Returns Process and matching of Input Tax Credit
(Updated Statutory provisions & Rules 03 June 2017)
Q 1. What is the purpose of returns?
a) Mode for transfer of information to tax administration;
b) Compliance verification program of taxadministration;
c) Finalization of the tax liabilities of the taxpayer within stipulated period of limitation; to declare tax liability for a given period;
d) Providing necessary inputs for taking policy decision;
e) Management of audit and anti-evasion programs of tax administration.
Q 2. Who needs to file Return in GST regime?
Ans. Every person registered under GST will have to file returns in some form or other. A registered person will have to file returns either monthly (normal supplier) or quarterly basis (Supplier opting for composition scheme). An ISD will have to file monthly returns showing details of credit distributed during the particular month. A person required to deduct tax (TDS) and persons required to collect tax (TCS) will also have to file monthly returns
showing the amount deducted/collected and other details as may be prescribed. A non-resident taxable person will also have to file returns for the period of activity undertaken.
Q 3. What type of outward supply details are to be filed in the return?
Ans. A normal registered taxpayer has to file the outward supply details in GSTR-1 in relation to various types of supplies made in a month, namely outward supplies to registered persons, outward supplies to unregistered persons (consumers), details of Credit/Debit Notes, zero rated, exempted and non-GST supplies, exports, and advances received in relation to future supply.
Q 4. Is the scanned copy of invoices to be uploaded along with GSTR-1?
Ans. No scanned copy of invoices is to be uploaded. Only certain prescribed fields of information from invoices need to be uploaded.
Q 5. Whether all invoices will have to be uploaded?
Ans. No. It depends on whether B2B or B2C plus whether Intra-state or Inter-state supplies.
For B2B supplies, all invoices, whether Intra-state or Interstate supplies, will have to be uploaded. Why So? Because ITC will be taken by the recipients, invoice matching is
required to be done.
In B2C supplies, uploading in general may not be required as the buyer will not be taking ITC. However still in order to implement the destination based principle, invoices of
value more than Rs.2.5 lacs in inter-state B2C supplies will have to be uploaded. For inter-state invoices below Rs. 2.5 lacs and all intra-state invoices, state wise summary will
Q 6. Whether description of each item in the invoice will have to be uploaded?
Ans. No. In fact, description will not have to be uploaded. Only HSN code in respect of supply of goods and Accounting code in respect of supply of services will have to be fed. The minimum number of digits that the filer will have to upload would depend on his turnover in the last year.
Q 7. Whether value for each transaction will have to be fed? What if no consideration?
Ans. Yes. Not only value but taxable value will also have to be fed. In some cases, both may be different. In case there is no consideration, but it is supply by virtue of schedule 1, the taxable value will have to be worked out as prescribed and uploaded.
Q 8. Can a recipient feed information in his GSTR-2 which has been missed by the supplier?
Ans. Yes, the recipient can himself feed the invoices not uploaded by his supplier. The credit on such invoices will also be given provisionally but will be subject to matching.
On matching, if the invoice is not uploaded by the supplier, both of them will be intimated. If the mismatch is rectified, provisional credit will be confirmed. But if the mismatch continues, the amount will be added to the output tax liability of the recipient in the returns for the month subsequent to the month in which such discrepancy was
Q 9. Does the taxable person have to feed anything in the GSTR-2 or everything is autopopulated from GSTR-1?
Ans. While a large part of GSTR-2 will be auto-populated, there are some details that only recipient can fill like details of imports, details of purchases from non-registered or composition suppliers and exempt/non-GST/nil GST supplies etc.
Q 10. What if the invoices do not match? Whether ITC is to be given or denied? If denied, what action is taken against supplier?
Ans. If invoices in GSTR-2 do not match with invoices in counter-party GSTR-1, then such mismatch shall be intimated to the supplier. If the mismatch continues even after it is made known to both and still it is not rectified.
Mismatch can be because of two reasons. First, it could be due to mistake at the side of the recipient, and in such a case, no further action is required. Secondly, it could be possible that the said invoice was issued by supplier but he did not upload it and pay tax on it. In such a case, the ITC availed by the recipient would be added to his output tax liability, in short, all mismatches will lead to proceedings if the supplier has made a supply but not paid tax on it.
Refer extract of Chapter IX (Sec 37 to 48) of CGST Act (Return provisions) on following link:
Refer Income tax, GST & Company Law daily updates on link
This FAQ on GST compiled by NACEN and vetted by the Source Trainers is based on the CGST/SGST/UTGST/IGSTAct(s). This FAQ is for training and academic purposes only.
The information in this blogger is reproduced from FAQ on GST publised by CBEC updated on 31 March 2017 and is not intended to be treated as legal ad vice or opinion. For greater details, you are requested to refer to the respective CGST/SGST/UTGST/IGST Acts.
The FAQs refer to CGST and SGST Acts as CGST/SGST as CGST Act and SGST Act are identical in most of the provisions. CGST Act has been introduced in the Parliament. The SGST Acts will be passed by respective state legislatures. A few provisions may be specific to state and may not be in CGST Act.