Data Management in Tally

Shifting to New GST Return: How to Prepare for the Change

Posted on by Tally Academy

The introduction of the new GST return system aimed at simplifying the tax filing regime for business owners across India. The current GST return filing will shift from GSTR-1 and GSTR-3B to a new single return RET-1/2/3 with an auto-filled ANX-1 (for tax liability) and ANX-2 (for Input Tax Credit). The new GST return filing mechanism will be focussed on allowing input tax credit based on the actual invoices uploaded by the supplier.

How to Prepare for the transition to the New GST Returns

If turnover is more than Rs 5 crore, a taxpayer will need to file the return (Normal Monthly) and make the tax payment on a monthly basis. If turnover is less than or equal to Rs 5 crore, a taxpayer will have the following three options to choose from:

·       Normal Quarterly

Return filing frequency will be on a quarterly basis. Tax payment needs to be done on a monthly basis. Applicable to any type of sales.

  • Sahaj: Return filing frequency will be on a quarterly basis. Tax payment needs to be done on a monthly basis. Applicable only to B2C suppliers.
  • Sugam: Return filing frequency will be on a quarterly basis. Tax payment needs to be done on a monthly basis. Applicable to B2B or B2C suppliers

·       Switching between return types

A taxpayer can switch only once in a financial year from Quarterly (Normal) to Sahaj or Sugam. The switch has to be initiated at the beginning of any quarter.

A taxpayer can switch only once in a financial year from Sugam to Sahaj. The switch has to be initiated at the beginning of any quarter. A taxpayer can switch more than once in a financial year from Sahaj to Quarterly (Normal) or Sugam.

The change has to be initiated at the beginning of any quarter. A taxpayer can switch more than once in a financial year from Sugam to Quarterly (Normal). The change has to be initiated at the beginning of any quarter.

·       Claim provisional ITC

A taxpayer who opts to file returns on a monthly or a quarterly (GST RET-1) basis would qualify to claim provisional Input Tax Credit (ITC) on missing invoices. However, the credit of missing invoices will not be applicable to a taxpayer who opts to file Sahaj (GST RET-2) or Sugam (GST RET-3).

·       Necessary actions on invoices

A taxpayer will need to accept, reject, or keep the supplier invoices as pending as necessary. A taxpayer has to take appropriate actions on the invoices uploaded to claim ITC between 11th and 20th of the month.

·       Modify ERP systems

The existing Enterprise Resource Planning (ERP) Systems will need to be modified in order to comply with the new GST returns. A few modifications include (not limited to): Bifurcation of capital goods and input services, Details related to Bill of Entry has to be included, Bifurcation of eligible and ineligible purchases and a single debit/credit note has to be linked with multiple invoices of a vendor.

·       Know other key changes

A taxpayer will need an HSN code for submitting details at a document level versus an individual HSN summary. B2B supplies which are accountable for reverse charge mechanism (RCM) need not be shown in the GST ANX-1 by the supplier. Nevertheless, the aggregate figure has to be shown in GST RET-1. The recipient of supplies has to declare the inward supplies which are liable for RCM in GST ANX-1.

·       File a NIL return

If a taxpayer is liable for a monthly return filing but hasn’t made any purchases or has no output tax liability and ITC to avail in any quarter, he or she will have to file one Nil return for the entire quarter versus monthly returns. The taxpayer needs to report Nil transactions through an SMS in the first and second month of the quarter.

Data Synchronisation: Definition and Importance Benefits

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What is Data Synchronisation?

Data synchronisation is the effort to ensure that, once data leaves a system or storage entity, it does not fall out of harmony with its source, thereby creating inconsistency in the data record. Often, we might modify and update the data after it has been entered into the system. It is important that when we make such changes, all the alterations reflect in all the systems in the same way and there are no discrepancies, in order to avoid any errors. Data synchronisation provides a means of creating harmony and consistency among all the systems that have access to data.

Data conflicts can result in errors and low data quality, which consequently leads to a lack of trusted data down the line. With data synchronisation properly implemented throughout a system, a business will see performance improvement in many areas, including:

  • Logistics and transportation
  • Sales team productivity
  • Order management
  • Invoice accuracy
  • Business systems
  • Cost efficiency
  • Reputation management

Data accessibility and error resolution afford time savings, allowing emphasis to be put on important business development processes like marketing, new product development, and strategic decision-making. Virtually everyone benefits from clean, synced data.

  • Customers receive product information and service that meets their specific needs
  • Business users can interact with all department members using up-to-date information, in real-time, even globally
  • Executives receive the latest data when making important strategy decisions
  • Stockholders can easily stay on top of their business interests
  • Manufacturers access the most recent updates or changes for accurate design and production
  • Distributors have access to the most recent product and marketing information

Benefits of Data Synchronisation

·       Data availability

One of the key benefits of a data synchronization system is that data is made available locally, rather than through potentially expensive, less reliable, and slow connections to a single central database. Data is accessible locally even in the absence of any connection to a central database, so you are not cut off from data in the event of a failure of a network connection.

·       Response time

Synchronization improves response times for data requests for two reasons. Retrieval rates are faster because requests are processed on a local server, without accessing a wide area network. Also, local processing offloads work from a central database server so that competition for processor time is decreased.

Tally.ERP 9 has a robust mechanism to synchronise Master data, removing the need for convoluted approaches, giving both higher reliability, as well as allowing new forms of control architectures (example, allowing for a central system to ‘create and modify masters’, while the local systems are only allowed to enter transactions). You can share data between two or more instances of Tally.ERP 9 using a client–server environment using data synchronisation. Data synchronisation can be initiated from the client to the server or vice versa, depending on your user-defined configurations.

The concept of ‘On Demand Synchronisation’ – where systems actually align to a Tally.NET Synchronization Service, allowing each system to independently complete their work without needing to be ‘connected to each other live’.  It has immediate benefits of removing the ‘manual’ coordination between two end-points before data is exchanged – which is a current typical behaviour. It immediately increases the scale of ‘simultaneous uploads’ from ‘multiple points’ – as each system is now independently operating without clashing with another.

Fund Flow Statement: Definition, Format with Example

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Definition of fund flow statement

A fund flow statement is a statement prepared to analyse the reasons for changes in the financial position of a company between two balance sheets. It portrays the inflow and outflow of funds i.e. sources of funds and applications of funds for a particular period.

It is also righteous to say that a fund flow statement is prepared to explain the changes in the working capital position of a company.

Objectives of fund flow statement

A question arises as to why prepare fund flow Statement when we already prepare profit and loss and balance sheet. The need here arises because the profit and loss and balance sheet will not explain the reasons for a change in the financial position.

Profit and loss a/c and balance sheet will give two years figures i.e., current years and previous years. But it will not explain as to why the movement has happened, let’s say, the extent of use of long-term funds for a long-term needs and the use of short-term funds for a long term and short term. Here is why fund flow statement is prepared.

Broadly, a fund flow statement will give us the following two information:

  • Sources of funds – From where the funds have come in
  • Application of funds – Where these funds have been used

Components of a fund flow statement

A fund flow statement comprises of :

  • Sources of funds: It talks about the extent of funds availed from
    • Owners
    • Outsiders
  • Application of funds: It talks about how the funds have been utilized
    • Funds deployed in Fixed assets
    • Funds deployed in Current assets

Fund flow statement explained with examples

National Enterprises raised its funds from the following equation listed below:

  • Long term funds for its noncurrent assets.

Explanation: Noncurrent assets are a company’s long-term investments for which the full value will not be realized within the accounting year. Examples of noncurrent assets include investments in other companies, intellectual property (e.g. patents), and property, plant and equipment.

So, going by the accounting parlance, long term funds are generally raised by a company to meet its long-term requirements. So National Enterprises using its long-term funds for its non-current assets are the right utilization of funds and these details are explained by fund flow statement.

  • What if National Enterprises uses its short-term funds to finance its long-term assets?

Here the fund flow statement when prepared conveys the users of financial information that the usage of the fund has not been made properly by the company as it is living dangerously by utilizing its short-term funds for financing long term assets.

It means that when the company is in need for funds for repaying it to the short-term obligation, it will be in cash crunch situation since once an investment is made into long term assets by the company it, it will not be in a position to convert it into liquid cash at a later stage due to the nature of the investment.

This is how the fund flow statement explains the source of funds and its utilization or application, allowing the users of financial information interpret and know the impact on the business.

Benefits of preparing a fund flow Statement

  • It helps to explain the managers of funds as to why the company is sitting in liquidity strain despite making profits as reflected in profit and loss statement.
  • On the contrary, it helps the managers to understand as to how a company is financially strong despite losses made by it in its operation front.
  • A fund flow statement helps us to analyze whether any short-term funds are being used for long term purposes. The grey area which can only be highlighted by preparation of fund flow Statement.

Users of funds flow Statement

The most interested users of fund flow statements are the lenders of capital. They pay more attention to the fund Flow Statements than the Profit and Loss and Balance sheet.

For Example, Bankers who lend money to the company as Overdraft or Cash Credit in return for interest. The bankers use the information provided by the company in its profit and loss statement and balance sheet in preparing fund flow statements, which then enables them to take decisions as whether to provide its overdraft or cash credit facilities to its clients or not.

Fund flow statement format

Sources of Funds   Application of Funds  
 Capital

Debts

Funds generated from operations

Sale of assets (if any)

 

 

 

 

 

·       (Bal.fig) Excess usage of funds over sources.

[Decrease in working capital]

 xxx

xxx

xxx

 

 Funds utilised in creation of Fixed assets

Funds utilised in creation of other Non- current assets.

Funds utilised in repaying existing loans.

Funds utilised for paying dividends, taxes

 

*(Bal.fig) Excess of Funds over application of funds –

 

 

[ Increase in working capital]

 

 xxx

 

xxx

 

xxx

 

xxx

 

 

xxx
Total xxx   xxx
  • Increase in working capital

Possibilities may arise when long term sources are in abundance of uses or application resulting in a gap. Which we call in fund flow statement as ‘Increase in working capital’. As it is a free flexible source which can now be used by the company for funding its working capital requirements. Say short term loans outstanding (if any) can be paid from the long-term sources slot or dividends be paid etc.,

  • Decrease in working capital

Possibilities that the company has more uses of funds, but it has very limited long-term source available. At that time, the company will go for funds which are available in the nature of working capital.

As a result, the company will reduce the funds available for working capital and divert it for long term uses. So, by decreasing the working capital, we get the funds which are available for long term uses which form part of the source of funds.

The increase or decrease in working capital can be known by preparing a statement of changes in working capital. This statement compares the values of two years of the difference between Current asset and Current Liabilities and tells as to whether there is an increase or decrease in working capital.

How do modern businesses prepare a fund flow statement?

Given the importance of fund flow statements brings to the table, most of the businesses prepare and analyze this statement more frequently. Today, most businesses use ERP software or accounting software which automatically prepares the fund flow statement along with various other financial statements. This allows business owners and other users of financial information to analyze and make on-time smart business decisions.

FAQ on E-invoicing under New GST Returns

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GST Council introduced e-Invoicing from 1st January, 2020 on a voluntary basis, for reporting of business to business (B2B) invoices. The GST Council had approved the standard to be used for the e-Invoice in its 37th meeting that was held on the 20th of September, 2019 in Goa. Below are some FAQs on the e-Invoicing system under GST.

What is e-invoicing?

Electronic invoicing or E-invoicing is the new system through which business to business (B2B) transactions are authenticated electronically by GSTN for further use on the common GSTN portal. In simpler words, it is an invoice generated using a standardised format, where the electronic data of the invoice can be shared with others, thus ensuring interoperability of data.

Issue of e-invoices by the taxpayers registered under GST having a turnover above Rs 500 crores has been notified on 13th Dec 2019.

How does e-invoicing model work?

Today, a transaction between the supplier and recipient is done directly without the government having any proof of the exchange. Under the e-Invoicing model, businesses will continue to generate invoices on their respective ERPs just the way it was being done in the past. The only difference is that, the standard, schema and format for the generation of invoices will be specified, to ensure a level of standardisation and the machine-readability of these invoices.

With e-invoicing, the moment an invoice is made, it will be uploaded to GSTN portal where pre-validation will be done, and a unique number called IRN (Invoice Reference Number) will be issued which will then be digitally signed. Once IRN is issued, it will then generate a QR code, containing vital parameters of the e-Invoice. This will be returned to the same to the taxpayer who generated the document in the first place. The IRP will also send the signed e-Invoice to the recipient of the document, on the email ID provided in the e-Invoice.

What are the types of documents that are to be reported into the IRP?

The following documents will be covered under e-Invoicing for now:

  • Invoices by the Supplier
  • Credit Notes by the Supplier
  • Debit Notes by the Recipient
  • Any other document as required by law to be reported by the creator of the document

What is the workflow of e-invoice?

Step 1 – Generation of e-invoice:

The taxpayer will continue to generate invoices in the normal course of business. However, the reporting of these invoices electronically has criteria. It needs to be done as per the e-invoice schema along with mandatory parameters. The mandatory fields of an invoice for the supply of goods are listed below:

  • Invoice type
  • Code for invoice type
  • Invoice Number
  • Invoice Date
  • Supplier details like Name, GSTIN of Supplier, Supplier address (including place, pin code, state)
  • Details of the buyer such as name, GSTIN, state code, address, place, pin code, payee name, account number, payment mode and IFSC code
  • Dispatch details
  • Invoice item being dispatched
  • Total tax amount, paid amount and payment due
  • Tax scheme (whether GST, Excise Custom, VAT)
  • ‘Shipping To’ details like Name, GSTIN, address, pin code, state, supply type, transaction mode (whether regular, ‘bill to’ or ‘ship to’)
  • Details of goods like Sl. no., quantity, rate, assessable value, GST rate, amount of CGST/SGST/IGST, total invoice value, batch number/name

The seller has to ensure that his accounting/billing software is capable of generating a JSON of the final invoice. The seller can create a JSON following the e-invoice schema and mandatory parameters by using the following modes:

  • Accounting and billing system that offers this service
  • Utility to interact with either accounting/billing system, ERP, excel/word document or a mobile app
  • Offline Tool to generate e-invoice by keying-in invoice data

Step 2 – Generation of unique IRN:

The supplier has the option to generate ‘hash’ based on specific parameters usually three of them such as Supplier’s GSTIN, Supplier’s invoice number, Financial Year (YYYY-YY). The prescribed algorithm, such as SHA256 must be used for the hash generation. If the hash is validated, it would later become the Invoice Reference Number (IRN) of the e-invoice.

Step 3 – Uploading the JSON:

The following modes may be used to upload the JSON of the final invoice:

  • Directly on the IRP
  • Through GST Suvidha Provider (GSP)
  • Third-party provided apps (including through API)
  • The supplier can also upload the hash along with the JSON onto the IRP, if generated by him

Step 4 – Hash generation/validation:

Hash will have to be generated by the IRP in respect of the invoices uploaded without the hash. In such a case, the hash generated by the IRP would become the IRN. Where the supplier has also uploaded hash, a de-duplication check will be performed. It is done by validating the hash/IRN against the Central Registry of GST System to ensure that the IRN is unique. Once validated, the hash/IRN is stored in the Central Registry. IRP will then generate a QR Code and digitally sign the invoice and make it available to the supplier. The IRP also sends the e-invoice via e-mail mentioned on the invoice to the buyer and seller.

Source: last FAQ doc released by GSTN

How will the system of e-invoicing be integrated with GST Returns?

An e-Invoice will be uploaded into the relevant GST return only once it has been validated and registered by the invoice registration system. After the validation has been done, it will be visible to the recipient for viewing and taking action (in the new return system).

The main aim of the tax department is to enable the pre-population of GST returns, which will reduce reconciliation-related problems. Once e-Invoicing has been implemented, the data in the invoices can be pre-populated into the relevant tables of the tax returns without the need for fresh data entry.

What data will be included in an e-invoice?

As per the draft format generated by the GSTN, an e-Invoice will contain the following parts-

  • E-invoice schema: This part will consist of the technical field name and the description of each field. It will also specify if a field is mandatory or not, and has a few sample values along with explanatory notes
  • Masters: Masters will specify the set of inputs for certain fields, that are pre-defined by GSTN itself. It includes fields like UQC, State Code, invoice type, supply type, etc
  • e-Invoice template: The template is as per the GST rules and enables the reader to correlate the terms used in other sheets. The mandatory fields are marked in green and optional fields are marked in yellow

What are the benefits of e-invoicing?

  • One-time reporting of B2B invoices while generation, which reduces reporting in multiple formats
  • Sales and Purchase Registers can be generated from this data, and GST returns can be kept ready for filing under the new return system
  • E-way bills can also be generated using e-Invoice data
  • There is minimal need for data reconciliation between the books and GST returns filed
  • Real-time tracking of invoices prepared by a supplier can be enabled, along with the faster availability of input tax credit. It will also reduce input tax credit verification issues
  • Automation of the tax-filing process
  • Reduction in the number of frauds as the tax authorities will also have access to data in real-time
  • Elimination of fake GST invoices getting generated

Difference between Old Vs New GST Return System

Posted on by Tally Academy

Introduction

The Indian government aimed at introducing GST to streamline the taxation policies even further. Under GST scheme, businesses followed the rule of ‘One Nation, One Tax’ which helped several taxpayers stay compliant seamlessly. However, several entrepreneurs found GST a bit complicated with numerous forms which are to be filed. Thus, to make the taxation system more simplified, the government announced the launch of GST 2.0 aka New Return Filing. The objective of the New Simplified GST Returns is to completely knock off the tax evasion pan India so that the transparency and equality can be attained under the indirect tax mechanism.

Let’s look at how different GST 2.0 is from the old return filing mechanism and how it will benefit the taxpayers.

Under the old return filing system

GSTR-1 return should be filed for reporting outward supplies and declaring tax liability on the same. Input Tax Credit (ITC) on imports has to be claimed in GSTR-3B under eligible ITC.

The taxpayer has to file monthly GSTR-1 if his annual turnover is more than Rs.1.5 crore. Otherwise, the taxpayer can file a quarterly GSTR-1.
This return includes/developers on a bill of entry

S. no Particulars
1 Supplies made to registered persons other than reverse charge mechanism (RCM) supplies and supplies through e-commerce operator
2 Supplies made under reverse charge mechanism
3 Supplies made through e-commerce operator
4 Interstate supplies to unregistered persons where invoice value is more than Rs.2.5 lakh
5 Zero rated supplies and deemed exports
6 Nil rated, exempted and non-GST outward supplies
7 Amendments to taxable outward supply
8 Advances received/adjusted during the tax period
9 HSN-wise summary of outward supplies
10 Documents issued during the tax period

Under the new return filing system

GST ANX-1 should be filed for reporting sales and declaring tax liability on the sales. Imports are also to be reported in GST ANX-1 and ITC on imports will be auto-populated in GST RET-1.
In the new return system, taxpayers are categorised into large taxpayer (whose annual turnover is more than Rs.5 crore) and the small taxpayer (whose annual turnover is up to Rs.5 crore). A large taxpayer has to file monthly GST ANX-1, whereas the small taxpayer can file his GST ANX-1 monthly or quarterly at his option.

This return includes

S No Particulars
1 Supplies made to consumers and unregistered persons
2 Supplies made to registered persons (Other than RCM supplies)
3 Exports with/without payment of tax
4 Supplies to SEZ units/developers with/ without payment of tax
5 Deemed exports
6 Inward supplies attracting reverse charge
7 Import of goods/services
8 Import of goods from SEZ units/developers on a bill of entry
9 Missing invoices which are to be uploaded by recipients
10 Details of the supplies made through e-commerce operators
11 Amendments to various supplies

Comparison – old vs new GST return system

The form GST ANX-1 under the new return system is similar to GSTR-1 under the old return system. There are some changes under the new return system when compared to old return system. Some of them are

  • Reporting of Supplies Under RCM

In the current filing system, invoice details can be reported while filing GSTR 1 form but can be viewed afterwards in GSTR-2A. In the new filing system, filing and viewing go simultaneously so that instant action can be taken on that.

  • HSN Summary Reporting

Under the old return system, the HSN code summary needs to be reported separately. But in the new return system, the supplier has to report the HSN codes at the invoice level (based on his turnover). In this way, the taxpayer will get the HSN data via his GST ANX-2 wherever the supplier was required to declare HSN.

  • Reporting of Imports

Under the old return filing system, ITC on imports alone has to be reported in GSTR-3B. However, under the new return filing system, the taxpayer has to report imports of goods and services in GST ANX-1.

  • Tax Payment

In the current system, Full Tax liability must be paid for a tax period while filing monthly return GSTR-3B. In the new system, complete Tax liability must be paid for a tax period in monthly PMT-08, regardless of monthly or quarterly filing of GST returns.

  • Reporting of Documents Issued

Under the new return system, there is no requirement for reporting of documents (along with serial numbers) like invoices, debit/ credit notes, receipt/ payment/ refund vouchers, delivery challans which were issued during the tax period.

GST Return Filing Date for March-May Extended till June Amid Corona Virus

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GST_Return_Filling_Date

The government on March 24 announced extension of the last date for filing GSTR-3B for Goods and Services Tax (GST) for March, April and May to June 30, amid the Corona Virus chaos. “Others can file returns due in March, April and May 2020 by last week of June 2020 but the same would attract a reduced rate of interest at 9 percent per annum from 15 days after due date (current interest rate is 18 % per annum),” she said.

Bigger companies, the FM said, would have to pay only interest but no late fee or penalty will be imposed. “No late fee and penalty to be charged, if complied with before or till 30th June 2020,” she said.

In a press conference, Sitharaman announced some crucial measures to fight the economic fallout of Covid-19 pandemic. The government also extended the date till the last week of June, for opting for composition scheme. “Further, the last date for making payments for the quarter ending 31st March, 2020 and filing of return for 2019-20 by the composition dealers will be extended till the last week of June, 2020,” the FM said.

The date for filing GST annual returns of 2018-19, which was due on March 31, has been extended till the last week of June. “Due date for issue of notice, notification, approval order, sanction order, filing of appeal, furnishing of return, statements, applications, reports, any other documents, time limit for any compliance under the GST laws where the time limit is expiring between 20th March 2020 to 29th June 2020 shall be extended to 30th June 2020,” the government said.

Sitharaman also extended the deadline for filing FY19 income tax (I-T) returns till June 30. ATM charges have been scrapped till June 30.

FORM RET 1 – Quarterly GST Return

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In the 31st meeting of GST Council, it was recommended to introduce and implement a new GST return system. One of the key aspects of the new GST return system is the introduction of different types of return forms considering the business profile. Quarterly return form RET-1 is one such return type designed for small taxpayers.

In this blog, let us understand the applicability, return filing period and format of quarterly return form RET-1

What is quarterly return form RET-1?

Quarterly Return form RET-1 is a return type for small taxpayers whose aggregate turnover in the financial year does not exceed 5 Crores and their outward supplies consist of B2B B2C and all other types supplies such as exports, SEZ etc.

To put it in simple words, businesses opting quarterly return form RET-1 will be allowed to make all types of outward supplies such as supplies to end consumers, unregistered business, registered business, exports, SEZ etc.

Except for the periodicity of filing return, the form type, format and details required to be furnished are similar to monthly returns.

Periodicity of filing quarterly return form RET-1

The periodicity of filing quarterly return form RET-1 is similar to the Sahaj and Sugam. You need file the returns quarterly with a monthly payment of tax on a self-assessed basis. The due date to file a quarterly return in Form RET-1 is 25th of the subsequent month following the quarter-end.

The due date for filing Sugam GST returns is given below

Quarterly Return Form RET-1
Quarters Due Data
April -June 25th July
July – September 25th October
October- December 25th January
January-March 25th April

Due date for payment of tax

Though the return filing periodicity is quarterly, businesses opting quarterly RET-1 are required to make the monthly payment.

The tax payment is on the self-assessed basis and the payment declaration challan known as Form GST PMT -08 should be used to remit the payment. The due date to remit the monthly payment is 20th of the subsequent month.

Types of supplies allowed under quarterly GST Return Form RET-1

Business opting quarterly return Form RET-1 will be allowed to make all types of supplies as mentioned in the below table.

Type of Outward Supplies Allowed (Yes) / Disallowed (No)
B2B transactions Yes
B2C transactions Yes
Exports Yes
SEZ units/developers Yes
Deemed Exports Yes
Outward Supply to e-Commerce Operators Yes
Nil Rated, Exempted or Non – GST Yes
Inward supplies attracting RCM Yes
Import of goods/services Yes
Import of Goods from SEZ Yes

 

Difference between Sahaj, Sugam and quarterly return form RET-1

All these returns are quarterly and designed for small taxpayers. The first difference, the obvious one is that each of these returns differs basis nature of supplies it supports. Sahaj supports only B2C supplies, Sugam supports B2C as well as B2B supplies and quarterly return form RET-1 support all types of supplies.

Second, the most important one, the facility of availing ITC on the missing invoice (invoices not uploaded by the supplier) and reporting of such bills is allowed for businesses opting monthly return and quarterly return in form RET-1. In other words, businesses who have opted Sahaj return and Sugam return will not be allowed avail ITC on the missing invoice.

Quarterly return form RET-1 return filing process

The quarterly return form RET-1 consist of one main return, to be filed on a quarterly basis supported by two main annexures. Form GST RET-1 is the return form to be used to file Sugam returns supported by the annexures.

The details of return forms and annexures to be used for filling Sugam return is given below.

Form Description Action
Form GST ANX- I Form GST ANX-1 is an annexure of outward supplies and inward supplies attracting reverse charge. You need to upload details of outward supplies along with purchases attracting reverse charge in FORM GST ANX – 1
Form GST ANX – II It’s an annexure containing details of auto-drafted inward supplies.

 

 

 Form GST ANX-II is an auto-populated annexure containing the details document uploaded by your supplier on a real-time basis.

Here you can either accept, modify or reject the invoice uploaded by your counterpart (seller) for confirming the ITC.
Form RET-1 Form RET-1 is a quarterly return applicable for business opting Sugam returns (Up to 5 Crores) Business need to file the monthly return by 25th of the subsequent month following the quarter-end

How to Transit to e-Invoice System?

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With the introduction of e-Invoice concept, the businesses will be mandated to validate and authenticate the invoices by the government portal. Before getting into the ways to transit to a new system of e-invoicing, let us understand the current practice.

Current Practice Vs E-invoicing in GST

Today, every business whether big or small, create invoices using various accounting /ERP software and some even through a manual process. As a supplier, these invoice details are furnished in GSTR 1 and the buyer gets the visibility of invoices uploaded in GSTR -2A.

With e-invoicing, the current practice of generating the invoice and reporting will change.e-Invoice requires B2B invoices to be authenticated electronically by IRP (Invoice Registration portal).

The concept of e-invoice begins with uploading of e-invoice data in the prescribed format (JSON) to the IRP system and post validation, a unique number called ‘Invoice Registration Number (IRN)’ is generated for every invoice uploaded. Along with IRN, the e-invoice is tagged with a QR code for further use by various Government portal like GSTN or E – Way Bill portal.

If you closely look at the current and e-invoice system, two changes are evident. First, the need to get the invoice authenticated with IRN. Remember, an invoice without IRN is not a valid invoice. Second, the reporting of invoice details in GST returns and the e-Way bill will be auto-captured based on the e-invoice data.

All in all, by just uploading your e-invoice data to IRP system, most of your compliance needs will be taken care of. That’s the level of technology at which the e-invoice system is being built by the government.

What does this change imply to businesses?

As they move forward, businesses should make provision for a new form of issuance of invoices and leverage the benefit of technology with which the e-invoice system is built. Just like any new system, e-invoice too requires businesses to be prepared and smoothly transit.

In a bid to help the businesses to transit smoothly to e-invoicing, the next section highlights the key things businesses should take care of.

How to transit to e-invoice system?

The first step towards preparing your business for e-invoicing system is to know and understand the e-invoice system. Understanding the fundamentals and how the e-invoice system works will help you identify the requirements and fill gaps. This also calls for educating your internal teams about the change in the invoice process that comes with e-invoice.

 

Secondly, the accounting software you use will play a key role in e-invoice system. The new system requires you to upload and authenticate the invoice with IRN. Accounting software or ERP that seamlessly interacts with the IRP system will make the task of e-invoicing easier.

Here are the key things the accounting software is expected to do.

  • Generating e-Invoice Data

You need to upload e-invoice data in JSON format as per the schema provided. Here, the accounting software should generate e-invoice JSON from the invoice details recorded as per the e-invoice standards. e-invoice standard consists of mandatory and optional fields and the accounting software should be able to cater to it considering your business necessities.

  • Seamless Integration with IRP System

After you create an invoice with the help of your accounting software, you will have to upload such an invoice on the IRP portal for validation and generating IRN. Here, the accounting software should have the in-built capability to interact with the IRP system and upload the e-invoice JSON without manual intervention. This will not only save your time but also increases the efficiency in invoice processing.

  • Download and Capture IRN

Once an invoice generated by you sails through the IRP portal, on its return, e-invoice JSON will be digitally signed and added with new elements such as IRN number and QR Code. The accounting software should be able to download the digitally signed JSON and accordingly incorporate the IRN and other details into the invoice you issue to your customer.

Sugam GST Returns – Form GST RET-3

Posted on by Tally Academy

The new GST return framework has introduced a set of return forms specially designed for small taxpayers. Among the new returns available, Sugam return form is once such GST return aims to simplify the GST complexities.

In this blog, let us discuss and understand Sugam returns, return filing periodicity, tax payment, format and filing process.

What is Sugam GST returns?

Sugam is a new GST return for small taxpayers whose aggregate turnover in the financial year does not exceed 5 Crores and their outward supplies consist of B2B as well as B2C. Businesses opting Sugam GST returns will be allowed to make outward supplies to end consumers, unregistered business and business registered under GST.

Applicability of Sugam return

To opt Sugam return under GST, you need to satisfy the below two conditions.

  • The aggregate turnover in the previous financial years is up to 5 crores
  • You are engaged in making B2B supplies (Unregistered Business and end consumers) and B2B supplies (supplies to business registered under GST)

Periodicity of filing Sugam return

The periodicity of Sugam return filing is on a quarterly basis with a monthly payment of tax. For businesses opting Sugam GST return, the due date to file a quarterly return is 25th of the subsequent month following the quarter-end.

The due date for filing Sugam GST returns is given below

Due Date to File Sugam GST Return
Filing Period Due Data
April -June 25th July
July – September 25th October
October- December 25th January
January-March 25th April

Due date for payment of tax

Though the return filing periodicity is quarterly, businesses opting Sugam return are required to make the monthly payment.

The tax payment is on the self-assessed basis and the payment declaration challan known as Form GST PMT -08 should be used to remit the payment. The due date to remit the monthly payment is 20th of the subsequent month.

Like Sahaj return, the self-assessed payment is required only for 1st and 2nd month of the and for 3rd month, payment with all adjustments should be made along with the returns.

Let’s understand with an example.

For April to June quarter, the taxpayer needs to remit the tax of April by 20th May and May’s tax by 20th June. For June, you need to pay tax along with first 2 months adjustment (if any) with main Sugam returns.

Difference between Sahaj and Sugam GST returns

While both the returns are quarterly and applicable for small taxpayers, basis the supplies nature it supports, these 2 differs. Sahaj as a small taxpayer return supports only B2C supplies whereas Sugam supports B2C as well as B2B supplies.

In other words, Sahaj return is suitable for businesses who are engaged in making only B2C outward supplies. On the other hand, Sugam is suitable for a business who make both B2C as well as B2B supplies.

Types of supplies allowed under Sugam returns

The following table gives the list of supplies allowed and disallowed under Sugam GST returns.

Type of Outward Supplies Allowed (Yes) / Disallowed (No)
B2B transactions Yes
B2C transactions Yes
Exports No
SEZ units/developers No
Deemed Exports No
Outward Supply to e-Commerce Operators No
Nil Rated, Exempted or Non – GST Yes
Inward supplies attracting RCM Yes
Import of goods/services No
Import of Goods from SEZ No

Sugam return filing process

The Sugam GST returns consist of one main return, to be filed on a quarterly basis supported by two main annexures. Form GST RET-3 is the return form to be used to file Sugam returns supported by the annexures.

The details of return forms and annexures to be used for filling Sugam return is given below.

Form Description Action
Form GST ANX- I Form GST ANX-1 is an annexure of outward supplies and inward supplies attracting reverse charge. You need to upload details of outward supplies along with purchases attracting reverse charge in FORM GST ANX – 1
Form GST ANX – II It’s an annexure containing details of auto-drafted inward supplies.

 

 

 Form GST ANX-II is an auto-populated annexure containing the details document uploaded by your supplier on a real-time basis.

Here you can either accept, modify or reject the invoice uploaded by your counterpart (seller) for confirming the ITC.
Form RET-3 Form RET-3 is a quarterly return applicable for business opting Sugam returns (Up to 5 Crores) Business need to file the monthly return by 25th of the subsequent month following the quarter-end

 

The key point which businesses should take note is that the option to avail input tax credit on the missing invoices (invoices not uploaded by the supplier) is not available in Sugam returns. This implies that businesses will be allowed to avail the ITC to the extent of the invoices auto-populated in Form GST ANX-II.

However, the option to claim ITC on a provisional basis on the missing invoice is available for taxpayers opting monthly return and quarterly normal return using Form GST RET-1.

Format of Sugam returns – Form GST RET – 03

The Sugam form RET – 03 contains the details of supplies (both inward and outward) declared through Form GST ANX – 1 and GST ANX – 2. This is the main return form which auto-populates the information of supplies from the first two annexure forms. The supplier (taxpayer) needs to complete the remaining details and calculate their tax liability.

To summarize the Sugam return format (Form GST RET-3), it contains the summary level details of outward supplies, inward supplies and adjustments related to it. The Sugam return format consists of the following details:

  • Outward supplies
  • Inward supplies attracting reverse charge
  • Debit/credit notes
  • Advanced received
  • Total tax liability
  • Inward supplies for claiming ITC
  • Net ITC available
  • Amount of TDS/TCS credit received (Transition / Switchover)
  • Interest and late fee (if any) and
  • Final payable tax along with details of tax payment and
  • Refund claimed from the ledger.

Sahaj GST Returns – Form GST RET-2

Posted on by Tally Academy

By Introducing different return forms for different types of business, the new GST return system aims to simplify the filing process for business registered under GST. Sahaj GST return is one such form among the several types of new GST returns to be introduced.

In this blog, let us understand all about the Sahaj GST returns right from its applicability, periodicity of return filing, payment of tax and return filing process.

What is Sahaj return in GST?

Sahaj is a type of GST returns for small taxpayers whose aggregate turnover in the financial year does not exceed 5 Crores and their outward supplies are of B2C nature i.e. outward supplies are made to end consumers and unregistered business.

Applicability of Sahaj return

The criteria to decide on the applicability of the return depends on the aggregate turnover and types of outward supplies you make.

  • The aggregate turnover in the previous financial years is up to 5 crores
  • You are engaged in making only B2B supplies (Unregistered Business and end consumers)

If you satisfy the above two conditions, you will have an option to file Sahaj GST returns.

Periodicity of filing Sahaj return

The periodicity of Sahaj return filing is on a quarterly basis. However, the payment of tax should be made on a monthly basis.

For businesses opting Sahaj GST return, the due date to file a quarterly return is 25th of the subsequent month following the quarter-end. Following are due date for filing Sahaj returns.

Due Date to File Sahaj GST Return
Quarters Due Data
April -June 25th July
July – September 25th October
October- December 25th January
January-March 25th April

Due date for payment of tax

Taxpayers opting Sahaj return are required to make the monthly payment though the return filing periodicity is quarterly. The payment of tax is on the self-assessed basis and should be made through a payment declaration form known as Form GST PMT-08. The due date for monthly payment of tax for Sahaj return is 20th of succeeding month.

The self-assessed payment is required only for 1st and 2nd month of the quarter and for 3rd month, payment along with all adjustments should be made along with the returns.

Sahaj return filing process

The Sahaj GST return consist of one main return, to be filed on a quarterly basis supported by two main annexures. Form GST RET-2 is the return form to be used to file Sahaj returns supported by the annexures.

The details of return forms and annexures to be used for filling Sahaj return is given below.

Form Description Action
Form GST ANX- I Form GST ANX-1 is an annexure of outward supplies and inward supplies attracting reverse charge. You need to upload details of outward supplies along with purchases attracting reverse charge in FORM GST ANX – 1
Form GST ANX – II It’s an annexure containing details of auto-drafted inward supplies.

 

 

 Form GST ANX-II is an auto-populated annexure containing the details document uploaded by your supplier on a real-time basis.

Here you can either accept, modify or reject the invoice uploaded by your counterpart (seller) for confirming the ITC.
Form RET-2 Form RET-02 is a quarterly return applicable for business opting Sahaj returns (Up to 5 Crores) Business need to file the monthly return by 25th of the subsequent month following the quarter-end