Quicker one-form GST filing process ready for roll-out

The Union finance ministry is finally ready to move ahead with the single monthly return system for the Goods and Services Tax (GST), a move that will simplify the process of filing returns and also getting input tax credit.

The three-phase plan was announced last May to address complaints about the difficulties in filing multiple returns (and the higher cost of compliance). According to that plan, for six months, in a transition phase, businesses would continue to file two returns, GSTR1 (for sales) and GSTR 3B , a summarised return form. After six months, they would move to a single filing on a to-be-introduced form. For consumer-facing businesses, the simplified form would be about total sales while for business-facing businesses, the form would incorporate invoice details.

That move was delayed while the back-end, the GST network (GSTN), was being made ready for this. Now, government officials directly familiar with the matter say the simplified form is ready, and could be launched by July, soon after the new government takes over.

No further clearances are required because the GST Council already cleared the three-phase plan last May.

The third phase will involve invoice matching.

The introduction of the new forms will reduce the annual compliance burden of traders from 24 GST returns (GSTRs) to just 12, apart from one return for the entire financial year, the officials said requesting anonymity. Technically, they would have had to file 36, but the second form GSTR 2 is not filed by most .

July will see a trial run of the second phase, the officials cited above said.

One of the major criticisms of GST was the compliance burden of filing returns. This was one of the reasons for the principal Opposition, the Congress party, to criticise the new tax regime. Traders, too, have been demanding a reduction in the number of returns to be filed.

“The new return mechanism should help the industry as multiplicity of filings is avoided, with a single monthly return in place. However, it also means that greater control would need to be exercised on vendor’s compliances as [after a transition period] input credit will be limited to the extent of GST amount reflected on the portal,” said Pratik Jain, partner and leader-indirect tax, PwC.

“The reconciliation between the company’s purchase records and that reported by the vendors would need to be performed on a regular basis and can’t be the year-end exercise. Government, on the other hand, would expect significant reduction in tax leakage once the new mechanism is fully implemented,” he added.

Parag Mehta, partner, NA Shah Associates LLP, said that the single return would allow the trader to verify before filing the returns whether the vendor has uploaded the invoices. “Hence Input Tax Credit (ITC) will be allowed based on the same. It will also ease the compliance as various reporting tables of GSTR 1, 2 & 3 will be combined in one single form. Number of returns will come down from originally proposed 36 to 12 per year. Will benefit small and medium enterprises to be GST compliant,” he said.

Rahul Dhuparh, DGM - GST, Taxmann said: “We can hope that single GSTR will reduce the compliance burden and there will be less cases of mismatch in the data reported to the authorities. However, whether it will be helpful or not will depend on the information sought by the government in the new form from the taxpayers. If this will happen, the biggest issue of credit mismatch will be resolved as the data is getting auto populated to the supplier and recipient. This will eventually reduce the time of a supplier to file his statement of output supplies and returns for making payment of taxes.”