Compliance Automation Needed for GST Forms
Historic tax reform is underway in India. The central government is introducing a Goods and Services Tax (GST) on the manufacture, sale, and consumption of goods and services. It replaces numerous existing state and federal taxes, including central tax, state tax, service tax, entry tax, and luxury tax. Existing taxpayers need to register with the GST database by a specified date, which varies by location. For example, taxpayers in Karnataka must register by 15 January 2017.
The implementation of GST creates a huge compliance burden for business entities. Manufacturer or service provider, taxpayers need to file numerous forms every year for each registered entity. Additional filings may also be required; for example, every Input Service Distributor is required to file monthly electronic returns by the 13th of the following month, and every registered taxable person required to deduct tax at source is required to file an electronic return by the 10th of the following month.
However, GST also opens growth opportunities for professionals such as chartered accountants, cost accountants, company secretaries, advocates, and other tax consultants. Normally, clients will authorize tax professionals to undertake all work related to GST compliance, including filing GSTR (GST return forms) and updating the GST database. The burden of compliance therefore shifts to professionals; and to successfully navigate the GST system and manage this compliance burden, professionals will need to use high a quality software system. Automation can mean the difference between success and failure. It saves time, reduces audit risk, and minimizes cost, enabling companies and practitioners to grow.
This whitepaper delves into the complexity of the GST regime's never-ending forms and reveals how technology can simplify compliance.
GST Returns
Recent GST developments focus on returns. Since GST replaces multiple taxes and brings compliance to a single platform, filing GST returns is mandatory for manufacturers, service providers, and traders. Electronic returns are required, and there are 28 different GSTR forms.
GSTR-1
Form GSTR-1 records a taxpayer's outward supplies, or sales of goods or services. The GSTR-1 must be filed monthly and is due by the 10th of the succeeding month. Modifications should be captured on a Form GSTR-1A. GSTR-1 is a Sales Register that describes the date and amount of sales of goods and services. For goods or services sold within the same state (intrastate sales), the entity must charge CGST (Central General Sales Tax) and SGST (State General Sales Tax). For sales to a consumer in another state (interstate sales), IGST (Integrated Goods and Service Tax) applies. Each transaction must be classified with either an SAC (Services Accounting Code) or HSN (the internationally accepted Harmonized System of Nomenclature) code. For example, eight digit HSN codes are used for exports and imports.
Some Other Forms
| Form | Description | Filing Period |
| GSTR 1A | Outward supplies as added corrected or deleted by the recipient | Monthly |
| GSTR 2 | Inward supplies of taxable goods and/or services claiming input tax credit | Monthly |
| GSTR 2A | Inward supplies made available to the recipient on the basis of FORM GSTR-1 furnished by the supplier | Monthly |
| GSTR 3 | Monthly return on the basis of finalization of details of outward supplies and inward supplies along with the payment of amount of tax | Monthly |
| GSTR 3A | Notice to a registered taxable person who fails to furnish return under section 27 and section 31 | N. A |
| GSTR 4 | Quarterly Return for compounding Taxable persons | Quarterly |
| GSTR 4A | Details of inward supplies made available to the recipient registered under composition scheme on the basis of FORM GSTR-1 furnished by the supplier | Quarterly |
| GSTR 5 | Return for Non-Resident foreign taxable person | Monthly |
| GSTR 6 | ISD (Input Service Distributor) return | Monthly |
| GSTR 6A | Form GSTR-6A Details of inward supplies made available to the ISD recipient on the basis of FORM GSTR-1 furnished by the supplier | Monthly |
| GSTR 7 | Return for authorities deducting tax at source | Monthly |
| GSTR 7A | Tax Deduction Certificate | N. A |
| GST – ITC-1 | Communication of acceptance discrepancy or duplication of input tax credit claim | Monthly |
| GSTR 8 | Details of supplies effected through e-commerce operator and the amount of tax collected as required under sub-section (1) of section 43C | Monthly |
| GSTR 9 | Annual return | Annual |
| GSTR 9A | Simplified Annual return by Compounding taxable persons registered under section 8 | Annual |
| GSTR -9B | Reconciliation Statement | Annual |
| GSTR -10 | Final return | Annual |
| GSTR -11 | Details of inward supplies to be furnished by a person having UIN | TBD |
Registration
All existing taxpayers are required to provide their details at GST Common Portal (gst.gov.in) managed by GSTN for the purpose of migrating themselves to the GST regime. An existing taxpayer is an entity registered under Central Excise Tax, Service Tax, State Sales Tax/VAT (except exclusive liquor dealers), Entry Tax, Luxury Tax, or Entertainment tax.
State tax authorities may assign a Provisional ID and Password to certain taxpayers, and suppliers may be required to quote this ID on the supply invoices for all interstate transactions.
There are 26 different type of forms under registration rules, including:
- REG-01 Application for Registration u/s 19(1) GST Act
- REG-02 Acknowledgement
- REG-03 Notice for Seeking Additional Information relating to Registration / Amendments / Cancellation
- REG-24 Application for Cancellation of Registration for the Migrated Taxpayers not liable for registration under GST
GST Challan/Payment
These registers/ledgers will be maintained at the GST Common Portal. There are 7 different type of forms under payment rules:
| PMT-1 | Electronic Tax Liability Register of Taxpayer (Part–I: Return related liabilities) or (Part–II: Other than return related liabilities) |
| PMT-2 | Electronic Credit Ledger |
| PMT-2A | Order for re-credit of the amount to cash or credit ledger |
| PMT-3 | Electronic Cash Ledger |
| PMT-4 | Challan for Deposit of Goods and Services Tax |
| PMT-5 | Payment Register of Temporary IDs / Un-registered Taxpayers |
| PMT-6 | Application for Credit of Missing Payment (CIN not generated) |
Centre Refund
Any registered taxable person, except persons covered by notification issued under clause (d) of sub-section (6) of section 38, who claims a refund of any tax, interest, penalty, fee or any other amount paid, may file an application for refund with FORM GST RFD-1. It must be filed electronically through the Common Portal either directly or from a Facilitation Centre, notified by the Board or Commissioner.
There are 10 different type of forms under centre refund rules:
| RFD-01 | Refund Application form |
| RFD-02 | Acknowledgement |
| RFD-03 | Notice of Deficiency on Application for Refund |
| RFD-04 | Provisional Refund Sanction Order |
| RFD-05 | Refund Sanction/Rejection Order |
| RFD-06 | Order for Complete adjustment of claimed Refund |
| RFD-07 | Show cause notice for reject of refund application |
| RFD-08 | Payment Advice |
| RFD-09 | Order for Interest on delayed refunds |
| RFD-10 | Refund application form for Embassy/International Organizations |
State refund
There are 5 different type of forms under refund rules:
| RFD-04 | Provisional Refund Order |
| RFD-05 | Refund Sanction/Rejection Order |
| RFD-06 | Order for Complete adjustment of claimed Refund |
| RFD-08 | Payment Advice |
| RFD-09 | Order for Interest on delayed Refunds |
Invoice
There is one form under Invoice: INV -1 Application for Electronic Reference Number of an Invoice
Automation simplifies the complexities of GST
New government tax regulations under the GST regime complicate tax compliance. Every dealer will be required to remit three monthly returns and one yearly return under the new regime. Multi-state suppliers need file GST returns in every state in which business is conducted.
Business entities have two choices moving forward: either devote more humans to tax compliance or switch to an automated solution. Manual compliance risks manual errors. India's GST system is broadly based on the GST system already implemented in Malaysia, and many Malaysian organizations were shuttered due to non-compliance after GST was implemented. The most affordable and accurate way to comply with the new GST tax regime is to adopt cloud-based automation solutions through certified GSPs (GST Suvidha Providers) or ASPs (Associate Suvidha Providers).
GST Automation can facilitate compliance with automated GSTR preparation and filing through an interactive dashboard. It reconciles invoices, tracks ITC mismatch, and provides correction assistance. It also archives files and acknowledgments in the cloud, so no data is lost. And you can access all this through a mobile app anytime, anywhere.
Automation provides a huge array of benefits, including timely compliance, report generation, comparison of reports, decision making, cost-effectiveness with reduced staff, technical and online support, and more.
The new GST regime will bring new compliance challenges for all businesses. Those that adopt Avalara's GST Cloud solution will be in the best position to successfully navigate the challenges ahead.
To learn more about how Avalara can help you with GST compliance automation, contact us through http://www.avalara.com/in/products/gst-returns-filing
Authors: Payal Mathur and CA Harshad Shinde.
