New GST return mechanism will be implemented in phases

The Finance Ministry on Tuesday unveiled a roadmap for the implementation of the new GST return mechanism. It has also put in place a transition mechanism.

The new mechanism will be used on a trial basis from July to September. For the large taxpayers (those whose aggregate annual turnover in the previous fiscal was more than ₹5 crore), Form GST ANX will replace GSTR 1 from October. Small taxpayers (with aggregate annual turnover in the previous fiscal up to ₹5 crore) who file on a quarterly basis will have to use this in January for the October-December quarter.

Form GST RET-1 will replace GSTR-3B; it will be mandatory from January for all taxpayers.

The government has released the draft of a new and simplified return form with offline tools. There are three main components to the new return process — the main return form (Form GST RET-1) and two annexures (Form GST ANX-1 and Form GST ANX-2).

From July, users will be able to upload invoices using the GST ANX-1 offline tool on a trial basis. They will also be able to view and download the inward supply invoices using the GST ANX-2 offline tool under the trial. The summary of inward supply invoices will also be available for view on the common online portal.

Additionally, from August, users can import their purchase register in the offline tool and match it with the downloaded inward supply invoices to spot mismatches.

Trial for familiarisation

The July-September trial is for taxpayers to familiarise themselves with the new return mechanism. It will have no impact at the back end on the tax liability or input tax credit of the taxpayer. In this period, taxpayers will continue to file existing return forms (GSTR-1 and GSTR-3B); failure to do will will attract penalties.

From October, GST ANX-1 will be compulsory, replacing GSTR-1. The large taxpayers will upload their monthly GST ANX-1 from October. However, the first compulsory quarterly GST ANX-1 to be uploaded by small taxpayers will be due only in January 2020, for the October-December 2019 quarter.

Invoices can be uploaded in GST ANX-1 on a continuous basis, both by large and small taxpayers, from October. GST ANX-2 may be viewed simultaneously during this period but no action will be allowed on it.

For October and November, large taxpayers will continue to file GSTR-3B on a monthly basis. They will file their first GST RET-01 for December by January 20, 2020. Small taxpayers will stop filing GSTR-3B and start filing GST PMT-08 from October. They will file their first GST RET-01 for the quarter October-December from January 20 next year.

Need for clarity

Some aspects of the transition plan require clarity, observed Archit Gupta, founder & CEO of ClearTax. It’s not clear whether ITC credit will be matched with ANX-2 or GSTR-2 in the intervening period between July to September, he pointed out.

Parag Mehta, Partner at NA Shah Associates LLP, felt the forms are not simple enough. User will have to upload GST ANX-1 reflecting their outward liability, imports and inward supplies attracting reverse charge.

“Based on GST ANX-1, filed by all, businesses will be able to download details of auto-drafted inward supplies in GST ANX-2.

“The trade will be required to accept, reject or keep in pending the ITC on inward supplies. After completion of GST ANX-2, an auto populated return in GST RET-1 will be generated. All the activities will have to be done on monthly basis,” he said.

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