GST: India Eases Compliance Burden For Small Businesses

Finance Minister Nirmala Sitharaman announced more measures to simplify filing of tax returns and reduce compliance burden on small businesses.

The GST Council made these recommendations in its 42nd meeting held on Monday. These follow a slew of measures announced earlier to ease compliance.

Here are the key announcements:

New Tax Filing Framework

Sitharaman announced a new framework to help businesses if they furnish information through various forms in time. For instance, if details of outward supplies or GSTR-1 are filed in time, it would:

• Help a taxpayer view the available input tax credit—from all sources like domestic supplies, imports or payments on reverse charge basis—in electronic ledger much before the due date for paying tax.

• Enable the GST system to autofill the information in GSTR-3B return.

• To implement this feature, taxpayers will have to file GSTR-1 before the GSTR-3B or summary return to ensure that input tax credit and tax liability is accurately captured.

The government also revised timelines for filing forms.

• Starting January, due date for filing GSTR-1 for quarterly taxpayers will be revised to 13th of the next month after the end of a quarter.

• The feature enabling autofilling of tax liability from a taxpayer's own GSTR-1 as well as input tax credit from supplier's GSTR-1 will be made available to monthly tax filers from January; and from April 1 next year for quarterly filers.

• Businesses having aggregate turnover below Rs 5 crore can file quarterly returns from January. They can pay up to 35% of net cash tax liability for the last quarter through an auto-generated challan.

The continuing efforts to simplify compliance for GST taxpayers, including those relating to auto population of various figures in the returns from January, good for businesses, according MS Mani, senior director at Deloitte India. However, he said, there should be a facility during the initial periods to take care of any system errors.

These changes would require businesses to prepare for them over the next three months so that the timelines of January next year can be achieved as these would require some process and system changes, Mani said.

According to Jigar Doshi, partner at TMSL LLP, the proposed changes will perk up the compliance structure by making it simple and has avoided the drill of introducing an entirely new return system.

Doshi also pointed out the missing factors that require consideration. “While an auto-populated 3B looks promising, the entire exercise is based on vendor's filing of GSTR-1 on time. If this is not done, the input tax credit may get deferred to next month considering the recent amendments in the CGST Rules.”

While the newly introduced return for determining eligible and ineligible input tax credit — GSTR-2B seems helpful, but it is incomplete as the parameters to classify ineligible credit do not presently include identification of blocked credit, he said.

Other Changes

To capture other details on the type of goods sold in the country, the government asked taxpayers having annual turnover above Rs 5 crore to declare HSN (harmonized system nomenclature) code at 6 digits for supply of goods and services in its GSTR-1 form. Business having turnover below Rs 5 crore must mention HSN code at 4 digits for business-to-business supply of goods and services. The government will separately notify eight-digit HSN code for notified class of supplies by all taxpayers.

The GST Council also recommended amendments in the Central GST rules to incorporate introduction of certain new forms.