This is not a new thing in the tax regulatory system in India. In the time of service tax and excise duty, the Income Tax Department used to share the 26AS data with CBIC. There are so many cases of tax evasion found out by CBIC just by sharing of 26AS data.

In our previous article, we emphasized that now GSTR-2A is the new equivalent of 26AS. GSTR-2A contains such vital information about a particular business that it can be a huge data mine for the income tax authorities in finalising the assessments. 

Now the government has openly come up with an MOU with its 2 departments. This means that in future, the GSTR-2A will play a very important role in income tax assessments.

How GSTR-2A can play a game-changing role in tax assessments, let’s discuss.

1. Expense Verification: The verification of expenses claimed by an income taxpayer can be done from the GSTR-2A data. If expenses data primarily matches with the GSTR-2A, it can be reasonably assumed that the expenses are verified. If data is not matching then there is something fishy about it.
2. Unexplained Expenses: GSTR-2A can show the data of such expenses which have not been claimed by the income taxpayer. This will form a basis of enquiry as to check for the source of such expenses incurred. If the taxpayer is not able to justify the source of the expenses incurred, then it can be treated as unexplained expenses by the taxpayer.
3. Underreported income: GSTR-2A can give a good idea about the size of the business. At present, many cases are showing on the income tax compliance portal where the taxpayer is having entries in his GSTR-2A but not filing the income tax return or not disclosing adequate turnover in the income tax return. This will help in unearthing the underreported income by the income tax department.
4. Non-existing firms: In GST era, the government is facing serious challenges in the form of the dummy and non-existing firms. There are many cases where a GST registered firm is running in a person’s name without the knowledge of the said person. With data sharing between CBIC & CBDT, this will introduce an additional check for finding out the non-existing firms in GST.

The above points are just a brief view of how powerful GSTR-2A can be in tax compliance. Government is now sitting on huge data where it can extract such information which an ordinary taxpayer cannot imagine.

Reconciliation of GSTR-2A is now more important than ever before as it will be treated as a “Janam Kundali” of the taxpayer by the assessing authorities.

The post GST Department to share GST data with Income Tax Department first appeared on ITC Reconciliation, GSTR 2A Reconciliation - Digitax Automation.

Many are looking at this as a welcome step towards ease of compliance in GST. No doubt that this step certainly is a welcome step for easing the compliance burden of the small taxpayers, however, there will be many cases where this can prove to be only a mirage for them.

For small taxpayers primarily making b2c sales, this will be a good step for reducing their compliance burden. Most of such taxpayers will get a major relief in compliance by filing the GSTR-3B quarterly. But they have to face the challenge of monthly tax payments also.

But for small taxpayers who are making b2b sales, then there is a problem which lies ahead.

In the same meeting, the GST council has proposed that the Input Tax Credit will be auto-populated through form GSTR-2B based on GSTR-1 filing by the counterparty. This means that, if a person is purchasing from a monthly GSTR-1 filer, the input tax credit of the purchases made shall be available to the buyer in the same month in which the purchase is made.

But, if the same buyer buys from a person who is filing GSTR-1 quarterly, he will get the input tax credit only after filing of quarterly GSTR-1 by the vendor. This means that the availment of the input tax credit from quarterly filer can extend up to as far as 4 months from the date of purchase.

This should be a major area of concern for MSMEs who are supplying to large companies having turnover above Rs. 5 crores. These large companies will now prefer to buy from the vendors who are filing GSTR-1 quarterly. Thus a small taxpayer will be under pressure from its large customers to opt for monthly filing of GSTR-1 with a constant fear of losing out of their large customer.

Though the MSMEs are currently also facing this problem since the rule 36(4) was made applicable last year. Due to COVID-19 situation, said rule was kept in abeyance till August 2020. But with this newly proposed provisions where the input tax credit is going to be auto-populated through form GSTR-2B, the challenge for MSMEs are even more.

Thus this option to file the GSTR-1 and GSTR-3B quarterly combined with new and revised input tax credit availment rules will result into a catch 22 situations for the small taxpayers who are supplying to large taxpayers in a b2b sales. They will be either forced to opt for monthly filing or lose their customer.

The post How quarterly filing of GST Returns will impact MSMEs? first appeared on ITC Reconciliation, GSTR 2A Reconciliation - Digitax Automation.

Recently the government has introduced 26AS in a new avatar. 26AS is now not only a tool to monitor your TDS but also an information tool for the government.

You must have experienced how Income Tax and GST (earlier Service Tax and Excise) departments are continuously pressing upon the reconciliation of 26AS with both income tax returns and service tax or excise returns.

Similarly, in very near future Income Tax and GST departments will also ask for matching of GSTR-2A with your Income Tax Returns, your books, and GST returns.

GSTR-2A will be one of the most important weapons in the arsenal of the Income Tax and GST departments while doing the assessments of your clients.

That’s why we say that GSTR-2A = 26AS

Have you included GSTR-2A reconciliation in your GST and Income Tax return filing process for your clients?

This is very important not only in the return filing process but also in doing accounting for your clients.

Try using Digitax G-RECS ITC reconciliation system.

The post Why GSTR 2A is equal to form 26AS first appeared on ITC Reconciliation, GSTR 2A Reconciliation - Digitax Automation.

So, let’s get started and go at length with types of GST returns.

1. GSTR-1

We all know that GSTR-1  is the return which is furnished for reporting details of all outward supplies of goods and services made within a  tax period. In simple words, it reports all the details of sales transactions made during a tax period. It also includes details of debit and credit notes, invoices and revised invoices issued during the tax period. If any amendments pertaining to sales invoices are made, even in regard to previous tax periods then they should also be reported in the GSTR-1 return.

GSTR-1 is to be filed by all the registered taxpayers. It is to be filed monthly, with an exception in the case of small taxpayers with a turnover up to Rs.1.5 crores in the previous financial year, who are allowed to file it quarterly.

2. GSTR-2

As we know it, GSTR-2 is the return wherein the reporting of the inward supplies of goods and services, that is,  the purchases made during a tax period. GSTR-2 return details are auto-populated from the Form GSTR-2A. The GSTR-2 return is editable unlike GSTR-2A.

GST Tip: The filing of GSTR-2 return has been suspended ever since the inception of GST.

3. GSTR-2A

GSTR-2A return is auto-populated from the GST portal based on data filed by the suppliers in their GSTR-1. It is non-editable and a read-only return. It is the return which has the details of all inward supplies of goods and services i.e. purchases made from registered suppliers during a tax period. The data is auto-populated based on data filed by the suppliers in their GSTR-1 return.

4. GSTR-3

As we discussed in the last article, GSTR-3 is a monthly summary return providing the summarized details of all outward supplies made, inward supplies received and input tax credit claimed, in addition to the details of the tax liability and taxes paid. The return is auto-generated based on the GSTR-1 and GSTR-2 returns that have been filed.

GST Tip: The filing of the GSTR-3 has been suspended ever since the inception of GST.

5. GSTR-3B

GSTR-3B is a monthly return containing details of tax collected on outward supplies and details of tax paid on input supplies. In simple words, it is a self-declaration containing the summarized details of all outward supplies made, input tax credit claimed, tax liability  and taxes paid. GSTR-3B is to be filed by all the registered taxpayers.

GST Tip: If there is no business activity for any period under tax, in such cases NIL return is to be filed.

6. GSTR-4 / CMP-08

GSTR-4 is the return that was to be filed by the registered taxpayers who opted for the Composition Scheme. But this return has now been replaced by CMP-08 return. The Composition Scheme is the scheme which requires taxpayers with turnover up to Rs.1.5 crores to opt into and pay taxes at a fixed rate on the turnover declared.

GST Tip: The CMP-08 return is a self-assessed statement-cum-payment done on a quarterly basis by the composition dealer.

7. GSTR-5

GSTR-5 is the GST return which is to be filed by non-resident foreign taxpayers, who carry out business transactions in India and are registered under GST. The return contains all business details from all of the outward supplies made to inward supplies received to credit/debit notes to  tax liability and taxes paid.

The GSTR-5 return is to be filed on a monthly basis, for each month the taxpayer is to be registered under GST in India.

8. GSTR-6

GSTR-6 is a monthly return which is to be filed by an Input Service Distributor (ISD). It contains the details of input tax credit received and distributed by the ISD. It also contains the details of all the documents issued for distribution of input credit and the manner of distribution. The return is to be filed before the 13th of next month.

9. GSTR-7

GSTR-7 is a monthly return to be filed by persons who are required to deduct TDS (Tax deducted at source) under GST. GSTR 7 contains all the details of TDS deducted, the TDS liability payable and paid and TDS refund claimed, if any.

10. GSTR-8

GSTR-8 is a monthly return to be filed by e-commerce operators under GST who are required to collect tax at source (TCS). GSTR-8 contains all the details of supplies made through the E-commerce platform, and the amount of TCS collected on such supplies.

11. GSTR-9

GSTR-9 is the annual return to be filed once in a year by the taxpayers registered under GST. It contains the details of all outward supplies made, inward supplies received during the year under different tax heads i.e. CGST, SGST & IGST and HSN codes. It also consists of all the details of taxes payable and paid. It is a consolidation of all the monthly or quarterly returns, i.e., GSTR-1, GSTR-2A, GSTR-3B filed during the year.

Exceptions to GSTR-9 are the taxpayers under the Composition Scheme, Casual Taxable Persons, Non-resident Taxable Persons, Input Service Distributors and the persons paying TDS under section 51 of the CGST Act.

GST Tip: The 37th GST Council meeting has decided GSTR-9 filing to be optional for the businesses with turnover up to Rs.2 crore in FY 17-18 and FY 18-19.

12. GSTR-9A

GSTR-9A is an annual return to be filed by the taxpayers who have opted for the Composition Scheme in a financial year. It consolidates the information of all the quarterly returns filed during the financial year.

GST Tip: The 37th GST Council meeting took the decision to waive off filing of GSTR-9A for Composition taxpayers for FY 2017-18 and FY 2018-19.

13. GSTR-9C

GSTR-9C is a reconciliation statement to be filed by all the registered taxpayers under GST whose annual turnover exceeds Rs.2 crores. The statement of reconciliation is between the figures as per audited financial statements of the taxpayer and the annual return GSTR-9 that has already been filed. It is certified by  a Chartered/Cost Accountant and is similar to that of a tax credit report provided under the Income-tax act.

GST Tip: GSTR-9C is to be filed for every GSTIN, thus, one PAN can have multiple GSTR-9C returns being filed.

14. GSTR-10

GSTR-10 is to be filed by a taxable person whose registration has been cancelled or surrendered under the GST. The return is also known as  final return and is required to be filed within 3 months from the date of cancellation or cancellation order, whichever is earlier.

15. GSTR-11

GSTR-11 is a return to be filed by persons who have been issued a Unique Identity Number(UIN) in order to get a refund under GST for the goods and services purchased by them in India. GSTR-11 contains the details of inward supplies received and refund claimed.

GST Tip: UIN is a classification especially made for the foreign diplomatic missions and embassies not liable to tax in India with the purpose of getting a refund of taxes.

So here are the types of GST returns and every extra information about them. Stay tuned for more such GST enhanced blogs.

The post All About Types of GST Returns first appeared on ITC Reconciliation, GSTR 2A Reconciliation - Digitax Automation.

Role of CFOs and Tax Heads is critical

Essentially, in this new GST regime, the role of CFO has undergone a sea-change and been imposed with significantly more responsibility of being true and correct in relation to tax reporting and compliances. As legislation imposes heavy corrective penalties in case of errors resulting in short payment of taxes or incorrect availing of ITC, the job of CFO has become more challenging.

Challenge of GST reconciliation

Ever-increasing regulatory requirements and with the vast volume of data CFO is getting it increasingly difficult, if not impossible, to manage whole work manually or with traditional spreadsheets. This reconciliation of the ITC data process requires:

• To find the mismatch in the data
• To find the missing entries in the returns filed by various
• To track the returns filed by the vendors.
• To get the timely alterations in the returns filed by the
• Manually editing or adding the data.
• To keep the records of ITC already claimed and pending

One of the recent studies has found that due to this tedious and time-consuming nature of the claim process, 40% of business houses are still grappling with GST compliance.

The only real solution here is the complete automation of the reconciliation process. This will not only eliminate all the above issues but will also enhance overall end-user experience and free up employees for more core responsibilities. With the adoption of advances technology such as direct import of data from the accounting software as well as GSTN portal and seamless integration with the returns filed by various vendors, the overall ITC matching process can shrink to a matter of 2 to 3 hours only. It will not only save the precious productive time but completely wipe off the fear of any future tax or interest liability.

To know more about GST automation solutions, you can contact at support@digitaxindia.com

The post Critical Role of CFOs and Tax Heads in claiming GST Input Tax Credit (ITC) first appeared on ITC Reconciliation, GSTR 2A Reconciliation - Digitax Automation.

You must be thinking, how is this even possible because the money passes through so many direct-indirect channels so its quite tedious task to do but in the advancing technological world everything is easy and can be done on a click. Just like using GRECS for ITC reconciliation to save time and money with a perk of doing it from home!

So, here we are to help you out with your doubt of how the government keeps a check on your tax credit claim. Let’s get started with the following pointers telling the exact method and process followed by the government. 

• Government is sitting on voluminous data in the GST regime.
• Earlier, the power of access to such huge data was unavailable.
• Government engages in the heavy use of Data Analytics with industry and sector benchmarking regarding ITC claim.
• Next comes the smart monitoring systems available with assessing officers configured with various kinds of analytical, graphical and ratio analysis.
• The advancing technology helps in keeping a close eye on unscrupulous refund claims.
• Availability of data trail enables the identification of circular trading transactions.
• Identification of fake entities and registrations using locational mapping techniques helps in tracking down the defaulters. 
• All India e-way bill system tracks the transportation of goods which is now linked with www.vahan.nic.in which provides transparency. Moreover, a proposed system of e-invoicing will further strengthen the control of the government.

With the increasing use of technology, there is less and less requirement of any human intervention in finding out the red flags among such big data. Hence, technology is being used in pinpointing the exact event of fraud and has increased the accuracy of anti-evasion measures undertaken by the department.

Do let us know in the comment section how do you like this piece of information. 

The post How GST department is monitoring your Tax Credit Claim? first appeared on ITC Reconciliation, GSTR 2A Reconciliation - Digitax Automation.

Nowadays, the GST portal has started showing monthly summary reports of Liability declared and credit claimed by the registered persons in a financial year. Following reports can be viewed in the GST site – 

1.   Liability statement other than export and reverse charge

2.   Liability due to reverse charge

3.   Liability due to export and SEZ supplies

4.   ITC credit claimed and due.

Out of these 4 reports, the ITC credit claimed and due report is one of the most important reports which is useful in the preparation of ITC related information in GSTR-9.

This report shows a monthly summary of ITC claimed in 3B and appearing in GSTR-2A auto-populated for that month.

Case Study

The following is a sample view of ITC credit claimed and due report of a particular case.

        ITC Credit Claimed and Due Report

However, when we see the auto-populated figure in point no. 8 of GSTR-9 of the same GSTIN, that figures are slightly different from the above report. The following is what appears on the screen. 

                Auto populated figures in point no. 8 of GSTR-9

As you can see that the auto-populated figures of 2A as showing in point number 8 of GSTR-9 and figures as showing in the ITC Credit claimed and due report, there is a difference in IGST figure. Total of IGST in ITC claimed and due report is 63,43,276.76 whereas in point no. 8 of GSTR-9 it is shown as 61,91,525.11. There is a difference of Rs. 1,51,751.65 in these 2 figures.

One may think, how this can be possible, where one report on the GST site shows one figure and the same GST site is showing another figure in another report.

How Digitax helps in finding this difference?

In Digitax G-Recs ITC reconciliation software you can see the consolidated 2A report for the whole financial year in various formats.

1.   Invoice Wise 2A report classified into Regular Invoices, Amended Invoices, Credit Note Debit Notes and Reverse Charge Invoices

2.   GSTIN Wise 2A report

3.   GSTIN wise 2A summary

4.   Month wise 2A Summary

Now, let’s see in the above case, how the difference can be easily seen.

When we see the invoice wise 2A report for the financial year in Digitax, the software classifies the Regular Invoices, Credit Notes, Debit Notes, Amended Invoices and Reverse Charge Invoices appearing in 2A for the whole financial year.

In the above case, when we see the 2A report for the FY 2017-18, the following classification comes.

From above it becomes clear that in the point no. 8 of GSTR-9, the auto-populated figures of ITC does not include Reverse Charge Invoices on which tax is liable to be paid on reverse charge basis. However, the credit claimed and due report, the credit of reverse charge invoices is included.

Sorting out the above difference without the help of any tool is quite challenging, whereas, with the right tool, you can save your valuable time and energy while preparing for GSTR-9.

For more information on Digitax G-Recs ITC reconciliation software, you can write to support@digitaxindia.com.

Stay tuned for more such information about GST and G-RECS.

The post Difference between auto-populated data of GSTR-2A shown in GST Login: A Case Study first appeared on ITC Reconciliation, GSTR 2A Reconciliation - Digitax Automation.

Here are the 5 changes under the GST to be applied for New Year 2020-

1. Restriction on the Claiming of ITC- With the effect to the decision taken in the 38th GST Council Meeting, Central Board of Indirect Taxes & Customs has reduced the percentage of eligible ITC available for Availment, the details of which are not been shown by the supplier in GSTR-1. Earlier, the CGST rules stated that only 20% of the eligible credit can be claimed as ITC in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers in GSTR-01, by a registered person. But now, the only total of 10% of such credit can be availed.

2. Commissioner has the power to block ITC under new Rule 86A- The new Rule 86A grants the power to a Commissioner to decide or vary the conditions for use of ITC available in the electronic credit register. As per the amendment, a Commissioner might not allow the debiting of the amount in the electronic credit register for the discharge of tax liabilities or claim of a refund of any unutilized amounts in the tax register if he/she has reasons to believe, that such tax credit is:

(i) Availed fraudulently based on invoices from a non-existing person or non-registered person.

(ii)Availed without the receipt of goods or services.

(iii)Availed on the strength of tax invoices which has not been paid to the government.

3. If GSTR-1 not filed, blocking the generation of E-way Bill- From January 11, 2020 non-filing of GSTR-1 for two consecutive months or quarters can lead to blocking of the generation of E-way Bill. Hence, in the year 2020, make sure that the regular filing of GSTR-1 and GSTR-3B go hand in hand.

4. E-Invoicing under GST Mandatory- From April 01, 2020, it is mandated for every registered person whose aggregate turnover (including exempt supplies) on PAN India basis exceeds Rs. 100 crores in a financial year to generate e-invoices in the case of B2B supplies and report the same to the notified common portals of GST, mentioned below:

(i) www.einvoice1.gst.gov.in;

(ii) www.einvoice2.gst.gov.in;

(iii)www.einvoice3.gst.gov.in;

(iv) www.einvoice4.gst.gov.in;

(v) www.einvoice5.gst.gov.in;

(vi) www.einvoice6.gst.gov.in;

(vii) www.einvoice7.gst.gov.in;

(viii) www.einvoice8.gst.gov.in;

(ix) www.einvoice9.gst.gov.in;

(x) www.einvoice10.gst.gov.in.

The portals will be in effect from January 01, 2020, for the smooth and better accommodation and transition of the taxpayers.

5. QR codes creation for B2C supplies – With effect from April 01, 2020, Quick Response Code (QR Code) will become mandatory in the cases where an invoice is issued by a registered person, exceeding rs. 500 crore in aggregate turnover in a financial year, to an unregistered person, i.e., B2C invoice.

For the cases, where a registered person makes a Dynamic QR Code available to the receiver through a digital display, such B2C invoice issued by the registered person containing cross-reference of the payment using a Dynamic QR Code, will be deemed as QR Code.

There are more such changes, to know about them stay tuned!

The post New Changes in New Year Under GST first appeared on ITC Reconciliation, GSTR 2A Reconciliation - Digitax Automation.

What is GSTR 2A?

•  GSTR 5 (supplied by non-resident taxable person)
•  GSTR 6 (Input Service Distributor) 
• GSTR 7 (Person liable to deduct TDS) 
• GSTR 8 (collected by TCS E-commerce) 

GSTR 2A Purpose:

The post Brief Introduction: What is GSTR 2A? 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!

The post 38th GST Council Meeting Highlights first appeared on ITC Reconciliation, GSTR 2A Reconciliation - Digitax Automation.