GST Council meeting on 21 July to decide on annual return forms

Industry expects that there could be some reconciliation with annual IT returns as the government aims to check tax evasion.

Goods and Services Tax (GST) was rolled out on 1 July 2017, and this is the first year when businesses will have to file annual returns (GSTR-9) for 2017-18 fiscal by 31 December 2018.

Also those businesses with turnover of more than Rs2 crore will have to file audit reports along with the annual returns.

Revenue officials have prepared a draft of the annual returns form, which will be deliberated by the all powerful GST Council chaired by union finance minister and comprising state finance ministers as members, at its meeting on 21 July.

The GST Network, which manages the IT backbone for the new indirect tax regime, will thereafter finalise the software to enable businesses to file the returns.

Tax experts said they expect the annual returns form to be in line with that in the erstwhile Value Added Tax (VAT) regime, with some columns for reconciliation with Income Tax returns and audit report.

Under the VAT regime, businesses were required to file returns in every state where they are registered and hence linking their annual returns with that of the same filed under IT returns was not feasible.

But, with GST being PAN based registration, it would be easier to reconcile the sales and purchases with that reported in IT returns.

As per the IT return forms notified by the income tax department, businesses filing ITR-4 (Presumptive Income From Business & Profession) will have to give information regarding turnover / gross receipt reported for GST as well as GST Identification Number (GSTIN). Besides, in ITR-6 which is to be filed by companies, businesses have to specify GST paid or refunded or credit outstanding.

Over 11.4 million businesses are registered under the GST regime. Of these, about 1.8 million businesses have opted for composition scheme.

Meanwhile, the group of state finance ministers tasked with reviewing the reverse charge mechanism under Goods and Services Tax has recommended the deletion of Section 9(4) of the Central GST Act, 2017, Bihar finance minister Sushil Modi has said.

Under the reverse charge mechanism, registered dealers are required to pay tax in case they buy goods from unregistered dealers or businesses. On 29 June, the government deferred the reverse charge mechanism for another three months till 30 September, after deciding to keep the reverse charge mechanism in abeyance till 30 June.

“The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both,” as per Section 9(4) of the CGST Act.

A separate group of ministers has also recommended that the proposal on incentives for digital payments be deferred by a year. The GST Council, in an earlier meeting on 4 May, had discussed a two per cent concession in the tax rate on items that are bought through digital modes of payment.

The proposal included one per cent concession on the Central GST and another one per cent on the state GST. For instance, an 18 per cent tax payable on a particular good or service would be reduced to 16 per cent if the consumer chooses to pay online. The incentive is proposed to be available on items taxed at 3 percent or more and subject to a ceiling of Rs 100 per transaction.

The cost to the exchequer of providing such a concession is estimated to be around Rs13,000 to Rs26,000 crore, the Council had said earlier.

The panel of states’ ministers on GST is headed by Bihar’s Sushil Modi, and includes Manpreet Singh Badal of Punjab, Rajesh Agarwal of Uttar Pradesh, Amar Agrawal of Chhattisgarh, and Thomas Isaac of Kerala as members.