Latest news with #GSTR-1
Economic Times
14 hours ago
- Business
- Economic Times
From July 1, GST returns pending three years can't be filed
ANI Goods and Services Tax (GST) The Goods and Services Tax Network on Saturday cautioned taxpayers that they will not be allowed to file their returns after three years from the due date from next month. In an advisory, it asked taxpayers to reconcile their records and file pending returns before the deadline. The restriction—set to be implemented on the GST portal from July—follows an amendment in the Finance Act, 2023. This will be applicable for various returns including GSTR-1, GSTR-3B and GSTR-9. "The said restriction will be implemented on the GST portal from July 2025 tax period. Hence, the taxpayers are once again advised to reconcile their records and file their GST returns as soon as possible, if not filed till now," the Goods and Services Tax Network (GSTN) said in its advisory. The Central Board of Indirect Taxes and Customs (CBIC) has already communicated to field formations to sensitise taxpayers about the deadline, so that they reconcile their records and file pending returns soon. Experts said the move is aimed at fostering greater discipline in the tax ecosystem and ensuring time-bound compliances.'For businesses, this advisory carries significant implications. It is absolutely imperative to ensure all returns are filed promptly to avoid loss of input tax credit to their buyers and significant penalties,' said Saurabh Agarwal, tax partner, EY. 'Looking ahead, it's highly probable that this three-year window will be further reduced,' Agarwal added. Rajat Mohan, senior partner, AMRG and Associates, said this will also help in restraining retrospective amendments. 'This move marks a definitive closure of the return filing window, aimed at bringing certainty to the tax system and limiting retrospective compliances,' said Mohan. He, however, added that it may severely impact taxpayers who- —due to litigation, system issues or genuine oversight—have pending filings. 'The absence of a redressal mechanism for exceptional cases could lead to permanent denial of input tax credit and financial setbacks,' Mohan said.
Time of India
14 hours ago
- Business
- Time of India
From July 1, GST returns pending three years can't be filed
The Goods and Services Tax Network on Saturday cautioned taxpayers that they will not be allowed to file their returns after three years from the due date from next month. In an advisory, it asked taxpayers to reconcile their records and file pending returns before the deadline. The restriction—set to be implemented on the GST portal from July—follows an amendment in the Finance Act, 2023. This will be applicable for various returns including GSTR-1, GSTR-3B and GSTR-9. "The said restriction will be implemented on the GST portal from July 2025 tax period. Hence, the taxpayers are once again advised to reconcile their records and file their GST returns as soon as possible, if not filed till now," the Goods and Services Tax Network (GSTN) said in its advisory. The Central Board of Indirect Taxes and Customs (CBIC) has already communicated to field formations to sensitise taxpayers about the deadline, so that they reconcile their records and file pending returns soon. Live Events Experts said the move is aimed at fostering greater discipline in the tax ecosystem and ensuring time-bound compliances. 'For businesses, this advisory carries significant implications. It is absolutely imperative to ensure all returns are filed promptly to avoid loss of input tax credit to their buyers and significant penalties,' said Saurabh Agarwal, tax partner, EY. 'Looking ahead, it's highly probable that this three-year window will be further reduced,' Agarwal added. Rajat Mohan, senior partner, AMRG and Associates, said this will also help in restraining retrospective amendments. 'This move marks a definitive closure of the return filing window, aimed at bringing certainty to the tax system and limiting retrospective compliances,' said Mohan. He, however, added that it may severely impact taxpayers who- —due to litigation, system issues or genuine oversight—have pending filings. 'The absence of a redressal mechanism for exceptional cases could lead to permanent denial of input tax credit and financial setbacks,' Mohan said.
Time of India
a day ago
- Business
- Time of India
GSTR-3B filing to tighten: GSTN to lock monthly tax form from July 2025, changes allowed only via GSTR-1A
In a significant compliance shift under the Goods and Services Tax regime, the GST Network ( GSTN ) on Saturday announced that the monthly GST payment form GSTR-3B will become non-editable from the July 2025 tax period onward. Starting with returns filed in August 2025, taxpayers will no longer be able to manually alter the tax liability in GSTR-3B once it is auto-populated — with any revisions allowed only through GSTR-1A prior to submission. According to GSTN, any changes in declared outward supplies will have to be made through form GSTR-1A before the GSTR-3B is filed for that same return period. These amendments will then be auto-populated into GSTR-3B and cannot be modified thereafter, PTI reported. "From the July 2025 tax period for which form GSTR-3B will be furnished in August 2025, such auto-populated liability will become non-editable," GSTN stated. "Thus, taxpayers will be allowed to amend their auto-populated liability by making amendments through form GSTR-1A, which can be filed for the same tax period before filing of GSTR-3B." GSTR-3B, a summary statement and monthly tax payment form, is filed on a staggered basis—on the 20th, 22nd or 24th of every month—depending on the taxpayer category. Currently, the portal allows taxpayers to edit the auto-populated values in GSTR-3B, which are based on information provided in forms like GSTR-1, GSTR-1A, or via the Invoice Furnishing Facility (IFF). This flexibility will be removed under the new system beginning with the July 2025 tax cycle. AMRG & Associates Senior Partner Rajat Mohan said the move aims to strengthen consistency between GSTR-1 and GSTR-3B and reduce revenue leakages. However, he noted that allowing corrections through GSTR-1A before submission is a useful safeguard. "Taxpayers must now ensure real-time reconciliation and error correction before the return is filed. This places greater responsibility on businesses to enhance internal controls and avoid last-minute adjustments," Mohan said. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Mint
6 days ago
- Business
- Mint
Small businesses bleed cash as GST kicks in before payments
Every month, Deepali Bhagat is taxed on income that hasn't reached her. The founder of a small ed-tech firm in Bengaluru, Bhagat must pay goods and services tax (GST) on every invoice she raises—even when clients delay payments for months. The burden eats into her working capital, sometimes pushing her to borrow or dip into savings just to stay compliant. By year-end, nearly 3% of her revenue is lost to GST on unpaid dues. Bhagat's not alone. This is a growing pain point for countless small businesses across India. This cash flow crunch stems from how GST is structured—on an accrual basis. That means businesses must pay GST as soon as an invoice is raised, not when the money actually comes in. Under GST rules, businesses must pay tax on either the invoice date or the payment date, whichever comes first. But in practice, payments typically come 40 to 90 days after billing. For firms with limited expenses to offset For firms with limited expenses to offset input tax, this means paying GST out of pocket well before receiving actual payment, directly denting working capital. 'My payments are usually delayed by 60 days or more after raising an invoice. Since my major expenses are employee-related, I don't have much input GST to claim, so I end up paying GST well before I receive the actual payment," said Bhagat, founder of D-Bright Minds. This is hurting businesses in more than just affecting their cash flow management. Also read: Chartering the troubled waters of accommodation services under GST Pay now, get paid later Under the GST framework, businesses must pay tax on monthly sales within fixed deadlines, even if their clients haven't paid them yet. Take, for instance, a services firm, XYZ, that makes sales worth ₹5 lakh in May. It issues invoices totalling ₹5.9 lakh, including 18% GST ( ₹90,000). Step 1: By 11 June, XYZ must report its total sales (based on invoices issued) through GSTR-1. Step 2: By 20 June, it must pay ₹90,000 in GST—whether or not the money has been received—after adjusting for any input tax credit (ITC), i.e., the tax paid on its own purchases. It also needs to file GSTR-3B, a self-declared summary return, showing the GST due after deducting ITC. But here's the catch: XYZ's clients can take upto six months to pay. Meanwhile, XYZ has already paid GST on income that hasn't hit its bank account. If the buyer defaults altogether, XYZ is still liable for the GST already paid. Worse, there's no foolproof way to recover that tax from the government. 'The GST Act (CGST Act, SGST Act and IGST Act collectively referred to as GST Act) does not provide any mechanism for recovery of the dues by the seller," said Utkarsh Desai, a chartered accountant (CA). 'Once the tax invoice is issued, the supplier has to discharge the tax liability shown in the invoice, either by utilising input tax credit or making payment in cash, irrespective of whether he receives the payment from the customer or not." The credit note dilemma When clients don't pay, the only recourse available to sellers under GST is to issue a credit note for the unpaid amount. This allows them to reverse the GST paid on that portion of the invoice. 'The month in which the seller issues the credit note, he can reduce the GST applicable on that credit amount from his total GST liability of that month. This is how a credit note helps in reversing the GST to that extent," said CA Vijaykumar Puri, partner at VPRP & Co LLP. But using a credit note isn't as simple as it sounds. For starters, credit notes must include a valid reason for the reversal, and can only be used under certain conditions allowed by law. 'Credit notes can be issued in specific situations such as deficiency in quality, price charged is higher than the actual rate, quantity difference, etc," said Desai. So, it can only be issued under strict conditions outlined by the GST laws and the seller and the buyer can't use it as a workaround for non-payments. There's another complication: The buyer has to reverse the ITC they claimed on the unpaid invoice. 'In cases where a credit note reduces the taxable value or tax, and the buyer had earlier availed full ITC, he is required to reverse the proportionate ITC. So, the seller's GST liability decreases, but the buyer's ITC too gets reduced accordingly in that month," said Puri. The seller has to ensure whether the buyer has reversed the ITC or not. Earlier it was difficult for buyers to ascertain this, but with the recent launch of Invoice Management System (IMS), this challenge has been resolved. 'The buyer's ITC is automatically reduced in the auto-generated ITC statement (GSTR-2B) based on the GST amount mentioned in credit notes issued by the seller," said Ashish Karundia, founder, Ashish Karundia & Co. Chartered Accountants. "If the buyer believes that a credit note has been issued incorrectly, they have the option to reject it. If the buyer takes no action, the credit note is considered to be accepted by default. The seller can check whether the credit note has been accepted, rejected, or deemed accepted by the buyer through the IMS - Outward Supplies dashboard under the returns tab after logging into the GST portal," he added. Also read: Indian gig workers who offer mobility services deserve GST relief Third, issuing a credit note means the invoice is cancelled, so the seller loses the option to pursue recovery of bad debt legally. Desai said a credit note for bad debt is a double edged sword in that sense. 'Once the credit note is issued, it means that there is no supply to the extent of the credit note and hence the seller cannot even take legal action." Bhagat of D-Bright Minds said she has refrained from using the credit note route to recover GST on unpaid dues for this very reason. If a credit note is not issued and payment is not made within 180 days of invoice generation, the buyer has to mandatorily reverse ITC, under Rule 37 of CGST Rules. 'However, the seller doesn't get a GST refund on this written off debt. The government has essentially earned GST as well as reversed ITC on bad debt," said Puri. Limited solutions offer little relief To address delayed payments, small businesses can opt for an MSME Udyam certificate, which legally requires buyers to clear dues within 45 days. But in practice, this mandate often backfires. Large corporations tend to avoid working with MSME-registered vendors due to this strict timeline, said CA Vijaykumar Puri, partner at VPRP & Co LLP. 'There have also been cases where big companies take in writing from small businesses that the latter has delivered defective goods, so the former is not liable to pay within 45 days. Big corporations have found workarounds around Udyam certificates, so it has not been effective in facilitating faster payments for small businesses," he said. The government's other major step—the Quarterly Returns and Monthly Payment (QRMP) scheme introduced in 2021—also falls short for many. The scheme allows small businesses to file GST returns every quarter instead of every month, reducing compliance frequency in theory. 'While quarterly filing is technically allowed, most of my big clients follow monthly billing cycles, so we too have to file monthly returns," said Vishal Jasani, who runs an advertising business. 'The buyer gets to claim ITC quarterly if we file returns quarterly, so they insist on monthly filing. This increases both our compliance load and administrative costs." Businesses under QRMP can file Invoice Furnishing Facility (IFF) to report sales on a monthly basis. 'Under QRMP, the seller doesn't have to file GSTR-3B monthly, only quarterly. However, the seller is still required to deposit GST every month, as per prescribed computation mechanisms. Further, discrepancies between monthly IFF data and the quarterly GSTR-3B can trigger scrutiny. This often defeats the simplified compliance objective of the scheme," said Puri. Call for reform from small biz Most major economies, like the EU states, UK and the US allow small businesses cash based accounting, which means they are liable to pay tax only after payment is received. Experts say the Indian government should consider introducing this. 'We need to move away from low trust to a high trust system, especially for small businesses. Businesses upto a certain turnover, should be allowed to pay GST on cash basis," said Puri. Karundia agreed and said similar provisions existed under the service tax regime. 'The option to pay GST on a receipt basis could be considered for certain categories of taxpayers, such as those with a turnover of ₹50–75 lakhs in the previous financial year, similar to the service tax regime." Alternatively, lawmakers might consider allowing taxpayers to choose between the cash and accrual method of accounting, as permitted under income tax laws, he added. Jasani said in a competitive market, they can't revise client terms or billing structures without risking valuable relationships. 'As a result, we have to absorb these GST related inefficiencies ourselves." 'Aligning GST liability with actual payment receipt would significantly ease operational pressures and enable small businesses like ours to focus on growth rather than cash flow firefighting." Also read: Mint Quick Edit | India's GST peak is reassuring
