Introduction

After the implementation of GST, the government has taken many measures to make the tax filing process simple and efficient.  The GST Council, in its 53^rd council meeting, has created a milestone by introducing many significant changes in regulatory compliance processes. Among them, the most-awaited proactive measure is the introduction of Form GSTR-1A, which is aimed at providing flexibility and accuracy in filing and streamlining compliance. At present, amendments to GSTR-1 can only be made in the subsequent return period. But GSTR-1A will allow amendments to the form within the same month so that taxpayers can immediately correct the errors and omissions. It is an optional form and can be used to revise or add transaction details within the same period after filing GSTR-1 but before filing GSTR-3B. The revised details will be auto-populated in GSTR-3B so that an accurate tax liability can be calculated.

Key features of GSTR-1A

• The taxpayer can make the modifications, changes that crop up after filing his GSTR-1. The changes made in GSTR-1A are automatically reflected in GSTR-3B. This helps in calculating tax liability accurately, reducing mismatches and notices due to discrepancies in the returns filed.
• Taxpayers can make the rectifications within the same return period, which ensures timely corrections, reducing the burden of carrying forward the amendments to subsequent periods. As these modifications are made before filing GSTR-3B, the changes get updated, and accurate details get reflected in GSR-3B. This helps in maintaining consistency and accuracy of data submitted to the tax authorities.
• The provision to file GSTR-1A facilitates the locking of the summary return GSTR-3B that taxpayers file every month, so that the data in form GSTR-1 and GSTR-3B is consistent. This reduces potential mismatches and resultant disputes, improving the GST system’s transparency and efficiency.
• As per the update from the council, the amended details cannot be amended again in the subsequent months GSTR-1. The taxpayer can only modify the unamended records in the subsequent period’s GSTR-1.

Also read: Understanding GSTR-1 Filing & Statement of Outward Supplies (GSTR-1) in GST

Impact of introduction of GSTR-1A on ITC Claims

The introduction of GSTR-1A is expected to have a significant impact on ITC claims by businesses, They are:

• Reduction in Tax Mismatches

Matching the data in GSTR-1 and GSTR-2A has always been a challenge for businesses, since the inception of GST. GSTR-1A helps minimize these mismatches by facilitating a more synchronized approach to reporting between suppliers and recipients.

• Streamlined ITC Claims

The most important benefit of GST is the input tax credit, in which suppliers can claim the tax paid on supplies used in the business. This set off considerably reduces the tax liability of businesses. By filing GSTR-1A and rectifying the errors in them through GSTR-1A, taxpayers can ensure accuracy and compute and avail eligible input tax credits accurately. By doing so, the notices and queries from the tax authorities can be avoided.

• Accurate Reporting

Businesses must ensure that the details furnished in GSTR-1 and GSTR-1A align with those in GSTR-2 to avoid discrepancies. This promotes accurate reporting and reduces the likelihood of ITC rejections due to mismatched data.

• Timely Reconciliation

Taxpayers must ensure timely reconciliation of invoices in various periodic returns and their books of account regularly. Reconciliation facilitates verifying the data between suppliers and recipients and recognizing the discrepancies. GSTR-1A helps in making corrections promptly, leading to smoother ITC claims processing.

• Enhanced Compliance

By reconciling GSTR-1 with GSTR-2A through GSTR-1A, taxpayers can improve transparency. This process of accurate reporting of transactions reduces the scope for tax evasion.

Read more: GSTR-3B Reconciliation with GSTR-1 and GSTR-2A: Avoiding Tax Mismatches and Penalties

Challenges Businesses Face

While GSTR-1A enhances compliance, it also poses challenges for businesses, especially smaller enterprises, in terms of understanding and implementing the reconciliation process effectively.

• The transactions reported in GSTR-1 reflect in the recipient’s GSTR-2A and subsequently in GSTR-2B. Based on this, the input tax credit is calculated. Changes in GSTR-1 will impact the ITC of the recipient. During reconciliation, these changes must be considered, which can be complicated for the businesses.
• Taxpayers cannot edit e-invoices after they are generated. They can only cancel them within 24 hours. They get 30 days from the invoice date to generate the e-invoices and GSTR-1 for the month must be filed within the 11^th of the next month. This makes it complicated for businesses.
• If the taxpayers generate e-invoices and later change the transaction in GSTR-1A, they must ensure proper reconciliation so that the data is accurate.
• Taxpayers must ensure that the sales registers, filed GSTR-1, or GSTR-1A, all match. Only then will the tax and ITC calculation be accurate and the compliance processes will be followed properly.
• Thorough reconciliation and audit processes are crucial, as in the GST regime, all processes are interlinked and a change in one place can trigger changes in many other places. Compliance processes can become complicated, especially for small and medium businesses.
• Advanced GST software can help in the reconciliation process with its advanced tools and solutions. A skilled workforce to manage the advanced systems is the best advantage for businesses to stay compliant and avoid notices from the tax authorities.

Read more – Latest GST and E-invoicing Updates Simplified

Format of GSTR-1A

GSTR-1A includes five subheadings. They are:

1. GSTIN

Taxpayers must enter the GSTIN, which is the identification number allotted to all taxpayers at the time of registration.

2. Name, month and year

legal name or trade name, along with the relevant month and year for which the GSTR-1A is being filed, must be entered under this section

3. Outward Supplies made to registered persons, including reverse charge

This section includes:

1. Modifications made in normal sales
2. Modifications made in sales attracting reverse charge

4. Details of zero-rated supplies made to SEZ and deemed exports

This section includes:

1. Alterations made to the details of the supplies made to SEZ units or developers
2. Alterations made to supplies related to deemed exports

5. Debit notes, credit notes issued during current period

Any changes made by buyers to debit notes, credit notes issued by seller must be specified under this head. Finally, the return must be signed after declaring that all information stated is correct and any reduction in output has been passed on to the buyer. GSTR-1A must be filed before the 16^th of the next month. After it is modified, the data will automatically get updated in GSTR-1.

Conclusion

The reintroduction of GSTR-1A marks a significant step in simplifying compliance and bringing more transparency and efficiency in GST compliance in India. By reconciling discrepancies, and matching the data between GSTR-1, GSTR-2A, and GSTR-1A, tax authorities can ensure the accuracy of the data submitted in the returns, accurate computation of tax liability and input tax credit. For this, businesses must maintain accurate records in their books of account, communicate with the recipients , ed and there are no compliance issues. This proactive measure introduced by the council will help to maintain transparency and consistency between the seller and buyer records, thus making the GST system effective and efficient.

Also Read: GSTR Filing Process with CaptainBiz – Tutorials

Frequently asked questions

1. What is GSTR-1A, and who must file the return?

Answer: GSTR-1A is a return that all taxpayers who have to report changes in their supplies that are reported in their GSTR-1, must file.

2. When can GSTR-1A be filed?

Answer: GSTR-1A can be generated after the recipient submits his GSTR-2 and before your submission of GSTR-3B.

3. How does GSTR-1A work?

Answer: The seller files GSTR-1 with details of sales, which are reflected in the GSTR-2 of the buyer. If the buyer makes any modifications, they are reflected in the GSTR-1A of the seller. It is optional for the seller to accept, reject, or keep the modification pending. When the seller accepts the modification, his GSTR-1 will be updated with the correct data.

4. What is the difference between GSTR-1 and GSTR-1A?

Answer: GSTR-1 is a return comprising the details of sales, whereas GSTR-1A is a return comprising of modifications made in the sales details. The details in GSTR-1 are entered by the supplier, while the details get auto-populated in GSTR-1A.

5. Can I file GSTR-1A before the recipient files GSTR-2?

Answer: GSTR-1A can only be filed after the due date for filing GSTR-2 is over.