Various Forms of GST New Return – Explained

GST New Return

Introduction to GST New Return:-

Since the inception of Goods and Services Tax (GST), the main intention of the government was to have a robust system for allowing invoice level reconciliation of transactions. It was envisioned in the form of the returns- GSTR-2 and GSTR-3. However, the government had to replace them since it was cumbersome for the taxpayers, especially small businesses to file multiple returns on a monthly basis.

Hence, a temporary summary return (GSTR-3B) with a self-assessed input tax credit claim and tax payment was launched while GSTR-2 and GSTR-3 were kept on hold. As a final solution to ensure smooth compliance for taxpayers as well as to ensure better transparency in the system, the new GST filing has come into picture.

1. What is new return under GST

Goods and Services Tax Network (GSTN) has released a web-based prototype of the offline tool of new return system. These new GST Returns will replace GSTR-3B, GSTR-1.These newly proposed prototype are user-friendly and will provide all details such as invoice upload, upload of purchase register for matching with a system-created inward supplies.

2. From when is the new return system applicable

New return system is now to be introduced from October, 2020 (earlier proposed from April, 2020).

3. What are the major differences between the current and the new system of GST returns

(i) Invoicing Requirements : One of the key changes is the mechanism to upload invoices in real-time by a supplier, which will be available for the buyer to view simultaneously and take action on in FORM GST ANX-2. The invoices can be marked as accepted or rejected by the buyer, or the same can be kept pending for action to be taken at a later date.

(ii) Provisional credit : In the event a supplier does not upload invoices or file his return, there will be a mechanism for availing input tax credit by the recipient on a provisional basis. The credit available in such cases would not be more than 20% of the specified value. There is no provisional credit allowed in the current system.

(iii) Amendment Returns :The new return system will have a provision to file two amendment returns for each tax period. The old system did not allow this and the only option available to taxpayers was to amend certain details in the GST return of the following period. Now, as an amendment return can be filed for the same tax period, interest on the amended tax liability may be avoided or reduced.

(iv) Small Taxpayers : Under the existing system, the taxpayers are considered as small if the aggregate turnover is upto ₹1.5 crores in the preceding financial year. This limit has been increased to ₹5 crores under the new system.

(v) Tax Payment : The new system requires for the payment of taxes every month even if the taxpayer has opted for quarterly filing of returns.

(vi) Return for e-commerce operators : Presently, the e-commerce operators are required to furnish a separate return in Form GSTR-8, whereas, under the new system, the e-commerce operators are required to furnish normal return i.e. no separate form under the new system.

4. How does the reconciliation of invoices takes place under the new system

In the present return system, the reconciliation is mostly manual as a taxpayer does reconciliation once at the time of filing either monthly or quarterly, as the case may be. The taxpayer will compare his GSTR-2A with his purchase books and if there is any invoice not available in GSTR-2A separately, he can simply claim it as provisional credit to the full extent in GSTR-3B. However, most of the taxpayers are still not aware that reconciliation must be done first and then ITC must be claimed in their GSTR-3B. This helps avoid reconciliation issues and additional tax dues later. Since there is no validation in place before filing, the critical part of reconciliation is likely to be missed at times.

Whereas, the new GST return system is automated; involving the reconciliation of invoices before proceeding with ITC claims.

You may also refer : New GST Return Forms

5. What are the forms required to be filed under the new system

GST RET-1 will contain details of all supplies made, input tax credit availed, and the payment of taxes, along with interest, if any. This return will contain two annexure forms namely GST ANX-1 and GST ANX-2.  GST ANX-1 (Annexure of Supplies) is for reporting details of all outward supplies, inward supplies liable to reverse charge, and import of goods and services, that will need to be reported invoice-wise (except for  B2C supplies) on a real-time basis. GST ANX-2 (Annexure of Inward Supplies) will report details of all inward supplies.

6. What details are required to be filed in the annexures to the main return

Annexure of supplies (GST ANX-1) –

• Details of the documents (invoice, credit/debit notes) can be uploaded any time during the month till filing of return.
• Documents uploaded upto 10th of following month shall be made available to the recipient for claiming ITC.
• Documents uploaded after 10th of following month shall be made available to the recipient in the next month.

Annexure of Inward Supplies (GST ANX-2) –

• Inward supplies auto-populated from the suppliers GST ANX-1).
• There will be a facility to match ANX-2 with purchase register
• It will also contain details auto-populated from Form GSTR-5 (Non-resident foreign taxpayer) and Form GSTR-6 (Return by Input Service Distributor).

7. What is the frequency of filing the newly proposed return

The frequency of filing returns has been discussed as under:-

• Normal Return i.e. Form GST RET-1 is to be filed either monthly or quarterly
• Sahaj Return i.e. Form GST RET-2 is to be filed quarterly
• Sugam Return i.e. Form GST RET-3 is to be filed quarterly

8. Which type of GST return should a taxpayer opt for

 The taxpayers can switch their returns in the following manner:-

• From Quarterly (Normal) to Sugam or Sahaj only once in a financial year at the beginning of any quarter.
• From Sugam to Sahaj only once in a financial year at the beginning of any quarter.
• From Sahaj to Quarterly (Normal) or Sugam more than once in a financial year at the beginning of any quarter.
• From Sugam to Quarterly (Normal) more than once in a financial year at the beginning of any quarter.

9. What actions can be taken by the recipient of supply with respect to the documents uploaded by the supplier

The recipient can either accept or reset (unlock) a document up to the 10th of the subsequent month i.e. the due date for the supplier to upload documents when filing monthly return. 10th of the month following the quarter is the due date for the supplier to upload documents when filing quarterly returns. Post this date the recipient can either accept or reject the document or can keep it pending.

10. Can Form RET-1 be filed via SMS If yes, when

Yes, the Form RET-1 can be filed via SMS. It is possible only in case of a Nil return i.e. when supplies have neither been made nor it is received.

11. Can an invoice be marked as pending by the recipient

Yes, Marking “invoice as pending” facility would also be present for the recipient if the recipient wants to defer claiming ITC for a later tax period.

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