New GST Returns

Understanding the Different Types of GST Return is essential for every GST-registered business to ensure compliance. Under GST, various returns must be filed to report sales, purchases, input tax credit, and tax liability.

• To report outgoing supplies (sales), GSTR-1 is filed on a monthly or quarterly basis.
• A monthly summary return for purchases, sales, ITC, and tax liability is called GSTR-3B.
• The Composition Scheme taxpayer's annual return is GSTR-4.
• Foreign non-resident taxpayers reporting taxable supplies in India use GSTR-5.
• Input Service Distributors (ISDs) file GSTR-6 in order to disburse input tax credits.
• Organizations that deduct TDS under GST use GSTR-7.
• E-commerce operators file GSTR-8 for supplies and TCS received.
• The annual return that combines all filings is called GSTR-9.

The New GST Return System was launched on a trial basis from July 2019, and the full-fledged system was put into place from April 2020 (earlier: October 2019). This transition plan was carried out in a phased manner. The trial phase was for users to familiarise themselves with the annexure forms of the new return system.

The transition plan that was previously announced was as follows:

• From July to September, during the trial phase, taxpayers continued to file their GSTR-1 and GSTR-3B returns as per the system in place.
• From October 2019, GST ANX-1 needed to be filed by large taxpayers, replacing the GSTR-1 return. However, GSTR-3B still needed to be filed up to November 2019. Small taxpayers paid taxes using PMT-08, which replaced their GSTR-3B return.
• From December 2019, large taxpayers started filing GST RET-01, the main return under the new return system. For small taxpayers, their first GST RET-01 was filed for the quarter of October–December 2019.

The GST Network (GSTN) introduced an interactive web-based prototype of the Offline Tool of the new return system. With this demo version of the prototype, a taxpayer is able to navigate across different pages. This prototype also allows a user to experience various functionalities such as drop-down menus, upload of invoices, and upload of the purchase register for verifying with inward supplies (system-created), etc.

A taxpayer is able to analyse and experience the practical aspects of the simplified GST returns with this prototype. A user can then share feedback or suggestions with the GSTN, and learn more about preparing GST ANX-1 and taking action on GST ANX-2 on the offline tool prototypes.

• Harmonized System of Nomenclature (HSN) code is needed in order to submit details at a document level (on the basis of turnover) versus a separate HSN summary.
• A user also gets the HSN via his GST ANX-2, wherever a supplier was supposed to declare the HSN code.
• B2B supplies liable to the reverse charge mechanism need not be shown by the supplier in GST ANX-1; however, the aggregate figure needs to be shown in GST RET-1.
• Inward supplies which are liable to RCM have to be declared in GST ANX-1 at the GSTIN level, by the recipient of supplies.
• The concept of B2C-L has been removed. The turnover limit for quarterly filers (small taxpayers) is considered as Rs 5 crore versus the earlier limit of Rs 1.5 crore.
• A recipient can report missing invoices at an invoice level (that is, when a supplier has not uploaded an invoice in the T+2 period).

There are several terms introduced in the new return system with regard to the upload of invoices:

Missing Invoices

Whenever a supplier has not uploaded an invoice or a debit note, and a recipient claims ITC, it is termed a "missing invoice". When ITC is availed on missing invoices by a recipient, and these missing invoices do not get uploaded by the supplier within the stipulated time frame, then the ITC availed with respect to such debit notes/invoices is recovered from the recipient.

Locking of Invoices

A recipient has the option to lock an invoice if he agrees with the details reported in that invoice. If there is a huge volume of invoices, it may not be practical to lock individual invoices, and in such cases, deemed locking of invoices is done on those uploaded invoices which are neither rejected nor kept as pending by the recipient.

Unlocking of Invoices

An invoice on which ITC has already been availed by a recipient is considered a locked invoice, and is not open for amendments. In case an amendment needs to be made to a particular invoice, the supplier has to issue a debit or a credit note. An incorrectly locked invoice can be unlocked by the recipient online, subject to a reversal of the ITC claim made, and an online confirmation thereafter.

Pending Invoices

An invoice which has been uploaded by a supplier, however one of the following scenarios applies to that invoice:

• The recipient has not received the supply.
• The recipient is of the opinion that there is a need for an amendment in the invoice.
• The recipient is unsure about availing ITC for the time being.

An invoice in such cases is marked pending by the recipient, and no ITC is availed by a recipient on these pending invoices.

Rejected Invoices

When the recipient's GSTIN is filled incorrectly by the supplier, the invoice is visible for a taxpayer who is not the receiver of such supplies. As ITC is not eligible to be taken on these invoices, the recipient needs to reject these invoices. To make the task of rejecting invoices hassle-free, the matching IT tool has the option to create a recipient/seller master list via which the correct GSTIN can be identified.