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24 July 2020
The Government may shelve new GST returns and increase the turnover limit for e-invoicing

Mr. Yogendra Garg, Principal Commissioner GST Policy at CBIC, while speaking recently at a webinar hosted by ASSOCHAM has hinted at the government’s plans to shelve the implementation of the new return filing mechanism – which was earlier proposed to be implemented with effect from 1 October 2020. Further, he also shared that the government is set to increase the turnover limit for the applicability of e-invoicing to businesses to INR 500 crore from the earlier prescribed threshold of INR 100 crore for all B2B supplies.
 
We have captured herein below the apparent plans of the government in this regard -

New GST return filing mechanism shelved

The introduction of the new GST return filing mechanism was one of the most important reforms announced since the inception of GST more than 3 years ago. The new return filing system was in the works for a long time, and a brief recap of the timelines in relation to the new return filing system is as under-
 
Timeline Announcement
4 May 2018 27th GST Council meeting gives in-principle approval to the new return filing system
21 July 2018 28th GST Council meeting approves salient features and format of the new returns
22 December 2018 31st GST Council meeting announces 1 July 2019 as the date for mandatory implementation of the new return filing system
 
Later, the implementation of the new return filing system was deferred on multiple occasions, the latest being in the 39th GST Council meeting, which fixed the date of its implementation as 1 October 2020.

However, now, it appears that the government has shelved the plans for the implementation of the new return filing mechanism altogether. The government has turned its attention to an advanced version of the existing returns with a phased implementation from October 2020 to January 2021.
 
Following are the modifications/additions planned in the advanced version, and that may be implemented-
  1. GSTR 2B - auto-drafted Input Tax Credit (ITC) statement to guide on the ITC to be availed or reversed (similar to earlier envisaged GSTR 2);
  2. A more detailed GSTR 1;
  3. GSTR 3B to be auto-populated based on the data furnished in GSTR-1 (similar to earlier envisaged GSTR 3);
  4. GSTR 2A to populate return filing status of both GSTR 1 and 3B;
  5. Linking GSTR 1 and GSTR 2A with GSTR 3B; 
  6. A matching tool for comparison of GSTR 2A with the purchase register;
  7. A communication channel between the supplier and the recipient;
  8. Improved comparison table for tax liability and ITC; 

Increase in the threshold of turnover for applicability of e-invoicing

It is also suggested that the government will not be further postponing the date of implementation of e-invoicing scheduled for 1 October 2020. However, the e-invoicing mechanism will be initially made applicable only to businesses having an annual turnover of more than INR 500 crore (against the existing threshold of INR 100 crore) for all B2B Supplies.
 
Our Comments

Based on the news reports, it is clear that the government intends to ease the compliance burden on businesses by refraining from the implementation of the new return filing system. Instead, the government seems to have found a middle path through which it can achieve the objective of closely monitoring the ITC claims without creating any substantial burden on businesses. However, the businesses should await a formal announcement from the government in this regard, which can be expected to be publicized officially soon.



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