7% of Taxpayers to File Monthly, 70% to File Quarterly
GST Revenue

Under the new GST return system, as few as 7% of the total number of taxpayers will be expected to file their GST returns monthly. Prakash Kumar, Chief Executive of the GST network has said that about 70% of taxpayers will get covered under quarterly returns. As 22% of taxpayers having nil returns, only 7% will have to file monthly GST returns.

The new system has classified small taxpayers to be those having a turnover of less than Rs.5 crore in the preceding financial year. This would put up to 70% of taxpayers under the small taxpayer category. Even though these taxpayers will need to pay their taxes on a monthly basis, their GST returns can be filed quarterly. This will ease their compliance burden to a large extent.

On the other hand, 22% of the registered taxpayers have a nil turnover. Taxpayers with a nil turnover can file a single return for the entire quarter via SMS. The SMS needs to be verified with a One-time Password (OTP). These are mainly taxpayers who do not undertake any business, but who have registered under GST so that they are eligible for contracts from the Government, as well as other agencies.

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Entities with a turnover above Rs.5 crore form the 7% of the tax base. These entities have to opt for the normal return form i.e. GST RET-1 and will have to file their returns on a monthly basis. According to Kumar, even though they form only 7% of the tax base, they still account for 85% of the total tax collections under GST.

In the 37th GST Council meeting held on 20 September 2019 in Goa, it was decided to postpone the implementation of the new return system to April 2020. This will give taxpayers the convenience of not having to transition to a new return system in the middle of a financial year. In addition, the GSTN will have sufficient time to ensure that the new system is well-prepared and can function without any glitches.

For any clarifications/feedback on the topic, please contact the writer at athena.rebello@cleartax.in

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