GST returns

Latest GST updates

by Sanjeev Archak Sanjeev Archak No Comments

The GST council held its 39th Meeting on 14.03.2020. The Council has taken some important decisions relating to interest on delayed payments, GST returns, and rates of GST among other things. In this blog we present to you the latest GST updates, read more below:

1.Interest on delayed payment of GST

The GST department had starting sending out notices for delayed payment of GST last month. You can read more about it in our detailed blog post .The GST department had clarified that the interest will be levied on net liability of GST. The GST council has now endorsed this decision and has provided the legal backing.

2.Changes in Due Dates for Annual Returns

The due date for filing Annual GST returns (in Form GST 9 & 9C) for F.Y. 18-19 has been extended upto 30.06.2020. This earlier due date was 31.03.2020. Further, MSME’s having turnover below Rs 5 crores have been granted relaxation from filing Form GST 9C (Auditor certificate). In some good news to the tax payers, late fees for delayed filing of Forms GST & 9C has been waived for FY 207-18 and 18-19 for tax payers having turnover of less than Rs 2 crores. It is important to note that Form GST 9C need not be filed by tax payers having less than Rs 2 crores in turnover.

3.Postponement of E-Invoicing

The Govt had announced a mandatory e-invoicing procedure for tax payers having turnover of more than:

  1. Rs 100 crores for B2B transactions
  2. Rs 500 crores for B2C transactions

This feature involved uploading invoices on the GST portal with a QR code. E-invoicing was supposed to start from 01.04.2020 but now has been pushed to 01.10.2020.

4.Postponement of New Returns

Further, the new returns scheme that was to come into effect from 01.04.2020 has been pushed to start from 30.09.2020. You can read more about the new returns here. The GST 3B and GST1 will continue until 30.09.2020.

5.Know your Supplier

It is proposed to introduce a new “Know your supplier” facility within the GST portal. Further, details are awaited on how this will be made available

Final Thoughts

So these were some of the latest GST updates.The GST back end, managed by the GST Network, has been beset with problems from inception. Very often, the servers of the GST crash when the return filing load is higher. The capacity of the GSTN to handle a large number of returns is doubtful. Frequent changes in the law have also caused problems for the tax payers and GSTN as well. The GST council has set a target of July 2020 to resolve all IT problems. Let us hope all is well by the said date.

GST Changes: Input Credit Restriction

by Sanjeev Archak Sanjeev Archak No Comments

Another set of changes to GST law has been announced on 20.10.2019. This time the GST Council has decided to restrict the input credit available to tax payers. Consequently, input credit  in respect of invoices/ debit notes not uploaded by suppliers (i.e. not appearing in form GSTR-2A) cannot be availed in excess of 20% of the eligible ITC pertaining to invoices / debit notes uploaded by the suppliers. This input credit restriction is explained as an illustration below:

Particulars Actual ITC Eligible ITC after amendment
Input credit for Oct                       1000  
Input credit appearing in GST 2A 600  Rs 600 is available as credit
Input credit not appearing in GST 2A 400 Rs 120 (600*20%) or Rs 400 whichever is lower i.e, Rs 120 is available as credit
Total GST Input Credit   Rs 720

This amendment will create multiple problems for tax payers and tax professionals.Starting October 2019, all tax payers will have to reconcile the input credit as per books of accounts and GST 2A. Further, the differences between the two will have to be communicated to the vendors. This is essential to avail input credits.

How will this impact quarterly return filers?

As per the GST law, tax payers with an annual turnover of less than 1.5 crores have the option of filing GST 1 returns quarterly. If you are business filing monthly GST returns and your supplier is filing quarterly returns, then there is bound to be a input credit mismatch. This will lead to a situation where large businesses will stop buying from small vendors. 

How will the GST portal identify ineligible credits?

All manner of GST credits are reflected in the GST 2A. The GST portal does not have any facility to distinguish between credits which can and cannot be availed. This being the case using GST 2A as measure to avail input credit is not a good idea.

Is a return matching tool available to tax payers?

The new return structure is supposed to include a matching tool. However, the launch of this tool has been put off till April 2020. The absence of this tool means that tax payers will have to invest in resources and systems to do the reconciliation. Further, there is a time constraint as GST returns have to filed on the 11th and 20th of the month. Setting aside weekly off days and one day for tax payment, the tax payers have a small time window to match GST credits, reverse ineligible credits, re-avail reversed credits and compute tax payable.

How will this impact compliance costs? 

The GST has already increased compliance costs due to complicated returns schema and multitude of returns. GST law has been amended countless times since inception. Huge number of clarifications/notifications/ circulars have been released making matters even more complex. Further, this amendment also burdens tax professionals with more work prior to filing returns. This is bound to push up compliance costs.

Final Thoughts

The Government has not thought through this idea before implementation. There are basic errors in this idea which have not been addressed. Moreover, this idea does not address month end movement of goods i.e goods/services provided at the month end with invoices being raised,such goods/services received in the next month. There is bound to be input credit difference in this case as well. 

A business owner will now have to chase all his vendors for input credits. Are business owners supposed to run business or worry about paper work? Chasing vendors will take up a huge resources and effort. Entrepreneurs are supposed to create jobs and fuel the economy. They are not be burdened with compliance clutter. These amendments to the GST are law are wholly unnecessary.