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News Indirect Tax-GST

  • Dec 01, 2020
  • Government puts off penalty provision for not using QR codes on GST invoices

    The lack of preparedness from the banks has forced the government to waive off proposed penalty for not implementing dynamic QR code on invoices issued by GST-registered taxpayers with over `500 crore annual turnover, sources in the revenue department said.

    The provision was to penalise businesses not using QR codes on their invoices from December 1 but now it would come into force from April 1. However, the penalty waiver is contingent on businesses using QR codes from the start of the next fiscal year.

    The move is aimed at promoting digital payment in business to customer (B2C) transactions through QR code and enabling GST payment on UPI — a digital retail payment option.

  • Nov 30, 2020
  • GST returns deadline: Reminders to 25,000 defaulter taxpayers

    The government is mulling cancelling GST registration for 5.43 lakh taxpayers who have not filed monthly tax returns (GSTR-3B) for the last six months or more, sources in the revenue department said. Additionally, the department would ‘persuade’ 25,000 taxpayers, who have not filed returns for October that was due by November 24, to comply with tax return deadlines.

    Sources said tax officers have been directed to follow up personally with these defaulting taxpayers so that their GSTR-3B returns due for the month are filed by November 30. These assessees were identified on the basis of last month’s statistics, sources said after a high-level meeting held in the revenue department.

  • Nov 30, 2020
  • CBIC asks for physical verification of biz granted deemed GST registration between Aug 21-Nov 16

    The CBIC has asked field offices to carry out physical verification of premises of businesses which have been granted deemed GST registration between August 21 and November 16 to ascertain that they have genuine business or intend to carry out so.

    The Central Board of Indirect Taxes and Customs (CBIC) has also asked taxmen not to grant GST registration on deemed basis in cases where the applicant has not opted for Aadhaar authentication or the authentication has failed.

    Current provision under Goods and Services Tax (GST) law allows for deemed registration upon completion of 21 days of application if the proper officer has not issued any notice within the said 21 days.

  • Nov 28, 2020
  • GST: CBIC notifies SOP for Verification of Taxpayers granted Deemed Registration [Read Instructions]

    The Central Board of Indirect Taxes and Customs (CBIC) notified the Standard Operating Procedure (SOP) for verification of taxpayers granted deemed registration. From August 21, 2020, rule 9 of the Central Goods and Services Tax Rules, 2017 provide that in cases where Aadhaar authentication has either not been opted for by the applicant or where such authentication has failed, the proper officer has to mandatorily initiate physical verification of the premises, or in cases where the physical verification is difficult, certain additional documents may be called for by the proper officer for verification before deciding upon the grant of registration. The present provisions allow for deemed registration upon completion of 21 days of application in such cases if the proper officer has not issued any notice within the said 21 days.

  • Nov 27, 2020
  • Rationalise GST rate structure to check GST fraud

    It has been more than 40 months now that the GST has been implemented in India. As has happened with tax reforms in most large economies, India too witnessed turbulence in the initial years of its implementation. Added to that turbulence was the Centre and states being at loggerheads on the GST compensation issue and delays in releasing the funds to the state governments. After a lot of persuasion, the states finally agreed to the Centre’s proposal, and without referring the matter to any of the judicial courts’, accepted either of the two options tabled by the latter. Kudos to them!

    Of late, there has been a plethora of cases unearthed by the central and state GST enforcement authorities, involving fraud relating to fake bills and claiming of input tax credits. Within a matter of days, around 50 persons have been arrested and around 650 cases have been booked. While the amounts involved in these unearthed fraud cases aggregate to crores of rupees, it remains to be seen as to how much of it will ultimately get recovered from the fraudsters. It is commendable that the government at both the levels—Centre and the states—has started to truly enforce the GST law and book criminals involved in such illegal activities. Better late than never!

  • Nov 26, 2020
  • GST officials catch massive tax fraud of Rs 2,350 crore, fake invoices, ITC claims

    The GST Intelligence has spotted yet another case of fraud related to the utilization and passing on of ineligible Input Tax Credit (ITC), with bogus invoices. The GST officials have arrested three persons involved in massive frauds involving GST amounting to over Rs 2350 crores, said a statement by the Ministry of Finance. The official found that Sachin Bhoruka, Director/Partner in various firms such as Erman Metals, Pioneer Trading, Marshal Multiventures, etc, was arrested for availing ITC amounting to Rs 485.64 crore and passing on fictitious Input Tax Credit amounting to Rs 485.55 crore. Thus, the total quantum of the fraud committed involved GST amounting to Rs 971.19 crores.

    In a parallel investigation, another person Mahesh Kinger, authorised aignatory of Blue Sea Commodities and Director of Theme Lights was also found engaged in the fraudulent availment and utilization, as well as passing on of ineligible ITC on the basis of bogus invoices issued and received without actual supply of any goods or services. These entities had availed ineligible ITC amounting to Rs 580.23 Crores and had passed on ineligible ITC amounting to Rs 579.76 crores. The total quantum of the fraud committed involved a GST of nearly Rs 1,159.99 crores.

    Further, the GST officers arrested Deepak Kumar Prajapati, Director of Udyog Kiran Ltd due to a similar fraud. The subsequent investigations revealed that Prajapati had set up an intricate web of over 22 firms that indulged in circular trading for the purpose of artificially inflating their turnover so as to avail higher bank loans and credit facilities.

  • Nov 26, 2020
  • GST compensation: Bengal, Kerala too pick option mooted by Centre

    The state governments of West Bengal and Kerala, which have been at loggerheads with the Centre over how to compensate the states for their GST revenue shortfall in FY21, given the paucity of the designated cess funds, also have accepted Option-1 mooted by the latter to meet the shortfall.

    With this, 25 states and all three UTs with legislature — Delhi, J&K and Puducherry — have come to accept the Option-1.

    Under the mechanism, the Centre envisages to borrow a total of Rs 1.1 lakh crore via a special RBI window and transfer the funds to states as back-to-back loans sans any consequent fiscal impact on states.

    Between them, West Bengal and Kerala will get Rs 10,197 crore under the special window. Further, the Centre has granted additional borrowing permission of Rs 4,522 crore to Kerala (0.5% of GSDP) and Rs 6,787 crore to West Bengal. The nod for additional borrowings is meant to be an incentive for states choosing the special window.

  • Nov 24, 2020
  • GST registration process in for overhaul

    The Goods and Services Tax Council will soon consider comprehensive changes to the registration process for new applicants which will make the process stringent for those not opting for the Aadhaar-based authentication, government sources said. The new regulations are aimed at curbing fly-by-night operators who use fake invoices to avail input tax credit (ITC).

    The law committee of the GST Council that met last week has submitted its recommendation on both fresh registrations and on weeding out existing risky taxpayers that are more likely to be involved in the scam. Sources said that suggestion are based on need to curb fake invoice menace while retaining simple compliance norms under GST.

    Existing registrants can be suspended on displaying risky behaviour, including non-filing of return for six months, high proportion of tax payment through ITC and suspicious income-tax profile, sources said. Currently, around 6 lakh GST taxpayers are dormant, and about 35,000 other assessees with more than Rs 50 lakh yearly tax liability have paid as much as 99% of tax through ITC. These taxpayers have also paid less than Rs 1 lakh income tax in the last three years.

  • Nov 23, 2020
  • Fake invoices: GST Council’s law panel suggests online registration with live photo, biometrics

    Central and state tax officials have suggested the option of online GST registration with live photo and use of biometrics to weed out the menace of fake firms claiming input tax credit, sources said. The GST Council’s law committee, which comprises central and state tax officials, has also suggested that a fresh registrant must go for compulsory physical verification and personal identification in case opting for non-Aadhaar authentication based registration process and he or she does not have income-tax return supported adequate financial capability.

    Finance ministry sources said the law committee has suggested that new or fresh registration in GST may adopt Aadhaar like registration process under which new registration can be done online with live photo and use of biometrics with due verification of documents.

    Such facilities can be provided at banks, post offices and GST Seva Kendras (GSKs). The GSKs can work on the pattern of Passport Seva Kendras to provide new registration facilities with required checks on fake registration, a source said.

  • Nov 23, 2020
  • New rules to sign up for GST

    An overhaul of the goods and services tax (GST) registration process and suspension of the registration of businesses identified as risky are among the proposals of a panel of officials attached to the GST Council.

    The proposals by the law committee of the GST Council, comprising central and state officials who advise its ministerial members, aim to tighten compliance measures and target restrictions on firms identified as risky, without affecting the ease of doing business in general, said a finance ministry official.

    The recommendations include the use of Aadhaar or Aadhaar-like biometric identification for new registrations, steps to identify businesses that pose a risk of revenue loss to the exchequer, use of income tax returns to verify the credentials of entrepreneurs seeking GST registration, and restriction on using tax credits from the purchase of raw materials to meet the final tax liability.

  • Nov 21, 2020
  • GST notices for past voluntary tax payments irk assessees

    As the government steps up its offensive against fake invoice rackets, it has started asking taxpayers to explain various aspects of voluntary tax payments made since the goods and services tax (GST) was launched. This has upset the assessees who are dealing with the fallout of the pandemic.

    Under GST, a taxpayer can discharge any outstanding tax liability through a form called DRC-03. This is used by taxpayers to address short tax payment or for discharging liabilities in response to show cause notices from the department.

    The GST administration is required to acknowledge such payments soon after it is made but many assessees told FE that they are getting notices since August even though the department never followed up due procedure after DRC-03 payments were made.

  • Nov 20, 2020
  • GST compliance to hit micro firms soon

    Micro-enterprises will soon begin to feel the heat of the government’s tax enforcement drive, with key compliance measures now covering larger businesses becoming applicable to them over the next few months.

    From December, firms with sales below rs5 crore—defined as micro firms—will not be able to generate an electronic permit (e-way bill) for goods transportation if they have defaulted on filing return forms for two consecutive tax periods.

    The National Informatics Centre, which runs the portal for generating e-way bills, said it will activate this feature for all firms from 1 December irrespective of their turnover. From 15 October, this compliance rule has been applicable for bigger businesses.

  • Nov 18, 2020
  • Centre, states look to tighten GST registration process

    The Centre and states are looking to further tighten the GST registration process and legal measures to deal with the rising cases of fake invoicing.

    A meeting of the law committee of the GST Council has been convened on Wednesday to discuss these issues, finance ministry sources said.

    The committee, comprising senior central and state tax officers, would also discuss the GST fake invoice frauds, further tightening of the GST registration process and work out other legal measures including necessary law amendment required in the GST Act to curb the menace of fake invoicing, they added.

    Also the provisions related to deemed registration under Goods and Services Tax (GST) law may be tightened to prevent the misuse of such provisions by fake dealers and the provisions related to suspension of registration may also be streamlined to make the procedure of suspension and cancellation of registration more efficient and faster, so that such fraud operators can be prevented in time from continuing to pass on fake credit down the chain.

  • Nov 18, 2020
  • Update on Blocking of E-Way Bill (EWB) generation facility, after 1st December, 2020

    In terms of Rule 138E (a) and (b) of the CGST Rules, 2017, the E-Way Bill (EWB) generation facility of a taxpayer is liable to be restricted, in case the taxpayer fails to file their FORM GSTR-3B returns / Statement in FORM GST CMP-08, for tax periods of two or more.
    From 1st December, 2020, onwards, the blocking of EWB generation facility would be made applicable to all the taxpayers (irrespective of their Aggregate Annual Turnover (AATO)) In terms of Rule 138 E (a) and (b) of the CGST Rules, 2017, on the EWB Portal.
    Thus, on 1st December 2020, the System will check the status of returns filed in Form GSTR-3B or the statements filed in Form GST CMP-08, for the class of taxpayers to whom it applies, and restrict the generation of EWB in case of:
    Non filing of two or more returns in Form GSTR-3B for the months up to October, 2020; and
    Non filing of 02 or more statements in Form GST CMP-08 for the quarters up to July to September, 2020

  • Nov 18, 2020
  • Updates on e-invoicing

    From 1-1-2021, Government has mandated e-invoicing for the taxpayers with aggregate turnover exceeding Rs. 100 Cr. (in any preceding financial year from 2017-18 onwards).
    To view the updates on e-invoice – enablement, testing, help options & resources, please CLICK HERE.

  • Nov 17, 2020
  • Fake invoices for GST credit: Govt may invoke COFEPOSA against offenders

    After a nationwide drive against fake invoices that tend to mar the Goods and Services Tax (GST) system, the government is examining if the offenders can be booked under COFEPOSA (Conservation of Foreign Exchange and Prevention of Smuggling Activities Act), apart from taking action against them under GST laws, Income Tax Act and Prevention of Money Laundering Act, sources said.

    The government is also examining whether businesses whose owners or promoters do not have commensurate income tax payment records may require physical and financial verification before their companies can be allowed GST registration

  • Nov 13, 2020
  • Fake ITC invoice scams busted in Delhi and Maharashtra

    The GST intelligence directorate has arrested a Maharashtra lawmaker’s (MLA) son for issuing fake invoices worth Rs 520 crore of input tax credit (ITC), sources in the tax department said. The arrest was part of a pan-India drive undertaken by the indirect tax department’s intelligence wing.
    Sunil Gutte, son of MLA Ratnakar Gutte, was arrested along with his associate after it was found that the firm in which he is a director had been engaged in availing `304 crore worth of ITC fraudulently while also passing Rs 216 crore worth of ITC to other multiple entities. The ITC was availed based on fake invoices without actual supply or receipt of goods and services.

    “It appears the main objective was to inflate the turnover of his firm artificially, and obtain enhanced credit limit from the bank,” an official said.
    About two year ago, Gutte’s brother, a movie director, was also arrested for availing fraudulent IGST refunds. “Their father who owned a sugar mill was also booked by Maharashtra police and enforcement directorate for allegedly availing loans worth Rs 328 crore from six banks, using names of 2,298 farmers, some of whom were dead, from some villages in Parbhani district,” another official said.
    Separately, the central GST commissionerate in South Delhi busted a syndicate of firms involved in availing invoices and e-way bills issued on the GST identification numbers of fake firms and obtaining IGST refunds on these documents.

  • Nov 12, 2020
  • Auto-populated Form GSTR 3B (PDF) for the taxpayers, from the month of October 2020 onwards

    GSTN has earlier introduced Form GSTR-2B, a static statement with details of ITC available for a tax period, for the benefit of taxpayers. GSTR-2B is an auto-drafted Input Tax Credit (ITC) statement generated for every recipient, on the basis of the information furnished by their suppliers, in their respective Form GSTR-1 & 5 and Form GSTR-6 filed by ISD.
    GSTN has also introduced a facility to download pdf statement to taxpayers, who are filing monthly GSTR-1 statement, with system computed values of Table 3 of Form GSTR-3B. This PDF will be prepared on the basis of the values reported by them, in their GSTR-1 statement, for the said tax period.

  • Nov 09, 2020
  • GST infrastructure can now detect, block bogus transactions in real time: Report

    Businesses that are on the tax authorities' radar for Goods and Services tax (GST) evasion will be automatically blocked from issuing electronic invoices when they attempt suspicious transactions.

    The tax department is using data mining and artificial intelligence to identify potentially fraudulent invoices and shell companies, according to a Mint report. The move is aimed at curbing tax invasion and improving the efficiency of the indirect tax system.

    Moneycontrol could not independently verify the story.

    "Now what will happen is that our intervention can also happen almost on a real-time basis. With data analytics, we can identify and block such entities from issuing electronic invoices so that they aren't able to damage the system. While deterring fraudulent elements, this also provides greater simplicity and convenience to honest taxpayers," an official told Mint.
    GST e-invoicing is mandatory from October 1 for companies with an annual turnover of above Rs 500 crore.
    The GST Network (GSTN) on November 8 introduced auto-populated or pre-filled tax forms, which will make the filing process easier.

  • Nov 09, 2020
  • Estimated GST shortfall likely to shrink after growth in revenue

    The Rs.2.35 lakh crore estimated shortfall in Goods and Services Tax (GST) collections in 2020-21 is expected to shrink by almost 15% with revenue seeing positive growth since September and the momentum expected to continue in the remaining five months of the financial year, two finance ministry officials said.

    Overall GST collections that saw their positive growth (this financial year) of 4% in September, after having plunged by 72% in March, posted a year-on-year growth of over 10% in October, when they crossed Rs.1.05 lakh crore. The October number added to the raft of good news about the economy, including car sales and a strong Purchase Manager’s Index score, an indication of a pick up in manufacturing activity.

    Besides positive GST collections since September, the number of states having a year-on-year decline in revenue has reduced from 15 in September to seven in October, the officials added on condition of anonymity. “The trend, if sustained in the next five months, will reduce the gap between projected revenue and actual revenue for FY-21 by about Rs.35,000 crore,” one of the officials said.

    According to official data, 15 regions that saw a fall in revenue in September 2020 compared to the same month last year included Chandigarh (10% drop in GST revenue), Delhi (7%), Sikkim (49%), Arunachal Pradesh (20%), Manipur (19%), Mizoram (42%), Tripura (3%), Meghalaya (6%), Daman and Diu (83%), Karnataka (5%), Goa (23%), Lakshadweep (58%), Puducherry (1%), and Telangana (2%).