GST Return Simplification:
- GSTR 1 and GTR 3B will continue for the next 6 months.
- New Single-return plan will go live after 6 months. Thus, there will be only 12 returns a year, instead of 36 returns.
- The GSTN shows the buyer, invoices uploaded by the seller and thus buyer can check the gap between the credit claimed by him and actually allowed to him.
- After 6 months of the transition period, if it is noticed that after uploading the invoices, the seller has not paid the tax amount to the government, GSTN has all the right to recover these taxes from the buyer. There will be no automatic reversal of credit from the buyer in these cases.
- Taxpayers (excluding a few exceptions like composition dealer and dealers having Nil transactions) 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.
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.
- Sugar Cess implementation has been postponed. The government believes that there should be a better way to increase revenue for the benefit of the farmers.
- Duties on Ethanol – Reduction in rate suggested.
- A group of ministers expected to work on these two above mentioned points and make recommendations within two weeks.
Simple Return design and easy IT interface: The B2B dealers 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.
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.
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.
Supplier side control: Uploading 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.
Transition: There will be a three stage transition to the new system of single monthly return.
Stage I shall be the 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.
In 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.
Under stage 3 (which shall commence after expiry of 6 months from date of implementation of stage 2), the facility of provisional credit shall be withdrawn and input tax credit shall be available only on the basis of invoices uploaded
by the supplier.
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.
In addition, a Group of Ministers has been set up for the following:
- to finalize the proposal of a concession of 2% in GST rates on B2C supplies applicable on digital payment subject to ceiling of INR 100 per transaction
- to discuss the imposition of sugar cess and reduction of GST rate on ethanol.
Further, GSTN (which is currently a private entity) has been proposed to be converted into a fully owned government company.
Incentives on digital payments
- Incentives here may need more time to come in force. A 5 member council will work on this before the next council meet.
De-Privatization of GST
- The GSTN will now be a government owned company with the central government holding 50% and state governments holding the balance 50% of the stake holding. The holdings by the state governments will be on pro-rata basis based on the GST ratios.
- There is a scope for better employment as GSTN looks forward to recruit more people
Simplified return filing and ITC claiming process:
- A comprehensive single return with details of inward and outward supplies. This will reduce the number of returns, help in invoice matching and have all details in one place. Focus will be on making everything tech savvy, on the move and supporting the idea of Digital India.
- Simplified ITC claiming process is the need of the hour to avoid waiting for confirmations, acceptances from the recipient or tedious tasks of uploading sale/purchase details to avail the credit.
- A possible process wherein the E-Way bill is checked just once during transit
- Alternate lines for uploading details for generating EWBs in case of un-supported formats
- One-nation, one format for generating E-Way bill were states will avoid having their own forms in addition to the basic notified ones.
Reverse Charge Mechanism:
- Preponement of applicability of Reverse charge mechanism(Before June 30). This could be initially only for a particular class of taxpayers, say dealers under composition scheme.
- Imposition of a cess on sugar to help farmers
- Include Real Estate/transfer of property into the GST regime
- Amendment of the ITC provision in the GST to enable any business to take credit on any business-related expenses (employee transport etc.)
- Exemptions for payments made by employees for the services received from the employers (eg: canteen services)
- Based on various adjudications on anti-profiteering norms under GST, some clarity is expected from the council
- Encouragement for digital transactions by providing cash backs, discounts, credits etc.
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