The Institute of Chartered Accountants of India
Simplified user friendly Model on GST Returns
23rd March, 2018
Shri Arun Jaitley
Hon'ble Union Minister of Finance
and chairman of Goods and Services Tax Council
Ministry of Finance
Government of India, North Block
New Delhi - 110001
Subject : ICAI suggests the SUF Model (Simplified User friendly Model) on return filing and enabling of credit.
Institute of Chartered Accountants of India (ICAI) is a statutory body establish under the Chartered Accountants Act, 1949 which regulates the profession of Chartered Accountancy in India. The ICAl has been actively the Govern in the evolution of the GST Laws till date by making suggestion for simplification, transparency and ease of doing business elc from early 2016, even before the Draft Model law was in place.
We also supported the Government and trade & industry by bringing out the background material of GST first in June 2016 and thereafter continued to bring out the amended versions from time to time with the last version in January 2018. We are works on this background material, once again, we will bring out the latest version shortly after the issues relating to returns filing are clear. We have effectively trained more than trade and industry professionals in GST. We wish to place on record that we have trained more than professionals and practitioners in depth in (1ST in the past 2 years. We are grateful to the Govern ment of India for providing us this opportunity to serve the country.
lCAl Suggests the SUF Model (Simplified User-Friendly Model) on return filing and enabling credit :
The model could be follows:
- Supplier will upload sulTÌmary information from B2B invoices on real time basis up to 10 th of the following month. The summary information will be limited to those relevant for purposes of allowing credit, namely:
- invoice number & date
- CSTIN of Supplier
- GSFIN of Recipient
- GEST Amount involved in each invoice (rate-wise)
- Supplier will upload in one-line, details of supplies made to unreo-istered persons (B2C) also. Both details so-up]oaded would be ra te-wise.
- No edit feature would be available and it will be dec-i lned concluded or locked Iny system on -10 th of the following of month at 00.00 for the previous month supplies nnade. During the year 20]8-19 system Inay need time to stabilize, therefore, if required, we may consider uploading of supplies details in two tranches i.e 10 th & -12 th of the following month for assessees whose turnovers exceed Rs.l .5 crore and above & below the said turnover category respectively
- CST Amount uploaded (B2B) will appear at 'total maximum credit available' to the Recipient and upon utilization of this credit, it would be deemed acceptance of the invoice (silnilar to methodology in Forrn 26AS under the provisions of Income 'lax Act, 1961). Recipient is welcome to utilize less than or equal to the total Inaximum of credit available subject to rejection of credits that does not relate to him.
- Requiring 'acceptance' by the Recipient increases data traffic but more importantly forces fait-accompli on the part of Recipient on all other aspects in the 'l ax Invoice, which may yet need to be kept pending for further discussions with Supplier. For allowing credit, Recipient is not to be compelled to accept other matters such as HSN, rate of tax, etc., and forego right to dispute them.
- 6 If for whatever reason, the facts stated in para 5 supra, is not acceptable the only other alternative would be, is that the buyer actually 'accepts' the credit - so that it is 'affirmed as genuine transaction by the buyer'. This will allow further analysis of habitually offending buyers without their takin4' recourse that they were 'innocent victims
- As this is SUF Model is for a short/ Inedium tern-I solution, notification under section 168 of CGST Act, 2017 may be issued to authorize this tnodel without any amendment to the law. Provisions of the law can be remain hut suspended until the long-term solution is rolled out.
- Alternatively, amendment to the provisions relating to availability of provisional credit in terms of section 41 of CGST Act, 2017 would now be required to be replaced with the confirmed credit based on supplier invoice uploading.
- 'he above proposal is in line with theme Trust the Business relation between the supplier & recipient who will check among themselves.
- In this SUF model, if a supplier effects an inter-State supply of goods Eway bill could be n-landated to safeguard against shifting of State's revenue. Intra-State E-way bill under this nnodel need not be resorted to as credit and stock of goods rernains in that particular State and mandated within Intra-State will dilute its feature of simple user friendly Assuming that this suggestion is not acceptable, it could be for transaction value of Rs. -l lakhs and above.
- There will be no change in the provisions relating to issuance of invoice, as it will be governed by the existing provisions to cover the requirennent• of issuance of invoices or at the time of removal of goods.
- The existing GS'T"R Form-3B could be continued with auto population of data relating to 'total maximum credit available' with edit feature for the 'extent' to which Recipient desires to utilize this credit. Input and taxes on the said automated liability generated needs to be paid by the Supplier who will then file the return.
- In case a Supplier has uploaded a wrong or incorrect Invoice, the supplier could issue an appropriate debit / credit note to the recipient to close that transaction. As such, there is no requirement of an edit feature.
- Restriction of the condition of receipt of Goods or Services for enabling credit under Section 16 of CGSI' Act, 2017 may be suspended currently and at a later point in time, based on certain conditions could be introduced (sin-filar to Rule 37) whereby, deemed credit (along with ant-Aica ble interest) would reaujred to be reversed the nf goods or services with in 180 days if it has not received the goods or services. It will ease the unnecessary reconciliation at the Recipient's end in cases where the goods were supplied during the last week of month & receipt of such goods occurred in first week of the following month. In any case, reconciliation of receipt of services can not be verified.
- In case a Recipient utilises the ineligible credit or credit not availab]e to him, then he is requ ired to reverse the same along with interest in tern-is of section 50 of the C (SSI' Act, 2017. '[his will in anyways be carried out by the Recipient as and when he files his returns in Form GSI 'R 3B.
- Option of existing quarterly return would be done away in case of smal] assessees as afl assessees would be required to upload his return on Inonthly basis.
- Recipient's will not be allowed to avai] any credit, if the Supplier does not upload the data in the syste1T1. It rnay be little harsh, but in tinne to come, assessees would prefer buying from established Suppliers and shall refrain from purchasing probable defaulters/ evaders / entry operators. It will also be the responsibility of the buyers to effect purchases from the responsible suppliers.
Precautions for Simple User Friendly Model to safeguard the revenue interest:
This model is based on self-assessment and susceptible to evasion, avoidance or frauds. Therefore, if no proper steps are taken in timely manner, the ease of this model can result in revenue leakages and credit litigation's. We suggests the following steps be taken by government with the help of GSTN to plug the leakages and loopholes in time:
|Date||Steps to be taken|
|Upto 10th of month||Allow assessee to submit outward supply.|
|20th of month '0||Allow assessees to file returns|
|25th of month '0||Allow some grace time to all defaulters ti suo moto file returns.|
|26th of march '0||GSTN to prepare list of persons who have not filed the monthly return/ filed output return but not monthly return and share the same with the designated IT cell of CBIT/Government|
|30th of month '0||CBIT/Government to send first set of mails of the defaulting assessees who have not filed the returns with simple reminder to file the return|
|5th of month '1||GSTN to recompile and send data of return defaulters pending for month|
|7th of month '1||Government to send second set of mails to the defaulting assessees with the reminder to file the returns and concequences of not filing the return. Follow up with SMS and auto call.|
|25th of month '1||GSTN to recompile and send data of return defaulters pending for month|
|30th of month upload '1||Government to send final set of mails to the defaulting assessees with reminder to upload the return clearly intimating the consequences of the fact that the shell not be able to upload at a later stage would envisage payment of tax in advance. In case, in 1 month time, if not rectified the he shall be required to get his link reopened through juridictional officer.\|
|10th of month '2||GSTN to recompile and send data of return defaulters pending for month 0 and Government to take appropriate action on such defaulting assessees including blocking their returns and output return data (month 2 data if uploaded shall not be available as credit to his buyers in Month 2)|