The government has introduced three significant changes in the GST return filing rules starting in September 2024 to make reporting accurate and convenient for taxpayers. These changes include revised thresholds, validation of bank accounts and negative liability reporting.

What the official circular says:

Threshold Limit For B2CL 

As per the changes, every business whose supply value exceeds Rs 1 lakh must report it in Table B2CL of GSTR1 from September 1, 2024. B2CL refers to all large business-to-consumer (B2C) transactions made to an unregistered person in another state. Now, a threshold limit has been laid to ensure major transactions appear separately in tax reporting.

According to a circular from the Income Tax Department on July 10, 2024, reporting negative liability is necessary for taxpayers in Table No. 3 of the GSTR-3B Form, effective September. Negative liability occurs when a person pays more than what was required in the current period, and the excess amount would be called a negative liability.

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Negative Liability Reporting

With the latest changes, the taxpayer must file a negative liability report, which will be auto-adjusted in the next month’s return. This change aims to simplify the GST filing process by ensuring all overpayments are accounted for. According to Amit Kumar Baid, head of tax, BTG Advaya, a dispute and transactional law firm, “Auto-adjustment of negative liabilities in next month’s GST return streamlines the process. This change reduces the administrative burden of manually tracking and claiming adjustments, helps avoid cash flow problems, and reduces the chance of errors, making tax compliance more efficient and less burdensome”.  

Adds Gunjan Prabhakaran, partner & leader, Indirect Taxes at BDO India LLP, a public accounting, tax, consulting and business advisory firm: “The format of return in form GSTR 3B has been changed to allow disclosure of the adjustment of negative values, which was not permitted earlier. The government had previously clarified that in case of carry forward of negative values, the taxpayers can adjust it in the subsequent return and disclose only net values.  

“However, the taxpayers had to maintain records about the adjustments. Such a disclosure of net values also led to mismatches between the values disclosed in returns of taxpayers, causing the tax authorities to send communications to taxpayers, asking to explain the differences. The amendment would help in reducing the recordkeeping and number of mismatch notices”.

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Bank Detail Validation Compulsory

The third amendment, effective September 1, 2024, relates to not providing bank account details. It has been notified that if any taxpayer fails to add or validate his bank account details in GST registration, he cannot file IFF or GSTR-1. Hence, if taxpayers have not yet added or validated bank account details in their GST registration, the tax authorities could block their GSTR-1 /IFF. 

These changes come after it was announced that gross GST collection in August 2024 increased by 10.2 per cent to about Rs 1.75 lakh crore compared to Rs 1.59 lakh crore GST collection in the same month a year ago. According to data from the GST council, gross GST revenues recorded on domestic transactions went up about 9.2 per cent to around Rs 1.25 lakh crore. Revenues from imports are up by a sharp 12.1 per cent, taking the total to Rs. 49,976 crores.  

Regarding the public benefit from these amendments, Jasmine Damkewala, senior partner at Circle of Counsels and Advocate-on-Record, Supreme Court of India, emphasized on the ease that the negative liabilities can bring, stating, “All the entries related to negative liability and adjustment of succeeding tax periods is made through the Negative Liability Statement. If the taxpayer is permitted to auto adjust this tax liability in the following month’s return, it helps give more time to the taxpayer to adjust negative liabilities towards positive liabilities. Where typically the taxpayer adjusts its liability towards GST in the present; by permitting auto adjustment in the following month’s return, the amendment has enhanced the ease of doing business and provided a breather to tax payers and has also promoted accuracy and efficiency in tax administration. Additionally, it has simplified the process of tax paying under GST”.