GST Countdown: Change In Return Filing Dates Won’t Impact Availment Of Credit, Experts Say
Change in return filing dates won’t affect input tax credit timeline.
In what comes as a big relief for taxpayers and the Goods and Services Tax (GST) Network, the GST Council has eased the timeline for filing tax returns under the new indirect tax regime by a month.
For the month of July and August, businesses will have to file taxes on the basis of a simple return, Form GSTR-3B, consisting of a summary of outward and inward supplies. Earlier, the deadline for filing details of goods and services supplied i.e. GSTR-1 was August 10 and for filing details of inward supplies i.e. GSTR-2, it was August 15.
In the interim summary return, businesses will have to file only their total purchases and sales and the net tax liability, Pratik Jain, an indirect tax partner at consultancy firm PwC explained.
The relaxation given is in terms of filing invoice-level details which was earlier due on August 10. That has now been moved to September 10. This would mean that the whole matching would also not apply before that because once you file the invoice-level return, only then can the purchaser match.Pratik Jain, Partner- Indirect Tax, PwC
Sunil Gabhawalla of chartered accountancy firm SB Gabhawalla & Co. pointed out that the apprehension regarding delay in input tax credit as a result of the new timeline is misplaced.
The credit has to be claimed on a self-declaration basis and reconciliation follows the claim of the credit. Many people are afraid that without reconciliation, I may not get credit. The way it works is, on the first day, you are given a provisional credit and you are expected to reconcile within a period of two months. If you are able to reconcile within a period of two months, life moves smoothly. If you are unable to reconcile, they will take it back from you by way of a reversal.Sunil Gabhawalla, Head, SB Gabhawalla & Co.
Jigar Doshi, a partner at SKP Group concurred with this view and said that one can draw from the experience of implementation of the negative service tax list, where in the initial period assessees were allowed to take cenvat credit as against their payment liabilities without filling returns.
It is highly probable that the benefit of GST credit on inward supplies will be allowed against the payment of GST liability for the first two months (interim period). Any late fee or penalty for short payment/erroneous claims in the interim period is likely to be condoned, as announced by the government.Jigar Doshi, Partner - Indirect Tax, SKP Group
While there’s relief on the return filing front, it’s imperative for businesses, especially retail organisations, to be up and running with their point-of-sale systems, Gabhawalla added. He said that on the midnight of June 30, businesses should be able to prepare GST-compliant invoices with correct calculations. In September, he added, a detailed line level upload will have to be done on the Goods and Services Tax Network.
Doshi added said that while the deferment of GSTR-1 and GSTR-2 for the interim period is a welcome move, conducting compliance for two months (i.e. July and August) along with the rush of filing GST TRAN-1 for transitional credit in the month of September may become a challenge for many organisations.