Complicated returns, technical glitches in the GST Network and increased compliance burden due to multiple monthly returns had turned returns filing a chaotic experience for taxpayers in the first year of the GST regime.

To address these concerns, the GST Council has approved a single monthly return for all taxpayers and given leeway to smaller taxpayers to file quarterly returns through simplified forms. While the new returns and the modified method to claim input tax credit — that may be implemented in early 2019 — will reduce the compliance burden and check tax evasion over the longer term, smaller businesses are likely to face hardships in the changeover phase.

Small businesses have already sunk money in modifying their accounting systems to adapt to GST from the earlier indirect tax regime that consisted of excise duty, sales tax, VAT etc. With the proposed merger of the three monthly GST returns — GSTR 1, 2 and 3 — into a single return, they will have to incur additional expense in tweaking the software.

The compliance burden is also expected to increase, especially for smaller businesses, due to the new method proposed for taking input tax credit. The GST Council has proposed that invoices be uploaded by the supplier on a real-time basis and the buyer accepts (locks) the uploaded invoice to claim input tax credit.

This can make larger companies pressure their smaller suppliers to upload the invoices immediately, and error-free. But this is likely to create an enormous burden for the smaller suppliers.