Everything you need to know about GSTR-2B and the new GSTR-3B

Archit Gupta | Updated on October 28, 2020

Several changes have been made in the filing flow to ease taxpayers’ compliance burden

Ever since the government decided to put the new GST return system on hold, there have been several welcome changes made to the current GST return filing flow. With the new GSTR-2B form introduced, taxpayers are now able to reconcile their ITC (input tax credit) more efficiently on a monthly basis. There have also been certain changes introduced to the GSTR-3B filing flow, with the auto-drafted GSTR-1 data now available at the taxpayers’ fingertips, to enable quick filing of their GSTR-3B returns.

What is the new Form GSTR-2B, and how is it different from the existing Form GSTR-2A?

GSTR-2B is an auto-drafted monthly statement, which provides a taxpayer with details of the input tax credit available for his business for a particular month. This ITC is a combination of both the eligible and ineligible ITC. The ITC gets auto-populated from the GSTR-1, GSTR-5 and GSTR-6 returns filed by the suppliers of that taxpayer. All the data available is displayed document-wise, which enables easy reconciliation with the books of accounts.

The new form GSTR-2B will also contain data from the ICES/ICEGATE portal, that is, ITC relating to the import of goods, including imports made from Special Economic Zone units/developers. However, reverse charge credit on the import of services will not be a part of this statement.

The Form GSTR-2B statement is an improvement over the existing Form GSTR-2A. GSTR-2A was a dynamic statement which was also auto-populated with the ITC details of the taxpayer’s suppliers. However, the disadvantage with reconciling books of accounts using the Form GSTR-2A was that the form kept changing as per the data constantly being updated as and when a supplier uploaded his documents.

Here is why the new Form GSTR-2B is important for taxpayers while reconciling their ITC data:

    Taxpayers can view and download the summary statement or section-wise ITC data in a PDF format. This data can also be stored for future reference.

      Both supplier-wise and document-wise data is readily available for easy ITC reconciliation.

        An advisory will be available for each section which specifies the action a taxpayer needs to take, such as ITC available, not available and ITC which needs to be reversed.

          It contains options to filter data, as well as sort data and run a text search to find a supplier or invoice.

            It helps the taxpayer ensure that no credit has been claimed twice, the relevant ITC has been reversed as per the law, and the tax on reverse charge basis has been paid, wherever applicable.

              The new flow of filing GSTR-3B

              When it comes to GSTR-3B return, there have been several changes made in the filing flow to ease taxpayer compliance. The GSTN recently announced that taxpayers would henceforth be able to download the system-computed GSTR-3B return in PDF format, based on the GSTR-1 filed data.

              Here, the turnover and tax liability will be taken into account after accounting for the credit and debit notes, amendments, and advances paid, if any. This facility has been introduced to simplify the filing flow for registered taxpayers, though they will still need to verify the data before they proceed to file their GSTR-3B.

              The second important step while filing GSTR-3B is the verification of data with the newly introduced Form GSTR-2B. Previously, some taxpayers verified their data with the auto-populated Form GSTR-2A, a dynamic statement which kept getting updated based on when a taxpayer’s suppliers filed their returns. However, most taxpayers wait until the end of the financial year to undertake this reconciliation process. With the GSTR-2B now available, taxpayers can reconcile their ITC with their purchase records on a monthly basis. This will give them ample time to communicate with suppliers in case of any missing ITC, or in case any rectifications need to be made.

              The third update to the GSTR-3B filing flow is the 10 per cent provisional ITC rule that will be enforced from the September 2020 return period. From the February to August 2020 return period, the Central Board of Indirect Taxes and Customs (CBIC) had relaxed this rule in light of the pandemic and the resulting effect on economic activity.

              However, from the September 2020 return period, taxpayers will need to cap their provisional ITC being claimed at a maximum of 10 per cent of the eligible ITC as per the Form GSTR-2A. Any additional ITC claimed on a provisional basis between February and August must now be cumulatively adjusted while filing September’s GSTR-3B return.

              Last but not least, in a welcome move, the Ministry of Finance introduced several new changes in the GST return filing processes, in the recently concluded 42nd GST Council Meeting. One of the initial moves has been to reduce the number of returns filed by small taxpayers, that is, taxpayers with a turnover not exceeding ₹5 crore.

              Small taxpayers will now need to file only eight returns instead of 24, as the monthly GSTR-3B return now needs to be filed only quarterly. They will still need to make tax payments every month, limited to 35 per cent of the tax liability required to be paid in each of the first two months of the quarter, and the balance in the third month. This computation will be based on the previous quarter’s tax liability.

              The government has taken multiple measures to reduce the taxpayers’ compliance burden even more going forward. The GST Council has approved the roadmap for GST return filing, and it will just be a matter of time before taxpayers see the changes being implemented. Soon, the GSTR-3B return will be auto-populated, provided the GSTR-1 has been filed first. The implementation of e-invoicing and the on-time compliance by the taxpayer could lead to an almost automated tax-filing process in due course of time.

              The writer is Founder and CEO, ClearTax

              Published on October 28, 2020

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