Developments in India’s GST Reporting

Andrew Decker
October 8, 2020

It’s now over two years since goods and services tax (GST) was implemented in India. And yet GST reporting continues to present challenges for businesses. With the unveiling by the GST Network of new filing enhancements and considering the increased focus on GST compliance with the advent of e-invoicing, a review of periodic GST filing is welcome.

The history of periodic GST filing

GST taxpayers must file electronic returns through a portal provided by the GST Network. GST rules originally required normal taxpayers to file three returns every month; the GSTR-1, containing details on outward supplies by the filer, the GSTR-2, containing details on inward supplies by the filer, and summary return GSTR-3 partially auto-populated by the first two returns. The filing of the GSTR-2 was quickly suspended, resulting in the suspension of the GSTR-3, and its replacement with the “simpler” GSTR-3B, which taxpayers had to complete manually.

A new GST return system, which would have replaced the current monthly filings with new form GST RET-1 and its annexes on inward and outward supplies, was planned for October 2020. Key aspects of this new system would have been the validation of supplier’s outward supplies by the recipient, and the auto-population of the RET-1 based on the annexes on inward and outward supplies. This summer, however, the new system was put on indefinite hold, with the government and the GST Network announcing they would instead be enhancing the current return system. 

Recent GST filing enhancements

Since August, the GST Network has unveiled three major GST Filing enhancements:

1.The creation of the GSTR-2B:

The GST Network now generates the GSTR-2B, a statement on Input Tax Credit for all recipients. The statement provides recipients with information on available and unavailable input tax credits as of the 12th of every month. The statement draws information from a recipient’s suppliers’ GSTR-1s, and other forms such as the GSTR-5 and 6 when appropriate. Beginning in September, details on imports from Special Economic Zones Units/Developers will also be included in the statement. The generation of the GSTR-2B should help taxpayers when completing the GSTR-3B and in managing their input credits. Additionally, the GST Network has also provided taxpayers with a reconciliation tool to reconcile the GSTR-2B with their own purchase ledgers.

2. GSTR-3B:

Taxpayers can now generate a PDF containing values found in table 3 (excluding 3.1d) of form GSTR-3B based on data found in their filed GSTR-1. The impacted sections of the report are not auto-populated. Taxpayers must still verify the values contained in the PDF and transfer them onto the actual GSTR-3B which they file.

3. Nil Returns:

Taxpayers can now file Nil GSTR-1 and GSTR-3B returns via SMS (text message).

All these changes are steps towards increasing the automation of return filing to ease the burden of GST compliance on taxpayers. Given the advent of e-invoicing in India last week and the ongoing challenges presented by the Coronavirus crisis, taxpayers will appreciate these enhancements and being able to avoid learning a new return system. These changes still don’t achieve the level of automation envisioned under the now aborted new filing system, or achieve true automation of GST filing. Going forward it’s important taxpayers continue monitoring the government’s steps to automate India’s GST reporting regime, especially once the e-invoicing reform has been fully launched.

Take Action

Sovos has more than a decade of experience keeping clients up to date with e-invoicing mandates all over the world.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Andrew Decker

Andrew Decker is a Senior Regulatroy Counsel at Sovos Compliance. Within Sovo’s Regulatory Analysis function, Andrew focuses on international VAT and GST issues and domestic sales tax issues. Andrew received a B.A. in Economics from Bates College and J.D. at Northeastern University School of Law. Andrew is a member of the Massachusetts Bar.
Share This Post

LATAM VAT & Fiscal Reporting
May 20, 2020
Sovos Acquires Taxweb, Extends Tax Determination Capabilities in World’s Most Challenging Compliance Landscape

Earlier this month Sovos announced its second acquisition of 2020, completing our solution for Brazil with an unparalleled offering that solves tax compliance in the place where it is most challenging to do so.  Too many companies doing business in Brazil have been burdened by managing multiple point solutions for continuous transaction controls (CTCs), tax […]

Tax Information Reporting
October 27, 2020
Tax Issues Only Going to Get Worse with PayPal Going Crypto

Starting in early 2021, PayPal customers can buy, sell and trade select cryptocurrencies using their PayPal and Venmo online wallet accounts. Shoppers will also be able to use crypto to purchase goods and services using their PayPal account, according to Reuters last week. For the 26 million merchants participating in the PayPal network, expanding payment […]

Sales & Use Tax United States
October 26, 2020
Does Florida Have Any Sales Tax Economic Nexus Changes?

Since the South Dakota v. Wayfair, Inc. decision, nearly every state has adopted sales tax economic nexus changes. However, Florida has not yet made any such changes. The Sunshine State has no remote sales tax law and does not have income tax. Some lawmakers proposed legislation that would require remote businesses with sales in Florida […]

ShipCompliant
October 26, 2020
5 Myths Surrounding Retailer Direct-to-Consumer Wine Shipping

By Tom Wark, Executive Director, National Association of Wine Retailers No one who pays attention to the ongoing political and legal battles over direct-to-consumer (DtC) wine shipping will doubt that this is a contentious area of the law. Claims concerning retailer wine shipping emerge from every corner of the regulatory landscape including the wholesale tier, […]

Sales & Use Tax United States
October 26, 2020
Understanding the New Texas Sales Tax Nexus Rules

The South Dakota v. Wayfair, Inc. decision made waves in the sales tax nexus world, with ripples being felt in every state. The Texas sales tax nexus rules were no exception, and all businesses operating in the Lone Star State – remote organizations and those with a physical presence – must ensure they stay compliant. […]

Sales & Use Tax United States
October 26, 2020
How the California Sales Tax Nexus Impacts Businesses

It is essential that California businesses – both those operating remotely and that have a physical presence in the state – understand and adhere to all sales tax nexus laws, especially when and if the laws change. Failure to comply with these obligations could impact how businesses properly collect and remit taxes, leading to audits […]