(Last Updated On: August 2, 2018)

Key features of New GST Monthly Returns

CBIC has Placed new GST Returns and formats in public domain on 30.07.2018

[Video] New GST Monthly Returns Process

Explained by CA Satbir Singh

Background of New GST Monthly Returns

GST Council in its 27th meeting held on 4 thMay, 2018 had approved the basic principles of GST return design. Now in its 28th meeting held on 21st July, 2018, GST Council approved the key features and new format of the GST returns. This brief note lists the salient features of the new return format and business process for the information of trade and industry and other stakeholders.

Part A: Key features of the Monthly Return:

Monthly Return and due-date

All taxpayers shall file one monthly return excluding a few exceptions like
- small taxpayers,
- composition dealer,
- Input Service Distributor (ISD),
- Non resident registered person,
- persons liable to deduct tax at source under section 51 of CGST Act, 2017
- persons liable to collect tax at source under section 52 of CGST Act, 2017,
Return filing dates shall be staggered based on the turnover of the taxpayer which shall be calculated based on the reported turnover in the last year i.e. 2017-18, annualized for the full year.
It shall be possible for the taxpayer to check on the common portal whether he falls in the category of a small taxpayer.
A newly registered taxpayer shall be classified on the basis of self-declaration of the estimated turnover.
The due date for filing of return by a large taxpayer shall be 20th of the next month.

Nil return

Taxpayers who have no purchases, no output tax liability and no input tax credit to avail in any quarter of the financial year shall file one NIL return for the entire quarter.
In month one and two of the quarter, such taxpayer shall report NIL transaction by sending a SMS.
Facility for filing quarterly return shall also be available by an SMS.

Small taxpayers

Taxpayers who have a turnover upto Rs. 5 Cr. in the last financial year shall be considered small calculated in the manner based on the reported turnover in the last year i.e. 2017-18, annualized for the full year.

A newly registered taxpayer shall be classified on the basis of self-declaration of the estimated turnover.

These small taxpayers shall have facility to file quarterly return with monthly payment of taxes on self-declaration basis.

However, the facility would be optional and small taxpayer can also file monthly return like a large taxpayer.

The scheme of filing of quarterly return is explained . Refer our video on New Quarterly GST Return Key Features

Continuous uploading and viewing

There would be facility for continuous uploading of invoices by the supplier anytime during the month and such uploaded invoice shall be continuously visible to the recipient.

Only uploaded invoice would be a valid document for availing input tax credit.

Invoices uploaded by the supplier by 10th of succeeding month shall be auto-populated in the liability table of the main return of the supplier.

The screen where it shall be visible to the recipient is hereafter called “viewing facility” (shown as “inward annexure” in the return document).

After the due date for the filing of return is over, the recipient shall also be able to see the return filing status of the supplier and thus be aware whether the tax liability on purchases made by him has been discharged by the supplier or not.

Viewing facility shall also show the trade name of the supplier.

Due date for uploading invoices and action to be taken by the recipient

Invoices uploaded by the supplier by 10th of the next month shall be posted continuously in the viewing facility of the recipient and the taxes payable thereon which can be availed as input tax credit shall be posted in the relevant field of the input tax credit table of the return of the recipient by 11th of the next month.These invoices shall be available for availing input tax credit in the return filed by the recipient.

Invoices uploaded after 10th of next month by the supplier shall get posted in the relevant field of the return of the subsequent month of the recipient though viewing shall be continuous.

For example, if invoice no. 1 of April is uploaded on 8 th of May ( i.e upto 10th of Next Month) and invoice no. 2 of April is uploaded on 15th of May (( i.e after 10th of Next Month) by the supplier, the recipient shall be able to avail input tax credit for
- invoice no. 1 with the return of April filed on say 20th May and
- Invoice no. 2 he shall be able to avail input tax credit with the return filed for the month of May, filed on say 20th of June.
- But both the invoices would be accounted towards the liability payable by the supplier in his return of the tax period of April.

Therefore, after the 11th of the next month the recipient shall be able to accept, reject or keep pending a particular invoice but the maximum limit of eligible input tax credit will be based on the invoices uploaded by the supplier upto 10th of the subsequent month.

In the transition phase of six months after the new system of return is implemented, the recipient would be able to avail input tax credit on self-declaration basis even on the invoices not uploaded by the supplier by 10th of the next month or thereafter using the facility of availing input tax credit on missing invoices.

Invoice uploaded but return not filed by Supplier

In cases where no return is filed after uploading of the invoices by the supplier, it shall be treated as self-admitted liability by the supplier and recovery proceedings shall be initiated against him after allowing for a reasonable time for filing of the return and payment of tax.

Unidirectional Flow of document

Only the invoices or debit notes uploaded by the supplier on the common portal shall be the valid document for availing input tax credit by the recipient.

Invoices or debit notes which have not been uploaded by the supplier and on which recipient has availed input tax credit shall be hereafter called “missing invoices”. Where credit is availed on missing invoices by the recipient and such missing invoices are not uploaded by the supplier within the prescribed time period, input tax credit availed in relation to such invoices or debit notes shall be recovered from the recipient.

Thus, input tax credit shall inter-alia be dependent on uploading of invoices or debit notes by the supplier either before or after filing of the return, within the prescribed time limit.

Missing invoice reporting

Missing invoices shall be reported by the supplier in the main return for any tax period with interest or penalty as applicable.

Reporting of missing invoices by recipient can be delayed up to two tax periods to allow recipient to follow up and get the missing invoice uploaded from the supplier.

For example, purchase invoices received by recipient in April on which input tax credit has been availed but not uploaded by the supplier, shall be reported by the recipient not later than the return of June filed in July.

Information about missing invoice uploaded by the recipient shall be made available to the supplier.

Taxpayers filing quarterly returns shall report missing invoices in the next quarter.

Offline IT Tool

An IT tool/facility for matching of the invoices downloaded in XL format from the viewing facility, with the invoices stored in the accounting software by the taxpayer (recipient), shall be provided. The IT tool/ facility shall have ability to filter invoices downloaded on the basis of –

i. Dates of invoice – to and from date;
ii. Date on which the invoice was uploaded by the supplier on the Common Portal;
iii. GSTIN of the supplier.

Payment of tax

Liability declared in the return shall be discharged in full at the time of filing of the return by the supplier as is being done at present in the present return FORM GSTR 3B.

Recovery of input tax credit

There shall not be any automatic reversal of input tax credit at the recipient’s end where tax has not been paid by the supplier.

In case of default in payment of tax by the supplier,

recovery shall be first made from the supplier and
in some exceptional circumstances like
- missing taxpayer,
- closure of business by the supplier or
- supplier not having adequate assets or
- in cases of connivance between recipient and the supplier etc

recovery of input tax credit from the recipient shall be made through a due process of service of notice and issue of order.

Locking of invoices

Locking of invoices means a handshake between the recipient and supplier indicating acceptance of entering into the transaction reported in the invoice.

Facility for locking of invoice by the recipient before filing of the return by him shall be available.

However, it may not be possible to lock individual invoices where the number of invoices is large and in such situation deemed locking of invoices shall be presumed on the uploaded invoices which are either
- not rejected by the recipient or
- kept pending by the recipient.

On filing of the return by recipient, all invoices shall deemed to be accepted except invoices kept pending or rejected.

Deemed locking of invoices

Invoices which have been uploaded by the supplier and made available in the viewing facility to the recipient but have not been rejected or have not been kept pending by the recipient shall be deemed to be locked after return for the relevant tax period has been filed by the recipient.

It may also be noted that invoices on which credit has been availed by the recipient (i.e. locked invoices) will not be allowed to be amended by the supplier and

In order to amend the reported particular of such invoices, a credit or a debit note will have to be issued by the supplier.

Unlocking of invoices

A wrongly locked invoice shall be unlocked online by the recipient himself subject to reversal of the input tax credit by him and online confirmation thereof.

Rejected invoices

Where the GSTIN of the recipient is wrongly filled by the supplier, the invoice would appear on the viewing facility of a taxpayer who is not the recipient of such supplies and therefore input tax credit is not admissible to him.

Recipient shall report such invoices as rejected invoices.

To assist the process of rejecting invoices with ease, the matching IT tool shall have facility to create recipient and seller master list, from which correct GSTIN can be matched.

Pending invoices

Pending invoices means such invoices which have been uploaded by the supplier but for which one of the three situations exist –
1. The supply has not been received by the recipient,
2. where the recipient is of the view that the invoice needs amendment,
3. where recipient is not able to decide whether to take input tax credit for the time being.

Pending invoices shall be reported by the recipient and no input tax credit shall be availed by the recipient on such pending invoices.

To reduce the number of pending invoices which needs to be reported, a simplification in the procedure for availing input tax credit shall be carried out as detailed below.
- where the goods or services have been received by the recipient before filing of a return and invoice for the same has been uploaded by the supplier upto the due date i.e 10th of the next month, input tax credit for the same can be availed by the recipient in the return.
- This is likely to make additional credit available to the recipient as goods or services received after 1 st of next month but before 20th become eligible for availing input tax credit.
- For example, input tax credit can be availed by the recipient on invoice issued in April and uploaded by the supplier by 10th May even if the goods or services have been received by the recipient before 20th May i.e. the date on which he is filing his return for the month of April (presently he is eligible for input tax credit only if goods or services have been received by 30th April).

A pending invoice can be rejected by the recipient at a later date when he is able to decide on either of the three situations mentioned below
- The supply has not been received by the recipient,
- where the recipient is of the view that the invoice needs amendment,
- where recipient is not able to decide whether to take input tax credit for the time being.

Amendment of invoices

Amendment of an invoice may be carried out by the supplier where
- input tax credit has not been availed by the recipient and
- the invoice has not been reported as locked by the recipient.

Once an invoice is locked by the recipient, no amendment of the same shall be allowed.

However, credit note or debit note for the same can still be issued by the supplier to change value, rate of tax, quantity or the tax payable.

IT facility would ensure that:
- (i) where a credit note is issued on an invoice which is kept pending, then both the credit note and the original invoice shall be linked in the system for availing credit so that excess credit is not taken by the recipient;
- (ii) where a credit note is issued on an invoice on which credit has already been availed i.e. the invoice is locked, the reduction in liability of supplier shall be subject to reduction in input tax credit of the recipient.

Amendment return:

To address the problem of human error i.e. wrong entries being made in the return, there would be a facility for filing of amendment return.

Amendment return is different than a regular return.

There would be a facility to file two amendment returns for each tax period within the time period specified in section 39(9) of the CGST Act, 2017.

Amendment of entries which flow from the annexure of the main return shall be allowed only with the amendment of the details filed in the annexure.

Amendment of missing invoices:

Amendment of missing invoices reported later by the supplier shall be carried out through the amendment return of the relevant tax period to which the invoice pertains.

Therefore, it would be advisable to report all the invoices and then avail the facility for amending return so that invoices reported late can also be amended through the amendment return.

For example, Invoice of April if uploaded in September shall get amended with the amendment of return for the month of April only and therefore trade is advised to report all the missing invoices before exhausting their opportunity to amend the return.

Amendment of details other than that of invoice:

All user entries of input tax credit table in the main return would be allowed to be amended.

This is necessary as amendment of subsequent returns should not be necessary with respect to the input tax credit table to keep the compliance load under control.

Change in the closing balance of the input tax credit shall be affected based on the declaration in the amendment return of the taxpayer.

Thus, the opening and closing balances of intervening month(s) shall not get impacted.

Payment due to amended liability

Payment would be allowed to be made through the amendment return as it will help save interest liability for the taxpayer. Input tax credit, if available in the electronic credit ledger can also be used for payment of the liability in the amendment return.

Negative Liability:

Negative liability arising from the amendment return shall be carried forward as negative liability in the regular return of the next tax period.

Higher late fee for amendment return:

For change in liability of more than 10% through an amendment return, a higher late fee may be prescribed to ensure that reporting is appropriate in the regular return.

HSN:

The table for reporting supplies with the tax liability at various tax rates shall not capture HSN but would continue to capture supplies at different tax rates as is the present practice. The details of HSN shall be captured at four digit or more in a separate table in the regular monthly return.

Return format:

The main return shall have two main tables, one for reporting supplies on which tax liability arises and one for availing input tax credit. Return shall have annexure of invoices which shall auto-populate the output liability table in the main return.

Payment of multiple liability:

Liability in the return arising out of invoices of different dates shall be summarized period wise. However, one payment for the total tax liability on all tax invoices shall be allowed to be made. For example, a missing invoice of April if needed reporting in September, would be reported in the regular return of September.
However, the liability for the month of September and April shall be shown separately on the common portal to the taxpayer in the regular return of September but one consolidated payment would be required to be made. Interest shall be calculated on invoices reported late i.e. in the present example on the invoice of April. After filing of the return, information relating to April invoice shall be clubbed with the information relating to April information.

Monthly Accounting:

All reported liabilities for a month in regular return for a tax period, liabilities from missing invoices uploaded/reported later and liability flowing from the amendment return shall be shown to the taxpayer and the tax officer at one screen on the common portal to assist tax period wise accounting and assessment.

Exports:

The table for export of goods in return would contain details of the Shipping Bill also. The registered person can either fill this information at the time of filing the return or after filing the return at his option. Filing the details of the Shipping bill in the return at a later date shall not be considered as filing of an amendment return. A separate facility for uploading shipping bill details at a later date shall be provided to the exporters.

Transmission of data to ICEGATE:

Once the information of S/B is completed, the entire data shall be transmitted to the ICEGATE (IT system of Customs administration). Subsequent amendments in export/Shipping Bill table shall also be carried out through a separate facility on the common portal and not through the process of filing of amendment return. There would thus be a special facility for the exporters. This amended data would also be transmitted to ICEGATE.

Integrated flow of information:

Till data starts flowing online from ICEGATE or SEZ online in the input tax credit of the return, credit on

imports and
supplies from SEZ

shall be availed on self-declaration basis.

Supply side control

: For a newly registered taxpayer and a taxpayer who has defaulted in payment of tax beyond a time period and/or above a threshold, uploading of invoices shall be allowed only upto a threshold amount or only after the default in payment of tax is made good respectively. This would lead to the recipient getting protected against the actions of the supplier and also the interest of public money (revenue) adequately protected. Where the condition for supplier’s side control are not satisfied due to default in payment of tax by the supplier, the invoice of such supplier shall not be populated in the viewing facility of the recipient and consequently, the recipient would not be able to avail input tax credit on such invoices till the default in payment of tax by the supplier for the past period is made good.

Profile based return

There are many kinds of supplies which can be made under GST and also there are many types of inputs using which input tax credit can be availed. Most of the taxpayers have only a few types of supplies to make and few types of inputs to report.Therefore, a questionnaire shall be used to profile the taxpayer and only such part of return shall be shown to him which are relevant to his profile. For example, a small manufacturer or trader, buying and selling locally may need to file a return consisting of only a few lines. Profiling would allow fields like export, supplies to and from SEZ to be blocked from return and make return adequate for his purpose.

Purchase information in the annual return:

Invoices/ Supplies on which the recipient does not intend to take input tax credit (such as ineligible ITC supplies) but are kept pending or rejected will have to be reported separately in the Annual return.

Suspension of registration:

Concept of suspension of registration would be introduced when a registered person has applied for cancellation of registration or when the conditions in law for cancellation of registration are satisfied. From the date of suspension to the date of cancellation of registration, return would not be required to be filed and also invoice uploading shall not be allowed for the period beyond the date of suspension.

34. Draft formats: The draft formats for monthly returns are placed at page 12 to 35. of above enclosed file