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Understand the new GST return filing system

Understand the new GST return filing system

Guide5 min read | Posted on January 31, 2020 | By Zoho Books Team

Latest Updates as per the 31st GST meeting:

During the 31st GST meeting, the GST Council decided to institute a new return filing system to help ease the burden of filing returns for taxpayers. In an attempt to help taxpayers switch to this new filing system, the GST Council has initiated a transition plan.
As of May 2019, a prototype of the offline tool used to file returns was shared on the online portal. The offline tool shares the same look and feel as the online portal.
The new returns have 5 main components: one main return and four annexures (Form GST ANX-1, Form GST ANX-2, Form GST ANX-1A, and PMT-08).
From July 2019, taxpayers will be allowed to upload their invoices using the offline tool for Form GST ANX-1 on a trial basis. They will also be able to view and download their invoices for inward supplies using the Form GST ANX-2 offline tool on a trial basis. From August 2019, taxpayers can import their purchase register using the offline tool and match it with their downloaded inward supply invoices to find mismatches.
The new annexures ANX-1 and ANX-2, will be made available for trial between the months of July and September, 2019. During this time, taxpayers must continue to file their outward supply details in Form GSTR-1 and their returns in Form GSTR-3B.
From October of 2019, Form GSTR-1 will be replaced with Form GST ANX-1. This will be made compulsory for large taxpayers (those with an aggregate annual turnover in the previous financial year of more than Rs. 5 crore) in October 2019, and for small taxpayers (those with an aggregate annual turnover in the previous financial year of up to Rs. 5 crore) in January 2020. Both large and small taxpayers may begin uploading invoices and other documents in Form GST ANX-1 on a continuous basis from October 2019. This is not the case for Form GST ANX-2, however, as this form can only be viewed during this period.
For the months of October and November 2019, large taxpayers are to continue filing Form GSTR-3B on a monthly basis. They must file their first Form GSTR-1 for the month of December 2019, by the 20th of January, 2020. Small taxpayers, on the other hand, must stop filing Form GSTR-3B and start filing Form GST PMT-08 in October 2019. They can start filing their first Form GSTR-1 for the quarter of October to December 2019, from the 20th of January, 2020.
Starting from January 2020, all taxpayers must begin filing Form GST RET-01. Form GSTR-3B must be completely phased out.

New GST returns

In an effort to simplify the filing process and increase tax compliance, the GST Council has approved a new return filing process. This filing process is expected to come into effect in six months. Here’s what you need to know about the new GST returns.

New Returns For Registered Taxpayers

All GST registered taxpayers except ISD providers, small taxpayers, composition dealers are expected to file one monthly returns.
The return will have two tables; one for reporting outward supplies and the other for availing input tax credit based on the invoices that the supplier uploads.
The taxpayer can create a profile according to the nature of supplies made and received. The fields that the taxpayer would need to fill in would be displayed according to the nature of his profile.
The date of filing will depend on the business’ turnover, in order to ease the load on the IT system.
Nil return filers or taxpayers who have made no purchase or sale will be able to file returns by sending an SMS.

New Returns For Composition Dealers

Composition dealers and dealers who have zero transactions can file quarterly returns.

New Returns For Small Taxpayers

Small taxpayers who have an annual turnover less than Rs.5 Crores have the option to do quarterly filing. This option will be available to small traders who make B2C or B2B and B2C supplies. The quarterly return will be similar to the main return with monthly payment facility.
The new returns for small taxpayers is called Sahaj and Sugam. This return will require fewer details than the regular return.
The GST Council has introduced 3 new returns, Sahaj, Sugam, and the Normal return in an attempt to simplify the process of filing returns.

Uploading Invoices

The seller can upload invoices at any time of the month in order to allow the buyer to avail input tax credit.
The buyer can view and lock the invoices as and when the seller uploads them.
The buyer is not required to upload their purchase invoice.
Sellers who have defaulted on tax payments above a certain amount will be prevented from uploading invoices to avail input tax credit.

Invoicing for B2B Dealers

If you are a B2B dealer, you are required to fill out invoice-wise details of your supply while filing. Based on these and the invoices uploaded by your seller, the system will calculated your tax liability automatically.
Invoices related to B2B transactions need to have a 4-digit or higher HSN number.

Process of Tax Recovery

In cases where the seller has not paid their tax due, the buyer’s input tax credit will not be reversed automatically.
In exceptional cases like a missing dealer, closure of a supplier’s business, or suppliers having inadequate assets, the revenue tax authority will decide whether to reverse the buyer’s credits or not.

Information in the Return

The recovery or reversal of input tax credit will be done after the tax authority issues a notice and order. The entire process will be automated and handled online.

How will the transition to the new filing work?

The transition will be done in three stages:

Stage I

In this stage, there will be no change in the current filing system. The filing of GSTR3B and GSTR1 will continue. GSTR2 and GSTR3 will remain suspended. This stage will last until the new filing software is ready to use, which is expected to occur in six months.

Stage II

When the new filing system is ready, it will allow you to upload invoice-wise data and also claim input tax credit on a self-declaration basis similar to the current GSTR3B filing process. During this stage, you will be able to see the credits available to you based on the invoices that your sellers have uploaded and the provisional credits that you can claim. This stage will last for six months to allow everyone to adjust to the new system.

Stage III

Six months after Stage II begins, provisional credit will end. The input tax credit that you can avail will then be limited to the invoices uploaded by your sellers.

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