The Goods and Services Tax Council may consider merging triplicate comprehensive tax return forms (GSTR-1, 2 and 3) into one consolidated form as it meets here on January 18 in a bid to reduce hassles for taxpayers while also enabling the crucial invoice-matching process, which it reckons is necessary to check tax evasion. Though compliance with these forms has been deferred to April to accommodate taxpayer’s concerns over it being cumbersome, the government is keen that the system is streamlined without any further delay.
According to sources, the merging of the forms is among several recommendations made by a committee headed by Ajay Bhushan Pandey, GST Network chairman, which was formed to suggest changes in rules, laws and formats for filing returns.
Another major suggestion of the committee is simplifying the return process for nil-tax filers to ensure that they can file their returns with just one click on the GSTN portal. Nearly 40% of the existing tax filers have claimed nil-tax liability since July.
Although the merger of the three comprehensive returns is intended to simplify the process, sources said that there won’t be any big change in the functionality or the data required to be submitted by taxpayers. The GSTR-1 forms is meant for filing details of outward sales of a dealer. After the form is submitted, the details of a purchases made by the dealer is automatically populated in the GSTR-2 form. The dealer is then required to verify the details and submit the form. On the basis of all this information, the final form, GSTR-3, shows a taxpayer’s tax liability and available input tax credit.
“With large changes like merging multiple return forms into one, each part of this chain needs to be reworked all over again. Apart from possible delays, the stability of newly reprogrammed system will also need to be re-tested, to ensure stability,” said Sanjay Phadke, head, GST, Vayana Network, a GST Suvidha provider said.
The committee’s suggestions, if implemented, could disrupt the precarious system which is still stabilising, some experts said. “This is not a right time to disrupt the system, especially since it won’t lead to much simplification unless there is a dilution in requirement of data,” said Abhishek Rastogi, partner, Khaitan & Co.