GST Council, at its meeting on Sept 20, may also consider extending exemption to FY19

Small Goods & Services Tax (GST) assessees are likely to be exempted from filing annual returns for a year or so.

According to officials, small assessees could be categorised into two groups those with annual turnover up to Rs. 2 crore and those with annual turnover of up to Rs. 5 crore. As on June 30, there are nearly 1.39 crore total assessees. Of these, nearly 86 per cent have a turnover of up to Rs. 2 crore. If the threshold of Rs. 5 crore is taken into account, it will cover 92 per cent of the assessees.

The GST Council on September 20 will consider a proposal to exempt assessees up to a certain threshold from filing annual return for the financial year 2017-18 only or for the financial year 2018-19 as well. It is believed that the Law Committee associated with the GST Council has cleared a proposal for such an exemption, but this can be implemented only after the Council gives a nod and a notification is issued.

Experts are divided over the proposal. Anita Rastogi, Indirect Tax Partner with PwC, felt that for small tax payers, this will be a relief and a step towards improving the ease of doing business. But for large tax payers, the form needs to be simplified. However, Rajat Mohan of AMRG felt that scrapping of annual filing for any taxpayer due to tech glitches is not a good sign for a prospective digital economy. When the return dates were extended, the government had cited technical glitches as the reason.

“This scrapping may also affect the revenue distribution of States to the extent of unreported ineligible tax credits,” he said.

Every GST assessee has to file an annual return in GSTR 9. Among these assessees, every registered taxable person whose turnover during a financial year exceeds Rs. 2 crore will also be required to get his accounts audited by a chartered accountant or a cost accountant and then submit a reconciliation statement in GSTR 9C along with GSTR 9. Assessees under the composition scheme (businesses with turnover up to Rs. 1.5 crore) will be required to file the GSTR 9A form. The last date for filing all these returns for the financial year 2017-18 has been extended to November 30 from August 31. The last date for financial year 2018-19 is December 31, 2019.

A cause of concern

However, assessees, particularly the smaller ones, are still struggling with the returns. Though the annual return is a compilation of all the monthly/quarterly return already filed, it gives a clearer idea about the tax liability or credit. Experts say bifurcation of credit into input and input service, vendor-wise bifurcation of inward supplies under reverse charge, HSN (harmonised system of nomenclature) and rate-wise summary of inward supplies and HSN code reporting at six- digit level are some of the additional requirements troubling taxpayers.

Besides, these forms were issued by the government after the close of statutory audits for financial year 2017-18, which created problems for taxpayers as the books of accounts were already closed for the financial year, and indirectly these forms required taxpayers to capture additional data at the input level stage, which was practically not possible.