Highlights of Report of the Joint Committee on Business Processes for GST on GST Return

Highlights of Report of the Joint Committee on Business Processes for GST on GST Return

GST is a self-assessed destination based taxation system. The submission and processing of return is an important link between the taxpayer and tax administration. There will be common e-return for CGST, SGST, IGST and Additional Tax.

  1. Person Liable to File Return

    • Every registered dealer: Every registered dealer is required to file Return for the prescribed tax period. A Return needs to be filed even if there is no business activity (i.e. Nil Return) during the said tax period of return.

    • UN Bodies, UN agencies etc., will have unique ID and will require to file return for the month (in simpler form) during which they make purchases. They would not be required to file regular return.

    • Government entities / PSUs, etc., not dealing in GST supplies or persons exclusively dealing in exempted/ Nil rated/ non-GST goods or services would neither be required to obtain registration nor required to file returns under the GST law.

  2. Types of GST Return

  3. Other Features of GST Return

  • The return can be filed without payment of self-assessed tax as per the return but such return would be treated as an invalid return and would not be taken into consideration for matching of invoices and for inter-governmental fund settlement among States and the Centre.

  • Nil Return also needs to be filed

  • Returns by Normal / Regular taxpayers with multiple registrations (for business verticals) within a State: Such taxpayers would have to file GSTR-1, GSTR-2 and GSTR-3 returns for each of the registrations taken separately.

  • Returns by Casual/ Non-Resident taxpayers (other than foreigners):

GSTR-1 (details of outward supplies);

GSTR-2 (details of inward supplies); and

GSTR-3 (monthly Return)

for the period for which they have obtained registration.

  • Returns by Non-Resident taxpayers (foreigners): GSTR-5 (Periodic Return for the period for which they have obtained registration within a period of 7 days after the date of expiry of registration). In case registration period is for more than 1 month, monthly return(s) would be filed and thereafter return for remaining period would be filed within a period of 7 days as stated earlier.

  • All normal taxpayers would be required to submit annual return by 31st December of next financial year. A separate reconciliation statement, duly certified by a Chartered Accountant, will also have to be filed by those taxpayers who are required to get their books of accounts audited under Section 44AB of Income Tax Act, 1961 (i.e. Tax Audit)

D.Invoice level reporting of certain details:

  • GSTR-1 will capture Invoice level Supply Information pertaining to the Tax period separately for Goods & Services.

  • B2B Supplies- Invoice Level details for inter-state and Intra State will be uploaded.

  • B2C Supplies- Inter-state , Invoices above Rs 2,50,000 will be uploaded. Intra- State – Aggregate taxable value of all invoices will be submitted Tax wise.

  • Invoice above Rs 50,000 to have Address of the Vendor

  • Export & Deemed Export : Invoice level details along with shipping bill details

  • with payment of GST

  • without payment of GST

  • Imports : Invoice level details along with Bill of entry Details ( GSTR-2)

E. HSN code/Accounting Codes:

  • HSN (Harmonised System of Nomenclature) Code Introduced for goods It needs to be mentioned in itemised invoice and returns

  • 4-digit HSN Code mandatory for taxpayers having turnover above Rs. 5 Crore in preceding FY

  • 2-digit HSN Code for taxpayers with turnover between Rs. 1.5 Crore & Rs. 5 Crore in preceding FY – optional in 1st Year and mandatory from 2nd Year

  • 8-digit level mandatory for exports & imports

  • Accounting Codes for services (SAC) also needs to be mentioned in invoice level details. Service Accounting Code to be prefixed with ‘s’ for differentiating from HSN

  • Mandatory for those services for which Place of Supply Rules are dependent on nature of services

  • Mandatory for exports & Imports

F. Steps in Return Filing

  • Step 1: The taxpayer will upload the final GSTR-1 return form either directly through data entry at the GST Common Portal or by uploading the file containing the said GSTR-1 return form through Offline Utility by 10th day of month succeeding the month during which supplies has been made;

  • Step 2: GST Common Portal (GSTN) will auto-draft the provisional GSTR-2 of taxpayer based on the supply invoice details reported by the counter-party taxpayer (supplier) on a near real-time basis;

  • Step 3: Purchasing taxpayer will accept/reject/modify such auto-drafted provisional GSTR-2;

  • Step 4: Purchasing taxpayer will also be able to add additional purchase invoice details in his GSTR-2 which have not been uploaded by counter-party taxpayer (supplier);

  • Step 5: Taxpayers will have the option to do reconciliation of inward supplies with counter-party taxpayers (suppliers) during the next 7 days by following up with their counter-party taxpayers for any missing supply invoices in the GSTR-1 of the counter- party taxpayers, and prompt them to accept the same as uploaded by the purchasing taxpayer;

  • Step 6: Taxpayers will finalize their GSTR-1 and GSTR-2 by using online facility at Common Portal or using GSTN compliant off-line facility in their accounting applications, determine the liability on their supplies, determine the amount of eligible ITC on their purchases and then generate the net tax liability from the system for each type of tax. Cash details as per personal ledger/carried forward from previous tax period, ITC carried forward from previous tax period, ITC reversal and associated interest/penalty, taxes paid during the current tax period etc. would get auto- populated in the GSTR-3;

  • Step 7: Taxpayers will pay the amount as shown in the draft GSTR-3 Return generated automatically at the Portal post finalization of activities mentioned in Step 6 above;

  • Step 8: Taxpayer will debit the ITC ledger and cash ledger and mention the debit entry No. in the GSTR-3 Return and would submit the same.

  • On submission of return, an Acknowledgement Number will be generated but final acknowledgement of receipt of return will be generated after validation of data is completed, which will also lock-in the Transaction ID.

G. Reversal of ITC

  • The ITC claim will be confirmed to purchasing taxpayer in case of matched invoices after 20th of the month succeeding the month of the tax period month provided counterparty supplying taxpayer has submitted the valid return (and paid self- assessed tax as per return);

  • System will auto-populate the ITC reversals due to mismatching of invoices in the taxpayer’s account in the return for the 2nd month after filing of return for a particular month.

H. Revision of Return:

  • There would be no revision of Returns

  • All unreported invoices of previous Tax period would be reflected in the return of month where it is proposed to be included. Interest will be auto-populated.

  • All under-reported invoice to be corrected by issue of debit/ credit note.


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