The simplified tax return forms for the goods and services tax (GST) has done away with many columns asking for information difficult to be provided by small taxpayers, besides extending quarterly-returns facility for over 90% of the taxpayers. Also, nearly 30-40% taxpayers who declare ‘nil’ sales would now be able to file their returns via SMS.
To avoid strain on the GST Network, the return-filing dates would now be staggered based on the turnover of the taxpayer. The due date for a large taxpayer (over Rs 5-crore turnover), who are required to file returns on a monthly basis, would be 20th of the subsequent month. The basic procedure for both quarterly and monthly returns is the same, which requires continuous uploading for invoices by suppliers.
These invoices would be converted into liabilities for suppliers and be available for recipient as input tax credit (ITC).
The new returns will profile the small taxpayers on the basis of a questionnaire upfront to ensure only relevant parts of the form is visible to the assessees. “For example, a small manufacturer or trader, buying and selling locally may need to file a return consisting of only a few lines. Profiling would allow fields like export, supplies to and from SEZ to be blocked from return and make return adequate for his purpose,” it said.
Additionally, compliance related to reporting of missing and pending invoices, non-GST supply and ITC details on capital goods would not be required for quarterly return forms, as small taxpayers rarely need this. “This information shall be required to be filled in the annual return. Small taxpayers who would like to facility of missing and pending invoice may file monthly return,” the draft document said.
Further, the quarterly forms have been divided into ‘Sahaj’ and ‘Sugam’. While the former would be for businesses making outward supplies only to businesses called B2B transactions and the latter is meant for outward supplies that are a mix of B2B and B2C (business-to-consumers) transaction. Such businesses constitute a very large part of the tax base, and therefore, two simplified quarterly returns are proposed for them.
Even small taxpayers who file quarterly returns would need to pay their taxes every month and avail ITC on self-declaration basis. They would need to fill out a payment declaration form on the basis of self-assessed tax liability along with ITC.
The draft document said the benefit of simplification would be on the compliance cost for small taxpayers, which would come down as payment declaration form is not a return and minor errors in the same would not lead to initiation of any legal action. “The issue for small taxpayers is the payment of tax has been fixed on monthly basis. Further, to ensure that the large taxpayers get their ITC monthly, the small taxpayers will also have to upload their sales invoices with the same frequency. Hence, the compliance level may reduce but not substantially for small taxpayers,” Parag Mehta, partner, NA Shah Associates, said.
“After the due date for the filing of return is over, the recipient shall also be able to see the return filing status of the supplier and thus be aware whether the tax liability on purchases made by him has been discharged by the supplier or not.” the draft said.
For both quarterly and monthly returns, the uploaded invoices alone would be considered for ITC. “While an offline tool for matching invoices has been proposed — taxpayers will need robust reconciliation and superior matching to continuously keep track of invoices uploaded and solve for missing invoices,” Archit Gupta, founder & CEO of ClearTax, said.