Article by, CA HARSHIL SHETH,
Email : ca.harshilsheth@gmail.com
Contact: 9879831157
Title: GST Return filing system (version 3.0) from 01.01.2021
Intention to Overhaul GST return filing system, But is it correct solution in reality ???
(Notification 82 to 85 is published to notify / amend rule 60/61/62/61A. Also Circular No.143/13/2020 is issued).
This article is presented in manner it is dedicated to every professional who are involved in compliance work.
Author’s CommentsIt’s all same. We are almost back to 2017 July scenario except – Accept / reject / edit. Problem appears more here which is “You can take ITC ONLY what appears in GSTR-2B till 14th date”.
Very tight restrictions than even earlier original system. (What about natural right to take ITC? What about promises of Seamless ITC? What about section 16 which says if you have invoices, claim ITC???).
Please note that for your reference – From Oct-2020, with rule 36(4) restriction, ITC as per GSTR-2A or 10% more can be claimed. Claiming ITC more than 110% is subject to reversal of ITC or payment of interest.
What is IFF ?
Upload B2B invoices using INVOICE FURNISHING FACILITY.
Of course, No need to report invoice again in GSTR-1 if already reported in IFF. The invoices in IFF to be furnished from 1st day till 13th day of next month. (1-13th). It is almost like GSTR-1. IFF is an improvised solution to upload monthly b2b invoices for Quarterly dealers, so that Counter party can claim ITC Monthly.
READ NOTIFICATION EXTRACT –
Quarterly dealer may furnish the details of outward supply for the first and second months of a quarter, up to a cumulative value of fifty lakh rupees in each of the month,- using invoice furnishing facility (hereinafter in this notification referred to as the – IFF) electronically on the common portal, duly authenticated in the manner prescribed under rule 26, from the 1st day of the month succeeding such month till the 13th day of the said month.
For example-
For JANUARY – Upload invoices in IFF (B2B) till 13th February
For FEBRUARY – Upload invoices in IFF (B2B) Till 13th March
For MARCH – Upload invoices (B2B + B2CS + B2CL) in GSTR-1 till 13th April
PART B – FOR PAYMENT OF TAX –
QRMP Scheme from 01.01.2021 – We will call it alternative method of 3B for taxpayers having turnover below 5 cr. Mind well, you can still file GSTR-3B. This seems optional.
QRMP (full form) – Quarterly Return Monthly Payment (for so called Ease)
1. How it works? For any Quarter
M1 (first month) – pay challan – GST PMT-06 by 25th day of succeeding month
M2 (second month) – pay challan – GST PMT-06 by 25th day of succeeding month
M3 (third month) – File GSTR-3B (as usual) – 22nd or 24th day
2. How to ascertain? – 2 methods to ascertain tax liability in QRMP for M1 & M2 month.
Method 1 – Self assessment
It is like self assessed 3B, but don’t file 3B. Just pay challan (in PMT-06) after considering Outward liability and inward ITC from 2B. (Yes you have to calculate manually your self assessment tax monthly).
That means, “Jaisa chal raha tha aise hi chalne den.”
Method 2 – Fixed sum method
Pre filled challan in PMT-06. Pay amount equal to 35% of total amount paid in last quarter… (Read again… “35% of Last quarter Net tax”) in M1 & M2.
3. How PMT-06 will work?
The amount deposited through PMT-06 for 1st and 2nd month will remain in the cash ledger and will be adjusted on filing GSTR-3B at the end of Quarter.
Any claim of refund of such amount lying in balance in the electronic cash ledger, if any, out of the amount so deposited shall be permitted only after the return in FORM GSTR-3B for the said quarter has been filed.
Lets see how actually this system will work after 01.01.2021. People might continue with GSTR-3B.
Author’s Comments
You will file GSTR-1 if T/O is above 1.5 cr & IFF monthly (i.e. b2b invoice upload facility) if T/O is below 1.5 cr ). And a simplified (read messed up) challan system replacing GSTR-3B. So both these works are monthly compliance only. There is nothing that Compliance reduced or anything eased up. These CHALLAN (instead of 3B) and UPLOADING OUTWARD supplies are compliance for M1 and M2. For 3rd month, you have to file GSTR-3B as usual and also upload GSTR-1 AS USUAL (Of course those invoices which are already uploaded in IFF, not required to upload again). It’s like from outer pack, you are under quarterly periodicity of filing return, but from inside you have to do everything like a monthly return filer. (Not commenting on interest and late fees and how it will work).
GSTR-3B was much stable and proper. It was easy and fast system of return filing. Better they should just stop simplification. We don’t want more simplified GST. In the name of simplification, everything is messed up for MSME.
So for 5 cr below taxpayers, Check the scenario after 01.01.2021.
On one side- GSTR-3B Quarterly. But with monthly payment of Approximate tax (Almost like 3B). For first two months, you may check 2B for ITC determination. In 3rd month, ITC will be restricted to the extent of available in GSTR-2B or as per rule 36(4). And a GSTR-3B after quarter end.
On other side – Monthly GSTR-1 or IFF To upload invoices monthly. Also quarterly GSTR-1.
It will take some time to digest even. Situation is funnier than ever.
CATEGORY 2 – RETURN FILING SYSTEM FOR TURNOVER ABOVE 5 CRORE
PART A — For uploading sales invoices —
Every month GSTR-1 before 11th (as usual)
PART B — For payment of tax —
GSTR-3B – AUTOMATIC (Almost) – FILE BEFORE 20th / 22th / 24th.
INWARD SUPPLIES From monthly filer
Since Your monthly supplier will file GSTR-1 ideally before 11th , ITC details will be auto-populated.
INWARD SUPPLIES From quarterly filer –
M1 (1st month of Qtr) – may upload in IFF (Only B2B) before 13th
M2 (2nd month of Qtr) – may upload in IFF (Only B2B) before 13th
M3 (3rd month of Qtr) – FILE GSTR-1 before 13th (as usual)
So ITC will be auto-populated monthly from the purchases only if suppliers uploads regularly in IFF before 13th.
Author’s commentsNow, Government wants to restrict ITC anyhow. “Claim only to the extent available in 2B”. That’s it. Earlier GSTR-1 / 1A / 2 / 2A / 3 was conceptualized on this principle only.
In present return filing system, ITC is subject to GSTR-2B. But problem for taxpayer is that “ITC from Quarterly dealers do not appear in GSTR-2B in M1 and M2. So taxpayer may not be able to claim ITC as equal to books. This problem is huge if taxpayer has purchases from quarterly dealers in a particular month.” On the other hand, claiming ITC more than 110% is subject to reversal or interest.
To remove this problem, Government has come up with highly ambitious project. To do these, NOTIFICATION 82 to 85 is issued to notify / amend rule 60 / 61/ 62 / 61A. Also Circular No. 143/13/2020-GST is issued. Applicable from 01.01.2021. And for this, IFF is introduced and this might be a improvised solution that quarterly dealer may be able to upload their SALES invoices before 13th (of course B2B only) every month. And recipients will be able to claim ITC on monthly basis. Cool. Let see how this added workload on part of professionals will be dealt by them.
GSTR-3B will be almost auto drafted. You may / may not change ITC amount by claiming 10% more. Or let’s see how things turn out after January -2021 on portal. Can’t say right now.
GSTR-3B after considering ITC from 2B or 10% more. Lets see.
As a professional, how your Monthly timeline will be
This will be Monthly timeline for Compliance work of Jan, Feb, April, May, July, Aug, Oct, Nov
- 1-11th = Upload GSTR-1 of Monthly Clients (1.5 cr Above)
- 12-13th = Upload IFF of Quarterly Clients (1.5 cr Below)
- 14th = Send 2B to All 5 crore Above Clients.
- 15th to 20th = File 3B of Those Having 5 crore above turnover.
- 25th = File challan PMT-06 for Those Having 5 crore below turnover (instead of 3B) in M1 + M2. After self assessment.
This will be Monthly timeline For Compliance work of over above work for Mar, June, Sept, Dec.
- 13th = Upload GSTR-1 of Monthly Clients (1.5 crore below) only in M3.
- 21st – 22th /24th = File 3B for Those Having 5 crore below turnover only in M3.
LAST SHOCK – NOW GST DATA IS VISIBLE IN INCOME TAX 26AS… SO KEEP RECONCILING –
- 3B with 2A
- 3B with 2B
- 2A with 2B
- 3B with 1
- 3B + 1 with 9
- 9 / 9C with Books
- All above with 26AS
- All above with GST / IT Audits
Last comment – Let us accept first that, just because of some 2% people claiming fake ITC or claiming Excess ITC, Government is imposing strictest rule 36(4). Their idea is seem clearer that they want taxpayer to claim ITC only what appears in 2B. OK. For making it successful, its better they should have just removed quarterly category if they really want to make 36(4) and Auto-drafted 3B successful (with help of 2B). Instead of making above KHICHDI solution. Everything is difficult to make client understand. Difficult to make staff understand. For professionals, in totally uncertain regulatory environment, it’s difficult to operate. They must give time to stabilize a system of 1.25 Cr tax payers. Instead of that since July, 2017, this is Nth time they have changed the rules of the game. And adding restrictions on ITC. Every time they try to remove an organ instead of treating the body. What do you think on this? Do give us feedback. Any error / mistake, please correct me – CA HARSHIL SHETH. Email : ca.harshilsheth@gmail.com. Contact: 9879831157
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