[Opinion] Recent Changes in GST Return and Practical Difficulties

Krishan Arora, Sachin Sharma & Rahul Jhawar – [2022] 141 taxmann.com 404 (Article)

A proposal of comprehensive changes in GSTR-3B was deliberated by the GST Council in its 47th meeting to provide clarity with respect to reporting and reconciling Input Tax Credit (ITC) reversals and subsequent re-availment. According to the Council’s recommendations, the Government has made certain changes in the GST return vide Notification No. 14/2022 – Central Tax, effective from 5th July 2022. Additional clarifications have also been provided through Circular No. 170/02/2022-GST dated 6th July 2022.

Proposed changes in GSTR-3B:

1. New Table 3.1.1 inserted for reporting supplies notified under Section 9(5) of the CGST Act, 2017:

• • At present, ECO (E-commerce Operator) u/s 9(5) is paying tax liability on services such as passenger transportation, accommodation, housekeeping and restaurant if supplied through it and disclose it in Table-4A [Taxable outward supplies to registered person] or in Table-7A(1) [Taxable supplies to unregistered persons] of GSTR-1 and in Table-3.1(a) [Outward taxable supply] of GSTR-3B along with its own direct supplies to the customer.
  • Further, a registered person who is not required to pay tax liability on such services, discloses the same in Table-8 [Nil & Exempted supply] of GSTR-1 and in Table-3.1(c) [Nil Rated & Exempted] of GSTR-3B. Since the Government came across myriad of irregularities and instances of tax evasion in this regard, a new Table-3.1.1 has been added in GSTR-3B where both ECO and registered persons can report supplies made under Section 9(5).
  • Now, an ECO is required to report supplies made u/s 9(5) in Table-3.1.1(i) of GSTR-3B and shall not include such supplies in Table-3.1(a). The applicable tax on such supplies shall be paid by ECO in cash only and not by ITC.
  • Similarly, a registered person who is making supplies as specified u/s 9(5) through an ECO, shall report them in Table-3.1.1(ii) and not include it in Table-3.1(a). The registered person is not required to pay tax on such supplies as the ECO is liable to pay tax on the same. The Table-3.1.1 in GSTR-3B has been made available on GST Portal from 01st August 2022.
  • Corresponding effect of above will be given in Table-3.2 [Details of inter-State supplies made to unregistered person, Composition taxable person, UIN holders] and hence supplies reported in Table-3.1(a) and Table-3.1.1(i) both shall be considered for Table-3.2 disclosure.

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