Invoice matching via simultaneous upload of invoices by sellers and buyers along with a broader focus on returns simplification will be the key focus area of discussion in the 26th meeting of the GST Council that is scheduled to be held on March 1 via videoconferencing.
As the deadline for suspension of GSTR-2 and GSTR-3 returns till March inches closer, the Council is aiming for returns simplification by converging towards one form. Filing of the monthly summary GSTR-3B return will be retained for now, two people close to the development said. The government proposes to bring back invoice matching, broadly facilitated by simultaneous upload of invoices by seller and purchaser, which will allow recipients to claim input tax credit immediately after the upload of invoice by the sellers instead of waiting for filing of returns.
The officials are also working on a turnover-based filing system, with big businesses beyond a certain threshold filing returns by 20th of a month and SMEs filing returns earlier than that to avoid clogging of the technological network of the indirect tax regime.
Officials from GST Council and Goods and Services Tax Network (GSTN) along with Infosys chairman Nandan Nilekani have been making presentations to stakeholders and approaching industry chambers for their inputs regarding the changes. GSTN chairman Ajay Pandey, who heads the panel on GST returns simplification, met representatives from the industry last week for their inputs.
“The new system proposes 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, enabling increase in working capital with businesses. The move, if successful, will help the government to reduce the cost of compliance,” one of the persons cited above said.
In the last meeting of the GST Council on January 18, Nilekani had suggested a system of filing the summary GSTR-3B returns along with uploading of suppliers invoices (as was initially proposed via GSTR-1 return).
As per the presentation, ‘system matching’ provides 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, a system which was followed in the earlier VAT regime before the July 1 rollout of GST. The new system proposes to have filing of one return and matching of returns by taxpayers, wherein they have to match only data under the mismatch category. The presentation stated that the buyer won’t be dependent on supplier to upload, but will be dependent on supplier for correction in the system matching option for GST returns.
Finance minister Arun Jaitley had said last month that the Council will finalise the return filing process in the next meeting. “Today it was discussed but not finally approved but it’s moving in that direction,” he had said.
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, 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 below Rs1.5-crore turnover have to file GSTR-1 every quarter, while those over Rs1.5 crore have to file returns on the 10th day of the next month.