CBIC New Return Filing System to Make GST Easier for MSMEs

Author: John Den Mark

The Goods and Services Tax (GST) was introduced in 2017 in order to replace all the other indirect taxes like Value Added Tax (VAT), Octroi, Surcharges, etc. The new indirect tax, GST, has brought transparency and centralization in the tax filing system. GST has proven to be beneficial for both, the government and the assessee. The GST council has introduced a new GST return filing system to make it more transparent and easier. The decision was made in the 31st GST Council meeting. The system will be implemented on 31st October 2020.

New GST Return Systems

Under the new GST system, the Central Board of Indirect Taxes and Customs (CBIC) has introduced three types of return filing forms viz. RTE-1 (Normal), RTE-2 (Sahaj), and RET-3 (Sugam). The assessee is required to file the form according to the turnover.

  • The assessee having an annual turnover of more than Rs. 5 crores are required to file the Normal return under RET-1 monthly
  • The assessee having an annual turnover of less than Rs. 5 Crores is required to file the return under RET-2 (Sahaj), quarterly if he is undertaking B2C works
  • The assessee having an annual turnover of less than Rs. 5 Crores is required to file the return under RET-3 (Sugam), quarterly if he is undertaking both B2C and B2B works
    • Annexures to Return Forms

    The New GST Forms Have Two Annexures:

  • GST ANX-1: The Inward and Outward Supplies are to be reported under this annexure. (Inclusions Imports and Reverse Charge).
  • GST ANX-2: The Inward and Outward Supplies exclusive of those under reverse charge are to be reported under this annexure. All the other items that can not be included in the ANX-1 will be listed in this annexure.

    • Amendments - The assessee can amend the return filed and ANX-1 easily. The amendments can be made for any specific year. The assessee can claim the Input Tax Credit (ITC) and tax payments under form PMT 08.

    Difference between New and Old GST SystemDifference Between New & Old GST System is as follows:
  • Turnover Limit - The turnover limit for the assessee was Rs. 1.5 Crore in the old GST system and Rs. 5 Crores in the new GST system.
  • Return Forms - The old GST system has sixteen different forms like GSTR 1, GSTR 2, etc. but the new system has three forms only. RET-1, RET-2 and RET-3.
  • Input Tax Credit (ITC) Claims- Under the old system, the assessee had to declare the claim himself but under the new one, he can automatically get the claim on the basis of details provided in ANX-2.
  • Reporting Missing Invoices - The missing invoices can be reported under the form GSTR 3B under the old system and the same can be done in the new system under RET 1 (Return) form.
  • Return Filing During Cancellation of Registration - It is compulsory for an assessee to file the return during the cancellation of registration under the old system but such compulsion is removed under the new system.
  • Reporting of Supplies under Reverse Charge Mechanism (RCM)- The supplies under RCM are required to be filed in GSTR 3B under the old system and the same is to be required to be filed in ANX 1 under the new tax system.
  • Reporting Harmonised System Nomenclature (HSN) Codes- HSN codes are required to be reported separately under the old system but it can be reported at the invoice level in the new system.
  • Reporting imports- The imports were required to be reported in form GSTR 3B under the old system and the same can be recorded in form GST ANX-1 under the new system.
    • Challenges of the New GST System

    The main focus of the new GST system is to record every transaction at the invoice level. It helps in uploading the invoices on a real-time basis under ANX-1 which can be challenging for the assessee as accuracy can be hard to maintain and errors might happen. In order to claim ITC, the assessee will have to keep the records clean under the new system. Under the old system, the ITC was credited to the assessee on a provisional basis but this will be changed under the new one.

    Need for Cloud Accounting System

    The older accounting system is required to be updated according to the new system. The system should be compliant so that there is no need to file the data manually. There will be no errors in reporting. An efficient filing and recording system will make sure that the ITC is credited to the assessee according to the real invoices. The cloud accounting system can simplify the return filing process, the government will also get real and regular information about the assessee. The method of e-Invoicing will also be promoted. The assessee and the government can easily access the invoices easily at the time of need.

    Grab on to the latest and most effective return filing utility, Gen GST Software designed and developed by SAG Infotech Private Limited. The software is aimed at facilitating unlimited returns for unlimited clients. Available in both online and offline modes, Gen GST software is the most compliant and advanced software that is solely based on secured JAVA language. The online version of Gen GST is the OS-independent utility which means the software will process invoice bills, file returns, and create e-way bills (online) without you worrying about your computer’s Operating System (OS).

    One can easily download the free trial version of Gen GST Software for GST return filing by simply requesting the download link which will be sent to your registered mail IDs. Also, the cloud-based GST SaaS service is available that will let MSMEs or small businesses in India do GST billing, return e-filing, generate e-way bills, refund vouchers, payment vouchers, credit/debit notes, purchase RCM and lot more.

    Gen GST apart from being feature-loaded is also a government compliant return filing software that will facilitate you with all the forms GSTR 1, GSTR 3B, GSTR 4, GSTR 5, GSTR 5A, GSTR 6, GSTR 7, GSTR 8, GSTR 9, GSTR 9A, GSTR 9C (as per your requirements). The utility has a user-friendly interface with all the basic features displayed on-board so that you are not stuck with the functionality of the software.

    Conclusion

    The new GST is beneficial for the assessee. The cloud accounting system is beneficial as it will help in uploading the invoices in real-time. The whole world is going digital, it is the need of the hour that the tax system is also made more and more digital. As the new system is projected to be implemented in October 2020, the assessee should opt for it to avoid penalties and be carefree.