The GST Move Towards Invoice Correspondence and Matching which can Scrutinize Tax Avoidance
The new single-page return and the transition process approved by the GST Council in the May meeting is a step in the right direction as it tries to iron some of the difficulties faced by taxpayers in the first few months, while trying to retain the basic objectives of GST – expansion of tax base and checking tax evasion. That said, one of the provisions of this new return filing process that might not go down too well with taxpayers is the withdrawal of the leeway provided to smaller companies to file quarterly returns.
The Freedom that was Given
In the first few months as the GST was implemented smaller companies had greater difficulties in getting used to the tax filing on an IT platform. Lack of computer knowledge, lack of manpower and necessary infrastructure made it difficult for them to adhere to the need to upload all the sales invoices every month in order to file the GSTR 1 returns. It was easier to get comfortable with GSTR 3B returns that are only summary returns and do not require uploading of invoices.
In order to provide some breathing space to smaller businesses, the GST Council, in its October 2017 meeting, asked taxpayers with turnover up to Rs 1.5 crore to file GSTR-1 on a quarterly basis. They were, however, required to file GSTR 3B on a monthly basis and receive input tax credit on a monthly basis.
With the need to upload invoices only once every quarter, the pressure on tiny businesses would have eased greatly. A look at the return filing numbers shows that about 40 percent of regular tax-payers opted to file quarterly returns. While around 22 lakh GSTR1 return forms were filed in October and November 2017, the numbers increased to 55 lakh in December.
The New Amended Announcement
The new return and filing process announced last week speak that all taxpayers, with the difference and exception of composition dealers and dealers with zero tax, will file one clarified and simplified monthly return, GSTR1. The return filing dates are to be unsteady, depending on the income of the registered entity.
The change is intended to be in three steps –> In step 1, the present system of filing of return GSTR 3B and GSTR 1 is to continue and is expected to continue only for six months.
After six months, the new single-page GSTR1 will have to be uploaded monthly by the smaller businesses, with turnover less than Rs 1.5 crore too. All the sales invoices along with self-declared input tax credit will have to be included in the return.
In stage 3, input tax credit will be available only if the supplier enters the transaction as part of his sales. In other words, the differentiation between smaller and larger businesses in GST filing is set to go after six months.
Good Move In a Right Way
This move is right in a way that invoice matching has become convenient and chances of errors are less. As invoice matching is important to check the avoidance of paying taxes but it was difficult because of some organizations, companies, particular person etc filing monthly or some filing quarterly. The mismatch in return filing dates was very confusing and made the task tedious of matching the dates.
The collective survey shows that organizations are more comfortable in filing GSTR1 returns and uploading invoices.63% percent of the entities are good with the GSTR1 and it was recorded by December 2017. So its right as well as logical that temporary relief to businesses is abolished.
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