayers and for all forms stands deferred to April 2020.

What are the advantages of the simplified return forms?

  1. A taxpayer will be able to upload invoices 24/7 to the GST Portal.
  2. A recipient will be able to acknowledge or reject an invoice on a real-time basis.
  3. A taxpayer without any sale or purchase in a period can file Nil returns via SMS.
  4. A recipient will be able to view the supplier’s return filing status on the portal.
  5. Introduction of the amendment returns:
    • If a taxpayer makes a wrong entry in his/her return, he/she will be able to file an amendment return. For every tax period, a taxpayer will be given the option to file two amendment returns.
    • With the new simplified returns, a taxpayer will also have an option to amend his/her invoices by filing for an amended return.
    • A taxpayer can also make a payment via an amendment return, which will help him/her save on his/her interest liability. In case Input Tax Credit (ITC) is in the electronic credit ledger of the taxpayer, it can also be used for paying the liability in the amendment return.
  6. Profile-based returns:
    • A taxpayer can create his/her profile on the basis of the nature of the supplies initiated and received by him/her. The return will display specific information fields that are pertinent to a taxpayer’s profile.
  7. 80% of the tables will be auto-populated:
    • The simplified return forms will consist of only two main tables. One table will be meant for reporting outward supplies; another table will be meant for availing ITC on the basis of invoices uploaded by the supplier. Once the supplier uploads the invoices, most of the details in the tables will be auto-populated.
  8. Offline IT Tool:
    • The IT tool/facility will be able to filter the invoices downloaded based on the following parameters:
      • Invoice dates – ‘from’ and ‘to’ date.
      • The date on which the supplier uploaded the invoice on the GST Portal.
      • GSTIN of the supplier.

Limitations to the simplified GST returns

  1. An invoice which has not been uploaded by a supplier, but on which a recipient (taxpayer) has availed ITC will be known as a ‘missing invoice’. When ITC is availed on a missing invoice by a recipient (taxpayer) and such a missing invoice is not uploaded by the supplier within the stipulated time frame, ITC availed on the basis of such invoices will be recovered via the recipient (taxpayer).
  2. An invoice will be deemed to be locked after the return for a specific tax period is filed by a recipient under the following conditions:
    • A supplier uploads an invoice.
    • This invoice is made accessible to the recipient.
    • However, this invoice has neither been rejected nor kept as pending by the recipient.
  3. A locked invoice on which a recipient has availed credit will not be permitted to be amended by a supplier. To amend such a kind of a reported invoice, the supplier will need to issue a credit/debit note. A wrongly locked invoice can be unlocked online by the recipient subject to reversal of ITC claimed by him/her and online confirmation thereafter.