Here is some good news for tax-paying businesses in India.
In this article, we’ve explained how these new forms will simplify the return filing process, new due dates, changes in existing GST forms and the proposed format of Sahaj and Sugam forms.
Over 93% of the taxpayers have a turnover of less than Rs 5 Cr and these taxpayers would benefit substantially from the simplification measures proposed improving their ease of doing business.
Even the large taxpayers would find the design of new return forms quite user-friendly.
Taxpayers who have a turnover upto Rs. 5 Cr. in the last financial year shall be considered a small taxpayer. These small taxpayers shall have the facility to file quarterly return with monthly payment of taxes on the self-declaration basis.
However, the facility would be optional and small taxpayer can also file the monthly return like a large taxpayer.
Option for filing monthly or quarterly return shall be selected by the small taxpayers at the beginning of the year and generally thereafter they would continue to file the return during the year as per the option selected.
During the course of the year option to change from monthly to quarterly or vice-versa shall be allowed only once and at the beginning of any quarter.
Here is how small taxpayers can benefit from Sahaj or Sugam forms.
Small taxpayers having turnover upto Rs. 5 Cr. would have the option to file one of three forms, namely – Quarterly return, Sahaj or Sugam.
Quarterly return shall be akin to the monthly except that it has been simplified and shall not have the compliance requirement in relation to –
(i) Missing and pending invoices as small taxpayers do not use these procedures in their inventory management.
(ii) Supplies such as non-GST supply, exempted supply etc as they do not create any liability.
(iii) The details of input tax credit on capital goods credit shall also not be required to be filled.
This information shall be required to be filled in the Annual Return. Small taxpayers who would like to facility of missing and pending invoice may file the monthly return.
Small taxpayers often have purchases only from the domestic market and sales in the domestic market i.e B2B purchases locally and the supplies either as B2C or B2B+B2C.
They constitute a very large part of the tax base and therefore two simplified quarterly returns are proposed for them respectively. They have been named as “Sahaj” (only B2C outward supplies) and “Sugam” (both B2B and B2C outward supplies).
The recipients from these small taxpayers would need uploaded invoice for availing input tax credit and therefore the small taxpayers would be given facility to continuously upload invoices in the normal course.
The invoices uploaded by 10th of the following month would be available as input tax credit to the recipient in the next month.
These small taxpayers would continue to pay taxes on the monthly basis and in the first and second month of every quarter, they would use a payment declaration form to make the payment.
In the payment declaration form, self-assessed liability and input tax credit on self-declared basis shall be declared. To assist in tax payment and availing input tax credit, necessary liability arising out of uploaded invoices of outward liability and input tax credit flowing from viewing facility would be shown to the taxpayer.
The payment declaration form shall only allow full payment of the liability arising out of uploaded invoices. Late payment of tax liability including that in the first and second month of the quarter shall attract interest liability.
All the large taxpayer but excluding small taxpayers, composition dealer, Input Service Distributor (ISD), Non-resident registered person, persons liable to deduct tax at source under section 51 of CGST Act, 2017, persons liable to collect tax at source under section 52 of CGST Act, 2017 are required to file monthly return within 20th of next month.
Large taxpayer means a payer having an annual turnover of over Rs.5cr in the last financial year.
This return will consist of two main tables. One table for reporting outward supplies and other for availing the input tax credit. The supplier can upload the invoices on the continuous basis and it can be reviewed and locked by the recipient/buyer for availing the input tax credit.
There would be the facility for continuous uploading of invoices by the supplier anytime during the month and such uploaded invoice shall be continuously visible to the recipient.
Only uploaded invoice would be a valid document for availing input tax credit.
Invoices uploaded by the supplier by 10th of succeeding month shall be auto-populated in the liability table of the main return of the supplier. The screen where it shall be visible to the recipient is hereafter called “viewing facility” (shown as “inward annexure” in the return document).
After the due date for the filing of return is over, the recipient shall also be able to see the return filing status of the supplier and thus be aware whether the tax liability on purchases made by him has been discharged by the supplier or not.
The invoices uploaded by the supplier till the 10th of the next month will get auto-populated in the return of the recipient from 11th of next month, which will be available as input tax credit to the recipient. Therefore, after the 11th of the next month, the recipient shall be able to accept, reject or keep pending a particular invoice but the maximum limit of eligible input tax credit will be based on the invoices uploaded by the supplier upto 10th of the subsequent month.
Example – For example, if invoice no. 1 of April is uploaded on 8th of May and invoice no. 2 of April is uploaded on 15th of May by the supplier, the recipient shall be able to avail input tax credit for invoice no. 1 with the return of April filed on say 20th May and for invoice no. 2 he shall be able to avail input tax credit with the return filed for the month of May, filed on say 20th of June. But both the invoices would be accounted towards the liability payable by the supplier in his return of the tax period of April.
Here are how some important cases will be handled in new proposed changes:
In cases where no return is filed after uploading of the invoices by the supplier, it would be treated as the self-admitted liability by the supplier and recovery proceedings will be initiated against the supplier.
Invoices or debit notes which have not been uploaded by the supplier and on which recipient has availed input tax credit are called “missing invoices”. Where credit is availed on missing invoices by the recipient and such missing invoices are not uploaded by the supplier within the prescribed time period, input tax credit availed in relation to such invoices or debit notes will be recovered from the recipient. For example, purchase invoices received by the recipient in April on which input tax credit has been availed but not uploaded by the supplier shall be reported by the recipient not later than the return of June filed in July.
Liability declared in the return shall be discharged in full at the time of filing of the return by the supplier as is being done at present in the present return FORM GSTR 3B.
Locking of invoices means a handshake between the recipient and supplier indicating acceptance of entering into the transaction reported in the invoice. Facility for locking of invoice by the recipient is available before the filing of the return by him.However, it may not be possible to lock individual invoices where the number of invoices is large and in such situation deemed locking of invoices shall be presumed on the uploaded invoices which are either not rejected or kept pending by the recipient. On the filing of the return by the recipient, all invoices shall be deemed to be accepted except invoices kept pending or rejected.
Pending invoices mean such invoices which have been uploaded by the supplier but for which one of the three situations exist –
1) The supply has not been received by the recipient,
2) Where the recipient is of the view that the invoice needs amendment,
3) Where the recipient is not able to decide whether to take input tax credit for the time being.
Pending invoices shall be reported by the recipient and no input tax credit shall be availed by the recipient on such pending invoices.
Invoices which have been uploaded by the supplier and made available in the viewing facility to the recipient but have not been rejected or have not been kept pending by the recipient shall be deemed to be locked after the return for the relevant tax period has been filed by the recipient.
It may also be noted that the invoices on which credit has been availed by the recipient (i.e. locked invoices) will not be allowed to be amended by the supplier and in order to amend the reported particular of such invoices, a credit or a debit note will have to be issued by the supplier. A wrongly locked invoice shall be unlocked online by the recipient himself subject to reversal of the input tax credit by him and online confirmation thereof.
To address the problem of human error i.e. wrong entries being made in the return, there would be a facility for the filing of amendment return.
Amendment return is different than a regular return. There would be a facility to file two amendment returns for each tax period.
The government has further simplified the way Nil return is filed. Now the taxpayer can file the nil return by sending SMS.
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