The country’s primary anti-smuggling intelligence agency has begun resending notices to exporters for availing GST exemptions where exports preceded imports. The Directorate of Revenue Intelligence (DRI) move followed a Supreme Court stay on a Gujarat High Court order favouring the exporters. The high court had quashed a revenue department notification allowing DRI to penalise exporters for allegedly not following “pre-import condition” and availing wrongful Goods and Services Tax (GST) exemptions.

Amid growing criticism of the imperfections of India’s goo-ds and services tax and the body blow it apparently dealt to small businesses and the informal sector, finance minister Nirmala Sitharaman on Friday came out in staunch defence of the destination-based consumption tax but hinted at an imminent overhaul of its structure. Since “all of us are party to (its making), let us own it up,” she said here, a day after an official release said a committee of officers would consider “a wide range of (possible) reforms” and suggest within 15 days measures to augment GST collections and improve the relevant administration. Saying that the criticism of GST is ‘harsh’, the minister said, “It might have its flaws and it might probably give you some difficulties but we can’t just damn it.. I honestly want each one of us to give solutions for better compliance”. Sitharaman was meeting industrial representatives, chartered accountants and cost accountants and entrepreneurs here as part of an outreach programme.

Officials of the central and state governments on Friday began exploring ways to step up revenue collection from the goods and services tax (GST) which has consistently remained below target.

As the declining GST collections continue to be a cause of worry for the tax authorities at the central and state levels, anti-evasion measures are being strengthened. The government on Thursday set up a committee of officers to suggest measures to augment GST revenue collections and administration and asked it to submit a report within 15 days to the GST Council Secretariat. “The committee should consider a wide range of reforms so that a comprehensive list of suggestions may emerge,” an official order said, adding that the panel’s terms of reference “include making suggestions about systemic changes”, including checks and balances to prevent misuse and steps to improve voluntary compliance. Separately, the government also amended GST rules to ensure that businesses can’t claim entire input tax credit (ITC) if their suppliers had failed to file returns and upload invoices.

The government has amended the goods and services tax (GST) rules to limit the provisional tax credits that businesses can claim, if invoices are not uploaded and the tax collected from the buyer not paid to the government, to 20% of the total taxes that they have paid on raw materials and services. The changes will come into force on the date of its publication in the official gazette, which is expected shortly, according to the notification by the Central Board of Indirect Taxes and Customs (CBIC).

Keen to plug revenue leakages, the government has decided to restrict input tax credit under the goods and services tax to 20% of the eligible amount for an entity if its supplier has not uploaded relevant invoices detailing the payments made.

Some Indian conglomerates and foreign banks are among those under the scanner for allowing subsidiaries or Indian entities to use brand names and logos they own for free. The indirect tax department wants these entities to put a valuation on the brand names and logos, charge fees from the subsidiary or group company and pay 18% goods and services tax (GST) on that, according to people with direct knowledge of the matter.

A host of back offices of multinational companies in the financial sector face a tax whammy, with Goods and Services Tax authorities denying them refunds of amounts paid on inputs, saying the work done for parent companies can’t be considered as exports and will be counted as a service for the same entity. GST authorities have rejected refunds on these grounds across states, including Haryana, Maharashtra, Tamil Nadu and Karnataka. The denial of refunds running into hundreds of crores of rupees to these outfits can derail their business model and may impact India’s attractiveness as the world’s back-office hub, especially with the emergence of low-cost sites in the Philippines and East Europe.

The declining trend in goods and services tax (GST) revenue this fiscal is largely due to a cyclical consumption slowdown, especially in the auto sector, official sources said while refuting Kerala finance minister Thomas Isaac’s view that it was a reflection of inefficient administration of rates that were slashed below revenue-neutral levels. Isaac had expressed his views through a tweet on Wednesday, a day after GST collection for September came in. The mop-up at Rs 91,916 crore was the lowest in 19 months and only for the second time since the GST was launched in July 2017, that monthly collection dipped (2.7%) compared with the year-ago period.

The much-expected stabilisation of the goods and services tax (GST) revenue continues to be elusive. Blame a seeming decline in nominal GDP growth and possibly an increasing inability of the system to check evasion, the gross GST collections plunged to 19-month low of Rs 91,916 crore in September (for primarily August transactions). The revenue in September 2019 declined by 2.67% from the year-ago month; there was only one precedent ( of August 2018) earlier of the GST collections in any month being lower than in the year-ago month.The collections in August (for July) had come in at Rs 98,202 crore and that was the lowest in the first five months of the current fiscal. The Centre’s budgeted GST revenue (including CGST, unsettled IGST and compensation proceeds) is projected to grow at close to 14% to Rs 6.63 lakh crore over the last year’s actual level, which was a quarter less than the original projection (BE).

Come April 1, 2020, one out of five Goods & Services Tax (GST) assessees will just have to send an SMS (short message service) to file his/her returns. The only condition for availing of this facility is that their turnover should be ‘nil’. “Under the new system, assessees with nil turnover will just need to send an SMS and they will receive an OTP (one-time pin/password) and based on the confirmation, filing of returns can be completed,” Prakash Kumar, CEO of GST Network (GSTN), said. Out of the total assessees, 22.73 per cent fall under this category. GSTN — the information technology backbone of the indirect tax regime — aims to make compliance easy for assessees under the new return system.

Trade, Imports, Exports for MSMEs: Small and medium enterprises (SMEs) acting as intermediaries or agents of businesses in India are facing acute financial crises on account of depleting margins on their businesses. Most of these intermediaries earn commissions by facilitating sales on behalf of foreign principals supplying goods to customers within and outside India.

Motor vehicles and biscuits may have hogged the headlines when the Goods and Services Tax (GST) Council decided not to lower the rates last week, but beneath the news radar, 165 other categories, including ghee, butter, cheese, and dry fruits, met with the same fate. The Fitment Committee (FC), the sub-committee of the GST Council comprising tax officials of the Centre and the States, had reviewed rates, including compensation cess, and procedural issues in respect of over 200 categories of goods. Finally, it recommended changes or clarification for 32 categories of goods, and deferred a decision in respect of 10, but left the rates on 167 categories of goods untouched. Based on representations, the FC analyses and decides on the merits of a change in tax rates. Its recommendations are placed before the GST Council, which accepts or rejects them.

The government is expecting a shortfall of around Rs 40,000 crore in the GST collections over what has been budgeted for 2019-20. This could put pressure on the compensation that states are eligible for in case the tax growth falls below 14% during the year. A state finance minister said the Centre had informed the GST Council, which met in Goa on Friday, about the expected shortfall at a time when economic growth has slowed down. Most states were, however, optimistic that the government will find a way to meet the compensation requirements, otherwise they may be forced to borrow from the market.

There are numerous concerns on the functioning of the GST regime, launched two years ago. But the e-Way bills system is displaying good traction. While there are a few glitches, users mostly agree that e-Way bills have brought down under-reporting and increased transparency. The system was rolled out for inter-State consignments in April 2018, and for intra-State consignments two months later, in a phased manner. e-Way bills generation for the period April-June 2019 was almost 40 per cent higher at about 15.65 crore, compared to 11.19 crore in the same period last year. For transport companies, the system has saved considerable time, removing check-posts and facilitating the shift from a ‘departmental policing model’ to a ‘self-declaration model’. It has also helped in curbing tax evasion.

Hotel and tourism industries got significant tax reliefs on Friday, as the GST Council that met here reduced the taxes on hotel rooms to the 0-18% range depending on their tariffs and cut the rate for outdoor catering to 5% without an option to claim input tax credit. Besides, the Council increased the tax rate for caffeinated drinks to 28% from 18%; as these beverages, touted to be harmful to health, are now in the highest tax bracket, they will now also be subjected to a 12% cess. The Council did away with the requirement of filing annual returns for taxpayers up to Rs 2 crore turnover, as part of the moves to reduce compliance burden. However, it also introduced some new slabs for items like semi-precious stones, complicating the GST structure even further.

The GST Council on Friday took an in principle decision to link Aadhaar with registration of taxpayers under GST and also examine the possibility of making the 12-digit unique identification number mandatory for claiming refunds. The council also decided to a withdraw a circular issued in June which prescribed that the additional discount given by a company to a dealer in certain cases will be liable for Goods and Services Tax (GST). As per an official release, the council also took an in principle decision to prescribe reasonable restrictions on passing of credit by risky taxpayers in order to tackle the menace of fake invoices and fraudulent refunds.

Tax officials of the Central government are said to have told state government counterparts that any extension in the period for which Centre is liable to pay compensation to states is unviable. Their meeting took place a day prior to the 37th GST Council meet here on Friday. A number of states have represented to the 15th Finance Commission that the Centre should pay them compensation for three years more to ensure that their GST revenue continues to grow 14% year-on-year, as guaranteed in the Constitution. The Constitutional provision for compensation is only till 2022 while states want it extended till 2025. Though the decision to extend the period is beyond the remit of the Finance Commission, states are hoping that it can impact the GST Council. However, one official said any such decision would require a Constitutional amendment which made it unlikely. Further, he said the guaranteed GST revenue growth was already ambitious and for a comfortable period.

The 37th GST Council meeting to be held at Goa on Friday is unlikely to approve any tax cuts that could have substantial revenue implications. The Council would consider the analysis conducted by the fitment committee on implications of rate cuts on automobiles, biscuits and cement, among other items. According to the fitment committee analysis, GST rate cut on automobile would lead to Rs 30,000-crore revenue loss annually along with an additional impact on cess collection by about Rs 24,000 crore. Similarly, cement and biscuits have large revenue implication and the committee’s report is likely to submit that rate reduction alone might not spur sales. However, sources said the Council might consider cutting rates on outdoor catering which currently attracts 18% tax.

Some companies have dragged the government and the indirect tax department to court over goods and services tax (GST) levied on these deals in what could jeopardise longterm land lease deals. As per the current regulations, 18% GST is levied on any long term lease transactions, and industry trackers said the GST paid becomes pure cost as it cannot be used as input tax credit in case the recipient wishes to construct any commercial building there. The companies filed a writ petition in the Rajasthan High Court demanding that either GST be removed from such transactions or they be allowed to claim credit. As of now, GST is levied on 99-year land lease and that becomes a cost as it cannot be set off if a hotel or any other commercial property is built on it. Most of such land is government-owned and leased to build hotels or ports.