Filing of Return and Matching of ITC

HARIDWAR CONCLAVE ON GST

7th August, 2016

By CA Ashish Chaudhary
Partner: Hiregange & Associates
FCA, CS, B.Com

1
 Coverage
 Introduction of GSTN
 Important component of GSTN
 Introduction / features of GST return
 Who needs to file return?
 Types of GST return - periodicity of return filing
– due dates
 Details of Each type of Return
 Matching, Reversal and Reclaim of Credit
 Miscellaneous Provisions

2
 GSTN
GSTN = Goods and Services Tax Network

This network will:

Provide common and shared IT infrastructure and services

to the CG, SG, Tax Payers etc

Provide common Registration, Return and Payment

services.

Assist Tax authorities in improving Tax compliance and

transparency of Tax Administration system.

Provide efficient Backend Services to the Tax Departments

of the Central and State Governments on request.
3
 Electronic Cash Ledger

Amt deposited by a taxable person is credited to this ledger

Deposit can be made by: internet banking, credit cards,

debit cards, NEFT, RTGS, other as maybe prescribed.

The amount available in the Electronic Cash Ledger may be

used for making any payment towards tax, interest, penalty,
fees or any other amount payable under the provisions of
the Act or Rules.

Manner of utilization, conditions and time limit would be

prescribed.

4
 Electronic Credit Ledger
Self-assessed ITC to be credited to this ledger to utilise output tax
liability

May include: ITC on inward supplies, ITC from ISD, permissible ITC
on RCM payments etc.

Order of utilisation for payment of tax shall be as follows:

IGST IGST, CGST, SGST
CGST CGST and IGST
SGST SGST and ISGT

Cross utilisation is not possible for following

CGST to SGST
SGST to CGST
5
 Tax Liability Ledger
Required to be maintained electronically by all. Sample
transactions:
Amount of liability based on self-assessment.
Liability arising out of any demand notice or adjudication
proceedings
The available credit utilized as against the available amounts in
the cash register or the credit register.

Order of discharge of tax : in the given order

Self-assessed tax and other dues of previous tax periods
Self-assessed tax and other dues of current tax period.
Any other amount payable under the Act/Rules- Demand u/s 51

Presumption that incidence of tax is passed on to the recipient of

such goods and /or services. This is subject to the contrary being
6 proved.
 Introduction / features of GST return
 Self-assessment of tax liability by the assesse
 Common e-return for CGST, SGST & IGST
 Separate returns for different categories of taxpayers
 Normal / Regular Taxpayer (GSTR-1, 2 & 3)
 Compounding Taxpayer (GSTR- 4 & 8)
 Foreign Non-resident Taxpayer (GSTR-5)
 Input Service Distributor (GSTR- 6)
 Tax Deductor (GSTR-7)
 CasualTaxpayer (GSTR-8)

H&A
Introduction / features of GST return

 Payment of due tax is must for filing valid return

Returns can be submitted with non or short payment but
shall be treated as invalid – not taken into account for invoice
matching & inter-Government fund settlement
 Provision for filing revised information
Differential Tax liability to be captured through Debit Note
/ Credit Note/ Supplementary invoices / correction mechanism
 Maintenance of electronic Cash Ledger
 Maintenance of electronic ITC Ledger
 Maintenance of electronic Tax liability Ledger

H&A
 Who needs to file return?
 Every registered person is required to file a return for the
prescribed tax period – No business – Nil return

 Persons exclusively dealing in exempted / Nil rated / non –GST

goods or services – No registration & no return.

 Government departments/ PSUs - supplier need to quote

Department ID – inter state purchases – considered as B2C
supplies.

H&A
 Types of return / due date
Sl N. Retur For To be filed by
n
1 GSTR 1 Outward supplies made by taxpayer (other than 10th of the next month
compounding taxpayer and ISD)
2 GSTR 2 Inward supplies received by a taxpayer (other than a 15th of the next month
compounding taxpayer and ISD)
3 GSTR 3 Monthly return (other than compounding taxpayer 20th of the next month
and ISD)
4 GSTR 4 Quarterly return for compounding Taxpayer 18th of the month next
to quarter
5 GSTR 5 Periodic return by Non-Resident Foreign Taxpayer Last day of registration

6 GSTR 6 Return for Input Service Distributor (ISD) 13th of the next month

7 GSTR 7 Return for Tax Deducted at Source 10th of the next month

8 GSTR
H&A 8 Annual Return By 31st December of
next FY
 Availment of Credit
Registered person – can avail

Recd Tax paid to apt. govt by

goods & supplier
services Furnished return
Possession:
(recipient)
Tax invoice
Debit invoice
Supplementary inv.
other tax paying docs
as maybe prescribed

Note: Goods recd in lots/ installments – credit in lots/installments only

25 - Details of outward supply- GSTR 1
Persons req to furnish: Every registered taxable person, except
ISD, person paying taxes under Sec 8 and Sec 37

By: within 10 days from end of respective tax period

Late submission : Only permitted on payment of late fees.

What to submit: Details of outward supplies effected

Taxable, exempt, non taxable. Export, interstate,

return of goods in relation to inward supply,
debit notes, credit notes, supplementary invoice
25 - Details of outward supply- GSTR 1
Separate table for submitting details in relation to NIL rated,
Exempted and Non-GST outward supplies to (both inter-state and
intra-state) to registered taxpayers and consumers.

Unmatched details: rectify error, add omitted entries

in the month of noticing – pay tax and interest, if short paid

No rectification after 30th sep following end of FY or Date of filing

annual Return, whichever is earlier.
 Components of GSTR - 1

 Tax payer details & return period details.

 Gross turnover of previous FY – only for first year – auto
populated –
 Final invoice-level - All B2B supplies - Line-item level data
in case multiple tax rate or HSN / SAC in one invoice.
 Inter-State B2C supplies - only if Taxable Value per invoice
is ≥ INR 250000/-.
 Aggregate State-wise inter state summary
 Components of GSTR - 1

 Aggregate summary - All B2C intra-State taxable supplies -

All exempted, nil rated & non-GST supplies (intra-State &
inter-State AND B2B & B2C) consolidated sale details would
be uploaded.

 Details relating to reverse charge will also be uploaded.

 The above HSN & SAC is applicable for – B2B supply and
B2C wherein invoice value is more than 2.5L
 Components of GSTR - 1

 Export & deemed Export - Invoice level details along with

shipping bill details
 with payment of IGST
 without payment of IGST
 Separate table for providing details of change in outward supply of
previous period – details of Debit Notes / Credit Notes & changes
in supply information for earlier tax periods with consequential
increase/decrease in tax liability
 Details of tax liability on receipt of advance
 Details of subsequent issuance of invoices issued w.r.t. advance
receipt
26 - Details of inward supply - GSTR 2
Persons req to furnish: Every registered taxable person,
except ISD, person paying taxes under Sec 8 and Sec 37. By
15th

Auto population from GSTR-1 by 11th.

What to do: Verify, validate, modify, delete details

furnished by suppliers. Add details not furnished by
supplier

Submit inward supply of goods/services, RCM, Debit

Note/credit Note
 Components of GSTR - 2

 Taxpayer details and Return period details

 Invoice level inward supply details received from registered
taxpayer
 To be auto-populated from GSTR-1 of counterparty supplier
 Recipient to have option to add receipts not declared by
counterparty supplier – if he is in possession of taxable invoice &
have received supply of goods / services
 Supplies attracting reverse charge – auto-populated and others.
 Bill of entry details of import of goods
 Invoice level details of import of services
 TDS credit
 Components of GSTR - 2

 Option to declare eligibility for ITC

 Separate table to provide details in relation to ITC received on

invoice – on which partial credit has been availed earlier.

 In case of CG – to capture availment of ITC over a period of time

 Separate table - Debit Notes / Credit Notes: Details of debit note,

credit note and changes in inward supply information for earlier tax
periods with consequential increase/decrease in ITC

 Aggregate summary of receipts of exempted, nil rated, non-GST

supplies & supplies received from unregistered person.
28 - Claim of input tax credit & Provisional
adjustment thereof
Every person can take ITC as self assessed.

Credit shall be credited in electronic credit ledger on

provisional basis.

If a person has not submitted valid return, then such

person shall not be allowed to utilize such credit till he
discharges self assessed tax liability
27 – Returns – GSTR 3
Liability of : every registered taxable person, except person
paying tax u/s 8, ISD by 20th of Next Month

Details: inward and outward supplies, ITC availed, tax

payable, tax paid and other particulars as may be prescribed

Valid return not furnished for previous period: taxable

person not allowed to furnish return for respective tax period

Non payment of full tax due : return is invalid for allowing

ITC in respect of supplies made by registered taxable person

Discovers omission or incorrect matters after furnished

return: rectify the return filed for month or quarter subject to
specified interest
27 – Returns – GSTR 3
Nil return: for every tax period whether supplies have been
made or not

ISD: furnish return for every calendar month or part thereof,

by 30th of next month

TDS: person deducting TDS – return to be submitted within

10 days from end of month.

No rectification: if errors found out as result of scrutiny,

audit, inspection or enforcement activity.
29 – Matching, reversal & reclaim of ITC
The details in a return of inward supplies of a recipient should be
matched in prescribed time and manner with:
Outward supplies furnished by other party (supplier)
Additional customs duty paid on goods imported
Any duplicate claims of input tax credit

If details of inward supply match with the outward supply or

additional duty of customs, credit shall be finally accepted and
communicated to recipient.

Duplication – communicated to recipient & added in output liability

of recipient in the month succeeding to the month in which
discrepancy is communicated.
Interest also required to be paid (From date of availing credit till
corresponding additions)
29 – Matching, reversal & reclaim of ITC
Credit claimed – excess
Outward supply not declared by supplier, or Discrepancy communicated to both.
From tax declared by supplier for same supply

If not rectified by supplier, will be added to output Liable to pay interest

liability of recipient in return (in month succeeding (From date of availing credit
the month in which discrepancy was communicated) till corresponding additions)

Recipient allowed to reduce output liab if supplier

declares invoice/debit note in his valid return.

Accepted rejected

Interest will be added Amt reversed shall be added back.

back in electronic cash Also, interest to be paid on such amt
ledger. at rate specified u/s 36(3)
29A – Matching, reversal & reclaim of
reduction in output tax liability

Output tax is reduced by outward supplier by issuing CN, details of

every such CN issued should be matched with:
Corresponding reduction in the credit by recipient in the
credit note for the current or subsequent tax period
Any duplicate claims for reduction of output tax liability.

If claim of reduction matches with reduction in ITC by recipient,

such shall be finally accepted & communicated

Duplication – communicated to supplier & added in output liability

of supplier in the month in which discrepancy is communicated.
Interest also required to be paid (From date of availing credit till
corresponding additions)
29A – Matching, reversal & reclaim of
reduction in output tax liability
Output liability reversed– excess
From ITC reversed by recipient, or Discrepancy communicated to both.
Credit note not declared by recipient

If not rectified by recipient, will be added to output Liable to pay interest

liability of supplier in return (of month succeeding (From date of availing credit
the month in which discrepancy was communicated) till corresponding additions)

Supplier allowed to reduce output liab if recipient

declares credit note in his valid return.

Accepted rejected

Interest will be added Amt reversed shall be added back.

back in electronic cash Also, interest to be paid on such
ledger. amt at rate specified u/s 36(3)
27A – First Return
Outward supplies – from date on which he became liable to
registration till end of month in which registration is granted

Inward supplies – from effective date of registration till end

of month in which registration is granted.

Under composition scheme – from date on which he

becomes registered taxable person till end of quarter in
which registration is granted.
30 – Annual Return & 31 – Final Return
Annual return
Every registered tax payer shall file Annual Return on or before 31st
December following the end of the financial year.

Input Service distributor, deductor of tax, casual taxable person and

Non-Resident taxable person are not required

Taxable persons who get their accounts audited under section 42(4) are
required to electronically file annual return under this section along
with a copy of the audited accounts as well as a reconciliation
statement.

Final return
Final Return – at the time of cancellation of reg.

within three months of the date of cancellation or date of cancellation

order, whichever is later, in prescribed form and manner
Misc Provisions
Sec 32 – Notice to return defaulters:
Registered person fails to furnish return u/s 27 & 31, a notice shall
be issued requiring him to furnish return within such time & manner
as maybe prescribed.

Sec 33 – Levy of late fee:

Return u/s 25, 26, 27, 31 not filed – liable to late fee @ Rs 100 per
day, max to Rs 5000.
Return u/s 30 not filed – liable to late fee @ Rs 100 per day, max to
amt calculated at a quarter % of his turnover

Sec 34 – Tax return preparers:

Eligible govt may prescribe manner of approval, eligibility
conditions, duties & obligations etc.
Registered person may authorize such person to prepare details for
returns.
 For any further queries
ashish@hiregange.com
8510950400