GST Council today in its 27th meeting approved
principles for filing of new return design based on the recommendations of the
Group of Ministers on IT simplification.
Transition to new return system
Ø Stage 1 :-
present system of filing of return GSTR 3B and GSTR 1. GSTR 2 and 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 be ready.
Ø 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 in case 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 and the provisional credit being claimed
by them.
Ø
Stage 3:-
After 6 months of this phase 2, the facility of provisional credit will get
withdrawn and input tax credit will only be limited to the invoices uploaded by
the sellers from whom the dealer has purchased goods.
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 staggered based on the turnover of the registered person to manage
load on the IT system. Composition dealers and dealers having nil transaction
shall have facility to 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
be the 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 shall
not 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
uniformity in 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 which the system will automatically calculate his
tax liability. The input tax credit will be calculated automatically by the
system based on invoices uploaded by his 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 of default 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 with the 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. The process 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 be blocked to control misuse of input tax credit facility. Similar
safeguards would be built with regard to newly registered dealers also.
Analytical tools would be used to identify such transactions at the earliest
and prevent loss of revenue.
Content of the return and implementation: Return shall be simplified also by
reducing the content/information required to be filled in the return. The
details of 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 keen to 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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