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India Announces Plans To Simplify GST Filing, Overhaul Refund System

Friday, May 4, 2018

Meeting on May 4, 2018, India's GST Council approved plans to simplify GST filing obligations.

According to a statement following the meeting, most taxpayers will be required to file a return monthly. Return filing dates will be staggered based on the turnover of the registered person. Composition dealers and dealers that have not made taxable transactions may be able to file returns quarterly.

Return will be simplified also by reducing the content and information required to be filled in the return, with specifics to be worked out by the law committee.

A new IT interface will be launched for those supplying taxable goods or services to upload invoices. At such point, the seller will be informed of his GST liability. Once all the proposed processes are complied with by the seller, the buyer will be able to access an input tax credit for the supply.

On enforcement and compliance issues, according to the Government, "there will not be any automatic reversal of input tax credit from buyer on non-payment of tax by the seller. In case of default in payment of tax by the seller, recovery will be made from the seller [...] however reversal of credit from buyer will also be an option available with the revenue authorities to address exceptional situations like missing dealer, closure of business by supplier, or supplier not having adequate assets, etc."

"Uploading of invoices by the seller to pass input tax credit who has defaulted in payment of tax above a threshold amount will be blocked to control misuse of input tax credit facility," the Government said. "Similar safeguards would be built with regard to newly registered dealers also. Analytical tools would be used to identify such transactions at the earliest and prevent loss of revenue."

While the plans are developed, the forms GSTR 3B and GSTR1 will continue to be used, and the obligation to file GSTR 2 and GSTR 3 will remain suspended. Within six months, the Government will launch the new facility to upload invoices. The facility for claiming input tax credit will be on a "self declaration basis," as in case of GSTR 3B now, the Government said. It added that, during this second stage, "the dealer will be constantly fed with information about gap between credit available to them as per invoices uploaded by their sellers and the provisional credit being claimed by them." Then, after six months, "the facility of provisional credit will get withdrawn and input tax credit will only be limited to the invoices uploaded by the sellers from whom the dealer has purchased goods," the Government said.