27th GST Council Meeting | GST Council approves simplified return filing

27th GST Council Approves Simplified Return Filing

The 27^th GST council, in its meeting held on 4 May 2018, took the key decision on simplifying the return filing process. The Sushil Kumar-led Group of Ministers deliberated the alternatives with industry and stakeholders and presented the recommendations to the Council for their approval.

The Council gave a go-ahead for the new return filing process which is to roll out in 3 phases.

Transitional Phase 1: From May 2018 till Sept 2018

For the peridot May 2018 to Sep 2018, returns i.e. GSTR 1 and GSTR 3B to continue. In this period, GSTN to design and develop the IT system for the new returns.

Transitional Phase 2: Oct 2018 to March 2019

Taxpayers to start following the new process. The B2B sales invoices to be uploaded on GST system. Amount of ITC to be declared by taxpayer based on self-computation. While the provisional claim of ITC be allowed during the transition period, information to be made available to the taxpayer about differences, if any.

Go Live Phase 3: April 2019 onward

The upload of invoices and other details to continue as per the new return format. The ITC claim, however, to be strictly based on the invoices uploaded by the supplier for the buyer. No option for the buyer to upload any additional invoices.

Overall, the new return filing process intends to reduce to and fro communication between the suppliers and buyers through returns. The suppliers can upload their invoices on a continuous basis on GST system and the buyers get a real-time view. The unidirectional flow for upload of invoices makes the process simpler for all taxpayers.

The new return format to be drafted by the Law committee and some specific aspects highlighted by the Council for the same:

One monthly return for all taxpayers with return filing dates staggered based on the turnover of the taxpayer.
Composition dealers and taxpayers having no transactions will file returns on a quarterly basis
B2B sales invoices to be reported at invoice level along with 4 digit HSN code. So the requirement of combining line items at rate-level no longer needed.
During Transitional phase 2, the returns to have a section to specify the self-declared ITC

While the new return formats were awaited, it was anticipated that the content of return would be reduced and simplified with the objective of easing the reporting burden for taxpayers.

Under the new filing process, there won’t be any auto-reversal of credit for the buyer in case the supplier does not pay taxes. Further, several other mechanisms to safeguard interests of taxpayers and Government and to prevent fraudulent transactions to be put in place. For instance, in case of defaults, the taxes to be recovered first from seller and reversal of credit for buyers to be considered in case of situations like missing seller, closure of business by supplier or supplier not having adequate assets etc.

The Council also announced incentive to taxpayers for encouraging digital payments. A concession of 2% with a ceiling of Rs.100 per transaction to be provided to taxpayers making payments in digital mode, subject to the conditions specified.

Phase wise implementation of new returns to make the transition process easier and the taxpayers, consultants and software providers to have sufficient time to adapt to the changes.

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