In today’s blog, we will talk about GST Return, its types and how to file them. All registered businesses are required to file monthly, quarterly and/or annual GST Returns based on the type of business to take the benefit of Input Tax Credit. Let’s dive deeper in the coming sections.

What is a GST Return?

A GST return is a document containing details of income which a taxpayer is required to file with the tax administrative authorities. The detailed document is then used by tax authorities to calculate tax liability. In simple words, it showcases the income of the registered taxpayers.

As per the GST Act, a registered dealer has to file GST returns that include:

• Sales

• Output GST (On sales)

• Purchases

• Input tax credit (GST paid on purchases)

To file GST returns, a taxpayer needs to have GST compliant sales and purchase invoices.

Who all are required to file GST Returns?

Any regular business is required to file two monthly returns and one annual return in the GST regime. Hence, making it 26 returns in a financial year.

Now, with the advanced technology, a taxpayer only has to manually enter details of one monthly return – GSTR-1 and the other return – GSTR 3B will get auto-populated by deriving information from GSTR-1 filed by the taxpayers and his/her vendors.

However, there are special cases under GST who need to furnish separate returns and these include –

• Input Service Distributors

• Non-resident taxable persons

• Persons allotted with Unique Identification Number (UIN)

• Taxpayers registered under Composition Scheme

• Persons required to deduct TDS or collect TCS under GST

What are the various types of GST Returns?

Following is the list of all the returns to be filed as prescribed under the GST Law along with their purpose and frequency.

1. Form GSTR – 1 :  It contains the details of outward supplies of taxable goods or/and services affected. One needs to file it monthly.

2. Form GSTR – 2 :  It contains the details of inward supplies of taxable goods or/and services affected claiming the ITC. One needs to file it monthly.

3. Form GSTR – 3 :  It is a monthly return on the basis of finalization of details of outward and inward supplies along with tax payment. One needs to file it monthly.

4. Form GSTR – 3B :  It is a simple return in which summary of outward supplies along with ITC is declared and tax payment is affected by a taxpayer. One needs to file it monthly.

5. Form GSTR – 4 :  It is a return filed by a taxpayer registered under the composition levy. One needs to file it quarterly.

6. Form GSTR – 5 :  It is a return that is required to be filed by a Non-Resident foreign taxable person. On needs to file it on a monthly basis.

7. Form GSTR – 6 :  This is the return for an Input Service Distributor which requires a monthly filing.

8. Form GSTR –  7 :  It is a return to be filed for the authorities deducting tax at source and requires a monthly filing.

9. Form GSTR – 8 :  It is a simple return which contains the details of supplies effected through e-commerce operators and the amount of tax collected. One needs to file it monthly.

10. Form GSTR – 9 :  A very important and only return that requires annual filing for the financial year by a normal taxpayer.

11. Form GSTR – 9A :  It is also an annual return which needs to be filed by a taxpayer registered under the composition levy anytime during the year.

12. Form GSTR – 10 :  This return has to be filed only once, when GST registration is cancelled or surrendered and is a Final Return.

13. Form GSTR – 11 :  A return which has the details of inward supplies needed to be furnished by a person with UIN  and claiming a refund. One needs to file it monthly.

GST Tip: It is important to know that all the returns are not in function and some of these were introduced but were suspended.

What is the late fee for not filing returns on time?

As we know, there are always provisions for not following the prescribed time frame, so is the case with GST returns. If one misses the time limit and does not file them within the time then he/she would stand liable to pay interest and a late fee.

The interest is 18% per annum and is calculated by the taxpayer on the amount of outstanding tax that has to be paid. The time period for the interest starts from the very next day of the last day of filing to the date of payment.

The provisions for a late fee is Rs. 100 per day per Act, meaning it is Rs. 100 under CGST and Rs. 100 under SGST, making it a total of Rs. 200 per day. The maximum amount is Rs.500.

GST Tip: There is no late fee on IGST.

For more in-depth information on topics related to GST and GST Returns, stay tuned!

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• Who all can opt-in for Composition:

• Steps to opt-in for Composition:

1. Log in to the Taxpayers’ Interface.
2. Go to Services > Registration > Application to opt for Composition Levy
3. Fill the form as per the form specification rules.
4. Click on Submit.

• Submission of Stock Intimation Details:

• Who comes under eligible taxpayers:

1. Rs. 1.5 Crore for normal taxpayers.
2. Rs. 75 lakh in the case of an eligible registered person, registered States, namely: –(i) Arunachal Pradesh, (ii) Manipur, (iii) Meghalaya,(iv) Mizoram,(v) Nagaland,(vi) Sikkim,(vii) Tripura,(viii) Uttarakhand.
3. For taxpayers dealing in only services or mixed supplies, this quantum is Rs. 50 Lakh.

• Who comes under non-eligible taxpayers:

1. any supply of goods which are not liable to be taxed under this Act.
2. inter-state outward supplies of goods.
3. supplies through electronic commerce operators who are required to collect tax under section 52.
4. a manufacturer of notified goods.
5. a casual dealer.
6. a Non-Resident Foreign Taxpayer.
7. a person registered as Input Service Distributor (ISD).
8. a person registered as TDS Deductor/Tax Collector.

• Return or Payment:

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• Perks of GST for business and industry – 

1.    Easy compliance: A robust and comprehensive IT system is the core foundation of the GST regime in India. Henceforth, all the taxpayer services such as registrations, returns, payments, etc. are available to the taxpayers online, which make the compliance pretty easy and transparent.
2.  Removal of cascading: GST is providing a reduction in the hidden costs of doing business. Developed as a system of seamless tax-credits throughout the value-chain, and across boundaries of States, it ensures that there is minimal cascading of taxes. 
3. Uniformity of tax rates and structures: GST has increased the ease of doing business and certainty by ensuring that indirect tax rates and structures are common across the country. Basically, GST has made business in the country tax neutral, irrespective of the choice of place of conducting business.
4. Gain to manufacturers and exporters: GST has reduced the cost of locally manufactured goods and services which in turn has increased the competitiveness of Indian goods and services in the international market and giving a boost to Indian exports as the compliance cost has been reduced due to GST. 
5. Improved competitiveness: Due to the introduction of GST, there has been a significant reduction in the transaction costs of doing business which has eventually lead to an improved competitiveness for the trade and industry.

• Perks of GST for Central and State Governments – 

1. Better controls on leakage: GST has resulted in better tax compliance due to a strong IT infrastructure. And the seamless transfer of input tax credit (ITC) from one stage to another in the chain of value addition, there is an in-built mechanism in the design of GST that has incentivized tax compliance by traders.
2. Simple and easy way to administer: Multiple indirect taxes at the Central and State levels have already been replaced by GST. With a strong end-to-end IT system, GST has made it simpler and easier to administer it than all other indirect taxes of the Centre and State that had been levied so far.
3. Higher revenue efficiency: GST has resulted as an effective measure in decreasing the cost of collection of tax revenues of the Government, and, therefore, has lead to higher revenue efficiency.

• Perks of GST for the consumer – 

1. GST turn out to be a transparent tax proportionate to the value of goods and services: GST has helped in removing the hidden tax on the commodities which has made transparency possible between the manufacturer and consumer, leading a way of paying one tax to the final consumer.
2. A big relief in overall tax burden: Due to the efficiency gains and prevention of leakages, the overall tax burden on most commodities have come down benefitting the consumers.

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Conditions To Claim Input Tax Credit under GST – 

• The due date of filing the GST Return for September of the next Financial year

• the date of filing the Annual Returns for that Financial year.

• Effecting exempted and taxable supplies
• Business and non-business related activities

Items on which Credit can not be availed – 

• It is made obligatory by the government for employers to provide such to the employees.
• Goods or services are taken to deliver the same category of services or as a part of composite supply. For example, Mr Abid uses the service of rent-a-cab to supply to Mr Zakir, a client, then the credit of ITC paid on purchases will be allowed.

The post ITC: Conditions To Claim Input Tax Credit under GST first appeared on ITC Reconciliation, GSTR 2A Reconciliation - Digitax Automation.

In the 38th meeting, the GST council suggested a few changes whose highlights are listed below in the simplified language so that it can be easily understood –

1. The deadline for the annual return in FORM GSTR-9 and reconciliation statement in FORM GSTR-9C for the Financial Year 2017-18 has been extended to 31st January 2020.
2. The deadline for filing GST returns for November 2019 has been extended to 31st December 2019 in regard with few North-Eastern States.
3. To address the grievances of general or specific nature of taxpayers there will be Grievance Redressal Committees (GRC) constituted at the Zonal/State level. The Grievance Redressal Committees (GRC) will be including both CGST and SGST officers along with representatives from various sectors such as trade and industry, GST stakeholders, GST practitioners, GSTN, etc.
4. The previous GST rates on lottery schemes that were 12% tax on state-owned and 28% tax on state-authorised are altered to 28% tax on all lotteries from 1st March 2020. The decision took place after the voting and to levy 28% tax was concluded in the matter.
5. To improve the filing of FORM GSTR-1, the Council has decided to provide relief to the taxpayers by giving a waiver of late fee for the tax periods between July 2017 and November 2019, if filed by 10th January 2020. Moreover, E-way Bill of those taxpayers who have not filed their FORM GSTR-1 for more than two consecutive tax periods shall be blocked from generation.
6. Now, the recipient whose invoices and debit notes are not reflected in the Form GSTR-2A can only avail a restricted 10% of the eligible credit available for those whose invoices or debit notes are reflected in form GSTR-2A. Earlier the credit to be availed was 20%.
7. In the case of non-filing of FORM GSTR 3B returns, a Standard Operating Procedure for the benefit of tax officers would be is released about the actions to be taken in such a situation. It will be of great help in blocking or reversal of fake Input Tax Credit availed.
8. The GST Council has also assented to various law amendments to the GST law which will be introduced in Budget 2020 – 21.

All these changes will be made effective from the date as specified and through Gazette circulars/notifications which alone shall have the force of law.

For more updates on GST related amendments and other tax-related information, stay tuned!

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The latest circular issued by CBIC has clarified the confusion about 20% cap on ITC claims, providing a big relief to GST taxpayers. The new rules related to availing ITC under the GST clarified that a certain category of Input Tax Credit claims such as ITC in respect of the IGST paid on imports and GST paid under the reverse charge mechanism have been opted out of the realm of the new rules introduced in October 2019.  

The clarification was made regarding the rules which were implemented by the CBIC limiting the ITC claims to 20% of the eligible amount where invoice matching has already been done. Nevertheless, the notification issued by the CBIC in the second week of October left a lot of ambiguity over the method of calculating this 20% amount, the cut-off date as well as whether it was to be calculated supplier-wise or on a consolidated basis. But now, the new circular has cleared up all the doubts related to these aspects for the benefit of GST payers. 

Let’s throw some light on the clarifications made by the CBIC. First of all, this 20% cap on the eligible Input Tax Credit will be exempted from calculating as a supplier-wise rather the GST payers will be able to avail the ITC on a consolidated basis. In order to deal with the complaints related to some businesses availing ITC using fake GST invoices, the CBEC,the nodal body responsible for the implementation of indirect taxes in the country, in October 2019 made it a compulsion to match the invoices uploaded by the suppliers in their GSTR1 forms before buyers could avail Input Tax Credit in their GSTR-3 returns. However, at the same time, the buyers were allowed to claim 20% more ITC over and above the eligible amount where the invoice matching was done but the lack of clarity of calculation method created a lot of mayhem among GST payers. 

To understand it better, let’s take an instance: If a buyer is entitled to avail input tax credit of Rs 5 lakh on purchases (inward supplies) made in a month but if his suppliers have only uploaded the correct invoices in respect of supplies of Rs 4 lakh only in the GSTR1 forms uploaded by them, then the buyer can avail ITC of Rs 4 lakh plus 20% of the eligible amount, i.e., Rs 80 thousand. Thus, the buyer could claim a total ITC of Rs 4.8 lakh in the month.

In order to check the problem of misuse of input tax credit system, the CBIC’s latest circular also clarified that the total amount of ITC, even after the addition of 20% input tax credit over and above the eligible amount where invoice matching has been done, cannot exceed the total amount of input tax credit that can be claimed.

For instance, if a buyer is entitled to ITC of Rs 8 lakh on inward supplies and invoice matching is done in case of Rs 7 lakh then as per the 20% cap rule, he is also entitled to avail 20% over and above the eligible amount of Rs 7 lakh, which is 1.4 lakh in this case. However, this can take the total amount of ITC to be availed by him in the month to Rs 8.4 lakh, Rs 40,000 more than the total ITC amount that can be claimed. The new circular has intended to clarify this only, that in any case ITC claims will be restricted to the total amount due.

This was one of the aspects of the new circular, to know more about where the new GST Input Tax Credit rule will not be applicable and to know more new amends every day, stay tuned!

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1. TDS on non-exempt portion of life insurance

As the net income portion is defined as the total sum received less of total amount of insurance premium paid. So If the maturity proceeds received by a person are taxable, then TDS will be deducted only on the net income portion and not on the total amount paid. And TDS will be deducted at the rate of 5 per cent in case the taxable proceeds, i.e., net income portion exceeds Rs 1 lakh. Prior to this TDS was deducted at the rate of 1 per cent on the total amount paid.

2. TDS on cash withdrawals from the bank account

In a recent move by the government in order to increase the digital payments and to avoid large cash transactions, governement has introduced a new section 194N. 

This section 194N that has been inserted in the Income Tax Act that will allow authorities to levy TDS at the rate of two per cent on cash withdrawals made from the account of any bank including cooperative banks and post office. 

3. Banks and other financial institution have to report even small SFTs

From the 1st September 2019, the threshold limit of Rs 50,000 for reporting Statement of Financial Transactions (SFT)  has been removed. With this move government has widened the scope of reporting requirement for such transactions by removing the minimum floor of Rs 50,000. 

This means that from September 1, banks and FIs can be asked to report even small transactions to the tax department which in turn can use the data to check your Income tax return.

Prior to this, banks and other financial institutions were required to report specified financial transactions (SFTs) to the income tax department if the amount of transaction exceeds Rs 50,000.

However, this floor of Rs 50,000 has been removed in the budget of July 2019 enabling the income tax department to ask for information about small transactions as well. Thus, the CBDT can now require reporting of transaction even if the value of such transaction is nominal.”

4. Linking your PAN with Aadhaar is a must now

From 1st Sept 2019, If any person fails to link his Aadhaar to PAN by the specified due date, then the PAN will be inoperative but not invalid. The government is yet to clarify the rules regarding the consequences if the PAN becomes inoperative.

Till the 31st of August 2019, the provisions of Section 139AA stated that the PAN will become invalid if it is not linked to Aadhaar by the specified date. This provision created confusion that whether it would be treated as if the person never had a PAN. 

However, to protect the validity of previous transactions done using the PAN, Budget 2019 changed the rules such that PAN will become now become inoperative but not invalid if not linked with Aadhaar by the specified deadline. 

With this amendment, the government has validated all the previous transactions done by the individuals using PAN.`

5. TDS on additional payments made when purchasing immovable property

Previously, tax was deducted by the buyer from the payment made for the purchase of property. However, other payments such as club membership fees etc. were usually subtracted from the total consideration to compute the amount of TDS. But now with effect from September 1, if any individual is buying a property then they have to include certain payments, such as club membership fee, car parking fee, electricity and water fee, maintenance fee and so on when computing the amount paid for the property for the purpose of deducting TDS.

The experts says that the primary reason for this comes from the from the fact that ‘consideration for immovable property’ was not defined properly in the Income Tax Act. But the TDS will continue to be deducted at the rate of one per cent if the value of the property exceeds Rs 50 lakh.

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