GST Council to select hybrid model for filing returns

Will simplify return filing; input tax credit could be delinked from payment of taxes

The Goods and Services Tax Council will simplify filing of returns at a meeting on Friday, through a ‘hybrid model’ recommended by a panel led by Bihar deputy chief minister Sushil Modi. According to the proposed model, a buyer will receive input tax credit based on the seller's uploading of invoices, including missing ones. This would be irrespective of whether the seller has actually paid the tax.

In a relief for businesses, the Goods and Services Tax Council is to simplify filing of returns at a meeting on Friday, through a ‘hybrid model’ recommended by a panel led by Bihar deputy chief minister Sushil Modi.

The proposed model is a fusion between the recommendation by Infosys Chairman Nandan Nilekani and the ‘provisional credit model’ suggested by government officers. A buyer will get input tax credit based on the seller's uploading of invoices, including missing ones. This would be irrespective of whether seller has actually paid the tax.

“The Council will discuss (this). It is expected to get acceptance,” said an official.

In the provisional credit model, the buyer would provisionally get input tax credit once he uploaded the missing invoices. This was to get reversed in three months if the seller had not uploaded the invoices and paid the tax.

“In the hybrid model, there will be no linkage to seller making the payment. A buyer will get credit as soon as a seller uploads the invoice. The buyer will not be denied any credit if the tax is not paid by the seller,” said the official.

Another officer said this could be a big positive for business as a whole. “How can a buyer control the seller paying taxes?”

“It would be unfair to business if non-payment of GST by the seller results in the buyer having to reverse credit already taken after paying the tax to the seller. Consequently, any model that does not require any reversal of bonafide credits would be welcome,” said M S Mani, partner at consultants Deloitte India.

In non-payment of taxes, the authorities will follow it up with the seller, based on the liability generated from the invoice upload. If the seller does not have money to pay or cannot be located, then the authorities would catch the buyer, the official said.

To make things easier, invoice uploads will be allowed on a daily basis, instead of on a monthly basis through the existing GSTR-1 form.

GST Network, information technology backbone for the indirect tax, has sought sufficient time to implement the approved return filing model. Hence, the current system of GSTR-3B (summarised return) and GSTR-1 (outward supply) will continue for the time being beyond June 30.