Highlights of New GST Returns

In the 27th GST Council meeting, the GST Council first announced the new GST return filing process. In the 28th GST Council meeting, the new GST returns and return filing process have been approved. Within a week, a draft of the new GST return forms has been placed in the public domain, to seek feedback from businesses, CAs and other industry members. As per the latest update, the GST Council is likely to implement the new return filing process from January, ’19. It is important for businesses to know the changes proposed in the GST return filing process. In this blog, let us understand the key highlights of the new GST return filing process.

a. Simplified monthly return for persons having turnover of more than Rs. 5 Crores

Regular taxpayers having turnover of more than Rs 5 Crores can now file a simplified monthly return. The new GST return form will have 2 main tables:

  • Outward supplies
  • Input tax credit based on invoices uploaded by suppliers

The due date of the monthly return will be 20th of the next month. However, the new GST return filing dates will be staggered, based on businesses’ turnover, to avoid undue load on the GSTN server.

b. Quarterly return for persons having turnover up to Rs. 5 Crores

Businesses having turnover up to Rs. 5 Crores (against the earlier limit of Rs. 1.5 Crores) will have an option to file quarterly returns. Businesses opting to file quarterly returns will, however, have to pay taxes and avail input tax credit on a monthly basis. These businesses have an option to file 3 types of new GST returns:

  • Sahaj: Businesses which purchase from suppliers in India and make supplies only to consumers (B2C) in India can opt to file the Sahaj return
  • Sugam: Businesses which purchase from suppliers in India and make supplies only to other businesses and consumers (B2B + B2C) in India can opt to file the Sugam return
  • Quarterly returns: Businesses which make imports, exports, supplies to SEZ, etc. can opt to file the quarterly return. The quarterly return will be similar to the monthly return but will be simpler and will not require certain details present in monthly returns, such as missing invoices, pending invoices, exempted supplies, etc. to be filled. However, these details will still be required to be filled by businesses filing quarterly returns, in their Annual return.

c. Simplified new GST return filing process: Upload-Lock-Pay

The new return filing process can be summarised as ‘Upload-Lock-Pay’. This means:

Upload: Invoices for supplies made will be continuously uploaded by sellers. Invoices uploaded till 10th of the next month will be available for input tax credit for the buyer.

Lock: The invoices uploaded by sellers can be continuously viewed and locked by the buyers. Here, ‘lock’ means to accept an invoice uploaded by a seller. Buyers also have options to reject the invoice, mark as pending, etc.

Pay: Taxpayers can pay the tax due on supplies after claiming input tax credit on invoices locked.

Here, a point to note is that unlike the current return filing process, only the invoices uploaded by the supplier will be considered for input tax credit for buyers. There is no provision for buyers to upload invoices.

This process will also ensure that the new GST returns are largely auto-filled based on invoices uploaded by sellers and accepted by buyers. Also, all the invoices which are not rejected or marked as pending by buyers will be considered to be accepted and locked at the time of filing of return. These steps will reduce the manual effort required to file the new GST return, especially for businesses where number of invoices is huge.

d. Profile-based return filing

Businesses will have the facility to configure their profile with details of the nature of supplies they usually make and receive. Based on this configuration, each business will be shown only the relevant fields of the return to be filled. This is again a step to customize and simplify the return filing process.

e. Facility to file return by SMS for nil return filers

Persons filing nil return (no purchase and no sale) will have the facility to file the GST return by simply sending an SMS.

f. Facility to amend return filed

Businesses will have the facility to amend invoice details and other information of a return already filed. Amendment of a return can be done by filing an ‘Amendment return’ and taxpayers can pay the additional tax payable through the amendment return. This will help them to save on the interest liability applicable if they have to wait for the next return to amend the details.

Hence, there are many changes that the GST Council has planned to ensure that the new GST return filing process is simple and easy for all businesses. However, it is important for businesses to prepare for the changes that are coming and set in place the required processes to ensure a smooth transition to the new GST return filing process. In our upcoming articles, we will help you understand each of these changes in more detail.

Freedom From Fear – Avoid GST Mismatches and Notices

Avoid-GST-mismatches-avoid-GST-notices-and-Penalties

Over the past few months, several businesses across the nation have been plagued with GST notices from the government. If reports are to be believed, there has been a nearly 34% of GST mismatch or underpayment of GST, amounting to an overwhelming deficit of INR 34,400 Crores. Both taxpayers and firms have been served these notices, in response to all GST returns that have been filed between July and December 2017 – leading to a general feeling of fear surrounding GST compliance. As we start off yet another year as an independent nation, presenting a blog on how we can possibly get freedom from fear – and avoid GST mismatches and GST notices.

Reasons behind GST mismatch

To begin with, there are two major reasons, why GST mismatches occur. First, difference between the self-declared GST liability and available input tax credit, after one has filed summary returns in Form GSTR-3B, and provided invoice-wise details of all outward supplies in Form GSTR-1. Second, difference between values appearing in Form GSTR-3B and Form GSTR-2A i.e. the details of purchases from one’s suppliers. Quite understandably, the latter reason is more crucial for the government, as any incorrect ITC allocation against the tax that is actually paid by the supplier, results in GST revenue loss.

Penalties due to GST mismatch

With the emergence of these GST mismatches and GST notices, it can be fairly assumed that the tax department’s previous soft approach towards non-compliance may be coming to an end in the GST era. The government has gone about its business in a stern manner indeed, mandating a time of 30 days to all businesses who have received a notice. Upon issue of the notice, if no explanation is received within the stipulated date, it will be assumed that one has no explanation to provide, and the relevant proceedings will be initiated against a business. Not to forget the stringent GST procedures, which have stipulated an 18% interest on wrongly claimed ITC, which is bound to discourage tax evasion or manipulation practices. Thus, it is important that businesses know what is to be done to avoid GST mismatches and in turn, avoid GST penalties.

Steps you can take to avoid GST mismatch

Under such circumstances, what could a business possibly do to avoid GST mismatches, thus attaining freedom from GST notices?

Work with the right vendors

One of the first steps that can be taken is to work with the right set of GST compliant suppliers. Doing so will ensure, that at no point in time, is there any GST mismatch between the purchase details uploaded by a business and the data uploaded by its suppliers. This will eliminate the possibilities of varying ITC calculations, and could go a long way to ensure that the data in Form GSTR-3B and Form GSTR-2A is consistent.

Maintain records systematically

Another step, is the need for businesses to keep a close watch on the data being fed in while filing summary returns in Form GSTR-3B and while filing final returns in Form GSTR-1. This requires a fairly high degree of GST compliance concentration from businesses, which can only be made possible by adapting a systematic way of maintaining books of accounts and records of transactions. Quite understandably, those businesses who still go about manual records or who maintain business records on spreadsheets, would be finding it a tad difficult to bring in the necessary corrections, and that too within the short time-frame, which is available to respond to such notices. The need of the hour, naturally, is some automated system or GST software system, which enables a business to be compliant.

However, what is encouraging to note is, that even with the original return filing model having given way to a condensed model with Form GSTR-1 and Form GSTR-3B, the government is able to enforce a fair degree of GST compliance across the country. With the simplified return filing model knocking at the door, it will be the right time for businesses to adapt the right technology, and enjoy freedom from GST notices, avoid GST mismatches and stay away from hassles at the end of the day.

28th GST Council Meeting Updates – Rate Changes for Goods

Reduction in GST Rates – 28th GST Council Meeting

The 28th GST Council meeting saw a plethora of reductions in the GST rate, which are listed as follows:

Reduction in GST Rates from 28% to 18%

As per the 28th GST Council recommendations, the rate of the following goods were reduced from 28% to 18%:

  • Paints and varnishes, including enamels and lacquers
  • Glazier’s putty, grafting putty, resin cements
  • Refrigerators, freezers and other refrigerating or freezing equipment including water cooler, milk coolers, refrigerating equipment for leather industry, ice cream freezer etc.
  • Washing machines
  • Lithium ion batteries
  • Vacuum cleaners
  • Domestic electrical appliances – food grinders and mixers, food or vegetable juice extractors, shavers, hair clippers etc.
  • Storage water heaters and immersion heaters, hair dryers, hand dryers, electric smoothing irons etc.
  • Televisions up to the size of 68 cm
  • Special purpose motor vehicles – crane lorries, fire fighting vehicle, concrete mixer lorries, spraying lorries
  • Works trucks which are self-propelled, not fitted with lifting or handling equipment which are used in factories, warehouses, dock areas or airports for short transport of goods
  • Trailers and semi-trailers
  • Miscellaneous articles such as scent sprays and similar toilet sprays, powder puffs and pads for the application of cosmetics or toilet preparations

Reduction in GST Rates from 28% to 12%

As per the 28th GST Council updates, the GST rate for fuel cell vehicles was reduced from 28% to 12%. In addition, the 28th GSTCouncil also decided to remove the previously applicable compensation cess on fuel cell vehicles.

Reduction in GST Rates from 18% to 12%

As per the 28th GST Council meeting updates, the GST rates of the following goods was decided to be reduced from 18% to 12%:

  • Bamboo flooring
  • Brass kerosene pressure stove
  • Hand operated rubber roller
  • Zip and slide fasteners
  • Handbags including pouches and purses, jewellery box
  • Wooden frames for painting, photographs, mirrors etc.
  • Art ware of cork, including articles of sholapith
  • Stone art ware, stone inlay work
  • Ornamental framed mirrors
  • Glass statues, other than those of crystal
  • Glass art ware including pots, jars, votive, cask, cake cover, tulip bottle, vase
  • Art ware of iron
  • Art ware of brass, copper / copper alloys, electro plated with nickel / silver
  • Aluminium art ware
  • Handcrafted lamps including panchloga lamp
  • Worked vegetable or mineral carving, articles thereof, articles of wax, of stearin, of natural gums or natural resins or of modelling pastes, including articles of lac, shellac
  • Ganjifa card

Reduction in GST Rates from 18% to 5%

As per the 28th GST Council meeting highlights, the GST rates of the following goods were reduced from 18% to 5%:

  • Ethanol for sale to oil marketing companies for blending with fuel
  • Solid bio fuel pellets

Reduction in GST Rates from 12% to 5%

As per the 28th GST Council meeting news, the GST rates of the following goods was reduced from 12% to 5%:

  • Chenille fabrics and other fabrics
  • Handloom dari
  • Phosphoric acid – fertilizer grade only
  • Knitted cap / topi having retail sale value not exceeding INR 1000
  • Handmade carpets and other handmade textile floor coverings, including namda / gabba
  • Handmade lace
  • Hand woven tapestries
  • Hand-made braids and ornamental trimming in the piece
  • Toran

Reduction in GST Rates to 0%

This was probably the most lauded section of the 28th GST Council changes. At the 28th GST Council meeting, the GST rate for the following goods were culled down to 0%:

  • Stone / Marble / Wood Deities
  • Rakhi (other than that of precious or semi-precious material)
  • Sanitary Napkins
  • Coir pith compost
  • Sal Leaves, siali leaves and their products
  • Sabai Rope
  • Phool Bhari Jhadoo which is a raw material for brooms
  • Khali dona
  • Circulation and commemorative coins, sold by Security Printing and Minting Corporation of India Ltd to the Ministry of Finance

Clarifications in GST Rates – For specific goods

Apart from GST rate reductions, certain clarifications with regards to GST rates of certain goods also formed part of the 28th GST Council highlights.

Fabrics

Fabrics attract GST at the rate of 5%, but it was subject to the condition, that refund of accumulated ITC because of inverted duty structure will not be allowed. However, considering the difficulties faced by the fabric sector, it was decided in the 28th GST Council meeting, that the refund will henceforth be allowed – and the same will be applicable on all purchases post the notification is issued.

Footwear

A GST rate of 5%, which was earlier applicable to footwear priced up to INR 500, will now be extended to footwear priced up to INR 1000. Footwear having a retail sale price of more than INR 1000, will continue to attract 18% GST.

Other Clarifications

  • Milk enriched with vitamins or minerals salt (fortified milk) will be exempt from GST
  • Water supplied for public purposes (other than in sealed containers) will be exempt from GST
  • 5% GST will be charged on Pool Issue Price (PIP) of Urea imported on government accounts for direct agriculture use, instead of assessable value plus custom duty
  • 5% GST will be charged on both treated (modified) tamarind kernel powder and plain (unmodified) tamarind kernel powder
  • 5% GST will be charged on beet and cane sugar, including refined beet and cane sugar
  • 5% GST will be charged on marine engines
  • 5% GST will be charged on unpolished kota stone and similar stones (other than marble and granite)
  • 18% GST will be charged on ready to use polished kota stone and similar stones (other than marble and granite)
  • Coal rejects from washery, arising out of cess paid coal on which ITC has not been taken, will be exempt from GST compensation cess

Enabling option of single E-way Bill for multiple vehicles

e-way-bill-for-multiple-consignments

With Delhi going live with the e-way bill on 16th June, the entire country has now moved into the era of the e-way bill, both at inter-State as well as intra-State levels. With no major glitches having been reported across the country, the implementation can be called a success, with lakhs of businesses using the e-way bill portal to generate e-way bills day in and day out.

In the meanwhile, the government and the GST Council have been working to simplify the e-way bill experience for businesses. One of the problems that came to its notice was that there was no provision for a single e-way bill for multiple vehicles. Such a scenario is true especially in two cases:

  • The original consignment is a huge one and is transported initially from the origin to the point of trans-shipment via rail or via a big vehicle. But for transporting from the point of trans-shipment to the destination, a similar sized vehicle is not available
  • The original consignment is reasonably sized, but the destination is in a hilly area where a big vehicle, although present, cannot be used for delivery of that consignment

In both these cases, the consignment is being split into parts during the second leg of the trans-shipment and then transported to the destination across multiple smaller vehicles. This meant that businesses needed to generate multiple e-way bills for the same consignment, one for each vehicle that was being used for the shipment, which meant loss of time and energy.

In order to solve this problem, the portal has now provided a multi-vehicle option in the e-way bill, i.e. you can now have a single e-way bill for multiple consignments, being transported across multiple vehicles.

Let us understand how you can generate the same on the e-way bill portal.

How to generate a single e-way bill for multiple vehicles?

The following are the steps to be followed:

  • Generate the e-way bill with source and destination as per the document or the invoice
  • Complete the movement of the consignment from the origin to the point of trans-shipment
  • Navigate to the e-way bill portal, select the ‘Change to Multi-vehicle’ option, and update the particular e-way bill for multiple movement, wherein, you specify the total quantity of the consignment and also, the starting point and ending point of the route, where you have the requirement of single e-way bill for multiple vehicles
  • Update ‘Part-B’ of the e-way bill, with the vehicle number, quantity loaded etc., once the consignment has been split, and loaded on to the smaller vehicles
  • Initiate movement of the consignments

Let us see, how do we execute the steps to enable the provisions of single e-way bill for multiple consignments via multiple vehicles, on the e-way bill portal.

Enabling multi-vehicle option for an e-way bill

As discussed above, the first step is to select the ‘Change to Multi-vehicle’ option from the main menu of the e-way bill portal. On doing so, a screen will open where you need to punch in the e-way bill number, for which you want to enable the multiple vehicle option under e-way bill.

enabling-multi-vehicle-option-for-an-eway-bill

  • Enter E-way Bill No – Punch in the e-way bill number here, for which you want to enable the option of single e-way bill for multiple vehicles. On doing so, the EWB details will show up
  • Do you wish to move the goods in Multiple vehicles – Set as Yes. This will open up some fields under the Multiple Vehicle Movement Details section
  • Mode of Transport – Select Road / Rail / Air / Ship
  • From Place* – Specify the origin
  • To Place* – Specify the destination
  • Total Quantity* – Specify the total quantity of the original consignment
  • Unit* – Specify the unit of measurement for the quantity specified
  • Reason* – Specify the reason to go for multi-vehicle option
  • Remarks* – Any additional remarks

Following these steps will complete the generation of e-way bill for multiple conveyance via multi-vehicle for the specified e-way bill.

Updating multiple vehicle details

Once the option is enabled, you will need to update the e-way bill when multiple vehicle details, whenever any part of the consignment is ready to be moved. Once the first part of the consignment has been loaded onto the first vehicle, and ready to be moved, you can revisit the e-way bill portal and select the ‘Update Vehicle’ option, and feed in the e-way bill number. On doing so, a ‘Multiple Vehicle Updations’ screen will be opened.

update-vehicle-number

If you notice, the groups that are available for selection are in the format “From Place – To Place, Quantity Unit”, as per what you have specified for that e-way bill previously. In the example shown above, some goods whose total quantity is 1000 Tons is being transported from one place to another.

Once you select the group, Part-B of the e-way bill will open up for you to feed in the vehicle details:

vehicle-details

  • Mode of Transport – Select Road / Rail / Air / Ship
  • Vehicle No* – Specify the vehicle number in the correct format
  • Place of Change* – Specify the place
  • Reason* – Specify the reason for change of vehicle
  • Transporter Doc. No. & Date – Specify the document no. if any and date of such a document
  • Quantity in Vehicle* – Quantity being transported in this part of the consignment. In the example above, the first part of the consignment, transported by the first vehicle is carrying 200 Tons, which means there is still 800 Tons to be accounted for.

This will be repeated multiple times, till all the parts of the consignment have been dispatched across multiple vehicles, resulting in a single e-way bill for multiple consignments.

The print of such an e-way bill will look as follows:

Part A of multi-vehicle e-way bill

multi-vehicle-ewaybill

Please note that the field ‘Valid Until’, contains the phrase ‘Multi Vehicle’, indicating that this is a multi-vehicle e-way bill.

Part B of multi-vehicle e-way bill

partb-multi-vehicle-eway-bill

The details of all the vehicles involved in this consignment will be mentioned here, along with details of origin, destination and quantity being carried.

One Year of GST: the Workings of the Technology-First Tax System

1-year-of-GST

I am writing as one of the people who have been in the ‘middle’ of this enormous tax reform – since we provide software solutions to businesses who need to comply with GST. This has given us a view on both sides of the bridge – the Government/GSTN side, and the Business/Practitioner side. The first who needs compliance, and the second, who need to comply.

 Getting a country which is the size of India to do a complete transformation has been extraordinary in itself. Despite all criticism – including mine – on how it could have been better, it remains something that everyone should pat themselves and each other on the back for.

Personally, the most important take-away was the continued expression of good intent by the Government to learn and correct. And not just expression of intent, it was also executive action. Whether it was responding to pains by changing/removing rules and processes, or changing tax rates, or even specific clauses of law – they have stood by the resolve to ‘make it happen’.

Yet, the original promise of GST is expected to come alive only in the months ahead – and their remains a growing urgency for actualizing the latest decisions on this subject taken in the first few months of this year. This relates to the ‘simplification of GST’, and its cascading impact on both rules and law, so that compliance becomes easier, and evasion, more difficult.

The past year has shown that a semi-complete technical process (GSTR-1 but no GSTR-2 – for example), creates not just problems for the Government, but also the taxpayer – since there is no simple way to complete compliance. It leads to confusions of information, conflicts of information, and increases suspicion and mistrust. It penalizes the honest and rewards the dishonest.

 

The past year has also shown, that being a technology-first tax system, it is far easier to detect the anomalies early rather than late, and therefore, is a strong pointer to the benefits of ‘simplification with completeness’. All the decisions have been taken for what can be called GST 2.0. What we await is the announcements for its actualization. What we await, is the realization of the core promises of GST. What we await, is the economic acceleration that it is capable of.

Bharat Goenka
Managing Director, Tally Solutions Pvt. Ltd.