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New GST returns system may not significantly benefit small taxpayers
August, 08th 2018

The GST Council’s decision to allow taxpayers with an annual turnover of less than ?5 crore to file quarterly returns will not benefit the small taxpayers as much as expected, according to tax analysts.

While the move may seem beneficial for small taxpayers as it reduces their compliance burden in terms of how often they have to file the returns, this benefit will be offset by the burden imposed by the regularity with which they will have to pay taxes and upload invoices.

“Assesses with turnover of up to ?5 crore are classified as small taxpayers and above ?5 crore are termed as large taxpayers,” said Parag Mehta, partner, NA Shah Associates. “GST returns will be filed on a quarterly basis by the small taxpayers and on a monthly basis by the larger taxpayers.”

“However, the issue again for small taxpayers is the payment of tax has been fixed on monthly basis,” Mr. Mehta added.

“Further, to ensure that the large taxpayers get their input tax credit on monthly basis, the small taxpayers will also have to upload their sales invoices on monthly basis. Hence, the compliance level may reduce a bit but not substantially for the small taxpayers.”

That said, analysts say that the benefit arising from filing quarterly returns, and the new forms the GST Council has approved for the purpose, are nevertheless significant.

“The proposal opens up a whole range of options and flexibility to the small taxpayers having turnover of up to ?5 crore to file returns based on their nature of transactions undertaken i.e. Sahaj (B2C supplies), Sugam (B2B + B2C supplies), and quarterly return (akin to main monthly return),” Aditya Singhania, deputy general manager of GST at Taxmann, wrote in a note. “The proposed monthly GSTR along with two annexures… has undoubtedly eased the compliance format by consolidating the numerous tables in each of the earlier GSTR 1 and GSTR 2 forms.”

The other benefit from this approach is the reduction in the load on the GST Network servers at any given point.

“Taxpayers can rejoice with the number of returns coming down from 36 returns a year to a half, that is, five in a year for quarterly filing or 13 in a year in the case of monthly filing,” Archit Gupta, Founder and CEO of ClearTax said.

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