New GST Return Scheme for Small Taxpayers

Introduction:

The Central Government is looking to overhaul the return filing system with a view to provide some relief to taxpayers with aggregate turnover under GST less than Rs. 5 crores. In this regard, it has released certain notifications to lay down a new scheme of return filing for such taxpayers. We have tried to summarize the changes / options in simple terms below.

Applicability

• The new scheme is applicable to those taxpayers having an aggregate turnover under GST law less than Rs. 5 crores in FY 2019-20 and in FY 2020-21 till date.
• The taxpayers wishing to opt for the new scheme shall have to file all returns of the preceding months which are due on or before the date on which the option is to be exercised.
• This option of the new scheme shall be deemed to continue till the eligible taxpayer chooses to opt out of the scheme or till the aggregate turnover of such taxpayer crosses Rs. 5 crores in the current financial year.
• Since this provision shall be applicable from 1st January, 2021, this notification also provides for the following transitioning periodicity for the existing taxpayers –
  • Taxpayers filing quarterly GSTR-1 in FY 2020-21, having turnover less than Rs. 1.5 Crores – Automatically converted to Quarterly filers under new scheme from 1st January, 2021.
  • Taxpayers filing monthly GSTR-1 in FY 2020-21, having turnover less than Rs. 1.5 Crores – Automatically converted to Monthly filers from 1st January, 2021.
  • Taxpayers with turnover more than Rs. 1.5 Crores but less than Rs. 5 crores in FY 2019-20 – Automatically converted to Quarterly filers under new scheme from 1st January, 2021
    Any taxpayer who wishes to change the automatically selected periodicity above can do so from 5th December, 2020 to 31st January, 2021. It is assumed that the option to switch the periodicity shall be available from the month of December, 2020 when the new system is put in place.

Return Filing

• Invoice Furnishing Facility ( IFF) –

• • Taxpayers who opt for quarterly filing of returns under the new scheme shall have the option to file a monthly detailed statement of tax invoices and debit/credit notes for supplies made to registered persons, using the invoice furnishing facility (IFF).
  • The facility to file this statement shall be available only for the first and second month of the quarter and only from 1st to 13th day of the succeeding month.
  • The maximum cumulative value of the supplies for each month that are sought to be furnished using the IFF shall not exceed Rs. 50 lacs.
  • This option will help in avoiding harassment from customers in cases of mismatches in GSTR-2A/2B.

•  GSTR-1

• Taxpayers who opt for quarterly filing of returns under the new scheme shall be required to file a quarterly GSTR-1 before the 13th day of the month succeeding the quarter.
• Such taxpayers shall not be required to again furnish the details which have already been furnished using the IFF in the first two months of the quarter.
• Following details shall form part of quarterly GSTR-1 –

• • Invoice-wise details of inter-state or intra-state supplies made to registered taxpayers (B2B) – other than those already furnished using IFF.
  • Invoice-wise details of inter-state supplies made to unregistered persons of invoice value more than Rs. 2,50,000 (B2CL).
  • Rate-wise and State-wise bifurcation of supplies made to unregistered persons of invoice value upto Rs. 2,50,000 (B2CS).
  • Details of debit/credit notes (CDNR)

• GSTR-3B

• Taxpayers who opt for quarterly filing of returns under the new scheme shall be required to file the quarterly GSTR-3B by the 22nd or 24th day of the month succeeding the quarter, depending on the State of registration.
  Example – A taxpayer opting for the new scheme from January, 2021 onwards shall be required to file the quarterly GSTR-3B for the quarter January to March, 2021 by 22nd of April, if the taxpayer is registered in the State of Maharashtra.
• Such taxpayers shall be required to provisionally deposit on a monthly basis, 35% of the tax amount paid in cash in the GSTR-3B of the preceding quarter or, in case of monthly filers, the entire amount of tax paid in cash in the GSTR-3B of the month preceding the quarter.
  Example – A taxpayer opting for the new scheme of quarterly returns from January, 2021 onwards shall be required to provisionally pay the entire amount paid in cash in the GSTR-3B for the month of December, 2020. Further, for the month of April, 2021, the taxpayer shall be required to deposit 35% of the total tax amount paid in cash in the GSTR-3B of quarter ending March, 2021.
• Such provisional monthly tax deposit shall not be required if there is sufficient cash balance in the Electronic Cash Ledger or Credit Ledger to offset the month’s tax liability or there is nil tax liability.
• Such provisional tax amount for the first two months of the quarter shall be deposited using a payment challan by 25th of the succeeding month.
• The cash balance at the end of the 3rd month of the quarter shall be available for utilization or offsetting while filing GSTR-3B.