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News Indirect Tax-GST

  • Dec 10, 2019
  • GST evasion? Rampant under-reporting of online sales detected

    The goods and services tax (GST) authorities have stumbled upon instances of online sales reported by several firms that sell goods on e-commerce portals like Amazon and Flipkart being much lower than such sales computed from the tax collected at source (TCS) data furnished by the marketplaces. Given that online sales are more traceable due to the organised nature of the marketplaces, evidence of evasion even in this segment confirms fears expressed by many analysts and state finance ministers like West Bengal’s Amit Mitra that GST evasion is much more rampant and large-scale than officially acknowledged and could be one of the principal reasons for the decline in collections apart from the slowdown in consumption. Under the GST system, sellers on e-commerce platforms, except those supplying services, are required to register on the GST Network, even if their turnover fall below the GST threshold of Rs 40 lakh per annum.

  • Dec 10, 2019
  • GST Council may raise base rate to 10% from 5%, move 243 items to 18% slab

    To raise additional revenue, the Goods and Services Tax (GST) Council may raise the base rate to 9-10 percent from five percent, reports The Times of India. The GST Council will reportedly discuss the option of moving 243 items to the 18 percent slab and scrapping the 12 percent slab. If this fructifies, there will be three GST slabs: five percent, 18 percent and 28 percent. Rejigging the GST structure may help raise an additional Rs 1 lakh crore in revenue, the report said, adding that the increase in levies could raise the effective tax rate to 12.5-12.75 percent from the current 11.6 percent. Moneycontrol could not independently verify the story. Officials are also considering taxing certain items that were previously exempt such as treatment in 'expensive' private hospitals and high-value company home leases, the article quotes sources as saying.

  • Dec 09, 2019
  • Brace for rise in GST rates as Centre looks at Rs 1 lakh crore additional revenue

    GST Council meetings have usually focused on cutting rates for products but that routine may come to a halt as revenue collection under the indirect taxation system has dropped drastically. A few days ago, Centre informed states that there are several concerns with regards to revenue collection and added that it will not be able to compensate them for losses. When the GST Council meets in the second fortnight of December, it is likely to discuss ways to shore up revenue and it could result in some exempted items could make a comeback under taxation while some items could be moved to a higher GST slab, reports indicate. The development comes particularly after Centre failed to pay GST compensation cess to at least five states. According to a report on the Times of India, the GST Council may also discuss restructuring of slabs under GST. Quoting top sources, the publication said the base slab of five per cent will be increased to 9-10 per cent while the 12 per cent tax slab will be removed.

  • Dec 09, 2019
  • Compensation cess: 7 states to move SC if Centre doesn't pay up Rs 30,000 crore GST dues

    Amidst muted Goods and Services Tax (GST) revenue growth and worries over delayed allocation of compensation cess to states, a few state governments are considering legal recourse against the Centre if their dues are not cleared immediately. States like Kerala, West Bengal, Punjab, Delhi and Chhattisgarh, Madhya Pradesh, Rajasthan and Union Territory of Puducherry -- all non-BJP states -- are planning to knock at the door of the Supreme Court if their concerns are not addressed. Finance ministers and representatives of these states met Union Finance Minister Nirmala Sitharaman last week, urging her to release the pending compensation cess since August. States get an average cess compensation of about Rs 7,500 crore per month (as per the last fiscal's numbers), which means the Centre is yet to release funds worth over Rs 30,000 crore to these states. Chhattisgarh Commercial Taxes Minister TS Singhdeo told Business Today that these states were planning to move the top court but they wanted to exhaust all other options before that.

  • Dec 09, 2019
  • GST Council may use cess route to boost revenue

    As it may not find it easy to raise the tax rates on mass-consumption, high-revenue items, given the overall demand slump, the Goods and Services Tax (GST) Council will likely increase the existing cess on so-called luxury/demerit goods and also impose such levies on a clutch of other items. The idea is to ensure that the steps taken to boost GST revenue don’t hit consumption and ruffle too many feathers in political circles.

  • Dec 06, 2019
  • CBIC withdraws GST circular on ITeS

    The Central Board of Indirect Taxes and Customs (CBIC) has withdrawn a circular which created confusion on whether IT service providers can be qualified as intermediaries based on self-assessment under the goods and services tax (GST). The government has withdrawn circular in view of numerous representations received expressing apprehensions on its implications. "In view of these apprehensions and to ensure uniformity in the implementation of the provisions of the law across field formations, the Board (CBIC),...hereby withdraws, ab-initio, Circular No. 107/26/2019-GST dated 18.07.2019," an official notification said. The government earlier in the year issued a circular on the scope of information technology-enabled services (ITeS) and coverage under intermediary services.

  • Dec 06, 2019
  • 5% GST rate may be hiked to 6% as govt looks to increase revenue

    In wake of growing revenue concerns, the Goods and Services Tax (GST) council may consider revamping tax structure and raising the existing 5 per cent rate to 6 per cent to shore up the shortfall in collections. The slab restructuring may help government garner additional revenues of Rs 1,000 crore per month. As of now, the GST has four slabs of 5 per cent, 12 per cent, 18 per cent and 28 per cent. The 5 per cent slab includes essential commodities such as food items, footwear and basic clothing.

  • Dec 05, 2019
  • Delhi HC stays interest levy on profiteered amount under GST

    Delhi High Court on Wednesday stayed the applicability of interest levied on the profiteered amount relating to the Goods & Services Tax (GST). The same petition had also challenged the composition of National Anti-profiteering Authority (NAA). When a company is charged with profiteering, interest at the rate of 18 per cent can be levied on the profiteered amount. It was challenged in a matter involving a profiteering order passed by the NAA against a real estate player. According to Abhishek A Rastogi, partner at Khaitan & Co, who is arguing a plethora of writs for builders, Section 171 of the CGST Act for anti-profiteering does not provide for applicability of interest and as a corollary interest is not payable since the Rules cannot go beyond the statutory provisions.

  • Dec 04, 2019
  • Sitharaman to meet state FMs today: Steps to boost GST revenue on agenda

    Given that a shortfall in Goods and Service Tax (GST) collections is threatening to upset the budget maths of both the Centre and states and the former has even started defaulting on paying the constitutionally guaranteed compensation amounts to the latter, the GST Council’s next session on December 18 might see hikes in tax rates on a host of items and a pruning of the 156-strong list of exempt items. Besides, the compensation cess, now levied on all the 34 items in the highest tax bracket of 28%, could be hiked and may also be imposed on a clutch of items in the lower slabs. The Council might also formulate alternatives to compensate states as the source fund has proved to be inadequate. However, the GST slabs as such might not see a revision at this juncture, as this requires a comprehensive policy review.

  • Dec 03, 2019
  • Tax revenues: Sequencing the GST reform

    At last, after four months, the GST revenue has crossed Rs 1 lakh crore in November. That should bring in some cheer in an otherwise gloomy scenario. Of course, this too falls short of the monthly target of Rs 1.18 lakh crore, and immediate measures are needed to improve tax compliance. There are many stories making rounds about the ingenious ways adopted to create a parallel informal economy. Therefore, the time is opportune to identify reform areas to increase revenue productivity and minimise administrative, compliance, and distortion costs. It must be admitted that GST implementation has important positives. The most important gain is from the abolition of inter-state check-posts. It is estimated that the long-distance travel time for goods has reduced by almost 20%. The reform has also helped improve supply chain management by not requiring the creation of branch offices to avoid inter-state sales tax. Also, the abolition of inter-state sales tax has made the tax destination-based, and reduced inequitable inter-state tax exportation.

  • Dec 03, 2019
  • Taxing C-suite salaries defies global norm

    Recently, there was hue and cry concerning the application of GST on the allocation of head office costs of an organisation to its branch offices in different states. It was reported in the media that the government intended to recover GST on cross charges on account of allocation of common costs, including salaries of CEO, CFO, IT support, administration support, etc. The government quickly issued a press release and clarified that there was no intention to levy GST on salaries of the ‘C’ suite of an organisation as the services provided by an employee to the employer are neither a supply of goods nor a supply of services, and hence, do not attract any GST. So far, so good. However, in the same press release, the government clarified that, following global practice, GST will apply to cross charges for inter-branch supplies of goods and services, which, of course, include the salaries of employees. This appears to confirm the fear of taxpayers rather than allaying it. Further, it stated that the GST so charged by one branch to another is available as an input credit, and hence, is not a cost to business.

  • Dec 03, 2019
  • Govt blocks GST e-way bill generation; move may impact 300,000 firms

    Businesses of roughly 300,000 firms paying goods and services tax (GST) were likely impacted on Monday, as the government had blocked e-way bill generation for non-compliant assessees. These businesses had not filed their monthly GST Return (GSTR)-3B for two consecutive months. The government had notified the rule last month as an enforcement measure amid subdued revenue collection. The GST system has been grappling with low levels of compliance. Only 65-68 per cent of eligible GST filers file the GSTR-3B within the due date, the GST Network (GSTN) data shows. “This month, the taxpayer will be alerted with a cautionary message while generating e-way bills, in case GSTR-3B for the past two successive months of the consignor/consignee GST identification number (GSTIN) has not been filed.

  • Dec 02, 2019
  • Finally, some good news: November GST collections up 6%

    India’s goods and services tax collections rose 6% to Rs 1.03 lakh crore in November, reversing two months of decline, with experts attributing the increase to festive shopping and better compliance. GST collections were Rs 97,637 crore in November last year and Rs 95,380 crore in October this year. The increase in collections was a sign of economic revival, recovery in demand and measures to ease compliance, government officials told ET. “After two months of negative growth, GST revenues witnessed an impressive recovery… During the month, the GST collection on domestic transactions witnessed a growth of 12%, highest during the year,” the government said in a statement.

  • Nov 30, 2019
  • GST is an iconic tax reform, will improve compliance: NK Singh

    The 15th Finance Commission Chairman NK Singh on Friday said the Goods and Services Tax is an iconic taxation reform that will improve compliance. “GST was a far-reaching iconic reform related to sharing of resources between the Central and State governments. It is indeed a radical tax reform,” Singh said at the India Economic Forum Skoch event here. “Let it not be misunderstood when many critics have said that the GST is a failure. This is exactly not a failure, this in my view is an outstanding attempt to bring about a radical change in architecture of taxation which will have many multiplier gains in terms of having the simplicity of the tax structure,” he said.

  • Nov 29, 2019
  • GST e-invoicing to help MSMEs secure loans faster

    The proposed e-invoicing system under the goods and services tax (GST) would help small businesses secure instant loans without furnishing a plethora of documents as banks can rate them on the basis of these invoices, said officials working on the system. Further, they added that the compliance burden, which is often most arduous for MSMEs, will reduce as the GST system would pre-populate the returns on the basis of information received from e-invoices. Under the system, the GST taxpayers would report their invoices to Invoice Registration Portal (IRP). This portal will generate a unique Invoice Reference Number (IRN) and digitally sign the e-invoice while generating QR code. The IRP will also send the signed e-invoice to the recipient of the document on the email provided in the e-invoice.

  • Nov 29, 2019
  • GST e-invoicing must for businesses with Rs 100-cr turnover from April 1

    From April 1 next year, electronic invoicing (e-invoicing) will be mandatory for businesses with a turnover of Rs 100 crore, the government said on Thursday. This will help curb goods and services tax (GST) evasion and make compliance easier. The e-invoicing system will be rolled out in a phased manner from January 1 on a voluntary and trial basis, beginning with firms with a turnover of Rs 500 crore, while businesses with a turnover of Rs 100 crore or more will be required to do it from February 1. "The basic aim behind the adoption of the e-invoice system is to facilitate convenience to the taxpayers by further simplifying the GST return system. Though e-invoicing the tax department would help business and taxpayers by pre-populating the returns, resulting in reducing reconciliation problems," a government release said.

  • Nov 27, 2019
  • BPO firms left in the lurch over input tax refund

    India’s business process outsourcing industry is in a quandary as refunds of taxes paid on inputs remain stalled for want of a clear directive from the government. A directive that sought to clarify what constitutes exports, and hence shouldn’t be subject to goods and services tax at the rate of 18%, received in-principle approval at the GST Council meeting in Goa in September, but it is being examined afresh and may land before the GST Council’s law committee owing to the revenue outgo. “There is a view that more clarity is needed to define markers that would help identify which entity is an intermediary and which is not,” a government official privy to the deliberations told ET.

  • Nov 26, 2019
  • Central GST collection at Rs 3.26 lakh cr in FY20: Anurag Thakur

    The Central GST collection so far this fiscal stood at Rs 3.26 lakh crore, which is around half the government's target for 2019-20, Parliament was informed on Monday. "The Budget Estimates for Central Goods and Services Tax (GST) for 2019-20 has been fixed at Rs 6,63,343 crore. The actual net GST collection for the Centre till October 2019 in current fiscal year is Rs 3,26,490 crore," Minister of State for Finance Anurag Singh Thakur said in a written reply to the Lok Sabha. He said the shortfall or excess in collection of GST with respect to budget estimate, if any, is calculated after completion of financial year. The minister was responding to a question on details of the shortfall in GST collections of indirect taxes until October this fiscal against the budgetary projections. On direct taxes, the minister said that for 2019-20, the budget estimate is Rs 13,35,000 crore.

  • Nov 23, 2019
  • NK Singh bats for symmetry between GST Council, finance commission

    RBI governor Shaktikanta Das on Friday said that there was a need to strongly institutionalise state finance commissions and empower the third tier of governance. Setting the tone for the 17th LK Jha Memorial Lecture titled ‘Fiscal Federalism: Ideology and Practice’ delivered by chairman of the Fifteenth Finance Commission NK Singh, the governor said that the issue of fiscal federalism was important in the aftermath of the introduction of GST and formation of the Niti Aayog. LK Jha, an Indian Civil Service officer, served as the governor of the RBI from July 1967 to May 1970.

  • Nov 23, 2019
  • Developer of land is not a seller, liable to pay GST, rules AAR

    Selling land does not attract the Goods and Services Tax, but if some one develops and sells a parcel, then it comes under the GST ambit, according to the Authority of Advance Ruling (AAR) in Karnataka. Bengaluru-based Maarq Spaces Private Ltd had entered into a Joint Development Agreement (JDA) with landowners for the development of a parcel of land into a residential layout along with specifications and amenities. The consideration was on revenue-sharing basis in the ratio of 75 per cent for the landowner and 25 per cent for the developer company. The cost of the development was to be borne by Maarq Spaces.