Press Release issued by CBIC for Simplified GST Return System in 27th GST Council meeting
Ministry of Finance
GST Council approves principles for filing of new return design based on therecommendations of the Group of Ministers on IT simplification
GST Council today in its 27 meeting approved principles for filing of new return design based on the recommendations of the Group of Ministers on ITsimplification. The key elements of the new return design are as follows
i. One monthly Return:All taxpayers excluding a few exceptions like composition dealer shall file one monthly return. Return filing dates shall be staggeredbased on the turnover of the registered person to manage load on the IT system. Composition dealers and dealers having nil transaction shall have facilityto file quarterly return.
ii. Unidirectional Flow of invoices : There shall be unidirectional flow of invoices uploaded by the seller on anytime basis during the month which would bethe valid document to avail input tax credit by the buyer. Buyer would also be able to continuously see the uploaded invoices during the month.There shallnot be any need to upload the purchase invoices also. Invoices for B2B transaction shall need to use HSN at four digit level or more to achieve uniformityin the reporting system.
iii. Simple Return design and easy IT interface : The B2Bdealers will have to fill invoice-wise details of the outward supply made by them, based on whichthe system will automatically calculate his tax liability. The input tax credit will be calculated automatically by the system based on invoices uploaded byhis sellers. Taxpayer shall be also given user friendly IT interface and offline IT tool to upload the invoices.
iv. No automatic reversal of credit: There shall not be any automatic reversal of input tax credit from buyer on non-payment of tax by the seller. In case ofdefault in payment of tax by the seller, recovery shall be made from the seller however reversal of credit from buyer shall also be an option available withthe revenue authorities to address exceptional situations like missing dealer, closure of business by supplier or supplier not having adequate assets etc.
v. Due process for recovery and reversal: Recovery of tax or reversal of input tax credit shall be through a due process of issuing notice and order. Theprocess would be online and automated to reduce the human interface.
vi. Supplier side control: Unloading of invoices by the seller to pass input tax credit who has defaulted in payment of tax above a threshold amount shall beblocked to control misuse of input tax credit facility. Similar safeguards would be built with regard to newly registered dealers also. Analytical tools wouldbe used to identify such transactions at the earliest and prevent loss of revenue.
vii. Transition: There will be a three stage transition to the new system. Stage I shall be the present system of filing of return GSTR 3B and GSTR 1. GSTR 2and GSTR 3 shall continue to remain suspended. Stage I will continue for a period not exceeding 6 months by which time new return software would beready. In stage 2, the new return will have facility for invoice-wise data upload and also facility for claiming input tax credit on self declaration basis, as incase of GSTR 3B now.
During this stage 2, the dealer will be constantly fed with information about gap between credit available to them as per invoices uploaded by their sellers andthe provisional credit being claimed by them. After 6 months of this phase 2, the facility of provisional credit will get withdrawn and input tax credit will onlybe limited to the invoices uploaded by the sellers from whom the dealer has purchased goods.
Content of the return and implementation: Return shall be simplified also by reducing the content/information required to be filled in the return. The detailsof the design of the return form, business process and legal changes would be worked out by the law committee based on these principles. Government is keento introduce the simplified return design at the earliest to reduce the compliance burden on the trade in keeping with the philosophy of ease of doing business.
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