GST Council approves simplified tax return filing system

May 5, 2018

The Goods and Services Tax (GST) Council in its 27th meeting chaired by Union Finance Minister Arun Jaitley announced new and simplified return filing process. It was approved based on recommendations of Group of Ministers on IT simplification for GST implementation.

Features of simplified return filing process

One monthly return: All taxpayers excluding few exceptions like composition dealer will file one monthly return. Return filing dates will be staggered based on turnover of registered person to manage load on IT system. Composition dealers and dealers having nil transaction will have facility to file quarterly return.
Unidirectional flow of invoices: Seller will upload unidirectional flow of invoices on anytime basis during the month. This will be valid document to avail input tax credit by buyer and allow them to continuously see the uploaded invoices during the month. Invoices for B2B transaction will use HSN at four digit level or more to achieve uniformity in reporting system.
Simple return design and easy IT interface: Taxpayer will be given user-friendly IT interface and offline IT tool to upload the invoices. The B2B dealers will fill invoice-wise details of outward supply made by them, based on which system will automatically calculate his tax liability. The input tax credit will be also calculated automatically by the system based on invoices uploaded by his sellers.
No automatic reversal of credit: There will be no automatic reversal of input tax credit from buyer on non-payment of tax by seller. In case of default in payment of tax by seller, recovery will be made from seller but reversal of credit from buyer will be also option available with revenue authorities to address exceptional situations like missing dealer, closure of business by supplier or supplier not having adequate assets.
Due process for recovery and reversal: Recovery of tax or reversal of input tax credit will be through due process of issuing notice and order. The process will be online and automated to reduce human interface.
Supplier side control: Analytical tools will be used to identify and block unloading of invoices by seller to pass input tax credit who has defaulted in payment of tax above threshold amount to control misuse of input tax credit facility. Similar safeguards will be built with regard to newly registered dealers to prevent loss of revenue.
Transition: The new simplified return filing process will be implemented in three-stage transition. The stage I is the present system of filing of return GSTR 3B and GSTR 1. GSTR 2 and GSTR 3 will be suspended in Stage I which will continue for maximum period of 6 months by which time new return software is ready. In stage 2, new return will have facility for invoice-wise data upload and also facility for claiming input tax credit on self-declaration basis, as in case of GSTR 3B now.