Detailing the transition plan for new returns system under goods and services tax (GST) after releasing the prototype last month, the Finance Ministry on Tuesday said the new system having three GST returns, ANX-1, ANX-2 and GST-RET 01, will be compulsorily rolled out from October. The new returns, ANX-1 (for outward supply) and ANX-2 (for inward supply) will be launched on a trial basis for three months from July to September, 2019, it said.
The new returns were initially planned to be mandatorily rolled out from July, after an initial three-month pilot phase from April, as was approved by GST Council in July last year. As per the new returns system, the existing monthly summary returns GSTR-3B shall be completely phased out from January, 2020 and will be replaced by the new form ‘GST RET-01’, the ministry said.
“From October, 2019 onwards, Form GST ANX-1 (outward supply details) shall be made compulsory and Form GSTR-1 would be replaced by Form GST ANX-1,” the ministry said.
The large taxpayers (with aggregate annual turnover over Rs 5 crore in the previous financial year) would upload their monthly Form GST ANX-1 from October, 2019 onwards.
Large taxpayers would continue to file GSTR-3B on monthly basis for October and November and they would file their first Form GST RET-01, the final return, for December, 2019 by January 20, 2020, the ministry said.
Small taxpayers (with aggregate annual turnover in the previous financial year up to Rs 5 crore), however, would file their first compulsory quarterly Form GST ANX-1 in January, 2020 for the quarter October to December, 2019. Small taxpayers will stop filing GSTR-3B and replace it with GST PMT-08 from October 2019 onwards. They will have to file GST RET-01 for the December, 2019, quarter from January 20, 2020. “It may be noted that invoices etc can be uploaded in Form GST ANX-1 on a continuous basis both by large and small taxpayers from October, 2019 onwards,” the ministry said.
Under the current return filing system, GST registered businesses file summary sales return GSTR-3B every month and pay taxes. They also file monthly outward supply details in GSTR-1, while the initially proposed GST returns, GSTR-2 and GSTR-3, were never rolled out.
In the new return filing system, GSTR-3B would be replaced by GST RET-1 and GSTR-1 by GST ANX-1. Annexure of outward supplies (ANX-1) and Annexure of Inward Supplies (ANX-2) will be filed as part of these returns. All the outward supplies will be detailed in GST ANX-1 while GST ANX-2 will contain details of inward supplies auto-populated mainly from the suppliers’ GST ANX-1.
From January 2020, all businesses would shift to new return filing system with entities above Rs 5 crore turnover filing GST RET-1, GST ANX-1 and GST ANX-2. Those with turnover below Rs 5 crore in the previous financial year would have to file GST PMT-08, GST RET-01. As per the transition plan, from July, 2019, users would be able to upload invoices using the Form GST ANX-1 offline tool on trial basis for familiarisation.
Tax experts said the new system would mean making changes to their business processes, though they welcomed a three-month trial period. Pratik Jain, partner & leader, Indirect Tax, PwC India said, “With the transition plan to new GST return filing system getting released, industry will have to immediately start making changes in the processes/ documentations and evaluate the availability/ readiness of technology solutions in order to be ready from next month, in case they want to participate in trial run.”
Abhishek Jain, tax partner, EY said, “A transition period of three months to familiarise with the new development and system is quite an applaudable thought and is aligned to this government’s outlook of ease of doing business. With a concrete transition plan release, businesses would now need to commence work on ERP system changes, business process changes, etc to be executed for aligning disclosures with the new return.”