Taxpayers should not procrastinate and use the additional three months to ensure issues are sorted and compliances are met with.
The Government recently extended the due date for filing of Annual return (GSTR-9) and reconciliation statement/ audit report (GSTR-9C) till November 30, 2019 and taxpayers should now use the additional three months to address their concerns and ensure the returns are filled on time.
This is the fourth extension from the original deadline of December 2018 and the said decision has been taken on account of technical glitches being faced by the taxpayers in filing the said returns.
According to Priyajit Ghosh, Partner, Indirect tax, PwC India , the extension for 2017-18 is expected to bring relief on several counts. “First, several technical issues are being faced by the taxpayers such as the JSON files (the data is converted into this file format and uploaded to GSTN for electronic filing) are rejected upon upload to GSTN without indication of error, digital signature related problem. While GSTN has addressed the issues on time to time basis, the extension will help both GSTN and the taxpayers,” says Ghosh.
Ghosh adds that owing to the first time preparation of the returns and reconciliation statement there are many open issues and the Government clarified some of the issues as recent as in July 2019. “As the taxpayers are attempting to complete the return and statement, they are encountering various practical and interpretation related challenges. The extended timeline will help the tax payers seek further clarifications on many aspects. The Government may choose to simplify and clarify various aspects of the filing,” says Ghosh.
As per a recent statistic, it is on account of these reasons that only 15% of the taxpayers have filed annual return and less than 1% have filed the audit report (GSTR-9C). Further, it may also be mentioned that out of 15% dealers who have filed the return, percentage of NIL return may be substantial. Also, in an event of recurring clarifications from the Government, it was expected that the auditors, consultants and tax payers would require some additional time to arrive at a conclusion with respect to correct reporting in GSTR-9 & GSTR-9C.
“The decision has been welcomed by the industry as it has provided much respite to the industry, which has been persistently struggling with filing annual return and audit report. The tax payers having been facing difficulties due to lack of clarification from the Government and technical glitches on the portal,” says Harpreet Singh, Partner, KPMG India.
Third, various parts of India has seen natural calamity and the 31st August deadline coincided with the due date for income tax returns as well. The extended deadline well past the festival seasons would facilitate the compliances much better which has so far seen a very low level of filing till date.
What to do
Archit Gupta, Founder & CEO ClearTax says taxpayers who have reconciled or are close to reconciliation, must finish the GSTR-9 filing process without delay. “The CA community has spent valuable time on client records, they want to finish their work and move on to the new return filing mechanism for GST. This is the sense we are getting from the market. Some aspects of the form are complex and simplification of the form will definitely improve its compliance,” says Gupta.
Gupta adds that businesses must take this window as additional time to close the issues related to reconciliation. “Using technology and smart reconciliation can help them fix mismatches they can see between GSTR-2A and GSTR-9 auto-populated information. This process must be completed soon so as to begin GST simplified return process (ANX-1, ANX-2),”
According to Singh, taxpayers should focus on clarifications issued by the Government and take up the challenges faced by them with the authorities in order to meet the new deadline. It is expected that the Government would clarify on the pending issues faced by the tax payers at the earliest so that the taxpayers would have sufficient time to implement the said changes in the filings.
“Given that the deadline for annual compliance for FY 2017-18, has been pushed to 30 November 2019, the taxpayers should now concentrate on undertaking reconciliation of input tax credit with GSTR-2A on priority, as the last date for availing input tax credit for FY 2018-19 is 30 September 2019.” said Singh.
Gupta says some aspects of the form are complex and businesses are finding it challenging to report. “The government must focus on simplification of the form to improve compliance. GSTR-3B and GSTR-1 could not be revised, businesses who have incorrectly reported information are facing a challenge with reporting them in GSTR-9. Providing opportunity and sections for reporting ‘adjustment made’ should be allowed. These adjustments may be related to information earlier reported incorrectly by the taxpayer, even though tax may have been correctly paid by them,” says Gupta.
He adds that the department should consider removing information sought with respect to HSN information of inward supplies. “Earlier businesses with a turnover of less than Rs 1.5 crore were not required to mention HSN code while making supplies, now those who bought from them, do not have the relevant information. Taxpayers are facing a challenge with bifurcating inputs information between input goods and input services, this bifurcation is inconsequential and should be done away with,” says Gupta.
“The move to relax the deadlines for annual return and audit report for FY 17-18 is likely to impact timeline for annual compliance for FY 2018-19, which is due on 31 December 2019. It is expected that the Government would issue necessary relaxation on this as well.” adds Singh.
Interestingly, Ghosh points out that even for the year 2018-19, while the order is awaited, GSTN is showing the last date of return filing as March 31, 2020 instead of the statutory timeline of December 31, 2019.
Source- Economic Times.