Another year went by, working remotely but connected virtually.
Compared to 2020 when the pandemic had hit unexpectedly, 2021 was better planned and consciously managed.
The year 2021 started with positivity as businesses and offices and the world was opening up. GST collections, one of the performance indicators for the economy, clearly indicate a steady recovery. The GST collection was consistently above ₹ 1 lakh crore, with the record-breaking collections of ₹ 1.4 lakh crore in April 2021. A brief slow-down was witnessed due to the second wave of pandemic, however business picked up again.
The trend in GST collections for this year aptly represents the ups and downs seen by businesses.
Government has taken several measures to support taxpayers during the tough times. Extension of due-dates for return filing and waiver of late fees and interest has helped the businesses, especially the small businesses, to manage their cash outflow. Then we saw some moves to ease reporting requirements by reducing the frequency of filing, making reporting optional for certain sections and so on.
On one side, efforts to help small and genuine taxpayers were taken, stricter rules for non-complying and fraudulent businesses were also brought into effect. At the outset these rules may appear to be cumbersome, however if addressed at root level, compliance gets taken care of.
GST updates to watch-out for
There are quite a number of changes announced by the GST Council in 2021 which have been brought into effect via notifications and circulars. We have compiled a list of Top 10 GST Updates of 2021 for your reference, however the key changes that had a deep impact on the taxpayers were:
- Linking ITC Claim to Regular Compliance: Linking of ITC claim to availability of invoice in GSTR 2B i.e. only after GSTR 1 is filed by the vendor. Further GSTR 1 filing is linked to GSTR 3B. So if GSTR 3B is not filed for the previous return period, then GSTR 1 cannot be filed. If GSTR 1 is not filed, then invoice does not show up in GSTR 2B. And if the invoice does not appear in GSTR 2B, ITC cannot be claimed. ITC happens to be the focal point of everything.
- GSTR 9C Self Certification=Enhanced accountability: GSTR 9C, the annual reconciliation statement between the GST records and financial statements now needs to be certified by the taxpayers themselves. Erstwhile, external certification from CA/CMA was in place. While taxpayers may still involve their external consultants to assist them in preparing and reconciling, the responsibility of accurate and complete disclosure is that of the taxpayer
Well that’s from the Government’s end. In response, we too rolled up our sleeves to make compliance less taxing for you.
A quick tour of what we were up to this 2021.
1. Helping you to maximize ITC claim was our goal too
Changes in GST rules demanded streamlining of reconciliation tasks. Introduction of GSTR 2B in 2020 was an important initiative from the Government.
Why not migrate to GSTR 2B for reconciliation instead of GSTR 2A?
A choice which we contemplated for long and went ahead with GSTR 2B as the extension to the reconciliation process. Our philosophy was to make the best use of both, instead of selecting any one of GSTR 2A and 2B.
GSTR 2A is available near real-time. With e-invoicing coming into effect, GSTR 2A gets populated without even vendors doing any activity for GSTR 1. On the other hand, GSTR 2B is tied to the due-date of GSTR 1. So, when the due date for GSTR 1 filing got extended, availability of GSTR 2B also got impacted. Since then GSTR 2B is available later than the usual date of 14th. While this impacted the recon for many, this did not disrupt the reconciliation process in IRIS GST.
Static nature of GSTR 2B is useful to decide and close on ITC, whether to claim or defer or claim and monitor. We leveraged this advantage by appending additional details of GSTR 2B in your reconciliation results.
With GSTR 2A and 2B and your reconciliation nicely blended in together, we were able to help companies like yours to achieve their goals of ITC maximization. Further to support this objective, we introduced several other features to make the process comprehensive and have better control of reconciliation. Just to highlight, you can now:
- Deemed Match: Match the invoices lying in mis-matched or missing categories once you have reviewed them. (we call it the PO-SO movement). For easy reference, such cases are marked as “Deemed Match” and you can add your review comments in IRIS Sapphire.
- Bulk update GSTR 2B: Get and update GSTR 2B in reconciliation results for all your GSTINs in one go.
2. Stronger Rules, better Reconciliation
One of our predictions for 2021 was that the ambit of reconciliation will increase. Purchase invoice reconciliation for ITC is the most important and crucial one, but there are other reconciliations that can bring efficiencies in GST compliance. In 2021, we took up many other reconciliations in IRIS GST.
- Reconciliation of E-invoices and your GSTR 1 data.
Despite the fact that e-invoices and GSTR 1 both being your own documents, we saw mismatches in the data. The Government auto-populated GSTR 1 (derived from your e-invoices) had differences compared to the final GSTR 1 due to multiple reasons such as:
- Invoice Cancellation: When an invoice gets cancelled after 24 hours of e-invoice generation, this could appear in auto-drafted but not in finalized GSTR 1.
- Issue in auto-population: Then there were some data population issues that resulted in all invoices not getting auto-populated, so you had to identify such cases.
Completely ignoring auto-drafted and uploading your finalised GSTR 1 was never a recommended option. If invoices are re-uploaded, the IRN details are no longer retained in GSTR 1, and it means GSTR 2A will also not have IRN and so your customer will not get those details in GSTR 2A. Customers could raise concerns if they are particular about IRN being in GSTR 2A for their ITC claim.
A win-win situation for you and your customers is cross-checking auto-populated data and re-uploading only if needed. This was introduced in IRIS e-invoicing solution – IRIS Onyx
2. Reconciliation for ISD invoices in GSTR 6, now annually
For those who have ISD registration, monthly filing of GSTR 6 is an activity and hence reconciliation also is to be done monthly. However, there could be carry-forwards and deferring of distribution of ITC. In such cases tracking such invoices and reconciling across months is necessary.
Annual reconciliation, in addition to ongoing monthly reconciliation, you can now do on IRIS platform
3. Enhanced reconciliations for e-way bills
How can e-way bills be left behind? In addition to checking e-way bills with GSTR 1, we introduced reconciliation with ITC-04 i.e. the return for job-work details. Job work entails back and forth movement of goods and hence the generation of e-way bills. Reconciliation of e-way bills with job-work gives you better control of your transactions and activities. Starting this Oct, ITC-04 becomes a half-yearly return, while e-way bills are to be generated when goods are to be moved. Given the timing difference, ITC-04 and E-way Bill reconciliation is becoming a necessity, than choice.
3. Your partner for e-invoice implementation
E-invoice was introduced in Oct 2020 for taxpayers with aggregate turnover above ₹ 500 crore. The threshold was reduced to ₹100 crore in Jan 2021 and then to ₹ 50 crore in April 2021. We are glad to have assisted you in being e-invoice compliant. The ancillary activities in invoicing cycle such as digitally signing with DSC, emailing to customers in your designed invoice format etc. also were added. As a result, your invoicing journey became more automated.
Preparing your GSTR 1 and making it available directly in our GST software extended the automation further. If you have not yet used this option, we definitely recommend to try it out. Needless to say, with this your GSTR 1 and E-invoice reconciliation will have more matches.
P.S. For your purchase invoices, verification of IRN is recommended. The government has released a mobile app which can verify the digitally signed e-invoice QR code.
Or use your own Peridot, to scan the QR codes and verify e-invoices and also e-way bills. Compliance, literally, is handy!
Keeping in view the small taxpayers and their need to be on top of their compliances, we expanded the scope of our mobile app, IRIS Peridot. Whether you do your GST filings in-house or get it done by CAs and tax practitioners, you can stay up to date with status of GST filing. You can get trends of sales and purchases, performance month-on-month, see how much ITC is available and not eligible as per GSTR 2A/2B.
Most importantly, your data is shown only to you and only after your consent. We do not take your GST portal password nor do any activity behind your back.
If you haven’t explored the Compliance in Peridot, we urge you to do so. Many other utilities we have included in the new version. What are those? Download Peridot, check it out and let us know your feedback.
4. Your views always matter – IRIS Surveys
We always look forward to your feedback and suggestions, not only for our products but also on the GST law and changes, its impact on business and the compliance processes. From time to time, we have conducted surveys, polls and even quizzes to understand you better. The response, as always, has been overwhelming and we wish to see your continued support ahead as well. But for 2021, some interesting and insightful results that we got
1. ITC coupled with GSTR 2B: When the announcement of pegging ITC availability to GSTR 2B came up, the feedback was leaning towards no impact. While many taxpayers had aligned their ITC claim to GSTR 2B, a good number of taxpayers still would get adversely impacted.
2. GSTR 1 Due Date Extension impact: In April 2021, due date for GSTR 1 got extended and hence GSTR 2B was available much later, after filing of GSTR 3B for the month. While it turned out to be a perfect follow up survey on GSTR 2B and its impact on recon. Not surprising that taxpayers who had tightly coupled computations to GSTR 2B had to face challenges.
3. ITC Claim Process: We never get tired of talking about ITC, however, working on ITC can get tiring. So when asked which is the most tedious task in the ITC claim process, the response was interesting. A deeper look shows the more consistent and systematic approach taken for ITC, the better control one can have.
4. Self-Certification of GSTR 9C: Annual GST compliances are round the corner and are to be finished by year-end. Self-certification of GSTR 9C came up with a new task on the list. Survey results indicate taxpayers perceive self-certification as an added responsibility.
We had many more, but the ones we cherry-picked to recap are the ones that will drive the GST compliance for the coming new year 2022.
Gearing up for 2022
We are excited and have big plans for the new year. We believe the new solutions and services that we have in store, will be useful and relevant for you. When we started in 2017 our goal was to ease your GST compliance and it has evolved over the period. Our focus for 2022 is enabling automation and process efficiency in core compliance as well as linked business processes such as accounts receivable and payables management, litigations and collaboration.
Resilience was the theme of 2021, for people, for society and for the economy. We passed through pandemic wave 2 with less damage. The fear of wave 3 is now looming on our heads and we sincerely hope our fears do not materialize.
Let us all be cautious, follow all the safety rules and stay fit and healthy. There’s a lot together we need to achieve.
Do you know about IRIS GST’ Integrated Solution?
IRIS GST’s Integrated Solution is a cloud-based software that brings all the tasks on a single platform. It is trusted by hundreds of companies across the country for their GST Filing, E-invoicing and E-way Bill management. This integrated solution is made available on a unified platform with a single log-in for ease of use i.e. get all our offerings – IRIS Sapphire, Topaz and Onyx from a single log-in and shared business hierarchy. Our Integrated Solution with all in one ‘GST Suite’ will not just streamline the GST Filing, E-way Bill Management and E-invoice processes but also will reduce the time involved with 100% accuracy!
Our integrated solution includes:
GST Software | IRIS Sapphire
An industry-trusted GST compliance tool for seamless data transformation from your ERP to GST data, vendor reconciliation, GST form filing and annual return filing
EWay Bill System | IRIS Topaz
A simple and hassle-free solution for mid-and large-sized businesses to generate, cancel, modify and update E-Way bills from a single platform.
An advanced e-invoicing solution that can integrate with your billing systems in multiple ways and help you generate IRN seamlessly without disrupting your current business processes
IRIS GST Suite – Integrated Solution is everything you need to seamlessly:
- Reconcile your GST Returns with vendor data
- Maximize ITC
- Never miss a due date
- Create and manage every e-way bill
- Generate IRN and QR Code for every invoice, all in one place!