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News Indirect Tax-GST

  • Jul 27, 2021
  • GST on annuity received for construction of roads – A never ending chaos!

    This indeed is the stance of the Government in resolving various grey issues left unanswered under GST. One such issue is taxability of annuity received by the concessionaires from Government/NHAI in execution of road projects.

    Before the deep dive, it is pertinent to understand where the problem persists. The execution of road projects for NHAI typically could be undertaken by contractors under following models:

    Engineering Procurement & Commissioning (EPC) /Build and Transfer Model
    Build, Operate & Transfer (BOT) – Toll Revenue/Annuity Model
    Hybrid Annuity Model – which is a combination of EPC + Annuity Model

  • Jul 26, 2021
  • GST: End hibernation on dispute resolution

    The adage “old is gold” is not necessarily true, and has exceptions. The same applies to the pre-GST indirect tax landscape of India. The long-queues of trucks at state-borders (with entry upon cascading and exorbitant entry taxes), the rampant tax evasion on inter-state characterisation of local sales, etc, and the incoherent and localised VAT policy, with cascading effect, rate-wars between states, etc, many ills marked the past. Hence, GST is a shining example of the present being better than the past. Having said that, the foundations of a bright future do not rise on a stand-still present. In fact, more work is required, over the hard work already done. Unfortunately, time is not on the side of the policymakers. The expected buoyancy of GST collections is yet to be achieved, many distortionary taxes (like stamp duties and those on petroleum, electricity, stamp duties) continue. The clock is ticking, and it is now less than a year before the true contours of cooperative federalism, the idea on which GST is based, begin to get perceived. Some policy issues are identified here as requiring urgent action.

  • Jul 23, 2021
  • Govt conducts review of legal issues in GST system: Report

    The Centre has begun a comprehensive review of the Goods and Services Tax (GST) law to examine issues that have emerged in the system.

    The review will also examine whether services provided by back offices of multinational companies in India qualify as exports, which currently have a GST rate of zero, The Economic Times has reported.

    There is also confusion over whether GST is applicable on discounts, which are reimbursed by FMCG and consumer durables companies to their dealers. The review is expected to simplify the law and reduce disputes related to the indirect tax, the report said.

    Moneycontrol could not independently verify the report.
    A government official told The Economic Times that the issues will be taken to the officials' committee of the GST Council for discussion. A detailed report will be prepared after feedback and sent to GST Council for a final decision.

  • Jul 23, 2021
  • PIL seeks setting up of GST tribunal to cut backlog of cases

    A PIL in the Supreme Court has sought directions to the Centre for setting up of the Goods and Services Tax Appellate Tribunal, as mandated under the Central Goods and Services Act, 2017, to avoid hardships caused to litigants and to curb huge backlog of cases.

    Even after four years of the CGST Act coming into existence, the tribunal has not been constituted, activist lawyer Amit Sahni alleged in its PIL. The GST Bill was passed in both the Houses of Parliament in 2016 and the Central Goods and Services Act, 2017, came into force from July 1 that year only.
    “The constitution of National and other Benches of the appellate tribunal under Section 109 of the CGST Act, 2017 is an absolute necessity of the hour and the respondents (government) cannot drag its constitution for an indefinite period,” Sahni said, adding that the litigants are unable to get speedy justice.

    Stating that the government was deliberately not setting up the GST tribunal, Sahani said GST was introduced with the objectives to simplify the taxation laws by subsuming multiple tax laws at different central and state levels into a single one and to lessen the burden of payment of multiple taxes from the shoulder of common citizens.

  • Jul 19, 2021
  • GST to be paid only on margin earned on resale of second-hand jewellery: AAR

    Jewellers will have to pay GST only on the profit earned on resale of second-hand gold jewellery, Karnataka AAR has ruled. The application to the Authority for Advance Ruling (AAR) was filed by Bengaluru-based Aadhya Gold Private Ltd seeking clarity on whether GST is to be paid only on the difference between the selling and purchase price if it purchases used/second- hand gold jewellery from individuals and there is no change in the form/nature of goods at the time of sale.

    The Karnataka bench of the AAR observed that GST is payable only on the margin between the sale price and the purchase price, since the applicant was not melting the jewellery to transform it to bullion and then recreating it into new jewellery, but rather cleaning and polishing the old jewellery without changing the form of the jewellery purchased.
    Experts said this ruling will reduce the GST payable on resale of second-hand jewellery. Currently, the industry usually charges GST at three per cent rate on the gross sale value received from the purchaser. AMRG & Associates Senior Partner Rajat Mohan said most jewellers procure old jewellery from common man/unregistered dealers, obliviating the need for credit of taxes in the hands of jewellers.

  • Jul 17, 2021
  • Government tenders to attract GST, deemed a service

    The government’s tendering process is all set to come under the goods and services tax (GST) umbrella after a tax ruling has said it constitutes supply of services.

    In a recent ruling Maharashtra Authority for Advance Ruling (AAR) said any tendering should attract GST on the processing fee and that 18% GST should apply wherever such forms are bought online or offline.

    Tax experts interpret this in two ways. While one view is that the tendering process should be exempt, the second one holds that tender processing fees do not specifically find mention in the exemption notification, hence should be taxable.

  • Jul 15, 2021
  • GST only on monthly maintenance over Rs 7,500: Madras HC

    In a relief to resident welfare association (RWA) members across middle and high-end housing societies, the Madras High Court has ruled that the goods and services tax (GST) is applicable to monthly maintenance amount exceeding RS. 7,500 only and not on the full amount.

    The decision overturns a 2019 circular issued by the Central Board of Indirect Taxes and Customs, which said exemption shall be granted only if the charges are limited to RS. 7,500 per month and that full amount will be taxed beyond that.

    The high court also quashed an Authority of Advance Rulings (AAR) order of 2019, which said that an exemption was permissible only if the contribution was up to RS. 7,500. In case the contribution was more than RS. 7,500, then exemption would not be valid and the full amount would have to be taxed, it said.

  • Jul 09, 2021
  • Authorities tracking RFID data to detect GST evasion, fraud

    Tax authorities have started tracking Radio-frequency identification (RFID) tags on commercial vehicles to detect Goods and Services Tax (GST) evasion and fraud by business owners.

    The authorities are comparing electronic permits issued for transporting goods and RFID tags that commercial vehicles use to pass through toll plazas to identify mismatches, reported livemint.com.

    By comparing details furnished at the time of generating e-way bills for goods movement with the actual movement of commercial vehicles at toll plazas, GST officials are trying to identify business owners who are evading GST. It may be noted that e-way bills are required for the transportation of goods more than Rs 50,000 by a GST-registered business or individual.

  • Jul 08, 2021
  • Airbus India liable to 18% GST on ‘intermediary services’ to overseas holding firm

    Airbus India’s technical advisory and procurement services for its France-based holding company are ‘intermediary services’ and liable to 18 per cent GST, Authority for Advance Ruling has said.

    Airbus Group India had approached the Karnataka bench of the AAR, seeking a ruling on whether the services rendered by it to its holding company Airbus Invest SAS, France, would qualify as ‘export of service’ under Goods and Services Tax (GST) law and hence construed as a ‘zero-rated supply’.
    The applicant — Airbus Group India Pvt Ltd — is a subsidiary of Airbus Invest SAS, France, (Holding company) and its ultimate holding company is Airbus, SE Netherland.

    Airbus India was established as a regional entity for performing services that include – procuring raw materials, assessing quality and risk evaluation, receiving a quotation from suppliers and sharing it with holding company, reviewing deadline of production, audit of the procurement process, report un-ethical suppliers’ practices.

  • Jul 03, 2021
  • Foreign crypto exchanges in India may have to pay 18% GST as the government mulls over taxation

    With the Indian government mulling over new laws to regulate cryptocurrencies in the country, the indirect tax department is looking into whether overseas exchanges need to pay the Goods and Service Tax (GST) at 18%.
    The 18% slab is meant for capital goods and industrial intermediaries, among other times, while the highest slab of 28% applies to luxury goods, like automobiles. It’s the same as the tax on brokerage with trading in conventional shares on the stock market.Indian crypto exchanges already charge their users GST. The tax is built into the trading fee that exchanges add to the buying price of Bitcoin, Ethereum and more. The exchanges pay GST to the government as part of their general tax payments.

  • Jul 01, 2021
  • GSTN enables functionality to lodge complaint of PAN misuse for GST registration

    GSTN, which handles the technology backbone of the Goods and Services Tax, has enabled an utility to lodge complaints relating to misuse of PAN for obtaining GST registration, a move aimed at curbing creation of bogus entities for the purpose of tax evasion. Any person whose PAN has been misused can lodge such a complaint. Following that, it would be sent to the concerned tax officer under whose jurisdiction the registration has taken place fraudulently for further action.

  • Jul 01, 2021
  • GST 4th anniversary: Finance Ministry to issue appreciation certificates to 54,439 GST payers

    The finance ministry on Wednesday said it will issue certificates of appreciation to over 54,000 GST payers for timely filing of returns and cash payment of the tax, to mark the fourth anniversary of the historic tax reform Goods and Services Tax.

    More than 66 crore GST returns have been filed so far and lower rates have helped increased tax compliance, the ministry said, adding GST revenues have steadily grown and have been above the Rs 1 lakh crore mark for eight consecutive months in a row.

  • Jul 01, 2021
  • Enhanced GST revenue collections should now be 'new normal': FM Nirmala Sitharaman

    Commending taxmen for the enforcement measures in dealing with GST fraud, Finance Minister Nirmala Sitharaman on Thursday said the enhanced revenue collection in the recent months should now be the 'new normal'. In a message to tax officers on the fourth anniversary of historic tax reform GST, she said in the last four years the taxpayer base has almost doubled from 66.25 lakh to 1.28 crore. She said for eight months in a row, GST revenues have crossed Rs 1 lakh crore mark and we have seen record GST revenue collection of Rs 1.41 lakh crore in April 2021. 'Commendable work has been done in the year gone by both in the area of facilitation and enforcement with numerous cases of fraudulent dealers and ITC being registered. The enhanced revenue collection in recent months should now be the 'new normal',' Sitharaman said.

  • Jun 29, 2021
  • It’s time to revisit the basics of GST

    GST has failed to deliver the promise. Even after four years, the IT backbone for its full implementation is not in place. The tax buoyancy has been far below expectations and with Covid, the shortfall has ballooned. The compensation payments are delayed and in arrears. And now, as the compensation guarantee period is drawing to an end, most states are drifting to the precipice of sudden fall in revenue and inevitable fiscal crisis. There is a lack of dialogue on these issues—the GST Council failed to meet for more than six months at a stretch and when it finally did, some veterans of the Council openly complained of the undemocratic manner in which the business was transacted. The discussions have degenerated to party alignments. A former Union finance minister feared that the time might come to script an elegy for the GST.

  • Jun 29, 2021
  • CM Manohar Lal Khattar approves GST reduction on services related to Covid management

    Haryana chief minister, Manohar Lal Khattar on Monday accorded approval for the notification related to the reduction of GST rates of goods and services relating to Covid-19 treatment and management as recommended by the GST council.
    The GST council, in its 44th meeting held on 12 June 2021, had reduced the GST. This notification shall be deemed to have come into force with effect from June 14, 2021 and shall remain in force up to and inclusive of September 30, 2021.
    Sharing more details in this regard an official spokesperson said that as per the notification the GST rates on two medicines namely Tocilizumab and Amphotericin B would be removed/fully exempted.

  • Jun 29, 2021
  • Re-orienting GST with focus on the taxpayer

    On the fourth anniversary of GST, a historic tax reform, these words of wisdom hold great significance to policymakers and administrators. India has crossed several important milestones over the last three years of GST. The monthly revenue collection has crossed the Rs 1 lakh crore mark for the last eight months in a row. Is this not an opportune moment to introspect as to what needs to be done now to make GST a sustainable and dependable revenue stream in the future?

  • Jun 28, 2021
  • Goa notifies GST reduction for Covid drugs, equipment

    Following the Goods and Services Tax (GST) Council decision to cut rates on Covid-related medicines, oxygen concentrators and testing kits, the state government has notified the reduction in GST rates on 18 items.
    While the GST has been completely withdrawn on Tociluzumab and Amphotericin-B, all the other products will be levied with a nominal rate of 2.5% state GST.
    The notification issued by under secretary for finance Pranab Bhat said that the special GST rates would be applicable till September 30.

  • Jun 28, 2021
  • Four years of GST: The good, bad and ugly

    On Friday, Tamil Nadu Finance Minister P Thiaga Rajan sparked a controversy, when he said that the implementation of the Goods and Services Tax (GST) was faulty and that there is a need to
    re-tool and restructure it.“Sensible people may agree or disagree on a design or system or platform, but logic says you keep re-evaluating based on the outcomes. Have you achieved the goals you wanted? Have you avoided the failures you feared? If the answer to both those is ‘no,’ logical people would say ‘re-tool, re-structure’,” Rajan said while addressing a virtual meeting organised by IIM-B’s Alumni Association, Chennai Chapter on ‘Tamil Nadu: The Road Ahead’. The criticism may sound “strongly worded” but as the GST regime is set to complete four years this week, even its strongest supporters agree that the GST regime is still a work in progress and there is a need for many structural changes for a more stable and hassle-free system.

  • Jun 26, 2021
  • EXPLAINED | How does the govt monitor profiteering after GST rates are cut?

    On June 24, the National Anti-Profiteering Authority (NAPA) directed the Central Board of Indirect Taxes and Customs and Goods and Service Tax Officials to ensure that the recent GST cuts in essential Covid items is passed onto customers by retailers, suppliers and manufacturers.

    At its meeting on June 12, the all-powerful Goods and Service Tax Council slashed the GST rates on a number of items crucial in the fight against COVID-19 pandemic. These include essential medicines, oxygen, oxygen generation equipment and related devices, and diagnostic and testing machine kits.

    The items on which rate cuts were made include Remdesivir, Tocilizumab, medical grade oxygen, oxygen generator, ventilators, masks, COVID testing kits, oximeters, hand sanitisers, cremation furnaces, ambulances, temperature checking devices and others. These cuts are applicable till September 30.

  • Jun 25, 2021
  • Sanitisers medicaments or disinfectants? Companies, GST dept lock horns

    Companies making hand sanitisers as well as raw materials have come under the lens of the Director General of GST Intelligence for allegedly incorrectly categorising these products and evading tax. But the matter, as it turns out, is not so simplistic as it seems. Pharmaceutical companies have argued that hand sanitisers are medicaments but the taxman believes them to be disinfectants.

    Things get further complicated as medicaments are liable for 12 per cent GST but disinfectants are under the 18 per cent GST bracket. According to the GST framework, anything that is used as medicine or used to manufacture medicine is categorised under medicaments, while soaps or liquids used as soaps are categorised under disinfectants.

    According to a report in The Economic Times, the GST department's investigation arm, DGGI, has initiated an investigation in this regard as well as sent notices to some companies. The DGGI has said in the tax notice, as seen by the daily, that 'medicaments' consist of mixed or unmixed products for therapeutic or prophylactic use in measured doses.

    Manufacturers have maintained their stand and a group of Gujarat-based pharmaceutical companies have even approached the Supreme Court in this matter. The apex court has directed them to approach the high court against the GST department. Makers have argued that hand sanitisers are crucial in the battle against COVID-19 and are therefore equivalent to medicaments that should be taxed at 12 per cent.

    The daily stated that hundreds of companies in Gujarat and Maharashtra are under scrutiny. Some of these companies make sanitisers, similar products, or raw materials for such items.

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