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News Indirect Tax-GST

  • Nov 14, 2019
  • Tax department wants to impose 18% GST on CXO salaries

    The tax department has started questioning top companies and banks if they were passing on some of the common costs like salaries of chief executives to their branch offices. The department wants companies to proportionately distribute common costs from head office to branch offices and treat this as a supply. Once this is treated as a supply, 10% of it has to be added to the cost and 18% Goods and Services Tax (GST) could be levied on the total amount. Some of the top companies headquartered in Pune, Mumbai and New Delhi have started receiving queries from the tax department on cross-charging. Under the GST framework, nothing is for free, including some of the common functions carried out at a company’s or a bank’s head office like human resource, IT functions, audit and legal fees paid. “The interpretation adopted by the tax authorities is that an employee of an organisation should be considered as an employee of a particular office only (not the organisation as a whole) for GST-related purposes.

  • Nov 07, 2019
  • HC asks Tax Dept to permit GST assessees to file for transitional credit

    The Punjab and Haryana High Court has permitted filing or revising Form TRAN I for transitional credit by November 30, 2019, irrespective of whether the form was filed, incorrectly filed or not filed at all. “Article 300A provides that no person shall be deprived of property saved by authority of law. While right to the property is no longer a fundamental right but it is still a Constitutional right,” the court said while disposing the petitions. Further it said CENVAT (Central Value Added Tax) credit earned under the erstwhile Central Excise Law is the property of the writ applicants and it cannot be appropriated for merely failing to file a declaration in the absence of Law in this respect.

  • Nov 02, 2019
  • Going downhill: GST collections drop 5.3% year-on-year in October

    Goods and services tax (GST) collections in October — concerning mostly September transactions — came in at Rs 95,380 crore, 5.29% lower than in the year-ago month, amplifying concerns over a likely big deficit in revenue from this comprehensive indirect tax and cementing the notion that economic slowdown is barely being reversed. The September GST collections were just Rs 91,916 crore, a 19-month low, and these were 2.7% lower than the year-ago month. There was only one more occasion since GST’s April 2017 launch the collection for any month declined from the year-ago month — in August 2018. The low October GST mop-up was despite the fact that as the month that follows the middle point of the fiscal, October is believed to be a high-revenue month for the government, rivalled only by April, that follows the end of fiscal year. Collections in October 2018 was Rs 1,00,710 crore and there were only six more months when the overall GST revenue crossed the Rs 1 lakh crore threshold.

  • Oct 31, 2019
  • Losses due to GST in FY23 to be Rs 13K cr: UP to Finance Panel

    Uttar Pradesh has estimated that the state will suffer a loss of Rs 13,500 crore in 2022-2023 due to implementation of the Goods and Services Tax. Presenting its estimated expenditure plans for the next five years to the 15th Finance Commission recently, the state said its revenue in subsequent years too will be hit because of GST. “The GST collection of UP is estimated to be Rs 65,000 crore in 2022-2023, therefore the compensation will be around Rs 18,000 crore. But the Union government will provide compensation only till June 2022, five years from the date of implementation of GST. Thus, in the last three quarters of 2022-2023, the loss of revenue is expected to be about Rs 13,500 and the revenue in the subsequent years may also be affected. Such losses in the post compensation regime need to be looked into by the finance commission,” the state government said in its submission to the commission last week.

  • Oct 22, 2019
  • Hotels, travel aggregators start refunding GST

    Sridhar (name changed) got a pleasant surprise on Monday morning when he got a message from an online travel aggregator regarding a booking for Varanasi hotel made in September for stay in November. "This is an important update regarding your upcoming hotel stay at XXX Hotel. The amount of tax applicable on this hotel booking has now been reduced in keeping with the new GST (Goods & Services Tax) reduction mandated by the GST department. We have therefore initiated a refund of ?XXXX.X which will reflect in your account in 7-12 working days. Wallet and UPI refunds will take only 1-2 days,” the message read. Sridhar’s friend Arnab too got a similar message for a hotel booking in Shimla. There could be many Sridhars and Arnabs who are pleasantly surprised by this move as a refund has been initiated, probably for the first time, after GST rate lowered for hotel sector.

  • Oct 19, 2019
  • GST return filing: Businesses need to do this differently while filing GSTR-3B for September

    The landmark Goods and Services Tax (‘GST’) has completed two years. Businesses have already gained experience to file the monthly return GSTR-3B for the month of September in the year 2018. Notably, the September month return invites various actions and adjustments by the taxpayers unlike other monthly returns. Here are the points which businesses must keep in mind for filing the monthly return GSTR-3B for the month of September: So far, the businesses are availing full ITC on the invoices received by them from the suppliers even if the suppliers have not uploaded the same on the GST portal and therefore, not reflecting in GSTR-2A. This is for the reason the matching mechanism has been kept in abeyance. Recently, vide CGST Sixth Amendment Rules, 2019 published on 9th October 2019, the Government has amended the CGST Rules to provide that the recipient shall avail ITC only to the extent of 20% of eligible credit available, in respect of invoices, details of which have not been uploaded by the supplier in its GSTR-1.

  • Oct 18, 2019
  • E-invoicing, a game-changer for GST

    The GST Council, on September 29, 2019, has approved the introduction of ‘E-invoicing’ or ‘electronic invoicing’ for business to business (B2B) transactions from January 1, 2020. Once implemented, it can help arrest tax evasion as it enables pre-populating of GST returns with the e-invoice details. Return filing will also become simpler with reconciliation becoming easier. Recently, a concept note explaining what e-invoice is and how it operates was released and made available on the GSTN website. The document allayed the concerns of the tax payers and reiterated that there is no requirement to generate the e-invoice on a government’s tax portal. The taxpayer can continue to use his accounting system such as ERP, Tally and excel based tools for creating the invoice. The only requirement is that the supplier’s software should be able to generate the invoice in a specified template in JSON format.

  • Oct 14, 2019
  • Exporters draw DRI wrath for alleged GST violations

    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.

  • Oct 12, 2019
  • GST may have flaws, will correct them: FM Sitharaman

    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.

  • Oct 12, 2019
  • Govt explores ways to revive GST collections

    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.

  • Oct 11, 2019
  • Falling GST collections: Govt reinforces steps to check evasion, broaden tax base

    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.

  • Oct 11, 2019
  • Govt frames new rules for companies to claim provisional tax credits

    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).

  • Oct 10, 2019
  • Taxman demands GST on brands, logos

    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.

  • Oct 10, 2019
  • GST refunds denied to MNC back offices

    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.

  • Oct 04, 2019
  • ‘GST revenue decline cyclical, rate cuts not to be blamed’

    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.

  • Oct 03, 2019
  • GST collection falls to the lowest in 19 months

    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).

  • Oct 03, 2019
  • Easier compliance: From April 1, over 22% GST assessees can just send an SMS for filing returns

    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.

  • Sep 30, 2019
  • How GST is hurting this set of Indian SMEs, global competitiveness lost

    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.