Filing Returns under GST for Professionals and Small Businesses

It’s been a month since GST or the idea of ‘One Nation One Taxhas been implemented in the country. While the earlier signs are encouraging, the regular monthly compliances in the form of deposit of tax and filing of returns are a bit ambiguous. GST has introduced the concept of computerized matching of input taxes through detailed returns.

The basic features of the returns mechanism in GST inter alia include

  • uploading of invoice level information
  • auto-population of information relating to Input Tax Credit (ITC) from returns of the supplier to that of recipient
  • invoice-level information matching
  • auto reversal of Input Tax Credit in case of a mismatch.
  • electronic filing of returns.

The GST Rules provide for registration under the GST law if the sales/receipts exceed Rs. 20 lakh. However, if you are engaged in interstate transactions, one cannot avail the benefit of this limit and is required to get registered. This applies to all professionals including freelancers. While the rules and the taxation process per se have been simplified for small taxpayers, registered persons need to file the following returns under GST Law:

Return Description Due Date of Filing
GSTR-1 Monthly Statement of Outward supplies of Goods or Services 10th of the next month
GSTR-2 Monthly Statement of Inward supplies of Goods or Services 15th of the next month
GSTR-3 Monthly Return for a normal taxpayer 20th of the next month
GSTR-9 Annual Return 31st December of the next financial year

For the majority of the professionals and small businesses, these will be the returns one would be required to file. Let’s have a sneak peak of the monthly compliance process:

  1. File GSTR-1 by 10th This is the monthly return for sales during the month. This will generate the GST liability for the month.

 

  1. File GSTR-2 by 15th This is the monthly purchases return. Once all the registered persons including your suppliers have filed GSTR-1, the sales of your suppliers to you will reflect into your purchases return i.e. GSTR-2. You need to cross-check the details, rectify if required and submit this return. This will be required to ascertain your input tax credit eligibility for the taxes paid on your purchases and other input services.

 

  1. File GSTR-3 by 20th after paying the tax Due – Once you have confirmed your sales and purchases through GSTR-1 and GSTR-2, GSTR-3 will get populated automatically with the details from the earlier returns. AS such, you now have the GST liability to be paid in front of you through the return. You need to pay the tax liability before you proceed to file the return. The tax can be paid through NEFT/ RTGS or Net Banking of the authorized However, make sure you pay your taxes sufficiently in advance to avoid delay in return submission, since the tax payment may also take some time to update in your account.

However, considering that the businesses and professionals need some time to understand the returns and comply in spirit, the GST Council has relaxed filing rules for the first two months post implementation. Instead, in the interim, GSTR 3B return form has been introduced which will be required to be filed by 20th of the next month for the first two months of GST implementation (July and August, 2017) instead of the normal returns – GSTR 1, 2 and 3. However, even these three returns will be required to be submitted, albeit a few days later. As such, the due dates for the first two months are as below:

Forms For July 2017 For August 2017
GSTR 3B 20th August 20th September
GSTR 1 5th September 20th September
GSTR 2 10th September 25th September
GSTR 3 15th September 30th September

 

GSTR-3B will have the details of outward supplies (sales), inward supplies (purchases) and its tax credit, other purchase like zero rated or exempted purchases and the tax payment details. It is a summary return for the first two months, which will be required to be followed by the regular returns. The regular returns will then be matched with the earlier summary return submitted and any differences in tax i.e. refund or additional payment will be done before the GSTR-3 return filing.

 

Our Prime Minister in the launch event for GST expanded the abbreviation as ‘Good and Simple Tax’. The coming months will show if the processes are further simplified. These monthly compliances and return submissions are a call to be more organized with your finances, which is desirable but fewer returns over the year is what most people prefer.

Simardeep Singh


Simardeep Singh is a Chartered Accountant based in Delhi. He loves sharing his knowledge about personal finance and investment.