Proposed returns process to simplify GST regime, bring relief to taxpayers
Life will be a bit easier for businesses and professionals under the goods and services tax (GST) regime if the proposed simplified returns are put in place six months down the line.
The number of returns to be filed will be much reduced compared to that in the existing scheme.
However, assessees will have to continuously upload invoices and keep track of matching purchase receipts with those of sales to claim input tax credit. This, many say, will be burdensome for taxpayers because currently they self-certify the credit claims.
In the original scheme of things under GST, assessees were supposed to file three returns in a month and one annual return, totalling 37 a year. After much hue and cry, the GST Council suspended one input return. Also, the detailed input-output return was also suspended and in its place the summary input-output return continued.
So, big businesses are filing two returns in a month and one annual return, or 25 returns a year. Small businesses file one return — summary input output return — a month and one supply return in a quarter. So they file 17 returns in a year.
In its place, the draft of simple returns the government has put in the public domain proposes that big businesses file one return monthly and one annual return. That makes it 13 returns a year, down from 25 currently.
Small businesses, a category which will be widened considerably once simple returns come, will have the option to file just quarterly returns. But, these assessees will have to exercise this option at the beginning of the year.
Currently, those with an annual turnover of Rs 15 million are categorised as small businesses. Once the simplified return process comes, those with an annual turnover of Rs 50 million will be called small businesses.
There will be three kinds of quarterly returns. One for manufacturers or service providers and two other for traders. Those traders with only business to consumer (B2C) supplies will file Sahaj and those with both BtoC and business to business (B2B) supplies will submit Sugam form.
However, buyers will have to keep uploading their invoices and keep track of sellers invoices as well. This is so because only taxes paid on invoices uploaded till 10th of the next month by suppliers will be available for input tax credit for buyers.
Also, every business will have to pay taxes monthly by 20th of the next month.
“So far as reporting of transactions are concerned, there will be relief for tax assessees. However, they have to continuously upload invoices and keep checking invoices uploaded by buyers,” says Archit Gupta, CEO Clear Tax.
Another expert says if the seller does not pay tax to the government, why should seller be put to task. It should be authorities which should check with buyers, he says.
Abhishek Jain, partner EY India says one has to wait for operational issues when returns are made effective.
According to Parag Mehta, partner, N.A Shah Associates, large tax payers will not be impacted much by these changes. For small tax payers also there will not be a substantial relief since he has to be compliant every month. "Matching concept till it stabilises will be an issue for both the large and small tax payers," he says.
There is also a new concept of 'locking' in the new scheme. Invoices filed by supplier can be locked by recipient to claim input tax credit.
Explaining the format, Jain says the monthly return will have all the details of what was required to be filed in three returns in original scheme of things. So, it will have your supply details, your purchase wise details and the balance will be your tax liability.
The quarterly form for manufacturers and service provider will be same as the monthly return, he says.
In Sahaj, traders will give only aggregate numbers and need not provide invoice level data. In sugam, traders will have to give invoice level data on sale side if there is B to B transactions and aggregate data on the purchase side. If these are B2C transactions, only aggregate numbers are required.
Those who have no purchases and nil output tax liability will file one NIL return for the entire quarter. They can report NIL transaction by sending an SMS in the first two months of the quarter. Facility of filing quarterly return will also be available by an SMS.