GST High Powered Committee On Return Filing - Representation by GST Research Foundation
November, 30th 2017
GST Research Foundation (GRF) consisting of professionals practicing in the field of GST made a detailed representation toSh. Dheeraj Rastogi, Hon’ble Commissioner GST Council & Member of High Powered Committee on Return filing.
The Hon’ble Commissioner has responded in his communication of 28.11.2017 :
Thanks all of you for sending a number of valuable suggestions. The meeting on Return Simplification today held preliminary discussion on the issue and the course of action to be taken.. The brief outline of the discussion and points for consideration were as follows:
Short Term issues affecting return filing and compliance
Long Term Compliance regime to be put in place
It was felt that let the Long term direction be finalised first and then one can adjust Short Term Compliance issues accordingly so that it does not result into changing/ redesigning system too often.
Points for consideration for suggesting the Long Term Compliance Regime and changes in returns formats are as follows:
(a) Frequency of Returns - whether common to all or different for different set of Taxpayers
(b) Tax Payment Frequency vis a vis (a) above
(c) ** (internal to the Council)
(d) Step-wise filing or One Step Filing
(e) Matching and return - intertwined together or independent of each other
(f) Linking compliance of all past returns (i.e. pending liabilities) with the subsequent returns or they be treated independently return periodwise
(g) HSN Data Capture requirement
(h) Linking Dr and Cr Notes, advances etc with Invoices or otherwise
It is therefore requested that the suggestions submitted by all of you, if arranged in the above structure, would be easier to consider and achieve the results in shortest possible time as well as to remove duplicity. It will also be good from the point of view as some of these aspects, may not have been considered by you while making the suggestions and they may be of incremental nature pre-supposing certain things.
This structured way of approaching the problem will result in a comprehensive suggestion for consideration and implementation.
As regards, Short Term issues affecting return filing and compliance are concerned, these may be finalised after the Long Term ones are finalised. Further, many of them may be in the nature of bugs in the current system or malfunction of Software. All such issues which pertain to be in the nature of bugs in the current system or malfunction of Software, will be flagged separately to GSTN.
Suggestions from above perspective (will) be taken up in the next meeting.
TEXT OF THE REPRESENTATION :
At the outset we humbly thank the Committee on GST returns for giving us this opportunity of highlighting major problems faced by Trade and Professionals while filing Goods and Services Tax (“GST”) Returns. Humble attempt has been made by professionals across India with the sole objective of maximising user acceptance of GST return filing system.
We highlight below mentioned issues and its probable suggestions for your kind consideration, as under:
Suggestions in respect of Form GSTR-3B
User interface is cumbersome
Right now to file a simple 3B form, a user has to interact with 6 different screens, with lots of additional steps of going back & forth and saving data, which overall adds to user’s frustration. Too much graphics (as well as animations) have been used, which can be easily done away with.
The online form 3B user interface should be simple and must be covered by single screen instead of multiple screens at present. This will save user’s time in running from one screen to another screen resulting in saving of overall time user spent on portal. With single screen user will also get holistic picture of his 3B return. Lesser time of user will result in indirect scalability of portal’s user handling capacity.
Multiple processes of Upload, Submit, Set off and Filing:
Any return has no legal sanctity or meaning in the eyes of law till returned data is signed.
Right now taxpayer has to got through multiple steps of uploading data, save, submission, set off and then finally signing it. This creates lots of confusion amongst taxpayer community and simple form is being treated as a bulky one.
The difference between Saved, Submit and Filed should be removed and it should be replaced with a simple process of “Sign and Submit”. Till the point return is “Signed and submitted”, user/taxpayer should be able to change any data in his return, as he deems fit.
No facility to preview taxpayer’s net tax liability
A Taxpayer’s net liability is computed after adjusting ITC already available, fresh ITC and balance available in Cash Ledger. Right now, purview and submit option only display Gross Output Liability as well as Gross ITC being claimed in tax period.
Once the preview and submit option is clicked, the system should auto calculate and display the liabilities under various heads like CGST, SGST, IGST considering balances in cash ledger, credit ledger and the current month data, which will lead to accuracy and also the taxpayer can know how much payment he must make and under which head.
Negative tax figures not allowed in table 3.1
As per instructions to form 3B: Quote Value of Taxable Supplies = Value of invoices + value of Debit Notes – value of credit notes + value of advances received for which invoices have not been issued in the same month – value of advances adjusted against invoices.
It is quite possible that in a particular month, value of credit notes may exceed value of invoice, resulting in negative values as well as negative output liability. Right now online form does not accept negative output liabilities, resulting in depriving taxpayer of his legitimate right. Similarly, in case of supplier of goods/services covered by RCM provisions u/s 9(3)/5(3), online form does not allow taxpayer to enter Zero Tax in table 3.1(a).
Online table 3.1 of form 3B should be enabled to accept values other than positive values.
Details asked for in form 3B is bulky and has no direct relation with GST Liability
Table no. 3.2 (further bifurcation of interstate supplies to Unregistered persons and Composition Taxable Persons) and Table no. 5 (Value of Exempt, Nil - rated and Non GST Inward Supplies)
Please remove the details asked in table no. 3.2 & 5 as it has no tax impact. In any case, tax liability is already captured from table 3.1.
Absence of Differential Due Dates
Due date of Small as well as Big Tax Payer’s falls on same on due date. This creates pressure on system and reduce response time of system.
Allow differential dates for filing. This will give server breathing space as well.
GSTN has already implemented this system while fixing Due Date of GSTR-1 for the month of July 2017 wherein differential due date of 3rd November 2017 was fixed for Taxpayers having Turnover of more than 100 Crores and 10th November 2017 for others.
On similar lines, differential due dates may be implemented.
Too much compliance for Small Taxpayers
Presently even small tax payers are made to file 3B on monthly basis, whereas Tax recovered from them is highly insignificant. Indirectly it is a monthly compliance in the name of quarterly compliance.
Kindly allow taxpayers having Aggregate turnover below 1.5 crores to file quarterly GSTR-3B.
Absence of Revision Facility for form GSTR-3B
Law does not put embargo on correcting GSTR-3B. By not putting in place system for subsequent correction / revision of GSTR-3B, for filed returns, government is postponing its own Tax collection to next month. Further revision of GSTR-3B is not affecting counterparty ITC claim.
Revision/Correction of filed 3B return should be allowed. At present there is no provision for revision of return after it is filed. Returns are being filed by large taxpayers as well as by small taxpayers. However, in case of large taxpayers returns are filed by large team of consultants and in case of small taxpayers returns are generally filed by small taxpayers themselves. Thus, system for revision of return should be allowed. Law should not penalize taxpayers for small errors rather than it should be taxpayer friendly.
No Quick fix solution for Tax Payment made under Wrong Head.
If for any reason while making Tax Payment, major code or minor code is wrongly inserted, in absence of GSTR-3, working capital of Tax Payer is getting blocked.
Option to apply for refund of excess in cash ledger should be enabled in form 3B as well. A lot of people have paid tax in wrong heads and are unable to utilise it. This option is available only in table 14 of GSTR 3filing of which is being delayed. Or In other words, a table similar to table 14 of GSTR-3 should be incorporated in 3B as well.
Alternatively Table 14 of GSTR 3 to be made a separate module (just like Table 6A of GSTR-1 (or GSTR 1-E) so that in case of wrong payment, taxpayer can get immediate refund.
Lack of choice of Utilisation of Credit and Cash Ledger Balance.
Section. 49(5) of the CGST Act, permits cross utilization of excess credit of CGST and that of SGST for payment of IGST. It is also pertinent to mention that the provisions of S. 49(5) of the CGST Act does not provide for any sequence for such cross utilization of excess credit.
However, the Common Portal, mandates to offset complete excess credit of CGST against payment of IGST first, before proceeding to offset the excess credit of SGST against payment of IGST
Let the taxpayer decide, how much balance he wants to cross utilize for payment of taxes for each head from the balance available, in accordance with provision of S. 49(5).
Further, under payment of taxes tile, after set-off of tax liabilities only tax adjustment figures are displayed and Gross & Net Liability figures disappears. This anomaly should be corrected immediately.
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Suggestions in respect of Form GSTR-1
Offline Tool provided for GSTR-1 is not comprehensive enough.
Right now a taxpayer has to be mandatorily use certain tables of online form, as a part of return filing process since present offline tool is not comprehensive enough to handle all tables of GSTR-1 and GSTR-2
The offline tool should contain all sections like documents details section.
Eg., Table 8, Table 9, Table 13 etc. are missing in present offline version 2.1 released by GSTN.
Saving of Invoice data online takes lot of time
It takes a lot of time and effort to save the data and filing. Time taken by GSTN to update and show data generally varies from 1 day or more. For better user acceptability this should be reduced to few minutes.
Correcting/Deleting bulk data online is a mammoth task and very cumbersome.
Please simplify the entire process of filing GSTR-1.
There should be a delete all / reset option for the entries uploaded. If a wrong file is uploaded, reset button should be present in online forms.
Many details asked while filing GSTR-1 is not required
Furthermore, and even best of ERP system is not capable of providing such details handily
Entire table 13 (related to documents) should be removed altogether. It was never asked in VAT / Service tax regime either. Furthermore, it is a mere repetition of information asked separately in various forms and wastage of nation’s productive time. E.g. Outward invoices details is captured in B2B table of GSTR-1, RCM invoice details is captured in table 4A. Similarly, outward challan details of goods sent to job worker is captured through form ITC-04
Further no meaningful purpose will be served by collecting such details where ITC is allowed only on counterparty check.
Alternatively, these details can be asked for in annual return.
Too Many Return Compliances
Imposing 49 statement/returns (12 GSTR-3B, 12 GSTR-1, 12 GSTR-2, 12 GSTR-3and 1 GSTR-9) (which does not include other returns like ITC-04 etc.) even on big tax payers is unnecessarily increasing compliance cost, more so now with Quarterly filing of GSTR 1, 2 & 3 by small taxpayers even matching concept has shifted to quarterly basis.
Return filing periodicity must be made quarterly for all taxpayer for GSTR-1, 2 or 3, as government is any way collecting its tax only monthly basis through GSTR-3B or in alternate only for Taxpayers having turnover of more than 100 cr be required to file Monthly GSTR-1, 2 & 3 and rest be permitted to file Quarterly Returns.
Further Due date of filing GST Returns for big and small Tax Payer should fall on different due date for effective server response
Dichotomy in date of Liability vis-a-vis eligible ITC for newly registered Taxpayers.
Once Taxpayer has applied for GST Registration, there is no legal justification for permitting ITC only from the date of issuance of registration certificate. Taxpayer’s ITC of intervening period (from date of liability to date of registration) should be permitted.
Kindly permit Taxpayer to insert Inward invoice from date of liability so as to allow recipient avail ITC of that period. i.e. Inward supply used / consumed for making taxable outward supply should be eligible for ITC to avoid double taxation.
This is case where registration is granted in another month, instead of month of registration application.
Asking user to punch each and every Sales Invoice is not practicable.
Invoice level detailing is not required. Asking users to feed details of each and every invoice is not practised in any part of the world.
Instead of invoice wise entries, only GSTIN wise entries should be taken. This will ease out the lengthy process or in other words Instead of Invoice level matching it should be supplier to buyer level matching.
Redundant tables in GSTR-1
Two separate B2C tables i.e. table no. 5 & table no. 7 can be merged.
Table no. 5: “Taxable outward inter-State supplies to unregistered persons where the invoice value is more than 2.5 lakh”and Table no. 7: “Taxable supplies (Net of debit notes and credit notes) to unregistered persons other than the supplies covered in Table 5” both should be combined in one Table
There should be only 2 Tables: B2B & B2C.
More number of tables, creates unintended errors and increase compliance overall time.
Export refunds stuck due to mismatch in Table 6A and icegate data
Many export refunds are stuck due to wrong quoting of invoice particulars in GSTR-1. This issue is more aggravated due to lack of availability of GSTR-1 of August 2017
As filing of GSTR-1 of August is not enabled as of today, at least edit option for Table 6A of July 2017 return should be introduced online immediately.
Three separate statements/returns for one Tax period is too burdensome.
Instead of three different returns viz GSTR-1, 2 and 3 one combined Return be prescribed.
Every Taxpayer should be allowed to file such Combined Return on Quarterly basis. Thereafter Mismatch report should be generated by GSTIN and Tax payer be given 2 months’ time to reconcile difference before unmatched credit is added to outward liability of recipient. Such system was successfully followed by many states in old regime.
Absence of Table to report details of Recipient who have not paid full Consideration along with Tax in full within 180 days.
In present Form GSTR-2, Table 11(A)(a) a recipient is required to reverse ITC in case of Non payment of consideration along with Tax in 180 days, however corresponding details are not collected from supplier in GSTR-1.
Capturing of such details will act as deterrent and also act as early warning to Department about Unscrupulous Taxable Person / Activities.
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Suggestions in respect of Form GSTR-2
Present system of invoice level matching is a strain on nation’s resource & puts entire burden on Taxpayers shoulders.
Mechanism should be developed that taxpayer needs to upload just the purchases and automatically GSTN system should figure out the mismatch invoices. Matching every single entry manually from thousands of entries by Tax payer is not practicable. Instead of invoice wise matching, GSTIN wise matching should be implemented or in other words Instead of Invoice level matching it should be supplier to buyer level matching.
Input, input service or capital good segregation information should be removed.
Selecting such details on Invoice level is highly time consuming.
Furthermore GSTR-2 gives option to taxpayer to select ineligible credit at invoice level as well as at gross level separately. Option to select eligibility/ineligibility first at invoice level and then at gross level serves no real purpose.
Collecting such trivial details should be avoided or in the alternate only summary details be asked in GSTR-2.
Further Invoice level selection of eligibility/ineligibility should be removed for ease of compliance.
Recipient is not allowed to modify POS details
If for some reason supplier has wrongly selected incorrect POS, only option available is to request recipient to reject such Inward supply and then again Recipient adding Inward invoice with correct invoice and same will have to be accepted by Supplier. This is a too cumbersome and uncalled-for process.
Allow amendment of PoS by recipient subject to check and balances (subsequent acceptance by supplier)
Inward Supplies subject to Section 17(5)
Technically Taxpayer is required to furnish details of such inward supply availed from Registered Taxpayer.
Inward supply from Registered person when not eligible for ITC, the requirement to furnish such information should be eliminated.
E.g., Food - Restaurants do not upload the transaction as B2B. Taxpaye be exempted from inserting inward supply details of Section 17(5) Transactions. Details of transaction where recipient does not want to claim credit/ ineligible for credit should also not be insisted in monthly / quarterly returns.
No option available for of consolidated Accept / Reject / Keep Pending actions
Presently Taxpayer can take such action only on a single invoice at a time. This takes lot of time and energy of Taxpayers.
Option to accept / Reject / Keep Pending multiple invoices should be provided in online mode.
No option available for auto populated Import Bill of entry in GSTR-2
Bill of entry details to be auto populated from the customs portal (ICEGATE) to reduce further mismatch between customs & GSTR 2 captured.
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Common Suggestion for GSTR 1 & 2
HSN code requirement for each and every Commodities / Services is very cumbersome
Only for Top 10 (Ten) Commodities / Services HSN codes should be asked for. This will effectively securer Revenue Interest and will make system user friendly with wide acceptability.
HSN Summary and multiple UQC
Presently HSN summary allows only one UQC. Therefore to provide details Taxpayer is required to convert Multiple UQC, which is very common in business parlance. Steel Bars may be sold in Kgs as well as Number which are 2 different UQC for same commodity.
Multiple UQC for a given hsn code.in table of HSN summary may be allowed.
Irrelevant Invoice Number Matching / Validation.
Error in Punching Invoice Number is very common and on this ground alone ITC claim may be rejected.
CGST Rule 69 be modified and Invoice Number / Debit note should not be matched for ITC credit. Only GSTIN and Tax amount may be matched.
Simple One touch NIL Return
Presently even for NIL GSTR-1, 2 & 3 Returns Taxpayer is required to rendezvous with system thrice over a period and thereby unnecessary burdens GSTN system.
For filing NIL Return, simple declaration like TDS Return should be good enough, further
Comprehensive Preview Option
Lack of Preview option may cause unintended error and thereby promotes amendments.
Return preview in PDF should be available with offline tool also.
One cash ledger instead of separate cash ledger(s)
Credit in Cash ledger is segregated into different heads which makes taxpayers unable to set off the cash credit of one head for other, which can be possible if there is a uniform cash ledger without minor codes. E.g.: If a person has 1,000/- in interest & a short amount of 100/- in late fee then again, he need to transfer amount from Bank Account although an excess amount is lying Electronic cash ledger.
It is suggested that in cash ledger there should only be one major head without any minor heads. GSTN offset facility is capable of capturing Tax payment into major heads viz IGST / CGST / SGST and minor heads Viz. Tax/ Interest / Late fees / Penalties etc for Government Accounting Purpose. Present Income Tax TDS System allows such payment/offsetting without getting into Major and Minor code successfully.
Others misc. suggestions
No Automatic Transfer of PLA Balance from Pre-GST regime
For suppliers registered under excise, they are required to file only refund application for unutilised Balance in PLA under existing law. At present they do not have facility to carry forward such balances in TRAN-01.
Unutilised Balance in PLA may be allowed to be carry forward through tran-01 or alternatively may be transferred to CGST cash ledger.
Mapping of Debit / Credit note with Invoices.
Present system only allows mapping of single Debit / Credit Note against single Invoice, thereby forcing issue of Multiple Debit / Credit Note.
A Debit / Credit note should be allowed to be mapped against multiple invoices.
Better Error Reporting / Error Handling.
Present system of Error Reporting / Error Handling does not pinpoint Errors accurately.
Excel / CSV download option should be available for the entries uploaded. Error reporting be streamlined and should pinpoint exact cause of errors.
We trust our suggestions would be positively considered by Committee.
GST Research Foundation is a society integrating the Tax Assessees, Tax Administrators, Tax Practitioners, Judiciary, Academics and Government Policy Makers across 30 States, 9 Union Territories and Central Government in India for deriving cutting edge economic and taxation policies for development of the nation on community serving model and is compliant with UN 2030 Sustainable Development Goals Agenda.
Presentation prepared by:
GST Research Foundation (GRF)
CA. Atal Bhanja CA. Deepak Bholusaria CA. Jignesh Kansara
Convenor &nsp; Committee Member Committee Member
Under Guidance of: Adv. Rakesh Chitkara
With active support of:
CA. Harini Shridharan, CA. Divya Bansal, Mr. M P Vasudevan, CA. Ramakant Hemani, Mr.Gawesh Narula, CA. MONISH, CA. Deepak Kucheria, CA. Sanjay sharma, CA. Mitesh Gogri, Mr. Sanjay, CA. Bharat Rattan, CA. Guruprasad , CA. Kishore, CA. Arpit Haldia, CA. Iqbal Singh Grover, CA. Shweta Nahar, CA. Avijit kumar, CA. Annapurna Srikanth, CA. Kidhin D Panjabi, Mr. U S Parab, CA. Manan Karvat, CA. Dharmesh Tailor, CA. Bharat, CA. Bharat, CA. Jay Arlani , CA. Pragya Singh, CA. Shravan Kumar R, CA. Suhas kelkar, Mr. Mukesh Bhalala, Adv. Amit Hasmukhbhai Oza, CA. Mudit G Bhansali, CA. Prakhar Bansal, Mr. Managesh Rajwade
By: Rakesh Chitkara - November 29, 2017
Discussions to this article
Very informative article placing the practical problems before the Council requesting the honour to make the trader life easy by simplifying the compliance more easy, so that business can actually concentrate on doing business rather than running behind consultant or expert in getting the complex compliance complied.
I support the view that three return viz. GSTR1, 2 & 3 will snatch good amount of time of the traders. This should be made one. Ask all the relevant and required information in single return inplace of asking various information in different table of the return. Make the GSTR return and software and program so robust that it picks the required information from the single return and make management information statement for the review of the government.
Yes, the invoicewise matching for allowing input tax credit is cumbersome. In many small businesses the owner does not afford to hire full time accountant but now under GST full time manpower is required to do the reconciliation.
Thanks to CBEC that the due dates has been extended. The dealer got some time to prepare themselves on the IT part. But this extension of due dates is piling up the humongous task which is going to impact the tax expert, accountant and business a lot.