The proposed GSTR regime shall provide for the monthly filing of business transactions through a set of eight forms depending upon the categories of transactions.
The numbers of forms are:
|Return/Ledger||For||To be filed by|
|GSTR 1||Outward supplies made by tax payer(other than compounding tax payer and ISD)||10th of the next month|
|GSTR 2||Inward supplies made by tax payer(other than compounding tax payer and ISD)||15th of the next month|
|GSTR 3||Monthly return(other than compounding tax payer and ISD)||20th of the next month|
|GSTR 4||Quarterly return for compounding tax payer||18th of the month next to quarter|
|GSTR 5||Periodic return by non-resident foreign tax payer||Last day of registration|
|GSTR 6||Return for input service distributor||15th of next month|
|GSTR 7||Return for tax deducted at source||10th of the next month|
|GSTR 8||Annual return||By 31st December of next FY|
|ITC Ledger of taxpayer||Continuous|
|Cash Ledger of taxpayer||Continuous|
|Tax Ledger of taxpayer||Continuous|
The key elements of each of the forms are as given below:
GSTR1: Regular taxpayers (including casual taxpayer) have to file this form. This would consist of the details of outward supplies for each registration. In case of taxpayers with more than one registration within any state, GSTR1 has to be filed separately for each of them. In the case of non-resident taxpayers, GSTR 1 has to be filed for the time period for which registration have been obtained by them. This will be done in the same way as that of a casual tax payer. The return form contains the following information:
- Basic particulars of the taxpayer.
- Time period of the return being filed
- Gross turnover of the taxpayer during the previous financial year. This information has to be submitted by the taxpayers only in the first year and in the subsequent years will be automatically filled in.
- Final invoice-level supply details regarding the tax period which has to be separate for goods and services.
- Particulars relating to advance received against a supply to be made in future has to be submitted in conformity with the GST law.
- Details regarding the taxes already paid on advance receipts for which invoices issued in the current tax period has to be submitted.
- A different table for providing details about revision in relation to outward supply invoices concerning previous tax periods.
- A distinct table for any modifications or correcting errors in the previously submitted returns.
GSTR2: The GSTR2 form also has to be filled by tax payers both resident and non-resident in the same way as the GSTR1. All the information contained in the GSTR1 will be auto populated in the GSTR2 form. The details of inwards supplies would be auto-populated in the Input Tax Credit (ITC) ledger on submission of return. GST law should provide that ITC with respect to capital goods will be allowed over a period of 2 years in equal installments. Further, GST law should make proper provisions for getting the advantage of ITC in the event that inputs are received in one lot or in multiple lots. A separate table for providing particulars concerning the ITC received onan invoice on which partial credit has been availed of previously is present. Another table for ISD credit and TDS credit received by the taxpayer is also existent in this form.
GSTR3: The GSTR3 form has to be filled by both regular resident and non-resident taxpayers in the same way as that of GSTR1 and GSTR2. The form would contain the aggregate outward and inward supply information which will be automatically filled up via GSTR-1 and GSTR-2. Information regarding ITC ledger, cash ledger and liability ledger would be updated on any activity by the taxpayer in relation to these. Details about the payment of tax under CGST, SGST, IGST and Additional tax separately has to be populated from the debit entry in credit/cash ledger. The GST law may have provisions for categorically maintaining the account for CGST, SGST, IGST, additional tax long with other minor heads for interest, penalty, fee etc. Taxpayer may opt to claim the refund of excess payment via the return for which concerned field will be given in the return form. Details regarding the ITC balance (CGST, SGST and IGST) at the end of the taxable period will be auto-populated in the ITC ledger despite the mode of filing of return. The return would also consist of a field for the taxpayer to either claim the refund or to carry forward the ITC balance (CGST, SGST and IGST). There may be provisions stating that the refund will be processed quarterly. The GSTR3 form will be auto-populated through GSTR- 1 (of suppliers), GSTR-2, ISD return, TDS return of deducting party, ITC ledger, cash ledger and tax liability ledger.
GSTR4: Compounding taxpayers would have to file a quarterly return called GSTR4. Taxpayers otherwise eligible for the compounding scheme can opt against the compounding and file monthly returns and thereby make their supplies eligible for ITC in hands of the purchasers. The cutoff date for filing GSTR 4 would be the 18th day of the first month of the succeeding quarter.
GSTR5: Non- Resident Taxpayers (foreigners) would be required to file GSTR-5 return for the time period for which registration has been obtained within seven days immediately after the date of expiry of registration. In case the period of registration extends to more than one month, monthly returns would be have to be filed and soon after, the return for remaining period has to be filed within a period of seven days as mentioned earlier. For them, the registration format will be the similar to that for UN bodies. It contains the details of both inward and outward supplies including tax penalties, fees and interest similar to the GSTR4. The difference lies at the HSN details at 8digit level, input tax credit availed and declaration of closing stock of goods.
GSTR6: The ISD is required to file return within 15 days after the end of the month. This form will contain details of ISD and the recipient. The GST registration number has to be mentioned. There is a table requiring information on supplier invoices which forms the base of ITC. These details will be auto populated but can also be entered manually. The invoice details with document number and date has to be entered. The amount of CGST, IGST and SGST credit as applicable has to be mentioned.
GSTR7: The taxes deducted at source at certain percentages have to be filed here. The purchasers cutting TDS will be required to file this return. It is similar to income tax form 26Q/24Q. The invoice number and TDS certificate with dates of both have to be entered.
GSTR8: The annual return will be compulsory for all tax payers. It would be a summary of monthly reports filed during the year. The returns have to conform to the audited financial statement of the taxpayer. The purpose of this form is to provide a comprehensive view of the activities of the tax payer.
Over the past few decades, Indian economy has undergone a massive change by opening up its markets to multinational giants. In such circumstances, several small and medium sized business entities due to their inability to cope with the changing market scenario, either have shut down or in a bid to survive, opted to merge with these conglomerates. At this juncture, experts felt the need of a comprehensive central legislation to not just to facilitate the growth and development of these industries but also to extend such support as would enable to them to adopt advanced technology and remain in the competitive era of globalization.
Previously, the growth and development of small scale industries was governed by Industries (Regulation and
Development) Act, 1951. The Micro , Small and Medium Enterprise Development Act, 2006 was introduced to specifically tend to the needs of the small and medium sized industries.
The MSMED Act categorizes Micro, Small and Medium enterprises based on investment made in plant and machinery. For determining the status of an enterprise, the following slabs have been prescribed:
All types of enterprises, whether sole proprietorship firm, partnership firm, Hindu undivided family business, cooperative society, company or undertaking falling under the above mentioned slabs can apply for registration under this Act, The registration under MSMED Act, 2006 is voluntary and not mandatory.
There are two types of registration:
- Provisional registration- A business unit can provisionally register itself under the Act in its pre-investment period in order to take necessary steps to apply for financial credit, water, power, land etc.
- Permanent Registration- A unit which is provisionally registered at the time of commencing production can apply for final or permanent registration. An existing unit is eligible to apply for the same without going through the provisional registration process.
The Entrepreneur’s Memorandum has to be filed with the General Manager of District Industries Centre (DIC) of the concerned district of the business enterprise. Filing of the same is compulsory for Medium enterprises (except those in private sector) and optional for Micro and Small enterprises. It is divided into two parts:
|EM Part I||EM Part II|
|Any person who intends to establish any micro, small or medium enterprise engaged in manufacturing or service sector shall file EM Part I. This validity of EM Part I is for 2 years after the expiry of which no renewal will be granted.||Existing units who have already commenced their activities has to file EM Part II within 2 years of doing the same.|
Online registration under MSMED Act can also be undertaken by entrepreneurs so that acknowledgement to EM Part I can be obtained without contacting DIC and Regional Joint Director. Online Entrepreneur Memorandum Acknowledgement is valid only when it is self-certified by the applicant and the same has been submitted with 4 copies within 30 days from the date of filing of online application to DIC/ Regional Joint Director of Industries and Commerce.
An application for registration can be made the Director of a company, any partner of a partnership firm or a sole proprietor or by the any person authorized to do so. Information of the applicant has to be provided.
An application should contain the following information:
- Name of the enterprise.
- Location of the enterprise
- Category of the enterprise
- Nature of activity (either manufacturing or service)
- Nature of operation
- Month of Installation of plants and equipment
- Other information
Other than these, information as to investment in fixed assets, disclosure of installed capacity of machinery, power requirements of the enterprise, details of employment, entrepreneur’s profile and the date of commencement of production also have to be provided.
De registration under MSMED has to be undertaken when the units produce more than the specified capacity or undertakes production of any item which requires a industrial or other statutory license.
Through the MSMED Act the government has provided a helping hand to micro, small and medium sized industries by keeping the registration process simple so that the benefits can be easily availed of. This Act has gone a long way in helping the small scale industries survive in the competitive global sphere.
Micro, small and medium sized industries form the backbone of a developing economy. They are the engine of economic growth and pave the way for the development of the nation. Over the past few decades, gates of Indian economy were opened to procure investments from multinational companies in the Indian market. As a result small and medium sized industries, being unable to keep up with the competition,were either compelled to shut down or forced to merge with these conglomerates. Generally, these industries are far more labor intensive and therefore also provide employment opportunities at low capital cost. A need, therefore was felt for the enactment of a comprehensive central legislation to protect these small scale industries and help them thrive in such competitive environment. The Micro, Small and Medium Enterprise Development Act, 2006 was introduced with the objective of preserving these small scale industries and to enable them to adopt such technological methods to successfully adapt to the changing global environment.
Staying true to its objective, registration procedure under MSMED Act was conceptualized to provide optimal benefits to all types of enterprises. Registration is not mandatory. However after registrationthe enterprises can enjoy the host of benefits provided under this Act.
Some of the benefits provided are stated below:
- The major benefit under this Act provided to small and medium sized units is the reservation policy which indicates that certain items have been reserved exclusively to be produced by these enterprises thus not only protecting their interests but also generating employment opportunities in the society. The Government has reserved 350 items for purchase from MSMEs under the Government Store Purchase Programme.
- Special Economic Zones(SEZs) are required to allocate 10% space for small scale units.
- The MSMED Act protects Micro and Small Enterprises from delayed payments. As per its provisions, where a Micro and Small Enterprise supplies any goods or renders any services to a buyer, the buyer is required to make the payment on or before the date agreed upon by them and in no case, the period can exceed 45 days from the date of acceptance. Under MSMED Act, protection is offered to relation to regular payment by buyers to MSMEs.
- In case of delayed payment by the buyer, the units shall retain rights to payment of interests. Liability to pay compound interests with monthly shall arise for the buyer on the principal amount from date starting after the due date at a interest rate which is thrice the bank rate prescribed by the Reserve Bank of India.
- By making Priority sector lending available to SSIs, easy sanction of bank loans are also available to units registered under this Act. In order to ensure that sufficient credit is available to micro enterprises within the MSE sector, banks should ensure that: 40 per cent of the total advances to MSE sector should go to micro (manufacturing) enterprises having investment in plant and machinery up to Rs. 10 lakh and micro (service) enterprises having investment in equipment up to Rs. 4 lakh ; 20 per cent of the total advances to MSE sector should go to micro (manufacturing) enterprises with investment in plant and machinery above Rs. 10 lakh and up to Rs. 25 lakh, and micro (service) enterprises with investment in equipment above Rs. 4 lakh and up to Rs. 10 lakh. Thus, 60 per cent of MSE advances should go to the micro enterprises. Moreover, Public sector banks have been advised to open at least one specialized branch in each district. The banks have been permitted to categorize their MSME general banking branches having 60% or more of their advances to MSME sector, as specialized MSME branches for providing better service to this sector as a whole.
- The Ministry of MSME, Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) with a view to facilitate flow of credit to the MSE sector without the need for collaterals/ third party guarantees. The main objective of the scheme is that the lender should give importance to project viability and secure the credit facility purely on the primary security of the assets financed.
- State government and Union territories have also compiled their own package of facilities and incentives for MSMEs. Some of the benefits include power tariff subsidies, capital investment subsidies, tax subsidies, development of specialized industrial estates and other support.
- Banking laws and excise laws have included MSMEs within their exemption notification. Therefore registration is seen as a proof for availing these benefits.
A return is a statement of specified details relating to business carried on by an individual/body of persons/company who is liable to be taxed under the concerned laws of the country during a financial year regarding their business activities during a particular period. GST is a self assessed destination based tax system. The submission of returns bridges the gap between the tax payer and the administration.
The following individuals need to file returns under GST:
- Every registered person has to file return within the stipulated period even if there is no business activity during said period.
- Government bodies and companies, public sector undertakings, etc. dealing in GST supplies which are exempted or excluded under Mode GST Law or persons dealing solely in exempted / Nil rated / non –GST goods and/or services are not required to obtain registration or file returns under the Model GST law. However, the respective State tax authorities shall, if it thinks fit, provide Departmental IDs to such government entities and ask the suppliers to mention the particulars of this ID in the supply invoices for all inter-State transactions made. Such supplies will conform to the provisions of B2C supplies and will be governed in the prescribed manner.
- UN agencies will have a unique GST ID and will file return for the month (in a simpler way) they undertake transactions. They will not be required to file regular returns and would provide their purchase statements (without purchase invoices) according to the periodicity given for claim of refund.
A basic periodicity of returns for a class of taxpayers would be prescribed. The period of filing of returns for different categories of tax payers would differ, after payment of tax due, either before or at the time of filing return. The periodicity of return for various classes of taxpayers is as follows:
There are some things we need to know about the filing of GST returns. They are as follows:
- Filing of GST would be made online. Of course the returns can be prepared and generated offline but in that case the returns have to be uploaded.
- There will be a common online return for CGST, SGCT, IGST and additional tax.
- A tax payer has to file returns either by himself or through his authorized representative.
- The tax payer may submit the returns himself or has to avail of the services of Tax Return Preparer (TRP) or Facilitation Centre (FC). TRPs will have to be approved by tax administration and will be given an ID. Information regarding TRP will be shared on GST portal.
- Registration of TRP/FC will be done by the Central Board of Excise and Customs (CBEC) / the respective State tax authorities. The particulars of the registration will be available on GSTN to help applicants/taxpayers to choose one from the given list of registered TRPs/FCs. The law regarding GST may also contain suitable provisions about it.
- A tax payer has to register at the GST portal (www.gst.gov.in). A unique ID and password would be provided to him. Thereafter, during filing of returns, he/she or his/her authorized representative would have to submit that ID and password.
- Tax payer can put his signature on the return through the “One-Time Digital Signature Certificate”. This will get rid of the hassle of printing out the acknowledgement of return.
- No revision of returns would be allowed under this scheme.
- Persons liable to pay tax would have to file annual returns under sub-section (1) of section 30 of the Model GST Law electronically in FORM GSTR 9 through the common portal either directly, or through the FC, as notified by Board or Commissioner.
- In taxpayer fails in the submission of periodic returns, a list of defaulters will be electronically generated (and a notice will be automatically sent via email / SMS) by the system after running a comparison of the return filers and the database of the registrants’ details. Such defaulter list will be provided to the concerned GST Authorities and follow-up action would be taken accordingly.
The steps of filing of the returns can be illustrated by the simple flowchart:
Until recently, filing of returns had been a rather cumbersome process since tax payers had to file separately for an array of indirect taxes such as VAT, excise duty, service tax etc. However, under the Model GST law, this inconvenience had been removed as a common filing of return exists. The GST portal has been recently launched. New registrations under GST will start from April 2017. About 80 lakh tax payers will be shifted from the existing system to GST regime.
Despite being ambitious, the GST model is relatively new and considering India’s current economic system, it still has a number of hurdles till it can successfully achieve the purpose it was framed for. Thus, it remains to be seen how this system can live up to its promises in the future.