The GST Council, in its last meeting on 4th May 2018, decided to go ahead with Simplification of Returns based on the recommendations placed by GoM led by Shri Sushil Kumar Modi. The roll-out is expected to happen over a period of a year and many measures have been taken to reduce the burden on the taxpayers and ease out the filing process. Monitoring and other mechanisms to keep a watch on reporting of fraudulent transactions have also been one of the considerations while devising the new process for GST returns.
While the GST rules and return formats are yet to be out, let us take a detailed look at the changes expected once the new filing regime starts.
What changes to expect in the new return filing process?
For most of the taxpayers, there will be only one monthly return. This return will be auto-drafted by the GST system based on the sales and purchases data uploaded by the taxpayers. The underlying principles of invoice uploads and confirmation by counter parties will continue to remain, however, there will be some differences in the process and the key ones are highlighted below
A. As a supplier
- You will have the flexibility to upload your B2B invoices on a continuous basis. This will help to spread out your GST reporting over a period of time rather than a few days which resulted in peak load earlier.
- The B2B invoices will be at line item wise as per the invoice prepared i.e. at HSN level. Thus the additional work which is being done now for aggregating the data at rate level may no longer be needed.
- Further, it is anticipated that details reported could also be reduced. For example, Outward supply details in case of B2C could be at the total level.
- Your tax liability will be ascertained by the invoices uploaded by you.
B. As a purchaser
- You will get to view the invoices uploaded by your suppliers, almost on real-time basis.
- Input tax credit available to you with respect to B2B invoices will be based on invoices which are uploaded by the supplier. You would not have the option to upload additional invoices or make modifications to the details uploaded by the supplier. Thus, additional ITC on provisional basis cannot be claimed.
- Other details such as RCM invoices, import transactions might need to be uploaded separately.
- There may not be immediate reversal of your ITC in case the supplier has not discharged his/her tax liability. The tax recovery shall be first made by the supplier and under the circumstances prescribed as per rules, the order to reverse ITC of the purchaser will be issued.
Comparative analysis of the new return filing processes
In the initial days, when GST regime came into effect, an elaborate filing process entailing involvement of suppliers and buyers was conceptualized. However, due to technical glitches and lack of adequate preparedness in the market, only limited processes and returns were rolled out. As of now and also during the transitional phase of implementing new filing process, the taxpayers will continue to file the returns for outward supplies (GSTR 1) and summarized monthly return (GSTR 3B).
At a high level, the differences in the filing process then, now and in future, is summarized below
GST Reconciliation is here to stay
One of the radical changes in the new filing process is that there will be uni-directional flow for upload of invoices. Thus, the to and fro exchange of information such as adding of new invoices, or modifications, will not be effected through the GST system. However, the collaboration between the suppliers and buyers will still be needed, so as to ensure each of the parties has uploaded correct and complete information and importantly, the buyer is able to claim the ITC eligible.
Hence reconciliation of invoices, which anyways happens to be a routine business process, further becomes vital for the whole GST return filing process. Taxpayers will need to have various tools and processes in place which can help them to fetch the invoices from GST system, compare with their source systems and communicate the differences to the supplier seamlessly and efficiently
We believe the new simplified process will indeed make the compliance easier and manageable for the taxpayers. Stay tuned with us for more updates on this topic.
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