Friday, October 30, 2015

Business Process in GST Returns


GST is a self-assessed destination based taxation system. GST return is a connect between the taxpayer and tax administration.

Who needs to file Return in GST regime?
  • Every registered person is required to file a return even if there is no business activity during the return period.
  • UN agencies etc. will not be required to file regular return but only for the month during which they make purchases.
  • Government entities / PSUs , etc. not dealing in GST
  • supplies or persons exclusively dealing in exempted / Nil rated / non –GST goods or services would neither be required to obtain registration nor required to file returns under the GST law.

Return Filing Periodicity
There will be different frequency (detailed in the report) for filing of returns for different class of taxpayers, after payment of due tax, either prior to or at the time of filing return.

Monthly Return:
  • Separate returns for the outward supplies, inward supplies and a consolidated return based on these two returns.
  • Separate returns for the Input Service Distributors, non-resident taxpayers (foreigners) and Tax Deductors.
  • The components of each of these return is being discussed in the Joint Committee report.
  • Invoice level information would be captured in the return: Invoices pertaining to B2B transactions, B2C transaction etc.

Quarterly Return for compounding Taxpayers (GSTR-4)
The taxpayers will also have the option of compounding scheme wherein they would be required to pay taxes at fixed rate without any ITC facilities, but only after crossing the threshold exemption limit.

Where will the taxpayer file Return?
  • A registered Tax Payer shall file Return at GST Common Portal either:
  1. by himself or,
  2. (Through his authorized representative
  • The filing may be done either
  1. directly, or,
  2. by using Applications developed by accounting companies/IT companies which will interact with GST System using APIs or through Facilitation Center (FC).
  • Registration of FC will be done by CBEC / respective State tax authorities and the registration data will be shared with GSTN to enable applicants/taxpayers to choose one from the available list of registered FCs.

Revision of Return
There would be no revision of returns. All revision will have to be corrected using credit/debit note and such credit / debit note would be reflected in the return for the month in which such adjustment is carried out.

Annual Return (GSTR-8):
All the Normal taxpayers would be required to submit Annual Return. This statement would provide a reconciliation of the returns with the audited financial statements of the taxpayer.

Processing of Return
After upload, the Portal will:
  • Conduct validations and acknowledge the receipt of the return
  • Forward the Return to tax authorities of Central and appropriate State Govt. through the established IT interface.
  • The ITC claim will be confirmed to purchasing taxpayer in case of matched invoices.
  • Communicate the macro-results of the matching to the taxpayers through SMS/e-Mail,
  • Auto-populate the ITC reversals due to mismatching of invoices in the taxpayer’s account in the return for the 2nd month
  • Aggregate cross-credit utilization of IGST and SGST for each State and generate settlement instructions based on IGST model and as finalized by the Payments Committee.

Tax Connect
Chartered Accountants


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