The GST Council in its 28th GST Council Meeting held on July 21, 2018 under the Chairmanship of Shri Piyush Goyal, Union Minister for Ra...
The GST Council in its 28th GST Council Meeting held on July 21, 2018 under the Chairmanship of Shri Piyush Goyal, Union Minister for Railways, Coal, Finance & Corporate Affairs had approved the new return formats. The Council had earlier approved the basic principles of GST return design and directed the law committee to finalize the return formats and changes in law. In pursuance thereof, the CBIC has placed Note on draft GST simplified returns and return formats in public domain on July 30, 2018 for perusal and feedback of stakeholders.
Following suggestions were compiled by Mr. Bimal Jain, Chairman, Indirect Tax Committee, PHD Chamber of Commerce towards making Return system and formats simplified for all taxpayers, which have been submitted to the Government for their kind consideration:
I Date of implementation and mock drill
We understand that the government is expected to roll out the revised return frameworks from the beginning of the next calendar year i.e. January 2019. Implementing the new framework in the mid of the financial year is likely to create hassles for the taxpayers in terms of performing reconciliations.
Suggestion(s):
·
Implementation
from next financial year - It is
therefore humbly requested to kindly consider roll out of the new system from
the beginning next financial year i.e. with effect from April 1, 2019. Further,
new system of return may be introduced as trial option for 3 months if the
Govt. is willing to introduce the new framework effective from January 2019.
·
API for
system configuration - Please
release the Return API by October 2018 so that sufficient time is available for
system configuration and sync with ASP/GSP.
·
Selected
companies for mock return filing - Further, it is requested to kindly consider for providing opportunities
to certain selected companies to undertake a mock return filing under this new
framework, sufficiently before being implemented. This would give an opportunity for industries
to practically experience the practical aspects in the framework and to
understand the finer aspects in the whole process and also give an opportunity
to the GSTN to have a check over various technical and validation issues and
take necessary rectifying measures well before the new return filing framework
is getting implemented.
·
Offline
Utility of New Return format to be released by September for practical training
of the tax payers on new return formats with SOP and guidance note of its
usage.
II Non-editable tax amount field
The new formats provide for system-based auto-computation of tax amount basis the taxable value and tax rate. It is also provided that that tax amount so computed will not be editable except in case of credit/debit notes issued.
Attention is drawn towards the fact
that there can be genuine mistakes on the invoices where the multiple of
taxable value and taxes have not been charged on the invoice and debit/credit
notes have been issued for the differential. If the tax amount is
auto-calculated by the portal, there would exist mis-matches in the invoices
issued by the suppliers and the information uploaded on the portal.
Further, depending upon the rounding
off logic of various IT Systems, the auto calculated figure may not be equal to
the amount considered in books of accounts of dealers and therefore, can lead
to infinite validation errors in data upload through ASP – GSP. In past, this
issue has already been experienced which caused a huge unrest amongst the
dealers and GSTN.
Suggestion(s):
·
Tax amount
field to be made editable - It is
humbly submitted that this field should be made editable so as to allow actual
invoice reporting and no validation/tolerance limit be imposed on the assessees.
III Quarterly return by small suppliers may result in block of working capital at recipient’s end
In the new return filing mechanism
an exemption has been given to dealers having turnover upto Rs. 5 crores in
last financial year to file quarterly returns with a facility to upload
invoices in the normal course.
Apprehensions are being raised that
if only an option is provided, hardly any such suppliers will rigorously upload
the invoices on a continuous basis which will actually lead to a delay in
credit realization in the hands of the recipients and blockage of working
capital.
Suggestion(s):
·
Uniform monthly
invoice uploading by all suppliers - It is requested that whilst these dealers can be allowed to file their
returns quarterly, let there be one uniform statutory frequency of invoice
uploading i.e. monthly for all dealers without any facility for cancellation /
revoking at the supplier’s end.
IV Missing invoice reporting in monthly return
“Monthly return” allows the taxpayer to claim
credits of any supplies which have not been uploaded by suppliers in Row 7,
Part A of Table 4 wherein the user is required to furnish the amount of input
tax credit and value. Further, “The Annexure of Supplies to main return”
provides a table for reporting details of missing invoices on which credit had
already been claimed, but the same have not been uploaded by the supplier in
the next two tax periods.
Suggestion(s):
·
No table to furnish document level details of missing
invoices of the relevant tax period - However, the return framework document does not
clarify as to where the impact of such document level details of missing
invoices of particular tax period would be taken in the monthly return.
V Facility of missing and pending invoices should also be given to small taxpayers
Para
3 on Page No. 10 states that Quarterly return shall be akin to the monthly
except that it has been simplified and shall, inter alia, not have the compliance requirement in relation to missing
and pending invoices as small taxpayers do not use these procedures in their
inventory management.
Suggestion(s):
Facility of adding missing invoices should be allowed to
small taxpayers – The impact of input tax credit
from missing invoice can be substantial even for small taxpayers even if they
have fewer transactions. Thus, this facility must be allowed.
VI Missing clarity on period up to which supplier can upload missing invoices
As regards reporting of Missing Invoices, Sr. No. 10 at page
17 gives an example. In this example it has been clarified that if the credit
has been availed by the recipient in April but the corresponding invoices have
not been uploaded by the supplier till filing of return for the month of May
(i.e. latest by 20th June),
recipient will have to report all such invoices while filing the return for the
month of June. While Table 3L at page 14 requires the recipient to report in
current month’s return i.e. June all invoices on which credit was availed in
T-2 tax period i.e. April but the same have not been reported by the supplier till
filing of current tax period return (i.e. latest by 20th July).
Thus, there seems contradiction on same thing mentioned at
two places.
Suggestion(s):
·
Guidance document on treatment of
missing invoices - It is submitted that a separate
guidance document should be created addressing to such concerns specifically
with respect to the concept of missing invoices. It is also requested to
clarify as to how the concept of missing invoices would work in subsequent
phase including the impact of cutover transactions (i.e. input tax credit
already claimed during this phase but invoices not uploaded by supplier in the
current phase).
VII Recovery from recipient for credit taken on missing invoices
Para 6 on Page No. 4 states that the
Invoices or debit notes which have not been uploaded by the supplier and the
recipient has availed input tax credit shall be considered as “missing
invoices”. If such missing invoices are not uploaded by the supplier within
prescribed time period, then ITC on such invoices or debit notes shall be
recovered from the recipient.
Suggestion(s):
·
Adverse impact on recipient - If recipient has taken credit on the basis of invoice
called as "missing invoice" and recipient has uploaded complete data
of the invoice on the portal, then it should be good enough to avail input tax
credit by recipient and action should be taken against supplier not uploading
the invoice and recipient should not be asked to reverse input tax credit.
Moreover, if, above procedure is not
possible and even after due follow up with the supplier, invoices are not being
uploaded by the supplier, credit should not be get reversed at recipient end
because it will block the working capital of the company and it will take huge
time to search & account missing invoices & reporting them in the
return which results wastage of manpower, time & money in following up with
the suppliers.
It is suggested to allow input tax
credit on self-declaration basis as is in transitional period of six months or
if it is not possible, then, in case of missing invoice, only after uploading
supplier's data on the portal, credit should be allowed to the recipient.
VIII Supply side control
Para 30 on Page No. 8 states that 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.
Suggestion(s):
·
Fixing threshold limit for uploading
invoices by newly registered taxpayer is unjust
- Restricting a newly registered user to upload invoices up to a certain
threshold is not proper without any grounds of default made by him. It is
merely based on presumption that newly registered taxpayer may be incapable of
discharging the tax liability. New registration does not necessarily mean a new
assessee, it could also be a new registration of an existing large solvent
taxpayer.
·
Adverse effect on
recipients – Fixing threshold
for defaulting supplier would mean that those buyers whose invoices were
uploaded before reaching threshold will get credit and the rest will suffer.
Further, there is no clarity as to how will a buyer get visibility of defaulter
status of supplier and thus be cautious in making purchases from such
suppliers.
IX Reporting of shipping bill/ bill of entry details
It is submitted that no separate field has been provided for
reporting bill of entry/ shipping bill number and date in the revised return
formats. In this regard, there is lack of clarity as to whether these details
would be required at a later date for performing invoice matching with the data
available on ICEGATE. (Section 3J of Table 3 Annexure of Supplies to main
return).
Suggestion:
·
It is thus humbly submitted to issue
clarification with respect to reporting of bill of entry details while filing
monthly returns.
X Separate reporting of transactions covered under Schedule III
This is an additional reporting requirement of activities,
which are neither a supply of goods nor supply of services, which has been
incorporated in the new formats.
Suggestion(s):
·
Additional compliance burden - Reporting of such transactions would require taxpayers to
make changes in their IT systems for identification of the same. Further,
reporting of these transactions would create additional compliance burden on
the tax payers. Therefore, it is requested to provide abundant clarity for
reporting of transactions under the said Schedule
XI ‘Non-GST supply’ Vs. ‘No supply’
Part D of Table No. 3 i.e. ‘Details of supplies having no
liability’ in the monthly rerun, inter
alia, requires separate disclosure as to the following:
1.
Exempt and Nil rated supplies;
2.
Non-GST supplies;
3.
No supply (Schedule III,
Section 7)
Suggestion(s):
·
Exempt supplies
already include Nil-rated supplies
– Definition of ‘exempt supply’ under Section 2(47) of the CGST Act, 2017 is
given as under:
“exempt supply” means supply of any goods or
services or both which attracts nil rate of tax or which may be wholly
exempt from tax under section 11, or under section 6 of the Integrated
Goods and Services Tax Act, and includes non-taxable supply”
Thus, when definition
of exempt supply itself includes Nil rated supplies, separate mention of the
same under Row 1 above will add to confusions.
·
Clarity on meaning of
non-GST supply – As seen supra that
definition of exempt supply includes non-taxable supply i.e. a supply of goods or
services or both which is not leviable to tax under this Act [Section 2(78) of
the CGST Act, 2017], hence, scope of non-GST supplies is not understood. This confusion persists in current format of GSTR-3B as well
which requires separate reporting of non-GST outward supplies apart from
exempted outward supply, which includes non-taxable supplies, Nil rated
supplies and exempted supply. Thus, clarity on items included in non-GST
supplies is required.
·
Difference in ‘non-GST
supply’ and ‘no supply’ – If schedule III
items are to be treated as no supply for which separate reporting is required
in Row 3 above, then items to be treated as ‘non-GST supply’ requires more
clarity viz-a-viz non-taxable supplies and Schedule III items.
XII Linking of Credit Notes with corresponding invoice
Para 16 at page no. 6 talks about a situation where a credit
note has been issued on an invoice which has been kept pending by recipient. In
such situation, it says that both the credit note and the original invoice
shall be linked in the system so that excess credit is not taken by the
recipient. However, there is lack of clarity as regards to below points:
Suggestion(s):
·
Clarity on establishing linkage
between credit note and corresponding invoice no
- Supplier is required to provide the details of credit notes in Table 3 of
‘Annexure of Supplies to Main Return’. But, the format of this table nowhere
requires a supplier to give reference of original invoice no. on which credit
note has been issued. In absence of this detail, it is not clear how the system
will be able to establish linkage between credit note and corresponding invoice
no.
·
Clarity on handling multiple
invoices against single credit note
- The proposed amendments in GST Law allow a supplier to issue single credit
note against multiple invoices. Therefore, going forward there may certainly be
a situation where a single credit note has been issued on multiple invoices out
of which some invoices have been locked by recipient and some invoices have
been kept pending. It is not clear, how the system will take care of such
situation.
Therefore, it is requested to provide abundant clarity in
this connection by setting out in details the process of linking credit notes
with the original invoices.
XIII HSN wise summary
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 as well as quarterly return.
Suggestion(s):
·
Generating HSN summary thus becomes
an additional work.
·
For small taxpayer’s requirement to
report HSN details can be done away with.
·
Preparing invoice data by grouping
values tax rate-wise is not the general practice adopted. If invoice is grouped
tax rate-wise it becomes difficult for buyer to reconcile with his physical
invoice which has item-wise details. Thus, taxpayer should be allowed to upload
invoice ‘as is’.
XIV Switching from quarterly to monthly return in middle of quarter
As per Para 2 on Page No. 10, option
for filing monthly or quarterly return shall be taken from these small
taxpayers at the beginning of the year and generally thereafter they would
continue to file the return during the year as per the option selected. During
the course of the year, option to change from monthly to quarterly or
vice-versa shall be allowed only once and at the beginning of any quarter.
Suggestion(s):
Switching in between may be permitted in exceptional cases – In exceptional scenarios like executing bulk order in
middle of the quarter, small taxpayers would need the flexibility to change
return type in between the the applicable quarter and comply with return type as applicable to him for the
relevant and subsequent quarter.
XIV Complexity in reporting requirements for input tax credits (Table 4 of Monthly Return)
·
Inward supplies not received during
previous tax periods on which ITC was kept pending:
Manner of populating the information during the first month is not clear and
clarity is also needed whether numbers will be auto-captured in the subsequent
months from Annexure of Inward Supplies of previous month and will capture all
pending invoices as on start of the month.
·
Inward supplies received (other than
those attracting reverse charge): Whether the
field will capture all documents issued during the tax period i.e. irrespective
of action taken by taxpayer in the Annexure to inward supplies.
Example:
Total Invoices uploaded by various suppliers in May – 500
Accepted by Recipient – 300
Rejected – 150
Kept Pending – 50
Previous month’s pending Invoices shown in Last Month’s B5 –
200
Accepted during current month out of these 200 invoices –
100
Queries:
·
How many invoices will be captured
in Table 4A – Sr. No. 1 [Inward supplies not received during previous tax
periods on which ITC was kept pending] - will it be 200 reported in B5 during
previous month?
·
Whether Sr. No. 2 of 4A [Inward
supplies received (other than those attracting reverse charge)] will include
all invoices issued during current month i.e. 500 or it will include only 300
accepted during current month?
·
Whether Sr. No. 2 of 4A will also
include previous month’s pending invoice accepted during current month i.e. 100?
·
How many invoices will be shown in
B5 of current month - will it be 150 invoices viz. 50 invoices pending out of
current months’ and 100 invoices pending out of previous month’s pending
invoices?
Suggestion - It is requested to clarify with examples how the data will
flow into various rows of this table to avoid any ambiguity.
Further, the clarity also needed for capturing the details
of ITC for import of goods, import of services and other reverse charge
transactions – Please note that the Annexure of outward supplies, inward
supplies attracting reverse charge and imports only requires us to furnish the
details of taxes charged and not input tax credit eligible on the same.
XVI Input tax credit claimed earlier (Row 7, Table 4 Part B)
The specific row captures
auto-population of input tax credits claimed earlier. Please note that the
framework document or the notes to the monthly return do not capture any
information on the manner of capturing details in this particular row.
Suggestion(s):
·
Specific
guidelines required for such reversal - It is requested to provide specific
guidelines for various scenarios where any of such input tax credit which was
claimed earlier would be subject to an auto-reversal as part of the monthly return.
XVIII Credit in respect of goods or services received in next month
Para 13.2 of Note on Returns (Page No. 6) explains that
recipient will be eligible to avail input tax credit in respect of goods or
services received after 1st of Next month but before 20th
where the supplier has uploaded the invoices up to 10th of next
month. This implies that even for the supplies received in the subsequent
month, credit can be availed by buyer in the previous month itself depending on
the data upload by the supplier.
Suggestion(s):
·
Mis-match with law provisions - In this regard, it is requested to please clarify if the
same is in line with the provisions of the GST Law under Section 16(2) of the
CGST Act, 2017, wherein receipt of goods & services is the primary condition
for availing credit or necessary amendments in Law will be made to take care of
this modality of availing input tax credit in such situation.
XVIII Effect on input tax credit if invoices are uploaded but no Return filed by supplier
Table 3 Column 9 of ‘Annexure of Inward Supplies’ (Page 24)
captures the date of data upload as well as date of return filing by the
supplier. However, industry is not clear on consequences if the supplier has
uploaded the invoice by due date i.e. 10th of next month but not
filed the monthly return by 20th on next month.
Suggestion(s):
·
Clarity on flow of credit in Table 4
where return is not filed by supplier
- It is requested to please clarify whether in such cases also, where return
has not been filed by the supplier, input tax credit will automatically flow
into Table 4 of Monthly Return and thus credit will be available to the
recipient.
XIX Amendment Return
Para 20 on Page No. 7 states that
there would be facility to file two amendment returns.
Suggestion(s):
·
No restriction on number of
amendments - It is requested to allow multiple
amendments in the monthly return irrespective of the number of amendments
keeping in mind that the initial challenges which would be faced during the
implementation. Since taxpayer would be paying higher rate of interest (in case
of liability) there should not be any restrictions on number of amendments
possible. Filing of annual return will indicate closure of books for a given
FY.
Also, a detailed guideline for use
of the functionality should be provided.
XX Transitional mechanism required to handle cut over transactions on transition to new framework
Please note that once the new framework is implemented, any
changes/ amendments for the transactions reported during the ongoing return
process may also be required. Further, any ITC claimed earlier for which
invoices have not been uploaded by vendor or vice versa (i.e. invoices uploaded
but credit claimed during the new framework) would also require to be reported.
Suggestion(s):
·
Detailed mechanism required - In this regard, it is requested to provide details of all
such scenarios along with necessary reporting framework for cut over
transactions or transactions pertaining to past period (i.e. pre-implementation
of new return framework).
·
It
is suggested to make arrangement on GST Portal to generate annual summary of
GSTR 3B and GSTR 1. It will be helpful to the taxpayer to find out mistakes
made during the filling of above said returns.
XXI
Others:
·
For
supply of goods, taxable event does not arise at the time of advance payment and
hence user need not be asked to provide advance received/adjusted information
as part of the return.
·
System should assist user to
calculate interest & payment amount on account of reversal of credit by
taking all the relevant information.
·
E-Sign of return (Aadhaar
OTP based) to be provided. It is simpler and more affordable than DSC based
signing.
·
Format
of GST Return should be based on Excel sheet like Income tax Return (Auto
calculated).
·
Cash ledger on GST portal to
be treated as wallet with freedom for cross utilization (across major and minor
heads of tax/interest/penalty for IGST/CGST/SGST).
COMMENTS