There are two significant viewpoints which make me say that GST in India is going to be unique- A four-fold dual GST system Invoice Matching Concept Four Fold Dual GST System-  Many countries in the world have a single unified GST system i.e. a single tax applicable throughout the country.  Nonetheless, in nations like Brazil and Canada, a dual GST system is prevalent whereby GST is levied by both the central and state governments. India has adopted dual GST system. For quite a while it has been argued that GST will be a single tax. However, it is quite evident that “Single Tax” in a nation like ours is just a myth. GST in India is going to be fourfold, i.e. there will be four different types of GSTs – CGST – Central Goods and Services Tax SGST – State Goods and Services Tax UTGST – Union Territory Goods and Services Tax IGST –  Integrated Goods and Services Tax. It is worth noting that concept of UTGST will come into play only when the transaction happens within a union territory “without legislature”.

Union territories without legislature mean union territories governed directly by president of India or any other person appointed by him. They are Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu and Lakshadweep. Union Territories with legislature mean the union territories which have their own elected legislative assemblies and the executive councils of ministers with partially state-like function.

Currently, out of 7 union territories only DELHI & PUDUCHERRY are union territories with legislature In addition, there are specific provisions for allowance of credit- Further, SGST/UT-GST tax credit of one state cannot be used to pay SGST/UT-GST of another state/union territory. For e.g., SGST Tax credit available of Maharashtra state cannot be used to set off SGST liability of Gujarat State. Whether, credit of CGST paid in one state will be available for payment of CGST of another state is still vague.

In GST, every Business to Business (B2B) Invoice will be cross matched with the filing done by counter party. For e.g. Shah Traders have disclosed purchase of Rs. 10,000/- vide Invoice 101 from Mehta Enterprises. This purchase entry will be cross verified with the sales entry submitted by Mehta enterprises in its return. If it does not match the mismatch will be communicated to both parties. If the mismatch is not resolved in 60 days the Input Tax Credit taken by Shah Traders on purchase will be reversed. All this will be automated with minimum manual intervention. Further, if tax is not paid by the supplier the purchaser’s input tax credit will be automatically reversed. Hence, purchasers will have to render the role of recovery officers of the government. Because until and unless their suppliers have filed accurate returns and have paid the tax on purchasers’ input tax credit is at stake. This demands a lot of discipline from Indian Businesses.

As Finance Minister had mentioned in his budget speech this year, “India is largely a non-compliant society”. It seems such reforms are stepping stones of a compliant society. I will not be surprised if other countries will follow India and introduce invoice matching in their compliance systems.  

Generally, the due date for filing GSTR 1 for monthly return filers is the 11th of the following month and for quarterly return filers it is the last date of the following month after the end of the quarter. Due date for filing GSTR 3B is the 20th day of the following month.

As a  relief to taxpayers there is relaxation on late fees and penalties. Late fees have been Waived off for both GSTR 1 & GSTR 3B  if returns are filed on or before revised due dates.

Relaxations for GSTR – 1

The revised due dates for filling GSTR 1 for both monthly (March 2020 to May 2020) & Quarterly return (Quarter ending 31^st March, 2020) is as follows-

Note: In GSTR 1, Late Fees of Rs.50/- (CGST & SGST each) may apply from the original due date till the date of filing the return if return is not filed before the revised due date.

Relaxation for GSTR – 3B

For taxpayers whose turnover is up to Rs. 5 Crores/-, as far as filing of GSTR 3B and payment of tax is concerned, there is no interest if returns are filed on or before revised due dates.

For taxpayers whose turnover is more than Rs. 5 Crores/- there will be no interest if tax is paid and GSTR 3B is filed within 15 days from the original due date of filing returns. Thereafter, there is relaxation of 9% on Interest if tax is paid and return is filed on or before revised due dates.

Note of Caution

If a taxpayer missed the revised due date as mentioned in above tables the levy of interest at 18% per annum shall be payable from the revised due date of return. In addition, regular late fee shall also be leviable for such delay along with liability for penalty. There is lack of clarity from department on whether late fees will be calculated from original due date or revised due date.

For eg., if your turnover is less than Rs. 5 Crores and if you pay tax and file return of February 2020 on or before 30th June,2020 there will be no liability for interest and late fees. However,if you miss this due date and file your return on 15th July,2020 interest @ 9% p.a. will be charged from 1st July,2020 to 15th July,2020.

However if you file on 15th October, 2020 i.e. after September 2020 interest @9% p.a. will be charged from 20th March,2020(i.e. Original due date of filing February month’s return) till 30th September, 2020 and interest @18% p.a. will be charged from 1st October till the date of filing the return. Additional late fees at the rate of 100 Rs. per day may also be imposed from 20th March, 2020 till 15th October, 2020.

Although there is relaxation to some extent. However, if you miss the revised due dates the interest and late fees imposed will be substantial.

Hence, it is advised that taxpayers file their GST returns well before revised due dates. 

We understand that above is a little complex to comprehend. However,we have tried our best to simplify it as much as possible. In case of any queries you can reach out to us through Ask a Query tab.

By CA Jigar Shah & Ms Hemanshi Chothani