GST: Returns JULY 09, 2017 ICAI Tower, BKC MUMBAI CA. Hemant P. Vastani 1
Sections Covering Returns 37. Furnishing details of outward supplies. 38. Furnishing details of inward supplies. 39. Furnishing of returns. 40. First return. 41. Claim of input tax credit and provisional acceptance thereof. 42. Matching, reversal and reclaim of input tax credit. 43. Matching, reversal and reclaim of reduction in output tax liability. 44. Annual return. 45. Final return. 46. Notice to return defaulters. 47. Levy of late fee. 48. Goods and services tax practitioners. 2
What is the purpose of returns? a) Mode for transfer of information to tax administration; b) Compliance verification program of tax administration; c) Finalization of the tax liabilities of the taxpayer within stipulated period of limitation; to declare tax liability for a given period; d) Providing necessary inputs for taking policy decision; e) Management of audit and anti-evasion programs of tax administration. 3
Who needs to file Return in GST regime? Ans. Every person registered under GST will have to file returns in some form or other. A registered person will have to file returns either monthly (normal supplier) or quarterly basis (Supplier opting for composition scheme). An ISD will have to file monthly returns showing details of credit distributed during the particular month. A person required to deduct tax (TDS) and persons required to collect tax (TCS) will also have to file monthly returns showing the amount deducted/collected and other details as may be prescribed. A nonresident taxable person will also have to file returns for the period of activity undertaken. 4
GSTR-1 GSTR-1A (autodrafted) Furnishing details outward supplies Returns/Particulars/Due date Communication to supplier of goods and services for any addition/deletion/modificati on made by the recipient in 10th of succeeding tax period Accept or reject before 17th of the succeeding tax period GSTR-2 Furnishing details of inward supplies Before 15th of succeeding tax period 5
GSTR-2A (autodrafted) Part A: Communication to receiver of goods and services in respect of goods and services procured by it and uploaded by the supplier. Part B: Communication to the receiver of credit in case of distribution of credit by Input Service Distributor in Form GSTR-6 Part C: Communication of details of tax deducted at source from the payments to the receiver based on Form GSTR-7 of the deductor. Part D: Communication of details of tax collected at source on payments received by the supplier from the e-commerce operator, based on Form GSTR-8 6
GSTR-3 Monthly return after finalization of outward supplies and inward supplies 20th of succeeding tax period GSTR-3A Notice sent to registered taxable persons when a particular return is not filed for a tax period 7
GSTR-4 Return to be furnished by a registered taxable person under composition scheme 18th of the month succeeding the quarter GSTR-4A Communication to the person registered under composition scheme in respect of inward supplies procured by it and uploaded by the supplier 8
GSTR-5 Return to be furnished by nonresident taxable person 20th of succeeding tax period GSTR-6 Return to be furnished by Input Service Distributor 13th of succeeding tax period GSTR-6A Communication to Input Service Distributor in respect of inward supplies procured by it and uploaded by the supplier 9
GSTR-7 Return to be furnished by persons liable to deduct tax at source under Section 46 of the GST Act 10th of succeeding tax period GSTR-7A Certificate to be issued to the recipient by the person deducting tax at source Within 5 days of remitting the amount deducted GSTR-8 Return to be furnished by persons liable to collect tax at source under Section 52 of the GST Act 10th of succeeding tax period 10
GSTR-9 Annual return 31st December of subsequent year GSTR-9A Annual return for composition dealers 31st December of subsequent year GSTR-9B Reconciliation statement to be submitted along with Annual Return 31st December of subsequent year 11
GSTR-10 Final Return 3 months from the date of cancellation/order of cancellation whichever later 12
Furnishing details of outward supplies Sec 37 (1) every registered person except ISD,NRTP, person liable to pay u/s 10 or 51 or 52 Shall furnish return electronically by 10 th of next month Such details shall be communicated to recipient Not allowed to anything between 11 th to 15 th of the next month. (2) Person who has been communicated the details u/s 38(3) and (4) shall Either accept or reject the details Up to 17 th but not before 15 th of the month succeeding the tax period 13
Furnishing details of inward supplies (Sec 38) (1) every registered person except ISD,NRTP, person liable to pay u/s 10 or 51 or 52 Shall verify, validate, modify or delete if required the details communicated u/s 37 (1) May include inward supplies not declared by the supplier u/s 37 (1) (2)Shall furnish details of inward supply of goods/services on which liable to pay under reverse charge. (3) Details of supplies modified, deleted or included by the recipient and furnished under sub sec (2) shall be communicated to the supplier in prescribed time and manner 14
RETURN FORM Returns under GST PARTICULARS DUE DATE APPLICABLE FOR GSTR1 Outward Supplies 10 th of the next month Normal/ Regular Taxpayer GSTR2 Inward Supplies 15 th of the next month Normal/ Regular Taxpayer GSTR3 Monthly return [periodic] 20 th of the next month Normal/ Regular Taxpayer GSTR4 GSTR5 GSTR6 Return by compounding tax payers Return by non resident tax payers [foreigners] Return by input service distributors 18 th of the month next to the quarter Compounding Taxpayer Within 7 days of the last day of registration Foreign Non-Resident Taxpayer 13 th of the next month Input Service Distributor GSTR7 TDS return 10 th of the next month Tax Deductor GSTR9 Annual return 31 st December next FY Ledgers ITC ledger, cash ledger, tax ledger On a continuous basis Normal/ Regular Taxpayer, Compounding Taxpayer
Returns Process Relaxation for first 2 months FFor the first two months of GST implementation, the tax would be payable based on a simple return (Form GSTR-3B) containing summary of outward and inward supplies which will be submitted before 20 th of the succeeding month. The invoice-wise details in regular GSTR 1 would have to be filed for the month of July and August, 2017 as per the timelines given below Month GSTR 3B GSTR - 1 GSTR 2 (auto populated from GSTR- 1) July, 2017 20 th August 1 st 5 th September* 6 th 10 th September August, 2017 20 th September 16 th 20 th September 21 st 25 th September Facility for uploading of outward supplies for July, 2017 will be available from 15 th July, 2017. 16
Outward & Inward Supplies Return (GSTR 3) Consolidated Return of Outward Supplies and Inward Supplies Return OUTWARD SUPPLIES includes [goods &/or services] INWARD SUPPLIES includes [goods &/or services] Zero Rated Supplie s & export s Interstate/Intrastate supplies & goods return Debit notes, credit notes and supplement ary invoice Details to be furnished by 10 th day succeeding the tax period Credit notes, debit notes Inward supplies of goods &/or services subject to RCM Inward supplies of goods &/or services subject to IGST Details be furnishe by 15 th d succeedi the period t
1 Contents of GSTR 3 Part A of the GSTR-3 shall be auto generated on the basis of the information furnished through the Form GSTR-1 and GSTR-2, electronic credit ledger, electronic cash ledger, electronic tax liability register of such taxable person Part B of GSTR-3 shall include details regarding liability towards tax, interest, penalty, fees or any refund other amount payable under the Act 18
Returns Process Upload GSTR-1 Can include missing invoice upto 17 th Auto-drafted GSTR-2A based on details from GSTR-1 filed by other suppliers Generate GSTR-2 by accepting/ rejecting/ modifying details from GSTR-2A General net tax: Pay/ carried forward in GSTR 3 Supplier to accept modifications by 17th Add missing purchase invoices
GST Returns Important Points Every registered taxable person to furnish returns Submission of return - Through online mode Return to be filed even if there is no business activity during the return period Error or omission may be rectified - No specific provision for revision prescribed B2B transactions proposed on invoice level GSTIN, Invoice No. & date, Value, Description, rate of tax and value of Tax. B2C invoice wise only for transaction above specified limit HSN Codes Goods and Accounting Codes - Services Separate Tables for Debit / Credit Notes / Input Service Distributor Credit / TDS etc. Common e-return for CGST, SGST & IGST Shall not be allowed to furnish a return for a tax period if the return for any of the previous tax period has not been furnished by him.
Matching, Reversal & Re-credit Matching Reversal Reclaim Details of inward supply furnished by a receiver to be matched with details of output supplies furnished by corresponding supplier Credit details of matching supplies only to be accepted - manner to be prescribed Details not matching resulting in excess to be communicated to both supplier & receiver Details communicated but not rectified by supplier to be added to the output tax liability of recipient Duplication resulting in excess also to be added to output tax liability of recipient Recipient entitled to reduce output tax liability if supplier rectifies the return within prescribed timelines
Matching Concept A registered taxpayer shall be entitled to Input Tax Credit (ITC) if below mentioned conditions are satisfied: a) He is in possession of Tax Invoice/ Dr. Note/Prescribed Tax paying document. b) He has actually received the goods and/ or Services. c) Tax charged in the invoice has actually been paid. d) He has furnished required return under the GST Law. 22
Conti.. Once the supplier and recipient has filed outward and inward supplies details as per Form GSTR1 and GSTR 2 respectively and the monthly return on Form GSTR 3, the details of inward supply furnished by the recipient shall be matched with the corresponding details of outward supply furnished by the supplier in his return for the same or earlier tax period. In the process of such matching, the details of inward supplies which matches with the details of outward supplies shall be finally accepted and shall be accordingly communicated to the recipient. 23
Conti.. The mismatch can be of the following nature a) Input tax credit availed by the recipient is more than the tax declared by the supplier b) Input tax credit availed by the recipient but outward supply is not declared by the supplier c) Duplication of claim of Input Tax Credit by the recipient In case of mismatch in the nature of clause (a) or (b), the discrepancy shall be communicated to both the supplier and recipient with an option to rectify the discrepancy in the return for the month in which the discrepancy is communicated. 24
Conti.. As far as mismatch on account of duplication of claim of input tax credit is concerned, the discrepancy shall be communicated only to the recipient and the excess amount shall be added to the output tax liability of the recipient of the same month in which discrepancy is communicated. With regard to mismatch (a) and (b) if the discrepancy is ultimately not rectified by the supplier or recipient, the tax discrepancy shall be added to the output tax liability as under 25
Conti.. a. If supplier does not rectifies the discrepancy then the excess input tax credit so availed by the recipient shall be added to the output tax liability of the purchasing dealer in the month succeeding the month in which the discrepancy is communicated along with due interest from the date of availing of credit till the corresponding additions made in his return. b. If the supplier later on declares the details of the Invoice and/or debit note in his valid return then the recipient shall be eligible to reduce his output tax liability which was added earlier in his return. Any interest paid earlier shall also be refunded to the purchasing dealer. 26
Matching of Credit Note Section 43 provides for matching of credit note issued by supplier with simultaneous reduction in claim of input tax credit by the recipient and for duplication of claim of credit note by supplier resulting in reduction in output tax liability. A credit note is generally issued for reduction in taxable value or tax charged in tax invoice or for return of goods or for deficient supply. Since the supplier has initially paid the taxes on the basis of tax invoice and recipient has also availed the credit on the basis of such tax invoice and now credit note reduces the output tax liability in the hands of supplier, the same is allowed only if the recipient has also reduces his claim of input tax Credit. 27
1 In the process of such matching, the claim of reduction in output tax liability by the supplier that matches with the corresponding reduction in claim for input tax credit by recipient shall be finally accepted and shall be accordingly communicated to the supplier. The mismatch can be of the following nature a) Reduction in output tax liability by the supplier is more than the corresponding reduction in claim of input tax credit tax by the recipient b) Credit note is not declared by the recipient c) Duplication of claim for reduction in output tax liability by the supplier 28
1 In case of mismatch in the nature of clause (a) or (b), the discrepancy shall be communicated to both the supplier and recipient with an option to rectify the discrepancy in the return for the month in which the discrepancy is communicated. As far as mismatch on account of duplication of claim for reduction in output tax liability is concerned, the discrepancy shall be communicated only to the supplier and the excess amount shall be added to the output tax liability of the supplier of the same month in which discrepancy is communicated. 29
1 if the discrepancy is ultimately not rectified by the supplier or recipient, the tax discrepancy shall be added to the output tax liability as under a. If recipient does not rectifies the discrepancy then the same shall be added to the output tax liability of the supplier in the month succeeding the month in which the discrepancy is communicated along with due interest from the date of claim for reduction in output tax liability till the corresponding additions made in his return. b. If the recipient later on declares the details of the credit notes in his valid return then the supplier shall be eligible to reduce his output tax liability which was added earlier in his return. Any interest paid earlier shall also be refunded to the purchasing dealer. 30
1 Here it would be relevant to note that, no such rectification of invoices/reclaim of input tax credit shall be allowed after due date for filing of return for the month of September of the following year or date of filing of Annual Return, whichever is earlier. For example, if the invoice pertains to Financial year 2016-17, then in that case it should be rectified before filing the return of September 2017 i.e 20th October 2017 or date of filing of annual return for F.Y. 2016-17 whichever is earlier, It is important to note that in case such period lapses, no such rectification is allowed and input tax credit related to them will be lost. 31
Matching Concept All Transactions where Input credit details of recipient are matched for output tax as stated by supplier and recipient The transaction is treated as matched Transactions where input credit as claimed by the recipient is less than the output tax as declared by the supplier in their return The transaction is treated as matched 1 32
Conti Transactions where the input tax credit is duplicated by the recipient Shall be communicated to the registered person in FORM GST MIS 1 Transactions where the claim for input tax credit is higher than the output tax as declared by the supplier Shall be added to the output tax liability of the recipient Transactions where the claim for input tax credit is higher than the output tax as declared by the supplier because the supplier has not furnished a particular transaction Shall be added to the output tax liability of the recipient 33
PARTICLARS COMMUNICATIONS 1 When credit note and claim for reduction of output tax liability by the supplier matches with the corresponding reduction in input tax credit claim by the recipient or is lower than the ITC claim by the recipient for the said credit note The same will be accepted and communicated to the supplier in FORM GST MIS -3 Example A both parties account for a credit note raised by the supplier, that results in lower of output tax liability and input tax credit by Rs 10000 Example B - A issues a credit note for Rs 10000 reduction in output tax liability as compared to an reduction in input tax credit for Rs 11000 by the recipient will also be treated as a matched transaction 34
Conti.. When credit note and claim for reduction of output tax liability by the supplier exceeds, partly with the corresponding reduction in input tax credit by the recipient as declared in his returns Example where a credit note that results in the reduction of output tax liability for Rs 10000 has been accounted for Rs 4000 and stated as such in their return at Rs 4000 The discrepancy will be communicated to both parties and shall be added to the output tax liability of the supplier for Rs 6000, in the month in which the discrepancy is communicated in FORM GST MIS- 3 and FORM GST MIS- 4 35
Conti.. When credit note and claim for reduction of output tax liability by the supplier exceeds, wholly with the corresponding reduction in input tax credit by the recipient as declared in his returns The discrepancy will be communicated to both parties and shall be added to the output tax liability of the supplier for Rs 10,000 in the month in which the discrepancy is communicated in FORM GST MIS- 3 and FORM GST MIS- 4 Example where a credit note that results in the reduction of output tax liability for Rs 10000 has not been accounted at all or considered in his returns 36
Reversal of ITC / Mismatch of ITC In terms of the provisions of GST law, the reversal of ITC arises when: there is excess claim of ITC by the recipient as against the tax declared by the supplier or the outward supply is not declared by the Supplier, or there is a duplication of claim of ITC by the recipient. 37
Re-claim of ITC Re-claim of ITC refers to taking back the ITC reversed in the Electronic Credit Ledger of the recipient by way of reducing the output tax liability. Such re-claim can be made by the supplier only in case the supplier declares the details of invoice and/or Debit Notes in his valid return within the prescribed timeframe. In such case, the interest paid by the recipient shall be refunded to him by way of crediting the amount to his Electronic Cash Ledger. However, it may be noted that no refund of interest would arise in case the excess ITC reversed was on account of duplication of ITC claim, as the same would be considered to be contravention of the GST provisions, where refund is allowable. 38
First, Annual and Final Return First Return Annual Return Final Return Every registered taxable person who has made outward supplies between date of liability to register to date of grant of registration Filed after grant of registration Every registered dealer to furnish annual return by 31st December except: ISD casual taxable person Person deducting tax Non-resident taxable person Reconciliation statement to be furnished along with the statutory audited report and annual return Every registered dealer opting for cancellation to furnish a final return To be furnished within 3 months from date of cancellation or date of cancellation order, whichever is later
First and Final Return The concept of filing a First Return and Final Return have been newly introduced. These returns play an important role of providing details of the assessee at the time of entry into and exit from the GSTN. The First return is required to be furnished by every registered taxable person on whom the levy of GST applies. It contemplates for providing the details of: (a) outward supplies from the date on which he became liable to registration till the end of the month in which the registration is granted, and (b) inward supplies from the effective date of registration till the end of the month in which the registration is granted. 40
A Composition taxpayer is required to furnish the First Return for the period starting from the date on which he becomes a registered taxable person till the end of the quarter in which the registration is granted. Every registered taxable person applying for cancellation of registration shall furnish a Final Return within 3 months of the date of cancellation or date of cancellation order, whichever is later. Conti.. 41
GST Return Important Points RECTIFICATION Rectification allowed till September 30 or date of filing of annual return NON FILLING Cancellation of registration for non filing of returns for 3 consecutive tax periods BLACK LISTING OF DEALERS Compliance rating to be introduced. Fall below the prescribed level would lead to blacklisting PENALTY- NON FILING OF RETURN(Sec 47) Late Fees: INR 100 per day subject to a maximum of INR 5,000 Late Fee - Annual Return INR 100 per day subject to a maximum of 0.25 % of the aggregate turnover of the defaulter
Goods and Service Tax Practitioners Sec 48 Eligibility Conditions Duties Obligations To be prescribed Can authorize GST practitioner to furnish GST returns Responsibility for correctness of particulars lies with Registered person Registered Person 43 GST The Centre practitioner of Excellence for GST