When the Goods and Services Tax system came into being on July 1, 2017, it was meant to make the process of paying your taxes easier and curbing tax evasion by businesses. The new changes in GST work on both aspects.

The Government of India introduced a new GST system that has made it simpler for businesses to file their returns. The introduction of GST registration online, two years back, made filing ITR easy for traders. This new system makes it even more hassle-free. Hailed as GST-2, the system allows some traders to file just one format every month instead of many. 

·      What’s the change?

Earlier there were three formats that had to be filed each month making it total of 36 filings per month. Over and above this, audit reports and others had to be submitted too. The new system takes away this cumbersome process. Now there is only one return for a month. The total number of returns for small taxpayers is reduced to four and for big payers to 12 for every year. 

Two new forms called Sugam and Sahaj have been introduced for a specific class of traders under GST-2

·      What is the deadline of GST-2?

The new system is set to be launched on 1st October 2019. The implementation deadline for taxpayers below Rs 5 Crore is 1st January 2020 while for taxpayers above the limit is 1st October of this year.

·      How does the new system check tax evasion?

A new feature was added to the e-way bill to control tax evasion. The bills will check ‘pin to pin’ distance to make sure that no replicate bills are created. The checking of the e-way bills with be automatic. Another move to curb tax evasion is the e-invoice. Using e-invoicing, all e-way bills will be created automatically along with the filing returns. The need to manually file returns is removed as the data is already present in the system.

Any transporter or business who moves goods of value over Rs. 50,000 must mandatorily generate an e-way bill. The move is again aimed to control tax evasion. 

·      What is the GST Network?

While making the filing of income tax returns for business easier is a crucial step for GST-2, there is one more that needs mentioning. The GST Network is the firm that makes the technological end of the tax regime. The company has created a new system for SMSes. Under the new system, alerts are sent to:

o  Promoters of the business

o  Directors of the business

o  Proprietors, i.e., the authorised signatory of the business

These are sent automatically and when there is a discrepancy in ITR or default in tax payment by the business. The same red flag SMSes are sent to the revenue department to keep the authorities in the loop and ready to take action where needed. 

The step to send SMSes was taken to make promoters and directors aware. The logic is that even though the information is available on the dashboard of the online ITR account of the business, the account may be handled solely by an accountant or CFP. As a result, the top heads of the business might not know about the mismatch or default. 

·      When are the red flag alerts sent?

An SMS is sent to the mentioned people when a difference crops up in:

o  GSTR-3B and GSTR-1

o  GSTR-3B and e-way bill

o  The input tax credit of the business and the corresponding return of the supplier

They are also sent when the business:

o  Defaults on tax payment

o  Doesn’t file their GSTR-3B

o  Doesn’t file returns for two months one after the other

The reminders are sent precisely three days after ITR is submitted. For instance, if the return is filed on 20th, then the SMS will be sent on 23rd. 

·      What steps will be taken in case of default or mismatch?

The facility to generate the automatic e-way bill for the business will be blocked, in case GSTR-3B are not filed for 2 consecutive months. This rule goes in to effect on 22 August of this year. 


Published by Samantha Brown