In order to simplify the compliance procedure further for GST-registered businesses, the 31st GST Council meeting proposed a new return system. It was absolute that a New Return System under GST would be introduced for taxpayers. This system is likely to be introduced on October 1st, 2020. This return will need to be filed on a monthly basis.
The Goods and Services Tax (GST), was introduced as a single, straightforward tax system to replace multiple indirect taxes.
Under the new system, there will be three main return forms – Normal (RET-1), Sahaj (RET-2) and Sugam (RET-3). The type of return to be filed and the filing frequency is determined based on the turnover of a business.
Annexures of Main Returns
All three return forms will have two annexures GST ANX-1 & GST ANX-2.
GST ANX-1 is used for reporting outward supplies, inward supplies that are subject to reverse charge, and imports of goods and services. The merchant can upload related documents on a real-time basis in GST ANX-1.
GST ANX-2 will have details related to all the inward deliveries received from a registered supplier including imports and supplies received from an SEZ unit. Some of the details uploaded by the supplier in ANX-1 will be automatically available for the recipients in ANX-2 to verify and accept, reject or keep it pending.
Important changes introduced in the new GST return system
These are some of the changes introduced in the new return system-
- HSN code will be needed in order to submit details at a document level vs. a separate HSN summary.
- A user will also get HSN code to his GST ANX-2, wherever a supplier was supposed to declare the HSN code.
- B2B supplies, liable to reverse charge mechanism need not be shown by the supplier in the GST ANX-1, however, the total figure will need to be shown in GST RET-1.
- Inward supplies which are accountable to RCM has to be declared in GST ANX-1 at the GSTIN level, by the recipient of supplies.
- The concept of B2C-L has been removed. The turnover limit for quarterly filers will be considered as Rs 5 crore of the present limit of Rs 1.5 crore.
Current System vs New Return System
Turnover limit for small business: Rs 1.5 crore for the previous financial year under current GST returns and Rs 5 crore under new GST returns.
Number of returns: Under the new system, there is a single return form (Normal/Sahaj/Sugam), containing two annexures.
Reporting of missing invoices: Missing invoices were reported using GSTR-3B in the current system. Missed invoices will be reported using RET-1 in the new system.
Reporting imports: In the current returns, ITC on imports was separately reported in GSTR-3B. However, ITC reports will be detailed under GST ANX-1 in the new returns system.
Need for cloud accounting
The new GST return has paved way for e-invoicing in India, where the taxpayers will now have to upload invoices in real-time. Since your accounting software will be connected with the government portal, it will allow you to retrieve invoices anytime to clarify the inconsistencies in your books.
With a new GST return system coming up, it is a good time for all businesses to switch to GST-compliant cloud accounting software. By adopting the Easy GST software and processes now, businesses can avoid penalties or other repercussions for non-compliance when the new return is implemented in October 2020.
