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October 9, 2020

Time Limit for Rectification of errors in GST for FY 2019-20 is September 2020 Return

by shivam jaiswal in GST

Time Limit for Rectification of errors in GST for FY 2019-20 is September 2020 Return

Introduction of GST is considered to be a significant step in the reform of indirect taxation in India. Amalgamating of various Central and State taxes into a single tax would help mitigate the double taxation, cascading, multiplicity of taxes, classification issues, taxable event, and etc., and leading to a common national market. In the GST regime, all registered businesses have to file monthly, quarterly and/or annual GST Returns based on the type of business.

GSTR-1 is a monthly or quarterly return that should be filed by every registered dealer. It contains details of all outward supplies i.e. sales. The following registered persons are exempt from filing the return:

  • Input Service Distributors
  • Composition Dealers
  • Suppliers of online information and database access or retrieval services (OIDAR), who have to pay tax themselves
  • Non-resident taxable person
  • Taxpayer liable to collect TCS
  • Taxpayer liable to deduct TDS

Time limit for Rectification of errors pertaining to outward supplies for FY 2019-20

Section 37 of the CGST Act pertains to furnishing of details of outward supplies. According to Section 37(3), any registered person, who has furnished the details of outward supplies for any tax period and which has remained unmatched under section 42 (Matching, reversal and reclaim of input tax credit) or section 43 (Matching, reversal and reclaim of reduction in output tax liability), shall, upon discovery of any error or omission therein, rectify such error or omission in such manner as may be prescribed.

The taxpayer shall pay the tax and interest, if any, in case there is a short payment of tax on account of such error or omission, in the return to be furnished for such tax period.

However, no rectification of error or omission in respect of the outward supplies’ details furnished shall be allowed after furnishing of the return for the month of September following the end of the financial year to which such details pertain, or furnishing of the relevant annual return, whichever is earlier.

“Details of outward supplies” shall include details of Invoices, debit notes, credit notes and revised invoices issued in relation to outward supplies made during any tax period.

Taxpayers should be informed about the time limit for amendment in GSTR-1 so that in case any entry need to be amended in GSTR-1 basis the reconciliation undertaken for FY 2019-20, the same can be done while filing GSTR-1 of September 2020. No Amendment in GSTR-1 for the relevant period is allowed after the due date of filing of GSTR-1 of September 2020.

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Time limit for issue of Debit Note

When a tax invoice has been issued for supply of any goods or services and the taxable value or tax charged in that tax invoice is found to be less than the taxable value or tax payable in respect of such supply, the registered person, who has supplied such goods or services, shall issue to the recipient a debit note containing the prescribed particulars.

Although there is no time limit to issue a debit note, debit note pertaining to any invoice for FY 2019-20 should be issued before the due date of filing GSTR 3B for September 2020 so that the recipient can take ITC on it.

Time limit for issuance of the credit note

Where a tax invoice has been issued for supply of any goods or services and the following situations arises:

  • taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply
  • goods supplied are returned by the recipient
  • goods or services supplied are found to be deficient

then the registered person, who had supplied such goods or services, may issue to the recipient a credit note containing the prescribed particulars.

Credit note pertaining to supplies made in FY 2019-20 can be issued not later than the due date of filing of GSTR-3B for Sep 2020 month i.e. Oct 20, 2020 or due date of filing of annual return, whichever is earlier. Hence, if a credit note is issued after September 2020 for any supply made during FY2019-20, then GST liability cannot be reduced i.e. it can be routed only through financial credit notes. No GST credit note for any procurements in FY 2019-20 shall be accepted post-Sep 2020. Only a financial credit note shall be accepted.

Reconciliation of Outward Supply between Books of Accounts and Returns for FY 2019-20

The registered person may also undertake reconciliation between books and return for FY 2019-20 so that all the missed out Outward supply are reported till September 2020

  • Taxpayers should carry reconciliation of outward supply as declared in books and outward supplies as declared in GSTR-1 Return. Any rectification/ modification needs to be undertaken till filing of GSTR-1 of September 2020
  • Any adjustment (except debit notes) for the FY 2019-20 should be made before filing GSTR-3B for month of September 2020. The amendments cannot be made post the due date for the month of September i.e. 20 October 2020. Therefore, it is imperative to file the return on or before the due date.
  • As per Section 34(2) of CGST Act, Credit notes pertaining to GST invoices issued in the last financial year cannot be reported under GSTR-1 post filing the return for the month of September 2020 or filing of annual return of relevant FY whichever is earlier. Therefore, any credit notes for FY 2019-20, should be issued by the month of September 2020.

If the taxpayer has missed completing yearly reconciliation before filing September 2020 returns, then, he/she will face discrepancies while preparing the annual returns for FY 2019-20. Unfortunately, by then, the window to claim any eligible ITC and make necessary amendments to invoices would have been missed, leading to excess tax outflow.

In conclusion, the September return period of a year following a financial year is significant as per the GST law. The government provides time to rectify mistakes made in regular returns during a relevant financial year in the September returns of the next financial year which is filed subsequently. Return for September of a year is the last return period during which taxpayers can rectify any omitted or incorrect details in the returns filed during the previous financial year. These corrections are crucial for an accurate closure of that financial year. They will also form an important checkpoint during the GST audit.

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