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.