Edition 1: Important GST tasks that businesses must complete in March 2020

It’s close to that time of the year – March, where the businesses become busy passing closing entries for the financial year ended and also make the necessary provisions for next year’s expenditure.

Accounting takes a forefront for businesses this month, especially large enterprises, as external auditors begin with their yearly statutory audits. In addition to the regular accounting tasks, businesses must also pay heed to certain Goods and Services Tax (GST) compliances during this month.

Of late, many businesses have increasingly been receiving GST notices. The grounds to receive notices include improper input tax credit (ITC) claims more than eligible as per GSTR-2A or failure of payment of interest for delayed tax deposits. A brief timeline will be given to reply to such notices – being less than 30 days.

Failure of responding to a GST notice may have penal consequences. Hence, they need to be attended to immediately by keeping the rest of the work at bay. Proper planning of the month can only help businesses strive through the GST compliance smoothly. Let’s dive into the key tasks for March 2020.

Firstly, March 2020 holds importance for its key deadlines apart from the regular GST returns in GSTR-1 and GSTR-3B. Most popularly, 31st March 2020 is the last date for filing GSTR-9 and GSTR-9C for FY 2018-19 without late fees. Currently, GSTR-9 is mandatory only for those taxpayers with an annual turnover of over Rs 2 crore.

Also, the CBIC had waived the filing of GSTR-9A for FY 2017-18 and FY 2018-19 for the composition dealers. The filing facility on the GST portal was opened only recently last week for FY 2018-19. 

Also Read: GSTR-9 and 9C Due Dates Contesting in HCs⁠—Taxpayers Look for Relief

Secondly, the deadline of TRAN-01 is further extended to 31st March 2020, in case it couldn’t be filed earlier due to technical problems on the GST portal. TRAN-01 is a form to transfer the balance of ITC of the pre-GST regime by those taxpayers who migrated into GST from VAT, excise and service tax regime.

It is pertinent to note that the filing of TRAN-02 must follow the filing of TRAN-01, to submit the closing stock details related to such ITC lying as of 30th June 2017.

Thirdly, the composition dealers must submit a declaration in CMP-02 by the end of March 2020. CMP-02 is an intimation to opt into the composition scheme for the upcoming FY 2020-21. Such a business could already be registered under the composition scheme on account of section 10 of CGST act (for the supply of goods) or for the supply of services under the notification 2/2019 dated 7th March 2019.

Non-filing of this form will invalidate the scheme for that particular GSTIN for the complete financial year depriving them of benefits of the scheme. Also, such businesses may have to end up depositing tax at regular GST rates applicable to the rest instead of the concessional rate of 1% on turnover. Hence, if you’re an eligible composition dealer, ensure to file CMP-02 by 31st March 2020 through the GST portal.

Moving onto the third most important compliance for March 2020, it deals with the preparation for the new GST returns system beginning from 1st April 2020. GST law gives time till the due date of filing GSTR-3B of September of a year following the financial year, to make any amendments to GST return information or claim ITC missed out earlier. While businesses have practised this in the past financial years of FY 2017-18 and FY 2018-19, will seemingly be difficult in 2020. That is because of the introduction of the new GST return system from April 2020. 

Some problems can crop up while migrating into the new system. For example, a business found out that an invoice filed in GSTR-1 was not filed in GSTR-3B until March 2020 return, only on 25th April. Now, it must give necessary effect to correction not under the GSTR-3B system, but the new GST returns -RET-1 under table 3A against line (8). No entry must be made in ANX-1.

Now, a business with a team having sound knowledge of the working flow of new GST returns may be able to crack this thing. However, it becomes difficult for any average businessman to understand this adjustment. The most viable solution then would be to complete one round of thorough reconciliation of the GSTR-1, 3B and 2A with the books of accounts. It helps them make any necessary adjustments while filing the GSTR-1 and GSTR-3B of March 2020 itself and avoid spillovers.

The upcoming financial year looks promising in terms of ensuring smooth and better-automated systems coming in place- New GST returns and e-Invoicing. We will do a deep dive into GST law to uncover other GST compliances for March 2020 in our upcoming 2nd edition of ‘Important GST tasks that businesses must do in March 2020’.

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