One return per month: GST Council eases filing requirements

One return per month: GST Council eases filing requirements

In a move expected to bring relief to taxpayers in India, the GST Council, at its 27th meeting held on 4 May, announced it will scrap the “36 returns system” and roll out a new, simpler “12 returns system” in the next six months. Once the new system is in place, taxpayers will have six months to make a complete transition. 

The council made this decision given the numerous IT glitches with GST since its inception. Although the government first tried deferring the “36 returns system” in hopes that improving infrastructure would solve the issues, the council decided instead to impose a simpler return process and to relax some requirements. 

Returns become much simpler

Experts see the new “12 returns system” as more business-friendly, noting the following benefits:

• Reduced number of returns and filing frequency

The new system reduces the frequency and number of returns taxpayers must file. Taxpayers having nil transactions, or composition suppliers, will file one return every quarter. All other taxpayers will file one return per month. The due date for filing will differ according to the turnover threshold limit.

• No need to upload purchase invoices

The supplier can upload invoices anytime during the month, and the buyer will be able to see these invoices on the GST portal. The system is unidirectional, i.e., the buyer doesn’t need to accept the invoices to claim input tax credit (ITC). Based on the invoices uploaded by the supplier, the buyer can avail ITC, as invoices will be the documents of record.

• HSN code required for B2B transactions

Invoices related to B2B transactions will need to include a minimum of four digits of HSN code for more consistent reporting.

• User-friendly IT interface  

B2B suppliers will fill in the invoice details related to outward supplies, and then the system will auto-calculate the tax liability. The system will also auto-calculate the ITC for the recipient based on the invoices the supplier has uploaded. Offline IT tools and user-friendly IT interfaces are expected to further ease the filing process.

• Returns require less information  

GST returns will be simpler and require taxpayers to input less information than before, saving businesses valuable time.

• Automated notices and orders for recovery/reversal

Taxpayers will generate notices and orders to recover GST or reverse ITC online. An automated workflow will mean fewer human interactions and more transparency.

Stages of the transition phase

  1.  Taxpayers are presently filing GSTR-1 and GSTR-3B and will continue to do so for the next six months. 

  2. When the new system rolls out, taxpayers will upload invoice data for outward supplies and be able to claim ITC on a self-declaration basis, called a Provisional ITC Claim. 

3. After the initial six months of the new system, taxpayers will be able to claim ITC based only on the information included in the invoices suppliers upload. 

No automatic reversal of ITC

Giving much relief to buyers, the GST Council discarded the policy of automatically reversing the buyer’s ITC when the supplier neglects to pay tax. This deprived many buyers of availing their share of ITC due to supplier default.

Instead, if the supplier defaults in paying GST, the government will recover taxes directly from the supplier.

However, GST authorities will still be able to automatically reverse ITC if they’re unable to find the supplier, if the supplier has closed the business, or if the supplier is unable to pay the GST owed.

GSTN to become a fully owned government entity

The GST Network will become 100 percent government-owned. Presently, the central government holds a 24.5 percent share, while the state governments collectively hold 24.5 percent. Non-government institutions hold the remaining 51 percent. The government will buy this 51 percent share to make GSTN a public entity.

Ministers from state governments will work on three recommendations

A group of ministers formed from the state governments will consider the following GST Council recommendations and then present their proposals for discussion at the next council meeting: 

1. Digital payments of GST

To promote the payment of GST digitally and take the country one step closer to a cashless economy, the GST Council proposed a concession of 2 percent in the GST rate of B2C supplies if the payment is made through cheque or net banking. Taxpayers can avail this concession when the GST rate is 3 percent or higher. Taxpayers will be able to deduct 1 percent from both the CGST and SGST rates, to a maximum concession of Rs. 100 per transaction. 

2. Cess on sugar apart from GST

Presently, 5 percent GST is imposed on sugar. However, the GST Council has proposed to levy a cess on top of that to help compensate farmers. 

3. Reduce GST rate on ethanol 


Avalara is an experienced application service provider (ASP) and partner of authorized GST Suvidha Providers (GSPs). To understand how our cloud-based application, Avalara India GST, can help you with GSTR-1 to -9, as well as e-way bill creation, contact us through


Recent posts
Tax planning for business expansion in the U.S.: Best practices for Indian startups in 2024
U.S. sales and use tax guide for SaaS businesses in India
Market entry playbook: Launching your brand in the U.S. tax landscape

Prepare your business for e-invoicing under GST

Discover how to meet all compliance requirements while integrating e-invoicing into your tax function.

Prepare your business for e-invoicing under GST

Stay up to date

Sign up for our free newsletter and stay up to date with the latest tax news.