Merging the suggestions received on two earlier proposed models for returns simplification under goods and services tax (GST), the Group of Ministers (GoM) chaired by Bihar deputy chief minister Sushil Modi on Tuesday converged in favour of a third “fusion” model, wherein credit is proposed to be given on a provisional basis after the uploading of sales invoice by supplier tied to certain conditions.
A single-page return is being proposed and a final draft of the three models after incorporating inputs from stakeholders would be presented to the GST Council for it to take a final call, Modi said. “Till the simplified return filing process is finalised, GSTR-3B will continue,” Modi said. The GoM on Tuesday met about 40 industry representatives and 15 tax experts to discuss simplification of return filing process.
The GST Council, headed by Finance Minister Arun Jaitley and comprising state counterparts, had last month discussed two models of GST returns and suggested that the GoM would discuss further simplification.
One of the earlier models had proposed availment of input tax credit simply by uploading of invoices by the seller and the subsequent confirmation by recipient. Based on acceptance by the recipient, the input tax credit would get sealed. The second model had provided for simultaneous upload of sales/purchase data wherein the buyer would be able to avail input tax credit on filing of purchase details at invoice level, but taxpayer had to match only data under the mismatch category.
Under the third (fusion) model, credit could be extended once the invoice uploaded by the supplier is verified by the purchaser on the GSTN portal. Also, system-based notices may be issued to taxpayers for non-payment of taxes even after availing credit and the credit could be reversed, an official said.
Modi said there was unanimity in the GoM that businesses would have to file only one return every month, instead of GSTR-1, 2 and 3 as was conceived earlier. Also, there was unanimity that there would be no system based matching and purchaser would have to verify the invoice uploaded by the seller. The model for returns simplification is focused on safeguarding the interest of revenue to the exchequer and avoiding inconvenience to the taxpayers, he said.
The GoM looking at returns simplification had last met in February but could not reach a consensus as states’ finance ministers flagged issues related to allowing input tax credit via simultaneous upload of invoices, but tax bureaucracy had opposed allowing input tax credit without being linked to tax payments under GST.
As per the structure being worked upon by Nilekani and state and central tax officials, businesses having zero tax liability for six consecutive months may get to file returns only twice a year. The return filing date may be spread out and businesses having annual turnover of up to Rs 1.5 crore may have to file return by 10th of next month, while others can file return by 20th. The number of returns filed by both small and large taxpayers will be 12 in a year. The GST Council in October had allowed small businesses with turnover up to Rs 1.5 crore to file quarterly returns.
When the GST was rolled out from July 1, taxpayers were mandated to file a simplified sales return 3B and also final sales returns (GSTR-1), purchase return (GSTR- 2) and finally two were required to be auto populated to generate GSTR-3. As technical glitches arose and the industry complained of hardship in filing GSTR-2 on the GSTN portal, the Council in November decided to keep filing of GSTR-2 and 3 in abeyance till March. All businesses now file GSTR-3B every month. Businesses with turnover up to Rs1.5 crore have to file GSTR-1 every quarter, while those with turnover over Rs1.5 crore have to file the return on the 10th day of the succeeding month.