Mohan Lavi

Anything but simple

Mohan Lavi | Updated on August 02, 2018

GST returns: New format complicates things

Locked Invoices. Rejected Invoices. Pending Invoices. Missing Invoices. Amended Invoices. GST taxpayers would need to get accustomed to an eclectic variety of invoices once the new format for filing of returns is introduced. A 54-page “Note on Simplified Returns and Return Formats” has been put out in the public domain. A glaring omission in the entire document is that it gives no reference to the authority behind it. In case the unnamed authority wants to issue a final note, they might as well remove the Word Simplified in the title of the note since the formats and instructions are anything but simple.

The premise behind the new system of filing returns appears simple. A supplier issues a bunch of invoices to recipients. On a constant basis, the recipient has the option to either lock (accept), reject (not accept), pending (doesn’t want to either accept or reject), missing (only one of the parties is interested in the reported invoice) or amend (change) the invoice.

On the basis of the recipients’ actions, input tax credit is either permitted, rejected or kept pending for the recipient. But the recipient cannot just sit on an invoice without taking any action for long- Invoices that have been uploaded by the supplier and made available in the viewing facility to the recipient but have not been rejected or have not been kept pending by the recipient shall be deemed to be locked after return for the relevant tax period has been filed by the recipient.

Invoices uploaded by the supplier by 10th of the next month shall be posted continuously in the viewing facility of the recipient and the taxes payable thereon which can be availed as input tax credit shall be posted in the relevant field of the input tax credit table of the return of the recipient by the 11th of the next month. These invoices shall be available for availing input tax credit in the return filed by the recipient. The note helpfully states that for the first six months after the new formats make their debut , input tax credit would be allowed based on a declaration. What it does not state is what will happen if a credit taken on the basis of a declaration is denied later.

However, application of the premise on a day-to-day basis is not going to be simple. Since the entire burden of claiming input tax credit has been placed on the fate of the invoice (which is not in the hands of the supplier), suppliers would need to have a constant communication with their counter-parties to ensure that they are not denied credit at least on high-value invoices. Though there is a beneficial provision to amend invoices twice, suppliers would not want to risk a high-value invoice to be amended.

Any taxpayer reading the Note would tend to conclude that it is best left to an external consultant as no Finance Department can have the luxury of having one person glued to a screen that displays the various types of invoices and the action to be taken on them.

Compliance cost

The GST returns have cells that are auto-populated, ones that are to be keyed in and questionnaires to be filled in. This would increase costs of GST compliance — a fact that is not going to please anyone.

It is expected that the new format for returns would be introduced from January 1, 2019. Considering past experience, it would be ideal if the period from January to March 2019 is used for the purposes of a dry run and the new format goes live from April 1. The dry run period should be used to correct bugs that are bound to exist.

The writer is a chartered accountant

Published on August 02, 2018

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