India’s GST return filing framework has evolved significantly since its implementation. A revised system replaced the initial GSTR-1 and GSTR-3B filings, introducing new forms such as RET-1, RET-2 (Sahaj), RET-3 (Sugam), ANX-1, and ANX-2. While the full replacement was deferred, key features have been integrated into the current system through the Invoice Management System (IMS) and GSTR-2B.
What Changed in the GST Return System?
The GST Council approved a revised return system in late 2018 to address deficiencies in the original mechanism. The existing system required taxpayers to file two separate monthly returns: GSTR-1 for outward supply details and GSTR-3B for the summary return with tax payment. The new framework proposed consolidating these into a single primary return supported by two annexures.
The revised system was designed for regular taxpayers only. Other categories, including non-resident taxable persons, casual taxable persons, composition dealers, and Input Service Distributors, would continue with their existing return procedures. The primary goal was to reduce manual data entry, enable real-time invoice matching, and simplify compliance.
A trial version became available in July 2019. However, the 37th GST Council Meeting on September 20, 2019, postponed full implementation until April 2020, which was further deferred to October 2020. Ultimately, the government chose to integrate the key features into the existing GSTR-1/3B framework rather than implementing a complete replacement.
New Return Forms and Their Purpose
The updated framework introduced five new forms to replace the GSTR-1 and GSTR-3B combination.
| Form | Full Name | Applicable To | Filing Frequency | Key Feature |
| RET-1 | Normal Return | All regular taxpayers | Monthly or Quarterly | Consolidated return replacing GSTR-1 + GSTR-3B |
| RET-2 | Sahaj | Small taxpayers (B2C only) | Quarterly | Simplified return for businesses selling only to consumers |
| RET-3 | Sugam | Small taxpayers (B2B + B2C) | Quarterly | Simplified return for businesses with both B2B and B2C sales |
| ANX-1 | Supply Annexure | All suppliers | Continuous upload | Real-time invoice upload replacing batch GSTR-1 filing |
| ANX-2 | Inward Supply Annexure | All recipients | Auto-populated | Accept/reject invoices for ITC verification |
Small taxpayers, defined as those with aggregate turnover up to Rs. 5 crore in the preceding financial year, may choose between quarterly filing options. The choice of Sahaj, Sugam, or Normal quarterly return depended on the business’s supply profile. Large taxpayers with a turnover of more than Rs. 5 crore were required to file monthly returns.
Quarterly Filing Options for Small Taxpayers
Sahaj (RET-2)
Sahaj was designed for the simplest business profiles. It allowed declaration of B2C outward supplies (sales to unregistered consumers) and inward supplies subject to reverse charge. However, it did not permit the declaration of supplies made through e-commerce operators where tax collection was required. Businesses could not claim credit for missing invoices through this form. Sahaj was suitable for small retailers and service providers dealing exclusively with walk-in customers.
Sugam (RET-3)
Sugam offered broader coverage than Sahaj. It enabled the declaration of both B2B supplies (to registered persons) and B2C supplies, along with reverse-charge inward supplies. Like Sahaj, it excluded e-commerce operator supplies that require TCS and did not allow credit claims for missing invoices. Sugam was appropriate for small businesses that had both registered and unregistered customers.
Normal Quarterly Return
The Normal quarterly return provided comprehensive coverage of all supply types, with no restrictions. This was the default option for small taxpayers who needed full reporting capability, including supplies through e-commerce platforms, SEZ supplies, and deemed exports.
How ANX-1 and ANX-2 Were Designed to Work
The annexure system introduced a fundamentally different approach to invoice management compared to the existing GSTR-1 batch upload model.
ANX-1: Continuous Invoice Upload
ANX-1 allowed suppliers to upload invoices in real time, continuously throughout the month. This meant each invoice could be reported to the GST portal immediately after issuance, rather than waiting for the filing deadline. The continuous upload provided real-time visibility into supply data for recipients, reduced the burden of month-end batch processing, enabled earlier detection of invoice-level errors, and improved the accuracy of the ITC data available to recipients.
ANX-2: Recipient Verification
Invoices uploaded by suppliers in ANX-1 are automatically populated into the recipient’s ANX-2. The recipient could then take one of three actions on each invoice: Accept (confirming the invoice for ITC purposes), Reject (returning the invoice to the supplier for correction), or Keep Pending (deferring action to a future period).
| Timeline | Available Recipient Actions |
| Before the supplier’s upload deadline (10th of the following month) | Accept or Reset (unlock) only |
| After the 10th until the return filing | Accept, Reject, or Mark as Pending |
| At the time of filing the return | All pending invoices must be actioned |
| Invoices not actioned | Deemed accepted after the action window |
Rejected documents triggered a notification to the supplier only after the recipient officially filed their return. This prevented premature alerts and allowed recipients to review and change their decisions before finalising.
Filing Frequency Changes and Restrictions
Taxpayers were permitted to change their return filing frequency (from quarterly to monthly, or vice versa) only once during a financial year. This change had to be made when filing the very first return of that particular financial year. Mid-year changes were not allowed, ensuring consistency in reporting periods throughout the year.
The restriction prevented manipulation of filing periods to gain compliance advantages. It also simplified portal processing by maintaining a stable filing schedule for each taxpayer.
Current Status and Operational Reality
While the ANX/RET system was trialled, it was not fully deployed for regular filing. Instead, the government integrated the most valuable features into the existing framework.
| Proposed Feature | Current Implementation |
| ANX-1 continuous upload | IFF (Invoice Furnishing Facility) for QRMP filers; real-time GSTR-1 upload available |
| ANX-2 accept/reject | Invoice Management System (IMS) launched in October 2024 |
| Auto-populated ITC | GSTR-2B auto-generated monthly ITC statement |
| Single consolidated return | GSTR-1 + GSTR-3B continue as two separate filings |
| Quarterly Sahaj/Sugam | QRMP scheme with quarterly GSTR-1 and GSTR-3B |
| Pre-filing amendments | GSTR-1A reintroduced in July 2024 |
| GSTR-3B hard-locking | Auto-populated values locked from July 2025 |
This hybrid approach preserved the benefits of the existing system while incorporating the accept/reject functionality and real-time ITC visibility. It simplified the quarterly filing that the new system was designed to deliver.
Key Terms
• RET-1: The proposed consolidated Normal return that would have replaced GSTR-1 and GSTR-3B for all regular taxpayers
• Sahaj (RET-2): A simplified quarterly return designed for small taxpayers making only B2C supplies
• Sugam (RET-3): A simplified quarterly return for small taxpayers with both B2B and B2C supplies
• ANX-1: The supply annexure enabling continuous real-time invoice upload by suppliers
• ANX-2: The inward supply annexure auto-populated from ANX-1, allowing recipients to accept, reject, or defer invoices
• IMS: Invoice Management System, the operational implementation of ANX-2’s accept/reject functionality launched in October 2024
Adapting to the Evolving GST Return System?
Stay up to date on the latest changes to the filing framework. Use WFYI tools to manage your GSTR-1 and GSTR-3B filings, leverage the IMS for invoice verification, and ensure accurate ITC claims through GSTR-2B reconciliation.
| Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. Consult a qualified tax professional for advice specific to your situation. |
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Frequently Asked Questions
Q1: Is the new GST return system (ANX-1/RET-1) currently in use?
No. The new system was trialled but not fully implemented for regular filing. The current operational system uses GSTR-1 and GSTR-3B, enhanced with the Invoice Management System (IMS), GSTR-2B, and GSTR-1A.
Q2: Who qualifies as a small taxpayer for quarterly filing?
Taxpayers with aggregate turnover up to Rs. 5 crore in the preceding financial year qualify as small taxpayers. They can opt for quarterly filing under the QRMP (Quarterly Return Monthly Payment) scheme.
Q3: Can filing frequency be changed mid-year?
No. Filing frequency can be changed only once per financial year, at the time of filing the first return for that year. Mid-year switches between monthly and quarterly are not permitted.
Q4: What replaced the ANX-2 accept/reject functionality?
The Invoice Management System (IMS), launched on October 1, 2024, provides the accept/reject functionality originally planned for ANX-2. Recipients can accept, reject, or keep invoices pending before they are reflected in GSTR-2B.
Q5: What is the QRMP scheme, and how does it relate to the new system?
QRMP (Quarterly Return Monthly Payment) allows small taxpayers to file GSTR-1 and GSTR-3B quarterly while making monthly tax payments. It implements the quarterly filing concept from the proposed Sahaj/Sugam system within the existing return framework.
Q6: Will the government fully implement the RET-1/ANX system in the future?
The government has chosen to integrate key features into the existing GSTR-1/3B framework rather than implementing a complete replacement. The current approach with IMS, GSTR-2B, and GSTR-1A enhancements is the operational model for the future.
