Issues in Filing GST Returns

Filing of GST Returns is a key business process in Goods & Services Tax Act, 2017. It is important from the point of view of the government as it helps it to know the overall revenue figures and also to collect taxes. It is also relevant for a buyer as he will get credit of input taxes through returns filed by suppliers. Inspite of it being so important, there are many issues which a professional or businessman is facing while filing these returns.

Issues in Filing Returns

• Returns have to be filed in a sequential manner. A regular or casual assessee has to file GSTR-1, 2 & 3 for a month, in sequence. Not only that, he cannot file his returns, say for the month of August, if he has not filed the same for July, for any reason, whatsoever. Reason may be incomplete data, inability to pay huge tax liability in a particular month and so on. Tieing the hands of the assessee in this manner is not a good strategy. Whether it is Income tax, state VAT laws, Service Tax etc., assessee can file returns for a period even if earlier one is pending.
• In B2B cases, Invoice wise and Rate wise data has to be given in GSTR-1, irrespective of the amount and quantum of transactions. For businesses where quantum of B2B transactions is large, the size of data increases exponentially, resulting in issues in uploading the same on GST portal. What objective does the government want to achieve by taking loads of information from the assessees. A better approach could have been to take data dealer wise and rate of tax wise, at least in the nascent stages. With familiarity of the masses, more detailed data could be asked for, if required. To burden the assessees and the GST portal from day one, does not seem to be a wise decision.
• Murmurs of dissent are also being heard regarding periodicity of returns. If we were fine with half yearly Service Tax returns, Quarterly VAT returns (in many cases), why we could not kick start GST with Quarterly returns, to begin with? A simple monthly GSTR-3B type of return and monthly tax deposit could have achieved the objective of monthly tax collection, without overburdening the tax payer.
• Designing of returns leaves much to be desired. The same should have been simpler and self explanatory. One does not know whether “Aggregate Turnover” of 2016-17 and Q1 of 2017-18 in GSTR-1 should be for that particular GSTIN or PAN based i.e. for the organisation as a whole. Similarly, one does not know whether one should include GST or not in “Value” under Invoice details of outward supplies. This lack of clarity results in different interpretations and consequently different reporting by different persons.
• We appreciate that Returns have to be filed in a time bound manner. But asking the assessee to file them during a particular time period, not allowing him to file during another period and even levying late fee for not filing in time, is not justified.
• Late filing fee should also be rationalised. Levying it separately for CGST & SGST is devoid of reason as it is a single return. Levying same on all sequential returns (GSTR-1, 2, 3& 3B) is also open to legal scrutiny.
• Not allowing the assessee to adjust excess deposit of GST under one head with another head is also not justified. Why should he be asked to deposit SGST & CGST again if inadvertently he has deposited the amount under IGST? Similar issues in Income tax TDS resulted in a lot of hardship to the assessees. With experience, it was done away with and presently TDS paid under any head can be adjusted with that payable under other heads. Why can’t we learn from our mistakes?
• A buyer cannot ensure that his supplier will deposit taxes and file timely returns. To punish him for no fault of his, is also senseless. Why should he be asked to pay taxes with interest, if the counter party has not fulfilled his responsibilities properly. Businesses are here to do business. To burden them with your responsibilities without any authority to ensure compliance of the same, is an unjust and debatable decision.



• Reversal of input taxes if payment is not made by the buyer in 180 days, is encroaching in the business relationship of the buyer and the seller. Issues regarding quality, quantity and payment etc. can best be left to the wisdom of the two parties and government should not have a role to play in it. Though it seems valid to some, difficulties in its implementation should have deterred the government in taking this stand.
• Asking e-commerce operators to collect tax at source from all payments made to vendors results in extra burden on vendors selling through e-commerce portals, besides increasing compliance burden of Snapdeal and Flipkart of the world.
• Not allowing an assessee to revise returns is another major roadblock in smooth transition to the new regime. All corrections, alterations cannot be routed through debit/credit notes, amendments etc. Some require changes in the initial entry itself. Making corrections in subsequent returns and linking each change to earlier reported figures, make return filing process cumbersome.
• Filing minimum 37 returns per registration per year is a mammoth task for a regular assessee. Small and medium assessees may not have the requisite staff for the same and may have to depend on professionals. Counter argument that GSTR-2 & 3 are auto-populated does not hold water because even these returns require time and effort to ensure correct and complete filing. Matching of own records with those of supplier in GSTR-2A is not easy, particularly where the volume of transactions is large. Supplier may have inadvertently entered someone else’s GSTIN or entered incorrect amount, GST etc or applied incorrect rate and so on. Ensuring all details are correct and match with our records is not easy, to say the least.
• Return of Outward Supplies (GSTR-1) cannot be filed if even a single GSTIN is invalid. This is very harsh and a return of a few thousand line items cannot be stopped just because a few GSTIN are not correct. It may not always be possible to take the correct GSTINs in the limited time. If we leave such bills in a month, then we have to pay even interest on the same in subsequent months. A solution to such cases could be to allow the seller to put a standard GSTIN in these cases and allow him to correct it subsequently. This worked successfully for PAN where PANNOTAVBL, PANINVALID and PANAPPLIED were allowed to be used for almost 7 years so that the deductors did not face practical problems while filing returns.
• Many errors such as invalid GSTIN are thrown at the time of actual filing on the portal. The average user reaches the portal when he has completed all his work, reconciled figures etc and this generally happens in the last few days of return filing period. Throwing such unpleasant surprises at the last moment, results in delayed filing. Ideally all such issues should be pointed out in an offline utility.
• Some suppliers may show parties whose correct GSTIN not received as unregistered and club them together statewise (for supplies up-to Rs. 2.50 lacs). Though they have deposited the correct GST amount, how will they correct this anomaly in subsequent returns. They will have to pay interest for late furnishing of invoice particulars in subsequent months when GSTIN is received for such parties.
• Practical issues have not been handled well in GST Returns. Taxing advances has resulted in a lot of problems. Sometimes initially it is not clear as to the items for which advance is received or whether it is for intra-state or inter-state supplies. Asking the person to pay GST @ 18% in such cases is fine but if later on supplies are made for a 6% item or 12% item, who is going to make those corrections and adjustments. If there is shortfall, he may be asked to pay interest on the same together with shortfall. If excess tax has been paid will government adjust it or refund the same.
• Though requirement of HSN code has been done away with in invoice wise details, HSN summary of the same is required in Return of Outward Supplies. This means that the assessee will have to maintain these details in any case. Mentioning HSN code in invoices and in summary in return is challenging for an average taxpayer even if his turnover exceeds Rs. 1.5 cr.
• Summary of documents issued in return of outward supplies for invoices, debit/credit notes, etc, is uncalled for. Assessee has to report starting and ending number of all bill books, number of bills issued, cancelled and net bills issued and other documents. Even details of invoices and payment vouchers have to be given separately for reverse charge cases. If that was not enough, Receipt voucher and refund voucher details have to be given for advances received and refunded.
• Sole dependence on supplier for accepting invoices/debit/credit notes not uploaded by him and added by the purchaser might result in supplier misusing his position. He might delay such acceptance which will mean additional liability of tax and interest for the buyer.
• We are aware that “One Nation, One Tax” is only a slogan as we have several taxes in the same nation. Not only that, we even has multiple formats for reporting in different departments of the same government. MCA takes data in XBRL/pdf format, Income tax department in XML format (IT Returns) and Text format (TDS statements) and now GST department wants data in JSON format. Software requirements like signer, java version, browser versions are different for each. This accentuates the technical issues faced by an average user and professional.
• After filing 3 returns per month, a regular person has to even file an Annual Return which is quite detailed. Audit Report where yearly turnover exceeds Rs. 2 crores is also mandatory. Reconciliation of all expenses will have to be made.
• What is the logic for asking for details of tax free and exempt supplies in GST returns? Will the tax payer now have to account separately for petrol/diesel expenses and other repair and maintenance expenses of vehicles, generators etc as the former are non-GST supplies. Similarly, if supplies up-to Rs. 5,000 per day from unregistered suppliers is not liable to GST, why should it be reported in exempt supplies?
• Technical glitches at GST portal are galore. In many cases, tax payers are unable to file timely returns due to technical issues at GST portal. Such issues should be resolved at the earliest so that the filing experience can be smooth, sturdy and seamless. Frequent crash of GST portal on last few days needs to be tackled properly. Its capacity should be increased manifold so that there should not be allegations and counter allegations from the GST authorities and actual users. Use of “stick” always does not have the desired result and beyond a point children become stubborn and indifferent. So “carrots” should also be used to motivate the users to file returns early. Some monetary benefit or rebate can be one such solution.

Having a uniform law for taxing goods and services all over the country was unthinkable till recently. The very fact that GST has seen the light of the day is a victory of the government and that of collective federalism. People at large also need to be congratulated for their acceptance of the new system, Inspite of it being too system driven and too demanding as far as reporting and deadlines are concerned. But we all know that Rome was not built in day. All big projects take time to materialise and have gestation periods, besides teething problems. GST is no exception. But to expect 100% compliance and adherence to strict deadlines Inspite of technical glitches and ambiguous law, is expecting too much from a common tax payer. Let us be reasonable, user friendly and receptive to the genuine issues and problems faced by businessmen and professionals. Let us consider them as stakeholders and not merely goose which lay golden eggs.

Authored By:
CA. RAJEEV KHANDELWAL
FCA, DISA (ICA)
Director of Webtel Electrosoft Pvt. Ltd.
rajeev@webtel.in