Infosys chief Nandan Nilekani on simplifying GST compliance; Will tweak GST Return Filing
Highlights of proposed Changes to GST Invoice Matching:
- Real-time invoice uploading
- Single Return Filing
- Introduction of Provisional Credit”
- Seller only” Invoice
- Uploaded Invoice Locked once accepted
- Automated GSTR 3 Report
Infosys chairman Nandan Neelekani proposed a model for introducing Changes to GST invoice matching to enable smooth flow of income tax credit for taxpayers. This will be discussed in GST council meeting on March 10. This model aims at simplifying three stage return filing and summary in return 3B procedures by replacing it with a single GST return. The GST Invoice matching wil be done offline by assessee individuals.
GST Invoice Matching; three points that could trigger as a failure criteria
- Solutions that create an additional burden on taxpayers.
- Any solution that involves the intervention of administrative authorities.
- Solutions that allow more mismatches in the first place.
All those measures taken in GSTR 2 perceived to be a burden according to Nilekani. It is because of the time is taken to match and correct invoices after few days was really high. It was perceived to be a “Three Monthly Return” procedure. Concepts like set-off liability, advance tax, separate reporting based on the type of invoices was a complex procedure. It requires the help of a tax professional. Also, rate level reporting was complex thing compared to item level reporting, he says.
Proposed Changes to GSTR 1
- GSTR 1 will have Only “Invoice Uploading” and not the “filing” of returns.
- Real-time uploading of invoices will ensure easy flow of the compliance.
- This will also enable continues acceptance of invoices. Those that uploaded after 10th of the month will be considered for the next month.
- Invoices once accepted will not have an option for modification.
- As it facilitates offline matching of invoices, it will also be easier to integrate with accounting packages.
Proposed Changes to GSTR 2 (GST Invoice Matching)
- A concept of “Provisional Credit” will be introduced. This will enable buyers to notify the supplier about missed invoices for uploading instead of buyer uploading purchase invoices.
- The system will notify about missed invoices, and once uploaded, it will no longer be present in the “Missed Invoices” list.
- He also proposed to create a benchmarking tool to compare the performance of taxpayers by preserving the “Missed Invoices list” in the system.
If implemented, there will no concept of “Mismatches” but there’s a possibility of non-payment of taxes. Hence, instead of penalizing buyer like in the current system, it’s recommended that to create provisions to recover dues from the supplier in the new law.
The new proposed system will also facilitate easy uploading of invoices. Small taxpayers having no automated accounting system can view and accept within the portal. Small and mid-level taxpayers with a little amount of automation can use offline excel based tools to view and accept invoices. It integrates will using APIs with fully automated accounting systems for large taxpayers.
The transition path
The current system involves self-declared GSTR 3B and monthly/quarterly returns. The new proposed approach to simplify GST return will have three phases.
- Continue with GSTR 3B
- Replace GSTR 1 with uploading of invoices.
- Continue with GSTR 3B,
- Enabling invoice acceptance (by buyer) feature.
- Implementation of system generated GSTR 3 as “Read Only” statement.
- 3B vs 3; comparison report.
- Discontinue GSTR 3B.
- Continue with uploading of invoices.
- Enabling system generated GSTR 3 with a payment system.
It dramatically reduces complex procedures in the current system. Continues invoice uploading will easily integrate well with business and accounting process as they do matching of invoices on the continues basis. He said pure system actually increases the burden by increasing chances of invoice mismatches. As it can be well integrated with the natural business processes, it will increase the quality of data, said Neelekani.