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October 7, 2020

What is the new process of filing GST Returns from January 2021?

by CA Shivam Jaiswal in GST

What is the new process of filing GST Returns from January 2021?

The 42nd GST Council met under the Chairmanship of Union Finance & Corporate Affairs Minister Nirmala Sitharaman through video conferencing on 5th October, 2020. The meeting was also attended by Union Minister of State for Finance & Corporate Affairs Shri Anurag Thakur besides Finance Ministers of States & UTs and senior officers of the Ministry of Finance& States/ UTs.

The key decision taken in this meeting was the enhancement of return filing process under GST.

What is the current GST Return filing process pertaining to GSTR 1, GSTR 2B and GSTR 3B?

  • GSTR-1 is to be filed by all normal taxpayers who are registered under GST. It is to be filed monthly, except in the case of small taxpayers with turnover up to Rs.1.5 crore in the previous financial year, who can file the same on a quarterly basis.
  • GSTR-2B is a static month-wise auto-drafted statement for regular taxpayers, which provides eligible and ineligible Input Tax Credit (ITC) for each month.
  • GSTR-3B is a monthly self-declaration to be filed, for furnishing summarized details of all outward supplies made, input tax credit claimed, tax liability ascertained and taxes paid. GSTR-3B is to be filed by all normal taxpayers registered under GST.

What changes were done in the Return Filing Process under GST?

  • From 1st January, 2021 onwards, taxpayers with annual turnover less than Rs 5 crore will not be required to file monthly returns (GSTR-3B and GSTR-1). They will only file quarterly returns.
  • Such quarterly taxpayers would, for the first two months of the quarter, have an option to pay 35% of the net cash tax liability of the last quarter using an auto generated challan. 
  • However, since states require money every month, payments can be made through challan every month, even though returns can be filed every quarter.
  • The Council decided to revise the due date of furnishing quarterly GSTR-1 by quarterly taxpayers to 13th of the month succeeding the quarter effective from January 1, 2021.
  • Auto population of GSTR-2B from suppliers’ GSTR-1 has been provided to help Taxpayers calculate input tax credit and it will give taxpayers a complete idea of the ITC they are entitled to. These changes would be effective from 1st January 2021. For small businesses that file returns on a quarterly basis, this would come into effect from 1st April, 2021.
  • The monthly tax returns of businesses giving summary of all transactions in form GSTR 3B will be automatically populated from the details given in the sales returns of the company as well as that of all its suppliers filed earlier in the month in form GSTR 1. These changes would be effective from 1st January 2021. For small businesses that file returns on a quarterly basis, this would come into effect from 1st April, 2021.
  • In order to ensure auto population of ITC and liability in GSTR 3B as detailed above, FORM GSTR 1 would be mandatorily required to be filed before FORM GSTR 3B w.e.f. 1st April, 2021.
  • The present GSTR-1/3B return filing system to be extended till 31.03.2021 and the GST laws are to be amended to make the GSTR-1/3B return filing system as the default return filing system.

GST Council also made the following recommendations w.r.t HSN/SAC Code

HSN code stands for “Harmonized System of Nomenclature”. This system has been introduced for the systematic classification of goods all over the world. Like goods, services are also classified uniformly for recognition, measurement and taxation. Codes for services are called Services Accounting Code or SAC. GST council came up with Revised Requirement of declaring HSN for goods and SAC for services in invoices and in FORM GSTR-1 w.e.f. 01.04.2021 as follows:

  • HSN/SAC at 6 digits for supplies of both goods and services for taxpayers with aggregate annual turnover above Rs. 5 crores
  • HSN/SAC at 4 digits for B2B supplies of both goods and services for taxpayers with aggregate annual turnover up to Rs. 5 crores
  • Government to have power to notify 8-digit HSN on notified class of supplies by all taxpayers.

GST Council also made amendments to the CGST Rules

Various amendments in the CGST Rules and Forms were recommended which included:

  • Provision for furnishing of Nil FORM CMP-08 through SMS
  • Refund to be paid/disbursed in a validated bank account linked with the PAN & Aadhaar of the registrant w.e.f. 01.01.2021
  • To encourage domestic launching of satellites particularly by young start-ups, the satellite launch services supplied by ISRO, Antrix Corporation Ltd. and NSIL would be exempted.


So, pre filled GST forms will become a norm from January, 2021. The usage of technology to check tax evasion comes at a time central and state government are facing a drastic drop in tax revenues but are unable to raise tax rates. Auto population of errors will help avoid clerical errors and ensure that deviations are minimised. With a view to further enhance Ease of Doing Business and improve the compliance experience, the Council has approved the future roadmap for return filing under GST

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