Even after a few years of introduction, many people are still making errors while filling their GST forms. To avoid trouble down the line, it’s very important to keep careful records when filing GST returns. The incorrect filing of GST returns could result in substantial penalties and accrued interest. It was crucial to verify your returns before submission since there was no opportunity to make alterations afterward. Unlike the previous system of service tax and VAT, which allowed for revising returns in error cases, GST did not possess such a provision at that time.
There used to be a VAT system before the GST came about in which cases of mistaken billing could be amended. Though the GST law has been in effect for six years, if you are registered with it, you must file your returns accurately to avoid departmental harrasment.
As per experts, a substantial number of GST-registered individuals and dealers frequently encounter inadvertent errors, including computational discrepancies and inaccuracies in tallying. The provision of revised returns alongside pre-filled return options could offer a viable solution to rectify such natural human errors.
Five types of errors and issues commonly encountered by taxpayer:
1. Common Filing Mistakes: A variety of mistakes are commonly made while filing GST returns. These include incorrect claims of Input Tax Credit (ITC), non-payment of GST under the Reverse Charge Mechanism (RCM), not mentioning exempted turnover in GST returns, and errors in categorizing supplies as zero-rated or nil-rated. Additionally, errors in uploading invoice-wise data in GSTR-1.
2. Reconciliation Issues: Taxpayers often face problems in reconciling GSTR 3B & GSTR 1 returns. For instance, if there’s a mismatch between the declared sales in these returns, it could lead to unnecessary litigation with the GST department.
3. Errors in Claiming ITC and TDS/TCS: Many registered individuals and dealers make errors in claiming Input Tax Credit on GSTR 3B returns and in understanding how to claim Tax Deducted at Source (TDS) and Tax Collected at Source (TCS). These mistakes can lead to financial losses and complications with tax authorities.
4. Failure to file NIL return: There is a common misconception among taxpayers that GST returns need to file there are no transactions to report for a tax period. This could result in penalties due to non-filing or delayed filing of returns.
5. Disclosure and payment of the tax under the wrong GST head: Various categories exist for reporting taxes when filing GST returns. Errors may occur when taxpayers input GST liability or input tax credit under incorrect GST categories. Payment mistakes, such as directing tax or interest to the wrong heads, can also happen during transactions.
Power of revised returns
A revised return is filed under section 139(5) of the Income Tax Act to correct mistakes or omissions made in the original return. This provision allows taxpayers to file a revised income tax return if they discover mistakes in their initial filing.Whether it’s a correction of errors, missed reporting, or changes in tax calculation due to changes in tax laws, rules, or tax rates, revised returns empower businesses to rectify their mistakes.As per the proposal, taxpayers will be able to rectify their returns including computation of tax.The income tax system already provides this feature. It is high time that GST Council gives similar mechanism unser GST law also.
Reduced Litigation
The Government is reportedly considering permitting the filing of updated or revised returns under the GST. This proposal, once implemented, is expected to not only benefit taxpayers but also contribute to a reduction in litigation related to the GST regime.
Challenges
If the revision of GST returns were to be permitted in India, it would bring about a significant shift in the tax filing ecosystem and it comes with its own set of challenges:
Complexity in Compliance: Allowing revisions would likely increase the complexity of the compliance process. Taxpayers and authorities would need to manage and track multiple versions of a return, leading to potential confusion and increased administrative burden.
Increased Workload for Tax Authorities: Tax authorities would face a heightened workload in reviewing, verifying, and processing revised returns. This could lead to delays in processing and increased demand for resources and manpower.
Potential for Misuse: There is a risk that some taxpayers might misuse the provision for revision by frequently changing their returns. This could lead to attempts at tax evasion or manipulation of liabilities, making the system more prone to fraud.
Need for Enhanced IT Infrastructure: To handle the increased volume and complexity of data from revised returns, the GSTN would require a more robust IT infrastructure. This would include enhanced data storage, processing capabilities, and security measures.
Educational and Training Requirements: Taxpayers, accountants, and legal professionals would require additional education and training to understand the nuances of filing revised returns. This is essential to avoid errors and ensure compliance with the revised guidelines.
Reconciliation Challenges: Revising returns could complicate the reconciliation process with input tax credit claims. Businesses might face challenges in matching invoices if their suppliers constantly revise their returns.
Legal and Policy Implications: The government would need to consider the legal and policy implications of allowing revisions. This includes determining the extent and conditions under which revisions are allowed, and how they align with the overall objectives of the GST regime.
Conclusion
In conclusion, strengthening efficiency in GST filing is crucial for businesses. While human errors are inevitable, mechanisms like revised returns provide taxpayers with the opportunity to correct their mistakes and ensure accuracy of their GST filing. By leveraging such provisions, taxpayers can significantly enhance their GST filing efficiency, thereby saving time, and resources, and avoiding unnecessary penalties. It is being reported by some senior tax officers that revision of GST returns may be permitted by April, 2025.
Remember, “An error doesn’t become a mistake until you refuse to correct it”. So, let’s empower businesses to correct their errors and enhance their GST filing efficiency through the power of Revised Returns.
-Rajat Mohan is Executive Director at Moore Singhi