Outward Supplies under GST & their reporting plays a very major role for both the Supplier & the Receiver while filing GST Returns.
The introduction of the New GST Return System has brought changes & additions to the existing reporting pattern of outward supplies.
These Changes will have a variety of effects on Businesses.
All this & more has been elaborated in the article.
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What is outward supplies under GST & what is its Role?
Outward supplies under GST is one of the most common terms in GST Rule.
When the trading of goods or services takes place, the goods flow from supplier to recipient while the value of the goods & Taxes on it flows from recipient to supplier.
For Suppliers, the goods or services that he sells are the outward supply & the same is the inward supply for the receiver of the goods.
Now this trade of goods & their values that attract tax needs to be declared essentially in the GST Returns both by the suppliers & the recipients very carefully & accurately in order to calculate the right amount of tax liabilities & Input Tax Credits.
Currently, all outwards supplies are declared in form GSTR-1 which is required to be filed monthly by the Taxpayers unless opted for quarterly otherwise.
Outward supplies play a major role in GST Return filing, in fact GST Return filing would lose its meaning if there was no reporting of outward supplies. It determines the tax liability that you have on your finished good when you make a sale.
And it also determines the tax that you have already paid as input in the making of the finished good. You can then adjust this Input Tax with your Tax liability & dodge the payment of GST in cash.
How are outward supplies reported in the Old GST System?
In the Current GST Return filing system, you need to file form GSTR-1 & declare all your outward supplies under GST such as exports, supplies to SEZ, and inward supplies under Reverse Charge Mechanism, etc.
GSTR-1 is the outward supply form under GST that all regular taxpayers must file monthly. You must declare your outward supplies in GST or sales made for the particular tax period in this form.
You must file GSTR-1 regularly either monthly, or quarterly if your annual turnover is less than Rs. 1.5 Crores.
The data filed in Form GSTR-1 by the supplier auto-populates the recipients GSTR-2A (Inward Supply Returns) and GSTR-1 filing is also mandatory to file GSTR-3B, the form that enables you to calculate & release Tax liabilities & adjust the ITC if possible.
Taxpayers release their Tax liabilities & claim the Input Tax Credit through Form GSTR-3B & GSTR-1 supports it making it a major form in the GST Regime.
GSTR-1 requires an invoice-wise & HSN summary wise reporting of outward supplies in GST for the filing of returns.
The due date for filing GSTR-1 is the 10th of every subsequent month post which you may be liable to late fees.
Following is a detailed list of all the tables in Form GSTR-1 where you need to declare the outward supplies under GST-
Taxable outward supplies in GST made to registered persons
Taxable outward inter-State supplies to un-registered persons where the invoice value is more than Rs 2.5 lakh
Zero rated supplies and Deemed Exports
Taxable supplies (Net of debit notes and credit notes) to unregistered persons other than the supplies covered in Table 5
Nil rated, exempted and non GST outward supplies
Amendments to taxable outward supply details furnished in returns for earlier tax periods in Table 4, 5 and 6 [including debit notes, credit notes, refund vouchers issued during current period and amendments thereof]
Amendments to taxable outward supplies in gst to unregistered persons furnished in returns for earlier tax periods in Table 7
Consolidated Statement of Advances Received/Advance adjusted in the current tax period/ Amendments of information furnished in earlier tax period
HSN-wise summary of outward supplies under GST
Documents issued during the tax period
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How to Report the Outward Supplies in New GST Return System?
Upon the introduction to the New GST Return filing system, the existing Form GSTR-1 will be replaced by an Annexure- Anx-1.
Annexure-1 is going to be the form for declaring the outward supplies in the New GST Return filing system.
All the functions of the Annexure are going to be similar to GSTR-1. Anx-1 will auto-populate the recipient's Anx-2 (Inward Supply Anx) & will help the taxpayer File their Main Return GST RET-1 where he can release his tax liabilities & ITC claim in GST.
Although the reporting of the outward supplies in Anx-1 is somewhat different from that of GSTR-1, more detailed & requires more precision.
In the New GST Return Filing system the Taxpayers are bifurcated into Normal (Having annual turnover more than Rs. 5 Crore) & Small taxpayers (Having annual turnover less than Rs. 5 Crore). The Normal Taxpayers must upload their Anx-1 & file GST RET-1 monthly, whereas Small Businesses can either opt for monthly or quarterly filing of these forms.
Note-The Quarterly Filers will have to release the Tax liability monthly using form GST PMT-08
Following is a detailed list of all the tables in Form Anx-1 where you need to declare the outward supplies in GST
Details of outward supplies, inward supplies attracting reverse charge and import of goods and services
Table 3 A
Supplies made to consumers and un-registered persons (Net of debit / credit notes)
Table 3 B
Supplies made to registered persons (other than those attracting reverse charge)(including edit/amendment)
Exports with payment of tax
Exports without payment of tax
Supplies to SEZ units/developers with payment of tax (including edit/amendment)
Supplies to SEZ units/developers without payment of tax (including edit/amendment)
Deemed exports (including edit/amendment)
Inward supplies attracting reverse charge (to be reported by the recipient, GSTIN wise for every supplier, net of debit/credit notes and advances paid, if any)
Import of services (net of debit/ credit notes and advances paid, if any)
Import of goods
Import of goods from SEZ units / developers on a Bill of Entry
Missing documents on which credit has been claimed in T-2 /T-1 (for quarter) tax period and supplier has not reported the same till the filing of return for the current tax period
Details of the supplies made through e-commerce operators liable to collect tax under section 52
Additional Changes in Reporting Outward Supplies in New GST Return System
HSN Summary wise reporting- In the New GST Return you must declare the HSN Summary on an Invoice level in Anx-1 & the same will auto-populate in the recipient's Anx-2.
In the current system HSN summary is reported separately & not in invoice level form.
Reporting of Imports- Unlike, in the current system, you will have to declare import of goods & supplies in detail in the New GST return, in Anx-1.
Reporting the supplies under RCM- The reporting of supplies under RCM has been changed in the New GST Return System. In the new system, you will have to declare the Inward supplies liable to RCM at the invoice level in Table 3H of Form Anx-1 as a recipient of such supplies which will auto-populate in Table 3B of GST RET-1.
In the new system, the Supplier will also have to declare the sales summary of outward supplies liable to reverse charge in Table-3 Section D ‘Details of Supplies having no liability’ in their main returns- GST RET-1.
Reporting invoices in real-time- The invoices will need to be reported in real-time under the New GST System. Earlier the invoices were collectively reported in the month-end, but with the implementation of New GST Return & e-Invoicing, the Invoices will be authenticated & must be reported in real-time.
This is also important because actions from the recipient's end are also required, which may require some time.
The above point is incorrect. Under new forms, B2C reporting is the same as in current system i.e. State-wise and rate wise, delete it.
No need to declare the document issued- In the New System, you will not be required to declare details of invoices, debit notes, credit notes or any other document issued during the respective return period.
The data for these documents is expected to be available & auto-populated from the e-Invoicing Portal if it clears validation.
Missing Invoices & Management of Provisional Credit- The provision of missing invoices & Provisional Credit has been added in the New GST Return System.
Under this provision, you can claim provisional Credits on Invoices that have not been declared by the supplier. These invoices are known as missing invoices.
Although, if the supplier fails to declare these missing invoices in T+2 (in case of monthly filing) or T+1 (in case of quarterly filing), then the recipient may report these missing invoices in Form GST Anx-1. These invoices will be then reflected to the supplier.
Note:T+2 means more than two tax periods from the tax period of Transaction. T+1 means after 1 quarter from the quarter when the transaction took place
Anticipated difficulties for Businesses in Reporting Outward Supplies in New GST Return System
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The Government intends to ease the compliance burden on Taxpayers while also making the New GST Return Filing System more transparent against tax evasion.
It may not be possible to achieve both the agendas at the same time. With all the changes & the increased transparency, the compliance burden has also increased for Taxpayers.
The changes & the New GST Return System may have these negative impacts on Businesses-
Frequent Changes- Very frequent changes in the GST System are distractive for Businesses. Businesses have to shift their focus from actual productivity to match the changing beats of GST.
Problems with Invoice-level management- The New GST Return system is completely focused on Invoice-level management to keep track of all transactions & avoid bogus transactions that lead to tax evasion.
Due to this, the taxpayer must ensure accuracy, & declare all the invoices correctly. If otherwise, both the supplier & the recipient can face problems.
Actions required- Too many actions are required due to the change in reporting of Outward supplies. The invoice needs to be declared in real-time so the recipient gets time to take action on them.
This requires quick actions from the buyer's as well as from the supplier's end.
Missing Invoice & Provisional Credit Issue- In the New GST Return System, the recipient will have to reverse the Provisional Credit claimed on missing invoices if the supplier fails to declare these invoices as per the 18 months rule from when the Provisional Credit has been claimed.
The recipient's workload will increase & he may also face a loss of ITC due to the supplier's default.
The New GST Return is a big change that has taken place very quickly. Taxpayers & Practitioners were only trying to understand the system & comply better with it when the whole system is being revamped again & new changes have been introduced.
It will take time for Businesses to understand & to adapt to the New GST Return System with more rules & more demands. And it will be expected that despite the demands the system will offer a better interface to the Businesses.
However, these are only the expected or most likely to happen events, the actual implementation will give birth to actual interface feedback.
It may ease things up or an array of practical problems can emerge. The New GST Return system as of now seems to require more & dedicated work, which may not always be possible for all types of Businesses.
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