Roll out of Goods and Service Tax in India is dubbed to be the mother of all indirect tax reforms in India after Independence. Though GST is not rolled out but the government of India has released business process documents on Registrations, Payment, Refund & Returns. In this blog we will review the business process document on returns, it implications on the business, it process and systems.
A tax return is a statement filed by the taxable person stating his transactions or summary of the transactions for the period along with the amount of output tax payable, input tax credit availed and amount paid in cash towards discharge of the output tax liability. This return is supposed to give the full information on the business transactions of the taxable person.
As a measure to make the roll out of GST is smooth, the GOI has detailed out the returns to be filed along with the format and the required information as this will give some time for the taxable person to changes in his business process.
As per the business process document on returns, the following are the key points
- Single return is to be filed for the state and central government
- Single return for all the taxes i.e CGST, SGST, IGST and Additional Tax
- Return filing is online
- Transaction level data to be uploaded in the return
Various returns to be filed under GST are
| Sl.No | Report Name | To be filed by | Content of the report | Due date |
| 1 | GSTR – 1 | Other than by compounding tax payer and input service distributor | Outward supplies – goods and services | 10th of next month |
| 2 | GSTR – 2 | Other than by compounding tax payer and input service distributor | Inward supplies – goods and services | 15th of next month |
| 3 | GSTR – 3 | Other than by compounding tax payer and input service distributor | Monthly return | 20th of next month |
| 4 | GSTR – 4 | Compounding tax payer | Quarterly | 18th of the next month of the quarter |
| 5 | GSTR – 5 | Non Resident Tax Payer | Inward supplies – goods and services | Last day of registration |
| 6 | GSTR – 6 | Input service distributor | Inward supplies – services | 15th of next month |
| 7 | GSTR – 7 | Other than by compounding tax payer and input service distributor | Return for tax deducted at source | 10th of next month |
| 8 | GSTR – 8 | Other than by compounding tax payer and input service distributor | Annual Return | By 31st December of next financial year |
Data Points in the report
Unlike in the current excise and service tax reports where the summary of the sales and purchases information in shown in the respective reports but in GST all the transaction level data has to be show in the report for the supply of goods or services based on the place of supply and point of taxation rules under GST.
Major data points in the report
- GSTIN of the tax payer
- period for which the report is being filed
- GSTIN of the buyer
- Line level invoice data showing the taxable amount and tax amounts for CGST, SGST, IGST and additional tax
- HSN code in case of items
- SAC (Service Accounting code) in case of services
- To flag the transactions is reverse charge is applicable
- if the goods are being received in a different state, then state code under the column POS
HSN Code
In the current tax regime, the HSN code is applicable only for the Excisable goods known as Tariff Codes and for customs. Under the proposed GST the same is rolled out for the all the taxes like SGST and IGST also.
In the reports, 4 digits of the HSN code is to be shown by the tax payers if the turnover is more than Rs 5 Cr and in case of turnover between Rs 1.5 Crs and 5 Crs the tax payer can show first two digits of the HSN code. In case of compounding tax payers, in the first year they are exempted to show the HSN codes.
In case if the tax payer is willing to show 8 or 6 digits of the HSN code there is no restriction.
Service Accounting Code
In the current service tax requirements, the tax payer is required to show the service type on the transactions and now the same is being replaced under GST and Service Accounting Code. This code must be shown in all the reports where supply of service transactions is being reported.
The above information is common across the reports and in the next section we will review the requirements for each report.
GSTR – 1
GSTIN of the tax payer along with the period for which the return is being filed.
The system will auto populate the previous year turnover from the second year on wards and in the first year the same has to be entered by the tax payer manually.
Invoice level details have to be shown in the report irrespective of the invoice value in case of B2B transactions for both interstate and intra state transactions separately for the supply of goods and services.
In case of B2C transactions, invoice value above Rs 2, 50,000 have to be reported in the report state wise and in case of transactions less than Rs 2, 50,000 summary of those transactions state wise has to be reported.
List of all debit notes and credit notes to be shown along with the original invoice for which these documents are issued with tax amounts.
In section 9, details of the transactions for which discounts are issued for the supplies made in the previous periods to be show here along with the original invoice number.
In section 10 summary of the transactions for interstate and intra state to be show for supplies made for NIL rated goods, exempted and Non GST supplies.
Shipping details i.e. Bill of Lading number and date to be show in section 11 of the report for direct exports and deemed exports. This information will be validated by the department with ICEGATE for processing of refunds if any applicable.
Advance received from the customers have to be shown section 12
Supplies made against advance received under section to 12 to be shown in section 13.
GSTR – 2
Most of the data in the GSTR – 2 will be auto populated based on the data filed by the seller in GSTR – 1. This is a radical shift from the current process of availing input tax credit where it is available based on the receipt of goods in case of excise and invoice in case service tax. Under the current process there is lot of revenue leakage and to plug this new process is being implemented wherein the buyer will be entitled to take credit only after the seller pays the taxes.
In Section 4 of the report, the data is auto populated based on the data filed by the seller. For this data, the buyer has to classify if the goods purchased are capital goods or inputs or none. Based on this classification the input tax credit is available. The buyer can also add purchase receipts if the same are not uploaded by the seller.
In section 5 of the report, the buyer has to list all the import supplies of goods for both capital and inputs along with the bill of entry details and total input credit available and input credit being availed during this month.
In section 6 of the report, the buyer has to declare the import of services with invoice wise details along with the input tax credit available and also the input tax credit available in the month.
In case of import of goods and services from outside India only IGST is applicable under GST apart from the other import duties.
In Section 7, the debit and credit notes issued by the supplier for the price adjustment or for any other reason uploaded will be auto populated and the tax payer has to classify the credit if for inputs or capital goods.
In Section 8, the information will be auto populated based on the data uploaded by the supplier in section 9 of GSTR – 1 for the discounts offered post supply of goods.
In Section 9, purchases from un registered dealers, compounding dealers, NIL Rate or exempt supplies are to be summarized by HSN or SAC code for interstate and intrastate supplies.
In Section 10, the input tax credit based on the ISD will be auto populated by the supplier’s returns.
In Section 11, the TDS credit for all the taxes will be auto populated based on the suppliers return.
In Section 12, will list the invoice for which partial credit taken during the previous months based on the invoice number. The data will be auto populated based on the previously uploaded information.
GSTR – 2 has to be filed by 15th of the next month for auto populating the data and corrections if any can be done by 17th.
GSTR – 3
It is a monthly return to be filed by the tax payer and it is mostly auto populated based on the data in GSTR – 1 and GSTR – 2. This report is to be filed by 20th of the month and first three columns will be auto populated once the user logs in.
Turnover Details including Gross Turnover, Export Turnover, Exempted Domestic Turnover, Nil Rated Domestic Turnover, Non GST Turnover and Net Taxable Turnover by the user manually.
Section 6 is for the outward supplies and in this section most of the data is auto populated.
Section 6.1 is for reporting the supplies to registered tax payers for interstate transactions and data is auto populated from Section 5, 8 and 10 of the GSTR -1 report.
Section 6.2 is for reporting the intra state supplies to registered tax payers and is auto populated from Section 5, 8 and 10 of the GSTR -1 report.
In GSTR – 1 for section 5, we have the state for each and every transaction and based on this state code the values are bifurcated between the interstate and intrastate to section 6.1 and 6.2 in this report.
Section 10 of GSTR – 1 has the breakup of the nil rate, exempted and non GST supplies for interstate and intrastate and from there the data is processed and shown in the respective columns.
In GSTR – 1 the user does not upload the tax rate and in GSTR – 3, the data is auto populated based on tax rate, so there should be process to determine the tax rate and show the data here, in case if the user collects higher or lower rates to the rates prescribed, will there be an validation or not, for this we need to see for the actual data validation at the time of submission of the report.
In Section 6.3 and 6.4 the supplies to consumers is shown for interstate and intra state and auto populated based on the data uploaded in GSTR – 1 from section 6,7,8 & 10.
Section 6.5 shows the deemed exports and data will be auto populated from Section 11 of the GSTR – 1 report.
Section 6.6 show the data related to discounts issues post sales or on account of clerical error or for any other reason and data is auto populated from Section 9 of GSTR – 1.
Section 6.7 shows the total tax liability for all the taxes derived from Section 6.1 to 6.6 auto populated for goods and services.
Section 7 of the GST – 3 deals with the input credit portion and similar to the output tax section in 6, most of the data is auto populated in the return based on data filed in GSTR – 2.
Section 7.1 deals with the input credit related to Inter State supplies received with respect to inputs, capital goods and services. The data is auto populated based on the data uploaded in section 4, 7 and 9 of GSTR – 2.
Section 7.2 deals with the input credit related to Intra State supplies received with respect to inputs, capital goods and services. The data is auto populated based on the data uploaded in section 4, 7 and 9 of GSTR – 2.
The list of invoices for the interstate and intrastate is derived based on the GSTIN mentioned in section 4 of GSTR – 2.
Section 7.3 is for summary of the input tax credit received on account of import of goods and services from foreign countries for inputs, capital goods and services based on section 5 & 6 of GSTR – 2.
Section 7.4 is for summary of Input tax credit received on account of post sales discount or on account of clerical error or for any other reason for inputs, capital goods and services for all taxes. Data is auto populated based section 8 of GSTR – 2.
Section 7.5 is for summary of output tax on account of reverse charge and for goods and services. Data is populated based on Section 6 of GSTR – 2.
Section 8 is for determining the total tax liability for the month for all the taxes under GST for the period for which the return is being filed. Data is auto populated based on sum of section 6.7 and section 7.5.
Section 9 auto populated based on section 11 of GSTR – 2 for the tds credit received for the period.
Section 10 shows the total input tax credit available for the month based on the Input Tax Credit ledger for each tax of GST by rate.
Section 11 shows the data for the tax amounts adjusted on account adjustments, penalty, late fee etc. and data is auto populated from cash and ITC Ledger.
Section 12 shows the amount eligible for refund and excess tax paid during the current and previous periods.
GSTR – 4
Is a quarterly return to be filed by the tax payers if they have opted for compounding scheme under GST. The tax payer after crossing the prescribed threshold limit can opt to be a regular tax payer wherein he can take credit of the input taxes or opt for a scheme where he can pay fixed rate on the sales and at the same time cannot avail input tax credit. This return is to be filed by 18th day on completion of the quarter.
Section 1 to 4 contains the regular information like the GSTIN, name of the tax payer, period for which the return is being filed etc.
Section 5 shows the purchases made by the compounding dealer and this data is auto populated based on the suppliers GSTR – 1. It also contains the purchases made from unregistered dealers. The data is split into two sections, one for the purchases without reverse charge and another with reverse charge.
Section 6 is for the imports made by the compounding dealer if any and the data is to be shown along with the Bill of entry number and HSN code of the item in 8 digits.
Section 7 is import of services by the compounding dealer if any along with the SAC code and the tax amount.
Section 8 shows the summary of the supplies made by the compounding dealer for the period with respective to supplies made to intra state supplies, un registered GST dealers along with exports.
Section 9 shows the amount of tax payable by the compounding dealer for the period along with interest and late fee if applicable.
Section 10 shows the payment details for the amount of tax paid.
In section 11 the dealer also has to clarify if the turnover is likely to cross before filing the next return for next quarter.
GSTR – 5
GSTR 5 is to be filed by the non-resident tax payers within 7 days on expiry of the registration certificate or monthly return till the registration number is valid. In case of monthly return it has to be filed by 20th of the next month.
Section 1 to 4 contains the generic date like the name, address, GSTIN and period for which the return is being filed.
Section 5 contains the details of the imported goods during the return period. HSN code has to be shown in 8 digits along with the Bill of Entry number, date, qty imported along with IGST if paid.
Section 6 contains the supplies made by the non-resident dealer for the return period and it contains the transaction level data along with the GSTIN of the buyer is available.
Section 7 contains the input tax credit availed for the return period for goods and services along with the GSTIN of the supplier.
Section 8 contains the amount of tax to be paid for all taxes under GST after adjusting the input tax credit if any available.
Section 9 contains the details of the closing stock at the month end or at the time of filing of the return.
GSTR – 6
GSTR – 6 is a return to be filed by the Input Service Distributor by 15th of the next month.
The first three sections of the report contains the information like the GSTIN, period for which return is being filed and also the name of the ISD.
Section 4 contains the purchase of service made by the ISD and this information is auto populated based on the GSTR -1 filed by the service provider / supplier. It also shows the supplies attracting reverse charge. We need more information for “Total tax available as ITC for distribution”, this needs to be interpreted based on the rules on GST when announced.
Section 5 contains the information relating to the distribution of the input credit.
Section 6 show the ISD ledger which is nothing but the summary of the input tax received, reversed and distributed along with the opening and closing balance for all the taxes under GST.
GSTR – 7
GSTR – 7 is to be filed by 10th of the next month by the tax payer who withholds / deducts TDS under GST.
The first three sections of the report are the generic data like the registration number, name of the deductor and the period for which the return is being filed. If we go through the dotted line in the report it talks about the GSTIN / GST TDS IN – does it mean there will be a different registration number for TDS under GST? The Business process document does not mention about this, for further information we need to wait for the rules and the act.
Section 5 contains the data for all the transactions where GST is deducted along with the GSTIN of the supplier for all the taxes under GST and it also shows the Challan number through which TDS has been paid.
Section 6 contains the amount of interest on delayed payments or late payment fee if any.
GSTR – 8
It is an annual return to be filed by the regular tax payers by 31st December of the next financial year. The return also has to be accompanied with a reconciliation statement signed by the auditor of the company. Details of the reconciliation statement format is awaited.
The following are the content of the GSTR – 8
- Details of the income and expenditure of the dealer
- Data is re grouped based on the data filed in monthly returns
- It shows the amount of refund if any payable by the department
- Details of the tax liability
- Details of the input tax credit
- Details of the items along with the HSN code, unit of measure and quantity for purchases and sales.
- Details of the input services and output services along with the SAC code.
Section 5 (a) contains the total value of interstate purchase of goods and services on which the input tax credit availed in two different tables.
It shows the item wise details of the purchases along with HSN code, description, unit of measure and quantity purchased along with IGST credit if any availed.
Section 5 (b) contains the information similar to 5 (a) but it is for intra state purchases and here the taxes shown are CGST and SGST along with tax credit availed.
Section 5 (c ) contains the details of the import of goods and service in two different tables along with the HSN code for item and SAC code for services with tax rate, amount and customs duty paid in case of goods.
Section 5 (d) contains the details of the purchases on which input tax credit is not availed, basically the purchase from compounding dealers and non-registered dealers.
Section 5 (e ) contains data related to sales returns, this means that whenever the customer returns the goods, the same has to be shipped on invoice with payment of taxes and the taxes are available as input tax credit. It contains item wise details along with HSN code and individual taxes like CGST, SGST and IGST.
Section 5 (f) contains the expense incurred other than purchases i.e. the ledger account along with the amount has to be shows in the section.
Section 6 is for the details of the income for the period during which the return is being filed.
Section 6 (a) contains the interstate supply of goods and services. HSN code, description of item, unit of measure, quantity, tax rate and tax amount along with taxable value for supply of goods and in case of supply of services it contains the description of service, SAC code, tax rate, taxable value and the tax amount.
Section 6 (b) similar to section 6 (a), this section contains the intra state supply of goods and service.
Section 6 (c) contains the export of goods and services on which GST is paid in two different tables along with the item and service details. In case of goods it contains the description of the goods, HSN code, tax rate, FOB value, IGST and customs duty if any paid. In case of service, the description of service, SAC code, tax rate, FOB value and tax amount.
Section 6 (d) contains the export of goods and services on which GST is not paid with same details as in section 6 (c).
Section 6 (e) contains the value of goods and services supplied on which GST is not paid.
Section 6 (f) contains the list of purchase returns made during the year along with the item description, HSN code, taxable value and tax amounts.
Section 6 (g) contains the income earned not on account of supply of goods and services. The details of the ledger account and the amount earned has to be shown in this section.
Section 7 is the reconciliation statement for each tax under GST like CGST, SGST and IGST. Month wise amount of tax paid, tax as per the audited account, difference if any and interest on it along with penalty has to be show in three different tables.
Section 8 contains the details regarding the refunds, arrears on account of audit or assessment.
Conclusion
The returns under GST are common for the state and centre and this helps in drastic reduction in the time taken for preparation of returns and more over all the state have the same format so there are no complexities involved to large extent. The paradigm shift with these proposed returns is that transaction level data has to be uploaded on monthly basis which is not required under Central Excise or Service Tax.
The data required to generate the returns is very simple and it is more or less like a listing report so any accounting software or enterprise recourse planning software should be able to support the same. The only open item for the time being is the process of filing of the return is directly on the GSTN server or on service providers appointed by the GSTN. It cannot be GSTN as the transaction level data has to be uploaded by each and every registered tax person and the servers cannot manage the traffic on the last days of the return filing.
Though the basic information is available the details will be known along with exact formats when the rules and announced.
Formats of the report can be accessed from http://dor.gov.in/sites/upload_files/revenue/files/mygov_1445315831190667.pdf
Challenges in returns and other ledgers will be continued in next part.
to be continued……..
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