September 2019 GST Return significant to correct filing errors, claim credit for FY18
- Oct 7, 2019 | Keval Shah
GST was implemented in 2017, but the new indirect tax regime, Goods and Services Tax, is yet to become stable. Taxpayers are still getting used to the new return filing system due to cases of errors including incorrect or inflated or understated input tax credit claims, omissions in transaction reporting.
September 2019 was crucial for taxpayers as it was the final month for taxpayers to claim input tax credit for invoices issued in 2017-18 as well as to rectify errors in their tax return forms for the year.
According to GST rules, if the taxpayer forgets to claim input tax credit for an invoice pertaining to FY2017-18, the time limit for availing it is the due date for the September 2018 returns. Similarly, if the taxpayer has missed reporting details of any credit or debit note issued in 2017-18 in the earlier monthly GST return forms, he can do the same only in September 2019 tax returns.
Also, the GST law does not provide for revision of returns filed and accordingly it may be so possible that there are several mistakes made while filing the GST return. As an alternative to filing revised return, Circular No 26/26/2017-GST (dated 29.12.2017) has clarified that any mistakes made while filing GSTR – 3B or GSTR – 1, the errors or rectification entries should be taken consideration in subsequent period tax returns.
Further, various provisions under GST law such as Section 16(4) provides for a timeline for claim of input tax credit for a financial year to be claimed by the due date of furnishing of return for September month. Also, the provisions of Section 34 dealing with respect to credit notes require disclosure of credit notes pertaining to financial year latest by the month of September after the end of financial year.
Therefore, for adjustments/rectifications pertaining to Financial Year 2018-19, September 2019 GSTR – 3B, is a very crucial exercise. Accordingly, one needs to consider the following steps:
Step 1: Preparation of invoice Register/Sales Register
Since the entire basis of filing GST returns might have been based on invoices issued from time to time during the Financial Year 2018-19, it may now be advisable to prepare the sales registers/invoice register.
Step 2: Reconcile such Invoice Register/Sales Register with turnover as per Financial Statements
In order to confirm the correctness of the Invoice Register/Sales Register, reconciling the same with Financial Statements is relevant. This will enable us to understand in case we have missed out any of the transactions.
Step 3: Comparison of Invoice Register with Outward Supplies in GST Returns filed
The next step of action should be to match the invoice register and the details of outward supplies filed in GSTR – 1 and GSTR – 3B for the year 2018-19 filed. While doing so, you may identify invoices, which may have not been correctly reflected in GSTR – 1 and accordingly the same should be modified. Similarly, the tax calculated on outward supplies in GSTR – 3B should be compared with Invoice register.
One very important which needs to be borne in mind is the GSTR – 1 or GSTR – 3B filed for the year 2018-19 will have certain adjustments made pertaining to the year 2017-18. So, in order to have proper comparison, the adjustments pertaining to 2017-18 should be first taken out and thereafter comparison should be made.
Step 4: Preparation of Input Tax Credit Register
As Invoice Register/Sales Register is prepared, similarly Input Tax Credit Register should be prepared on an invoice level basis for all items on which Input Tax Credit is available
Step 5: Calculation of Reversal of Credit if applicable
Section 17 of CGST Act, 2017 provides that in case a supplier is providing taxable as well as non-taxable services, then he is required to reverse the input tax credit as attributable towards exempted supplies. So, in case an assessee is covered by such provisions, then reversal as per Rule 42/43 should be calculated.
Step 6: Comparison with ITC claimed in GSTR – 3B
The Input Tax Credit Register should be compared with ITC claimed in the GSTR – 3B filed for the year 2018-19. As highlighted above, it is to be noted that the GSTR – 3B for the year 2018-19 will have certain adjustments for 2017-18 as well which needs to be removed for effective comparison.
Similar comparison should be made for reversal of ITC as per Rule 42/43 of CGST Rules, 2017.
Step 7: Reconciliation with GSTR – 2A
The next step of comparison should be the Invoice Register vis-à-vis the GSTR – 2A as made available on GST portal. This will enable the assessee to identify the vendors who have not disclosed the invoice details and ITC has been claimed by assessee. Also, there may be certain invoices appearing in 2A but may not been reported correctly in accounting records. This will enable the assessee to claim timely credit.
Step 8: Preparation of Invoice Register on which RCM is applicable
Similarly, invoice register with respect to invoices where RCM is applicable should be prepared
Step 9: Comparison with RCM paid in GSTR – 3B
Thereafter comparison should be made with RCM already declared and paid in GSTR – 3B.
Based on the above steps, all such impacts should be taken before filing GST returns for the month of September 2019.
September GST returns are significant for taxpayers and they need to make sure that the input tax credit is accurate. Taxpayers will need advanced reconciliation algorithms in the GST return filing software so that potential legal notices are avoided.
The GST Council has announced that new GST return forms are expected to be rolled out effective 1 January 2019. These GST forms will give the tax authorities powers to detect tax evasion by cross-verification of claims made by suppliers and buyers through invoice matching.
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