GST-returns to be filed monthly, GSTN to go to government
What's the story
The GST Council took some major decisions in its 27th meeting yesterday. The most important is the introduction of monthly returns filing for most taxpayers, a move that will greatly simplify the current three-step process. The system is expected to be implemented in 1-1.5 years. The Council has also decided to make the GST Network (GSTN) a government-owned entity; currently, private firms hold 51%.
Filing
No more filing returns thrice a month
Under the new system, almost all taxpayers will have to file returns monthly; composition dealers and those having nil transaction will have to file quarterly. The latter category includes 30% of all taxpayers, said Finance Secretary Hasmukh Adhia. To ensure a smooth process and avoid pressure on the system, the return filing dates will be staggered, depending on the entity's turnover.
Phases
Implementation to be done in phase-wise manner
The system will be implemented phase-wise. For six months, the current system of GSTR 3B and GSTR 1 will continue. In the next six months, the system will let taxpayers upload invoice-wise data and claim input tax credit based on self-declared information, like in the current GSTR 3B. Thereafter, input tax credit will be calculated only on the basis of invoices uploaded by the seller.
Invoice
Shift of invoice-uploading responsibility to seller
The system will eventually accept a unidirectional flow of invoices, with only sellers being allowed to upload invoices. Buyers will be able to continuously view them; during the aforementioned second phase, they will be constantly notified about gap between their credit based on sellers' invoices, and the amount being claimed by them. A friendly interface and offline tools will help taxpayers upload invoices easily.
Information
Buyers to be protected somewhat from seller's possible tax default
The Council has assured there won't be automatic reversal of input tax credit from buyer on non-payment of tax by seller. In case of default by seller, the dues will be recovered from him, but reversal of credit from buyer will also be an option.
GSTN
GSTN to be transferred to the government
The GSTN, whose 51% stake worth Rs. 5.1cr is currently held by private firms (HDFC, ICICI Bank, LIC Housing Finance and others), will now move to the government's ownership. Then, the Center and states, currently holding 24.5% each, will both own 50%. The GSTN has been allowed to retain their staffing terms for five years, and to hire new employees at market-linked salaries.
Deferred
Decisions on incentive for digital payment and sugar cess pending
The Council discussed, but didn't decide on two other moves- concession in tax rate on payments made digitally, subject to a cap of Rs. 100, and imposition of cess on sugar over and above 5% GST, apart from reduction in GST on ethanol. At least two states have raised concerns over the incentives plan. The issues will be deliberated by a Group of Ministers.