GST Returns

INTRODUCTION

Most of the indirect tax statutes in India are based on selfassessment
procedure. Filing of returns is an important
part of implementing the tax and the self-assessment
scheme. In simple words, a return is a declaration that
a tax payer gives to the tax administration which would
broadly comprise of furnishing details of his outward
supplies (and the tax collected thereon), inward supplies
(and tax charged thereon) and the net tax payable or
refundable.

Due to the multiplicity of indirect taxes, a tax payer, at
present, may be required to file more than one return
under more than one of the applicable tax legislations.
Each of the applicable legislations would have its own form
of return requiring various details. This makes compliance
under existing indirect tax structure time-consuming and
cumbersome.

RETURN FILING PROCESS UNDER GST
REGIME

A return is defined u/s. 2(97) to mean any return prescribed
or required to be filed under the Act or any rules made
thereunder. While the procedure of self-assessment would
continue under the GST regime, the process of return
filing would witness a radical change. Broadly, the filing
process envisages furnishing information through three
statements/returns, which are required to be furnished by
three different dates as prescribed under the law. In view
of complete electronic compliance and matching concept,
the sensitivity of furnishing accurate data would assume
immense importance in the GST regime.

SALIENT FEATURES OF RETURN
COMPLIANCE UNDER GST

TYPES OF RETURNS UNDER GST

The types of returns, nature of compliance, periodicity
and references to statutory provisions and return rules
are tabulated hereunder:

FORM GSTR1: DETAILS OF OUTWARD
SUPPLIES

The process of return filing under GST shall commence
with Form GSTR-1. A registered taxable person [‘RTP’]
shall furnish details of his outward supplies [including
deemed supplies under Schedule-1]. The various tables
in the form are summarised hereunder:

AUTO DRAFTED DETAILS OF SUPPLIES
– GSTR-2A/ 4A/ 6A

Auto drafted details of outward supplies furnished
by n-number of suppliers shall be communicated to
respective RTP’s in Form GSTR 2A [regular RTP’s],
GSTR-4A [Composition RTP’s] and GSTR-6A [ISD’s].
These shall be made available to the recipients after 10th
of the month following the tax period on the common
portal based on details furnished in GSTR 1, 5, 6, 7 and 8. The auto drafted details shall comprise of the following:

FORM GSTR2: FURNISHING DETAILS OF
INWARD SUPPLIES

Section 38 of the CGST Act states that every RTP shall
furnish details of inward supplies received during a month.

This process would require the RTP to first go through
the herculean task of reconciling the auto drafted details
made available in GSTR-2A with the actual supplies as
per his books of accounts. Supplies that are not auto
populated shall be entered by the RTP and he shall selfclaim
the credit thereon. Table-wise details to be furnished
in GSTR-2 are summarised hereunder:

FORM GSTR-1A: AUTO DRAFTED DETAILS
OF SUPPLIES TO SUPPLIER

Details of inward supplies as added, corrected or deleted
by the recipients shall be communicated to the supplier
in Form GSTR-1A [Section 38(3)/ (4) r/w Rule Ret-1(4)].
This implies that supplier shall be provided only details
of unmatched transactions in GSTR-1A.The source of
details appearing in GSTR-1A shall be counter party
GSTR 2, GSTR-4 or GSTR-6. The supplier is required to
accept or reject the details contained in GSTR-1A on or
after 15th but before the 17th of the month succeeding the
tax period. Consequently, details furnished in GSTR-1 by
such supplier shall be updated. If the supplier does not accept the change made by the recipient, it shall qualify
as an unmatched transaction in the hands of the recipient.
GSTR-1A shall contain details of mismatch in respect of:

 Taxable supplies to RTP other than those attracting
RCM

 Taxable supplies to RTP attracting RCM

 Zero rated supplies made to SEZ units or developer
and deemed exports

 Debit/ Credit notes including amendments there of
issued during the period.

FORM GSTR-3: MONTHLY RETURN

Subsequent to filing GSTR-1 and 2, a monthly return in
Form GSTR-3 has to be furnished which can be filed only
after GSTR-1 and 2 are uploaded. It consists of two parts.
Part-A shall be auto generated based on details furnished
in GSTR-1 and 2. It comprises of details of turnover,
output taxes, RCM liability, ITC, reversal and reclaims
relating to ITC and reduction in output liability, TDS, TCS
and liability to pay interest and late fees. In Part-B, the tax
payer needs to furnish details of tax, interest and late fee
payments and details of refund claims.

PART-A: Elements relating to ITC and other credits

Part-A would also provide details of various credits that
flow from the claims made in GSTR-2. The structure of
details relating to credits is explained with the help of a
diagram hereunder:

PART A: Details of Interest and Late Fees

Table 10 shall auto populate levy-wise details of interest
payable on account of various reasons. Extract of the
table is reproduced hereunder. Table 11 shall also furnish
details of late fees payable.

PART-A: Elements for computing total tax liability in Table 9

Part B of the return is to be filled by the tax payer. Various
tables in which details have to be furnished in Part B are
enumerated hereunder:

FORM GSTR-4: QUARTERLY RETURNS BY
COMPOSITION TAX PAYER

Section 10 of the CGST Act provides for composition
levy for small businesses.The threshold for opting for
composition levy has been capped at Rs. 75 Lakhs.
Under composition levy the RTP is not allowed to claim
ITC. However, he has to verify details of inward supplies
received in Form GSTR-4A and prepare details of inward supplies. GSTR-4 is a consolidated return which would
contain details of outward and inward supplies and
computation of tax and other dues and details of payment
thereof.

Where RTP opts for paying tax under composition at the
beginning of the financial year, the RTP shall continue to
furnish GSTR 1, 2 and 3, wherever required, relating to
supplies for the prior period. He shall continue doing so till
the due date for filing return for the month of September
in the succeeding financial year or date of furnishing of
annual return for the previous year, whichever is earlier.
However, in such cases he shall not be entitled to claim
any ITC in respect of invoices pertaining to period
prior to opting for composition levy [Rule Return-4(4)].
Conversely on the same lines where RTP opts to withdraw
from composition he shall continue filing GSTR-4, where
required up to the dates referred above [Rule Return-4(5)].
Broad contents of GSTR-4 are tabulated hereunder:

FORM GSTR-5: RETURN FOR NON-RESIDENT
TAXABLE PERSON

Non-Resident taxpayers are required to furnish details of
all taxable supplies in GSTR-5.Details to be furnished in
GSTR-5 are tabulated hereunder:

FORM GSTR-5A: DETAILS OF SUPPLIES OF
OIDAR SERVICES BY A PERSON LOCATED
OUTSIDE INDIA TO A NON-TAXABLE PERSON
IN INDIA

The above person shall be required to furnish return in
Form GSTR-5A. Details to be furnished in the return
broadly include the following:

1 State wise and rate wise details of supplies made to
consumers in India and IGST/ Cess thereon
Amendments to above details may be made in Table
5A

2 Interest, penalty or any other amount payable

3 Tax, Interest, late fee or any other amount payable
and paid.

FORM GSTR-6: RETURN FOR INPUT SERVICE
DISTRIBUTOR [‘ISD’]

An ISD is shall furnish details of receipt ITC for distribution
and distribution of ITC in GSTR-6. The auto populated
details of inward supplies shall be made available to ISD
in GSTR-6A. The ISD shall verify, modify, accept or reject
the contents and prepare details in GSTR-6. Since, the
ISD only receives tax invoices it shall not be liable for any
payment under RCM. At its level it has to identify invoices
with respect to eligibility of ITC at invoice level in GSTR-6.
However, it shall distribute the eligible as well as ineligible
ITC [Table-5]. Further, Tax effect of amendments, credit
and debit notes as well as mismatches of ITC shall also
be distributed amongst the units by issuing credit note
[Table-8]. Any excess or short distribution amongst units
shall be re-distributed [Table-9]

FORM GSTR-7: RETURN FOR TAX DEDUCTION
AT SOURCE [‘TDS’]

Under the GST regime, certain persons are required to
deduct tax at source on specified inward supplies. Details
to be furnished in GSTR-7 include the following:

 Deductee-wise details of amount paid and TDS
deductee quoting the GSTIN of the deductee.

 Amendments to above details furnished can be made
in Table 4.

 Amount of TDS and amount paid.

 Interest, late fees payable and paid.

 Refund claimed from Electronic cash ledger

 Details of entries in Electronic cash ledger for payment
of TDS/ Interest shall be populated after payment of
tax and submission of returns

 Certificate of TDS is to be issued in GSTR-7A

FORM GSTR-8: STATEMENT OF TAX
COLLECTION AT SOURCE [‘TCS’]

An E-Comm is required to collect tax at source from net
value of taxable supplies made through it. It has to furnish
details of supplies made through it and the TCS in GSTR-
8. Broad details furnished in GSTR-8 are as under:

MISCELLANEOUS RETURN COMPLIANCES

Every RTP [Other than ISD, NR Taxable person, casual
taxable person and persons liable for TDS/ TCS] shall file
an annual return for every financial year on or before 31st
December of following the end of the said financial year:

LATE FEE [SECTION 47]

Section 47 provides for levy of late fee for default in
furnishing of returns on or before the due date. The same
are tabulated hereunder:

MATCHING CONCEPT

The GST regime has introduced the concept of matching
claims of ITC and claims relating to reduction of output
taxes by a RTP. This concept forms an important basis for
claiming of ITC under GST regime. Currently, many states
in India match input set-off claimed with corresponding
sales disclosed by suppliers. However, this is not a
practice followed under Central Excise and Service Tax.
Under GST regime the matching is envisaged on two
broad fronts:

 Matching of ITC claims

 Matching of claims relating to reduction in output tax
[e.g. Credit notes].

MATCHING, REVERSAL AND RECLAIM OF
ITC [SECTION 42]

Section 41 states that a RTP shall be allowed to self-claim
ITC in respect of his inward supplies on provisional basis
for 2 month [As per the FAQ released by the CBEC on
31-03-2017]. This provisional acceptance shall be subject
to the matching of claims in terms of section 42. In terms
of section 42, all claims of ITC by a RTP being a recipient
of supply shall be matched by the GSTN portal after the
due date of filing GSTR-3. The claims shall be matched –

 With corresponding details of outward supply
furnished by the concerned supplier in the same or
earlier month. Following details shall be matched:

• GSTIN of Supplier

• GSTIN of the Recipient

• Invoice or Debit note no.

• Invoice or Debit note date

• Tax Amount

 With the IGST paid on Import of goods by him

 For duplications of claims of ITC

Claims shall be accepted in following cases

 In respect of invoices and debit notes that were
accepted by the recipient without amendments on the
basis of GSTR-2A shall be accepted subject to the
supplier filing a valid return;

 Where the amount of ITC claimed by the recipient is
equal to or less than the amount of output tax paid by
the supplier on such invoice or debit note.

Explanation 1 & 2 to Rule ITC-10]

Details of claims that have matched shall be communicated
to the recipient in Form MIS-1 [Rule ITC-11]

Discrepancy in ITC Claim

The matching process may lead to discrepancy on
following broad grounds:

 Recipient has claimed ITC in excess of the tax
declared by the supplier

 There is no matching declaration by the supplier

 Duplication of claim of ITC by recipient.

Consequences in Case of Discrepency

The discrepancy in ITC claim shall be communicated on
GSTN portal to the recipient in [Form MIS-1] and supplier
[Form MIS-2] on or before the end of the month in which
matching is done. This process may lead to the following
situations:

MATCHING, REVERSAL AND RECLAIM OF
REDUCTION IN OUTPUT TAX [SECTION 43]

The matching process envisaged by section 43 is in respect
of credit notes issued by a RTP. Any reduction in output
tax on account of credit note requires a corresponding
reversal of ITC claim by the recipient. Section 43 states
that the details of every credit note issued by a supplier
shall be matched –

 With the corresponding reduction in claim of ITC by
the recipient, in the same or subsequent month, and;

 For duplication in claim of reduction of output tax

The matching of reduction in output tax shall be done in
respect of following details:

 GSTIN of the supplier and the recipient

 Credit note no. and date

 Tax amount

The other procedure relating to matching, reversal and
reclaim of reduction in output tax contained are similar to
provisions relating to matching, reversal and reclaim of
ITC discussed above.

CONCLUSION

It is evident that compliance under GST is going to be a
month-long activity and not a monthly activity. Accuracy
of data punching would be of utmost importance. Further,
the technology driven matching concept would surely
make GST a self-monitoring system. However, in times
to come small businesses would face great challenge in
coping up with high compliance requirements coupled
with increased cost of compliances.

GLOSSARY/NOTE

 E-Comm: Electronic Commerce Operator

 RTP: Registered Taxable person

 ITC – Input Tax Credit

 All references to section should be read as reference
to CGST Act.