Model GST Law 2016: returns and Input tax credit maching mechanism

GST is going to be a reality very soon. Under new Law process of filing return and to claim input tax credit will be more transparent. Each and every Invoice will be matched with each other. Although final responsibility will be on Goods/services recipient even if the default is of supplier.

• Is it possible to file a return without payment of tax?

Yes, Under GST a return can be filed without prepayment of taxes but taxpayer will have to pay the taxes before the last date to file the return. If the taxpayers fails to make payment of tax return filed by him will be a defective return. No credit will be allowed to service or goods recipient for such goods/services. It is a kind of hardship on services/goods receivers as they will have to ensure the payment of GST by suppliers of goods or services and if supplier fails to make payment they will have to suffer the losses.

• Do I need to file return if I am a services recipient?

Yes, If you are liable to pay tax under provision of tax deducted at source you will also have to file the GST return.

• Can I rectify the mistakes/omissions in returns I found later on?

Yes, Any taxable person who has file a valid return found any error or omission they can correct it later on but there are two exception to this rule

1. The error should not result from a scrutiny, audit, inspection or enforcement activity by the tax authorities.
2. Such error or omission can be rectify only up to due date for filing of return for the month of September or second quarter (if the tax payer need to file a quarterly return) following the end of financial year or the actual date of filing of relevant annual return, whichever is earlier.

• How can I take the credit of Input tax credit?

Every taxable person shall, be entitled to take credit of input tax, as self-assessed, in his return and such amount shall be credited, on a provisional basis, to his electronic credit ledger to be maintained in the manner as may be prescribed: Provided that a taxable person who has not furnished a valid return under section 27 of the Act shall not be allowed to utilize such credit till he discharges his self-assessed tax liability.

• When I can be declined the input tax credit?

There will be a process of Matching, reversal and reclaim of input tax credit on the part of department. The details of every inward supply furnished by a taxable person for a tax period shall, in the manner and within the time prescribed be matched with the corresponding details of outward supply furnished by the corresponding taxable person in his valid return for the same period. In case the input tax credit claimed by a recipient in respect of an inward supply is in excess of the tax declared by the supplier for the same supply or the outward supply is not declared by the supplier in his valid returns, the discrepancy shall be communicated to both such persons. The amount in respect of which any discrepancy is communicated and which is not rectified by the supplier in his valid return for the month in which discrepancy is communicated shall be added to the output tax liability of the recipient

• When I need to file Annual return if I need to audit my final accounts?

Every registered taxable person is required to file Annual Return for every financial year electronically in such form and in such manner as may be prescribed on or before the thirty first day of December following the end of such financial year.

In case taxpayers accounts are required to be audited they also need to file annual return electronically, along with the audited copy of the annual accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the year with the audited annual financial statement, and such other particulars as may be prescribed.

Following person are not required to file an annual return under GST

• An Input service distributor,
• A deductor need to deduct and deposit Tax at source.
• A casual taxpayer
• A non- resident taxpayer.