Small GST payers are discovering that the proposed GST forms — Sahaj and Sugam — may create a new pain point in obtaining input tax credit (credit for taxes paid on inputs used). As of now, GST payers are grappling with the inability to rectify GSTR-1. It remains to be seen whether this problem will continue in the proposed forms (see graphic).

The annual GST return (GSTR-9), in current avatar, is seen as complex for small GST payers. There is some temporary respite available. The GST Council in its 37th meeting held on September 20 made it optional for taxpayers having an aggregate turnover of Rs 2 crore or less to file the annual returns for the financial year 2017-18 and 2018-19.

For the current financial year, no such option is available. However, a committee is likely to be set up to suggest simplifications. The due date of filing the annual GST return for the financial year 2019-20 is December 31, 2020. Tax professionals are hopeful that the annual return form will be simplified by then.

“At present, GST rules specify one format of returns for all taxpayers. They are required to file GSTR-1 for outward supplies and GSTR-3B, which is the summary return for sales and input tax credit. The only concession is regards the periodicity. For instance, taxpayers having a turnover of up to Rs. 1.5 crore can file GSTR-1 on a quarterly basis. There is no such leeway available for the summary return, which has to be filed monthly. These returns are cumbersome for small taxpayers,” explains ManojMalpani, senior adviser with Bizsolindia Services, a consultancy company.

Sunil Gabhawalla, indirect tax expert, says, “The basic difficulty in the current filing process is the inability to revise the returns immediately. The only choice is to rectify the mistakes in subsequent returns. Thus, a simple data entry error can result in additional tax outflow.”

“Further, there is a restricted ability to amend outward supply transactions in GSTR-1. It can be done only once. Practically, we have seen small taxpayers making genuine errors in uploading details of invoices issued to customers. For instance, a taxpayer made an error in the GSTIN of a customer and the date of invoice in the original return. Realising his error, the GSTIN was corrected. Subsequently, he noticed the date error. However, the portal doesn’t permit a second rectification,” illustrates Yusuf Hakim, indirect tax partner with CNK & Associates.

“The other issue which arises is that goods rejected or discounts offered cannot be shown as a negative amount on a net basis. This results in funds being blocked with the government for a prolonged period,” adds Gabhawalla.

The GST Council has postponed the new system to April 2020. It proposes simpler returns which will require fewer details. Sahaj and Sugam can be filed by small taxpayers, having a turnover of Rs 5 crore or less, depending on whether they have B2C or B2B transactions (or a mix of both).

Apart from simplification, the fact that the threshold is pegged at a high Rs 5 crore is a major advantage, say tax experts. However, the mechanism of monthly payment of GST will continue.