GST-Compliances under GST

GST Return Filing | Critical Changes from 1st January 2021 with Examples

CA Hema Pandey

Updated on February 19th, 2024

GST was made as a general Law for everyone, with ease of GST Return Filing compliance. But with the passage of time and emergence of more practical cases, changes are bound to be made.

We know that, GST is the most prominent indirect tax, with the highest revenue to the government replacing so many indirect taxes. It has to be flawless for government and just for taxpayer.

Thus, the government is frequently amending Act and rules so that the law becomes more and more accurate. For this, government is coming with various changes under GST Return Filing.

In this article, we will see the recent amendments which are made and applicable from 1st January 2021 in GST return filing.

Rule 36(4): Restriction on ITC vide notification no. 94/2020

About the Section/Rule

  • This rule is about restriction on availment of Input Tax Credit (ITC).
  • ITC which is auto-populated in GSTR-2A in a particular period can be claimed as ITC.
  • More than that, only maximum 5% on credit available in GSTR-2A can be claimed.
  • This rule was introduced in October 2019, when the limit was of 20% in place of 5%.
  • After that, it got reduced to 10%
  • From 1st January 2021, this limit is reduced to 5%.
  • It needs to be mentioned that there was exemption from rule 36(4) from Feb to August 2020 due to COVID-19, which means taxpayers were allowed to use ITC as per books.
  • Rule 36(4) is not applicable to: Import of Goods, Input Service Distributors, Reverse charge mechanism

Examples

Rule 36(4)

If Book credit is Rs. 1,00,000

Credit as per GSTR-2A is Rs. 50,000,

Then taxpayer can take the credit of Rs. 52500 (50000+5%).

Exemption during Feb to August 2020

If book credit from Feb to August 2020 was Rs.10,00,000

And as per GSTR-2A, it was Rs.5,00,000, then the tax payer was allowed to claim full 10,00,000.

However, as per 10% rule, he could have claimed only 550,000. This, means he claimed 4,50,000 extra.

 So, in the month of September if the ITC available is 6,00,000, he can claim only 1,50,000 (6,00,000-4,50,000).

GST Return Filing Rule 59(5): - Restriction to file GSTR-1 if 3B not filed vide notification no. 94/2020

About the Section/Rule

Taxpayer shall not be allowed to furnish details of outward supplies under form GSTR-1 in following cases:

  • Where taxpayer has not filed GSTR- 3B for preceding two months in case of monthly returns
  • In case of quarterly return, where he did not file GSTR-3B for preceding tax period.
  • Taxpayers covered under rule 86B, i.e., he can only claim 99% of his output tax liability from Electronic credit ledger, 1% he has to mandatorily pay from Electronic cash ledger.

Examples

Suppose Mr. Anil fails to file GSTR-3B for the month of Jan and Feb 2021, he will not be able to GST filing of GSTR-1 in the month of March.

Suppose Mrs. Seeta files quarterly return, and if she does not file GSTR-3B for April to September quarter, she will not be able to file GSTR-1 for oct to December quarter.

Suppose, on ABC pvt. Ltd., rule 86B is leviable, then he has to mandatorily file GSTR-3B every period, otherwise it will not be allowed to file GSTR-1 for the next period.

GST Filing Rule 9: Grant of registration within 7/30 days vide notification no. 94/2020 

GST return filing

About the Section/Rule

  • Earlier registration on application based on Aadhar authentication were granted within the period of three working days, otherwise it was treated as deemed registration, will now be granted in seven working days.
  • If a person, other than a person notified under section 25(6D), does not go under Aadhaar authentication or fails to undergo Aadhar authentication, the proper officer with the approval of an officer authorised by the Commissioner not below the rank of Assistant Commissioner, may carry out the physical verification of his Place of Business if he deems fit, and grant or reject the registration or within 30 working days after completion of verification.
  • If the proper officer fails to take appropriate action within 7 working days from 7/30 working days, as the case may be, the registration shall be treated as deemed registration.

Examples

If Mr. Sanjay wants to get himself registered under GST as an individual, he will have to mandatorily do biometric based Aadhar authentication to get his registration done.

If his registration is not accepted or rejected within7 days, it will be treated as deemed registration.

In case the registration is not done through Aadhar authentication then, if his registration is not accepted or rejected within 30 days, it will be treated as deemed registration.

GST Return Filing Rule 138 (10): E-way Bill validity

About the Section/Rule

  • This rule says that, goods have to travel 200 kms in in one day.
  • For additional 200 km, 1 additional day shall be allowed.
  • Previously it was 100 kms in a day which is now amended to 200 kms
  • This amendment is not applicable to Over dimensional cargo, multimodal shipment, in which at least one leg involves transportation by ship.
  • E-way bill’s validity may be extended within 8 hours from time of its expiry

Examples

If R Ltd. Wants to send its goods to its customer, it will get 1 day to complete the journey of 200 kms in a day. Thereafter, it will get 1 additional day for next 200 kms.

Quarterly Return Monthly payment scheme (QRMP)

GST filing

About the Section/Rule

  • In this, returns can be furnished quarterly but payment needs to be made monthly.
  • Applicable from 1st Jan 2021. 3) Tax to be paid by 25th of every month.
  • Payment through GST-PMT-06 challan.
  • Two methods: a)  Fixed sum method (example 1)  b) Self-assessment method. (as per their calculation)
  • If there is sufficient balance in Electronic cash/ credit ledger in 1st or 2nd month of quarter, he need not pay any tax.
  • If he paid excess tax during previous months, he can claim refund but only after filing GSTR-3B.

Examples

For example, Feb month’s payment is to be made by 25th march.

Under Fixed sum method, under challan, taxpayer has to pay per month:

  1. 1
    If he filed quarterly return in previous period, 35% of tax paid in last quarter. If tax paid in last quarter is Rs. 100, then this month it will be Rs. 35 this month bifurcating same proportion in CGST, SGST, IGST and Cess of last quarter
  2. 2
    If he filed monthly return in previous period, amount equal to tax paid in last month, has to be paid in same proportion

GST Return Filing Rule 86B: ITC to be claimed up to 99% from Electronic credit ledger (from 1st jan 2021)

About the Section/Rule

  • Under this rule, specified class of taxpayers are restricted to utilise only 99% of output tax liability out of Electronic credit ledger, remaining 1% has to be mandatorily paid in cash.
  • It becomes applicable only if value of taxable supply (excluding exempt supply and zero-rated supply) in a month exceeds Rs. 50 lac rupees.
  • It is to be mentioned that value of taxable supply of the month is to be checked in this case, and not the whole tax period. If the T/o of one particular month exceeds 50 lacs, Rule 86B becomes applicable. If in next month, it is less than 50 lacs, rule 86B is not applicable

Examples

Illustration 1

++ Suppose in Z. ltd outward supply in Jan 2021 is as follows:

Total supply           Rs. 80,00,000

Exempt Supply      Rs. 15,00,000

Export                     Rs. 10,00,000

The total taxable supply in Jan 2021 is 55,00,000 which is above 50,00,000.  Thus, Rule 86B is applicable.

If in next month, it becomes 49,00,000, rule 86B will not be applicable.

Illustration 2

Output supply                Rs. 60,00,000

Tax @ 18%                      Rs. 10,80,000

ITC available                    Rs.  12,00,000

ITC usable                       Rs. 10,69,200

 (99% of 10,80,000)

1% to be paid in cash    Rs.10800

 (1% of 10,80,000)

E-invoicing under GST:-Notification no. (13/2020) (61/2020)

gst filing

About the Section/Rule

  • From 1st January 2021, entities having turnover (based on PAN) exceeds Rs. 100 Crores from B2B transactions and Exports in any preceding F.Y from 2017-18 onwards. Previously, it was 500 Crores.
  • Taxpayer has to normally generate invoice in its software and then has to register it on Invoice Registration Portal (IRP).
  • E-invoice needs to be generated under Form GST INV-01
  • E-invoice is not applicable to: a) Special Economic Zone Under GST b) Insurance Co, Banking Co, Financial institutions, NBFC c) GTA d) Supplier of passenger transport service
  • Once E-invoice is generated it will auto-populate to GSTR-1.

Examples

Suppose if the turnover of M/s Shivam enterprises crossed 100 crores in any of its preceding F.Y from 2017-18 onwards, it will have to generate E-invoice on the portal for all its B2B transactions.

Rule 21A vide notification no. 94/2020: Suspension of GST registration by Proper officer

About the Section/Rule

  • Effective from 22/12/2020
  • From sub-rule (2), “after affording the person reasonable opportunity of being heard” shall be omitted. Which means on suo motu cancellation of GST registration by Proper officer, no Opportunity of being heard will be given to the tax payer.
  • New sub-rule 2A inserted which says, if there is significant difference between GSTR-1 and 3B, or, ITC under GSTR-3B, proper officer will cancel the registration. After cancellation, taxpayer will be intimated through email.
  • New sub-rule 3A has been inserted, which says, if registration has been suspended and any refund is due, then no such refund shall be granted in that suspension period

Examples

If a taxpayer has shown 5 crore in GSTR-1 and 2 crore in GSTR-3B, than if proper officer finds it significant, he may suspend his registration.

In this type of scenario, it becomes very important for a professional to stay updated with the law, For such updates keep visiting GST Hero.

Hope this article added some value to your GST compliance

Thank You for reading.

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CA Hema Pandey

About the author

Hema is a Chartered Accountant who is having about Eight years of experience in taxation and accounting. She is in practicing as a Chartered Accountant since 2020. She is a writer by passion and thus shares her experience and knowledge through her articles at various platform.

Predominantly her area of interest is GST. Since GST is a very new concept for India, every practitioner is looking for clarity in this area. She likes to share her experience with everyone and therefore tries to put them in form of articles.
Apart from this, she is also well-worsed in Financial market.

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