ANALYSIS. Taxing times: Why the filing of GSTR-2 was postponed

The postponement of the last date for filing GSTR-2 to November 30 and GSTR-3 to December 11, did not surprise anyone.

Since the rollout of the GST regime in July, tax payers have been struggling to adapt to the new system. While the summary returns for July, August and September (GSTR-3B) have been filed, the first full set of returns, including GSTR-1, 2 and 3, have not been filed even for July.

GSTR-2 return filing comes with a unique set of issues as the purchase invoices raised by a company have to be reconciled with those of its suppliers. Some basics first, GSTR-1 is the return for outward supplies that have to be filled along with invoice level details by the GST assessee.

Once this is done, the GSTR-2 summary form can be downloaded from the GST portal. This summary form contains details of all inward supplies, culled from the GSTR-1 filed by the suppliers of the company.

Each of the invoices in the GSTR-2 need to be either accepted, modified, rejected or kept pending for future action. Missing invoices have to be added to this list after which GSTR-2 can be submitted.

Given the elaborate procedure, it is not surprising that tax payers struggled through the GSTR-2 filing exercise. Most of the issues were, however, due to the inefficient and user-unfriendly GSTN portal.

“Registered persons have faced various technical errors and delays during the filing of returns due to the inefficiency of GSTN portal. At times, GSTN portal displayed wrong supplier’s name against GSTIN,” says Tanushree Roy, Associate Director, Nangia & Co LLP.

Sometimes, errors crop up due to validations placed at various places in the offline tool.

However, error file generated from GSTR-2 does not provide detailed explanation of any of the error, causing unnecessary delays in filing GSTR-2.

Also, re-generation of the said error file takes 2-3 hours, causing delay in the overall process of filing return.

Registered persons were provided a facility to download GSTR-2A in offline mode.

However, the only format available for downloading the utility GSTR-2A was (.json) which requires special tools to read the data.

In its absence, data were required to be manually filled in the form, which was extremely time consuming. The option to open such files into excel was provided only from October 27, 2017.

“The government utility was released very late, there were bugs in this utility and it is not very user friendly,” says Abhishek Jain, Tax Partner, EY India.

While the government has taken pains to point out that the GSTR-2 is an auto-populated return, it does require a lot of work as each invoice has to be checked, modified etc.

“Further, though the purchase invoices were auto-populated, taxpayers had difficulty in filling the HSN details along with quantity for purchases made,” says Aditya Singhania, DGM GST, Taxmann.

Roy too thinks that this has been a difficulty for companies.

“Registered persons are required to furnish HSN summary of all inward supplies during a tax period in Form GSTR-2. However, due to lack of proper knowledge, various registered persons have not recorded invoices HSN wise in their IT systems making compilation of such data a humongous task,” she says.

GSTR-2 of recipients (statement of inward supplies) gets auto populated once GSTR-1 of the supplier is filed.

However, a taxpayer is expected to identify eligibility of Input tax Credit (ITC) and map each transaction with their purchase registers in the same return which involves significant time. Also, registered persons who claimed ITC based on their purchase register in GSTR-3B are under pressure to match it with their GSTR-2.

“Once the data is uploaded from the government utility on GSTN, it takes lot of time to process and in some cases it took more than one day to process the data.

“The taxpayers, is many situations, had not captured the data correctly which was resulting in reconciliation issues,” says Jain.

It is, however, hoped that once a cycle of filing GSTR-1, 2 and 3 are complete, at least for July, there will be more clarity for tax payers and things might ease for subsequent months. Till then tax payers will have to struggle on.

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