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News Indirect Tax-GST

  • Apr 02, 2020
  • March GST collections below Rs 1 lakh cr, way behind target; FY20 govt revenue goal at stake

    Even as the Modi government revised down tax revenue target to Rs 21.6 lakh crore, the low GST collections may make it difficult to achieve even the revised target. GST collections in the month of March stood at a mere Rs 97,500 crore. In March CGST collections stood at Rs 19,183 crore, SGST at Rs 25,601 crore, IGST at Rs 44,508 crore and Cess at Rs 8,306 crore. With this, the full-year GST collection has grown only 4 per cent than the previous year. While the GST for the domestic transaction has shown a growth rate of 8 per cent in FY20, over the revenues last year, GST from imports on goods contracted by 8 per cent on-year.

    Earlier, the government had raised the monthly GST collections target for the last three months of the current fiscal due to lower collections in the previous months.

  • Apr 01, 2020
  • As GST approaches third anniversary, these stumbling blocks still linger implementation

    GST Law is about to celebrate its third anniversary and it has been a roller coaster journey for the law. The GST Council and the government have been very proactive in making amendments in the law to give benefits to various stakeholders including consumers, businesses and field officers. However, there are still some concerns that are turning out to be roadblocks and not allowing the law to settle down completely.

    Technological issues
    In recent years, the Government has given a big push to digital India and it reflects in GST law also. In our country, where computer literacy ratio is around 6% only, implementing a law that is heavily dependent on technology, is a reason for big worry. GSTN portal, itself has been a matter of concern as well as a major setback to the whole legislation.

  • Mar 26, 2020
  • How GST changed the face of Indian tax system; here are six benefits to society

    Goods and Services Tax is considered as the biggest post-independence indirect-tax reformation in India as it has redesigned the whole concept of taxation. Being a techno-driven and consumption-based administration, it is completely transparent and convenient than the previous tax structures. Additionally, it has disregarded evils to society like tax-evasion and bribery. In the long haul, it not only brought an excellent boost to the Indian economy and society but also the government revenue increased. It practically removed the cascading effect of the previous tax system.

    GST is a value-added tax that is collected at each level of a supply chain. In the earlier indirect tax regime, in certain cases, the tax paid on procurements were not available for setting off the output tax liability.

  • Mar 25, 2020
  • GST Return filing date extended, relief from late fee, penalties

    To provide relief to businesses grappling with the economic impact of Covid 19, the government on Tuesday said it is extending the filing of Return for the month of March, April and May 2020 and composition returns under GST June 30.

    Addressing the press, Finance Minister Nirmala Sitharaman added that staggered filing will apply. “While I announce 30th June as the date, specific regions will have dates like 27, 29 or 30th.

    Significantly, the FM also said companies which have less than Rs 5 crore turnover will not have to pay interest, late fee or penalty. For bigger companies late fee and penalty will not apply and only interest at a reduced rate of 9% will be charged. “This is only for bigger companies. Majority of companies will have no interest, late fee or penalty,” said Sitharaman.

    The date for opting for composition scheme has also been extended to June 30, 2020.

  • Mar 23, 2020
  • Startups Find Filing GST Returns A Herculean Task Amid Coronavirus Lockdown

    Work from home is and should be the norm given the critical situation in India today. However, with this comes a few challenges for startups and even bigger corporates. One such challenge faced by companies is that the employees who take care of filing tax and GST returns and generating e-way bills are not able to access their office systems.

    While the safety of the employees is the primary concern for the startups, they may face compliance delays due to this. The challenge is especially high for early-stage startups with limited access to financial tech applications.

    Limited Resources And Complicated GST Process The process of filing GST itself from consolidating bills of expenses and purchases from different teams, validating and entering on the accounting systems, calculating GST due from sales and more is complicated. And, it usually happens in the last week of the month and under the current situation, it could be difficult for a lot of companies.

    “A lot of people use systems like Tally ERP which is not very ‘online’ or remote-friendly. Invoices are in the office, and people have not taken them home. In a lot of industries, there are policies that prevent people from carrying sensitive financial info out of their offices,” said Mohammed Iqbal, founder, WaterScience.

    Another imminent concern could be liquidity itself, as a huge part of receivables collections also happens towards the end of the month. “How will you pay GST if you don’t have money in the bank?” asks Iqbal.

  • Mar 18, 2020
  • Can’t comply with summons due to coronavirus: Companies, banks, NBFCs tell taxman

    Many companies, exporters, banks and NBFCs have refused to comply with the summons served by the revenue department due to Coronavirus scare.

    These companies have served legal responses to the tax department stating that none of the executives would be able to meet the revenue officials due to COVID-19 scare.

    The legal responses — or notices — filed by the companies claim that most of the senior officials are already working from home and to expect them to travel would put their lives in risk.

    “It should be noted that to comply with the summons proceedings, our personnel will be required to travel.. COVID-19 is an imminent life-threatening disease and travel of company personnel, unless absolutely unavoidable, is discouraged,” one of the notices served to indirect tax officials by an automobile major reads.

    “It should be noted that to comply with the summons proceedings, our personnel will be required to travel.. COVID-19 is an imminent life-threatening disease and travel of company personnel, unless absolutely unavoidable, is discouraged,” one of the notices served to indirect tax officials by an automobile major reads.

  • Mar 17, 2020
  • SGST short of FY20 target by a quarter

    The states’ own GST revenues — SGST receipts minus the compensation from the Centre — were short of the aggregate protected level by Rs 1.15 lakh crore or 23% in April-February this year, according to data reviewed by FE. The gap will likely remain roughly at the same level in percentage terms for the year as a whole, implying an annual shortfall of a whopping Rs 1.25 lakh crore. Clearly, the compensation funds will fall short of bridging the gap.

    In April-February, the GST compensation cess collection has come in at Rs 90,450 crore, while the disbursement for April-November period itself was higher at Rs 1 lakh crore. The Centre has used about Rs 28,000 crore of the Rs 47,271 crore absorbed by the Consolidated Fund of India in FY18-FY19 period as ‘surplus’ revenue from the GST compensation cess to reduce the state governments’ GST revenue shortfall in FY20. There could still be a shortfall of Rs 25,000 crore or thereabouts for the states from the protected revenue level in the current year.

    Nearly all large states saw a doubling of the gap between SGST and protected revenue this fiscal from last year’s level in the April-February period, with the highest deficit being for Punjab (46%), followed by Kerala, Karnataka, Gujarat, Bihar and Madhya Pradesh (see chart). The protected revenue refers to the constitutional guarantee provided to the states that their GST collection would grow 14% year-on-year.

  • Mar 16, 2020
  • Bridging the gap: Centre may borrow to meet GST shortfall; rate increased on mobile handset

    The Centre is mulling borrowing from the market to compensate States in the event of a GST revenue shortfall. In the meantime, the GST Council has decided to hike the levy on mobile handsets and hand-made matches, while lowering it on Aircraft Maintenance, Repair & Overhaul (MRO) services.

    Total collection from GST Compensation Cess stood at over Rs. 78,000 crore, while the total compensation payout is more than Rs. 1.20 lakh crore during the current fiscal year.

    Finance Minister Nirmala Sitharaman, who is also Chairperson of the GST Council, reiterated that the Centre is maintaining what is stated in law in terms of compensation payout. The law prescribes that the Centre has to pay the revenue deficit to States for first five years from the introduction of GST, if growth of GST revenue collection is less than 14 per cent.

    Since, collection from cess is less than what is required to be paid, there is a proposal to borrow from the market. Sitharaman said there are many issues such as guarantees on those borrowings, the rate of interest and the impact on FRBM (Fiscal Responsibility and Budget Management), besides others.

    She said that she would take legal opinion and discuss the matter with the GST Council. There will be a special meeting of the Council to discuss this proposal, which is expected to take place 2-3 weeks after the ongoing Budget session of Parliament.

  • Mar 14, 2020
  • GST query: Vendors on e-commerce platforms get notices

    Hundreds of online vendors selling goods on e-commerce platforms like Amazon and Flipkart have received notices from the GST authorities to explain the differences in sales numbers reported by the e-commerce operators when they collected tax at source (TCS) and the sales reported by the sellers in their monthly return GST-3B. Large-scale evasion is suspected as taxpayers seem to have under-reported sales and paid lower taxes in self-declared returns.

    The notices pertain to the October 2018 to September 2019 period. Taxpayers have asked to explain the mismatch within three days of receipt of notices. As FE had reported in December, the taxman had stumbled upon instances of huge discrepancies in taxable value brought out by two different modes of reporting.

    “It is good that the system is detecting such fraud as such practices put undue pressure on honest and genuine sellers. We had supported the concept of TCS for online sellers precisely for this reason,” a vendor said, on condition of anonymity.

    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.

  • Mar 14, 2020
  • Amit Mitra writes to FM: Not right time to hike GST rates

    Arguing against the planned move to correct inverted duty structure in Saturday’s GST Council meet by hiking tax rates for a few mass-consumption items produced by employment-intensive sectors, West Bengal finance minister Amit Mitra asked Union Finance Minister Nirmala Sitharaman that such changes could wait till the economy stabilised.

    In an attempt to correct one type of error concerning the goods and services tax (GST) rates, namely inverted duty structure, the Council might end up causing further downturn in job-intensive sectors and the agrarian economy, Mitra cautioned in his letter to Sitharaman.

    Rate hikes for several items including textiles, footwear, fertilisers, mobile phones, tractors and renewable-energy devices have been recommended by a fi-tment committee under the Council. Inverted duty structure denotes prevalence of higher taxes on inputs than on finished items.

    Mitra wrote: “Markets in India are facing a double whammy with stagflation on one hand and the looming effects of the coronavirus outbreak on the other … May I urge you not to make changes in the rate structure during these perilous economic times, particularly keeping in mind the interest of the common people.” FE

  • Mar 12, 2020
  • GST on cellphones, footwear, textiles to be rationalised on March 14

    The GST Council is likely to rationalise tax rates on five sectors, including mobile phones, footwear and textiles, and defer implementation of the new return filing system and e-invoicing in its meeting on March 14.

    The Council, chaired by finance minister Nirmala Sitharaman, would also discuss operational glitches on the GST Network portal and seek a resolution plan from Infosys, which has won the contract for managing back-end for GSTN in 2015, officials said.

    Further, ways to augment revenue collection would also be discussed as the Centre has made it clear to the states that it does not have money in compensation funds to pay off the states for loss in revenue due to the goods and services tax (GST) implementation.
    The Council would also discuss the integration of the GST e-way bill system with the NHAI's FASTag mechanism from April to help track movement of goods and check GST evasion, while also discuss preparedness for Aadhaar-based authentication of GST-registered taxpayers.

  • Mar 12, 2020
  • FinMin flags 17 'areas of dissatisfaction' with Infosys-designed GSTN

    The finance ministry has flagged 17 'areas of dissatisfaction' with Infosys-designed GST Network, including transition issues for taxpayers in Jammu and Kashmir, Aadhaar verification and lack of scalability of server. The other areas which the ministry has flagged as "unresolved or late resolved" with Infosys include delay in providing software for blocking of e-way bill generation in cases of non-filers of GSTR-3B.

    Besides, new supply code for point of sale outside India, or deploying a feature that would allow assigning registration application to the same jurisdictional officer after past rejection (a decision on which had been taken in early 2019), were also flagged by the ministry.

    Infosys, which in 2015 won the contract for managing backend for GST Network (GSTN), has drawn flak from the ministry over the tech glitches, some of them have been unresolved for almost two years.

    The finance ministry has sought an urgent resolution plan from the Bengaluru-based software giant to address these tech glitches and the 17 areas have been highlighted by the government, sources said.

  • Mar 09, 2020
  • New imposts, cess hikes preferred ways

    The Goods and services tax (GST) Council, at its next meeting likely by the end of this month, will devise a mechanism on how additional funds would be found to bridge the states’ GST ‘revenue shortfall’, given that the designated corpus has fallen short of the requirement, according to official sources.

    The obvious options are to restructure the GST slabs and raise the aggregate rate to the revenue-neutral level envisaged before GST’s launch or hike the cesses, through which the compensation funds for states are mobilised or introduce new such imposts.

    As a comprehensive GST rates overhaul may be postponed for a later date — finance minister Nirmala Sitharaman recently said she preferred the system to stabilise before another major rates rejig — there is greater chance of the Council resorting to the cess route.

    Speaking at the Indian Express group’s Idea Exchange programme recently, finance secretary Ajay Bhushan Pandey said the relevant law was clear that the Centre could make payments only from the compensation proceeds generated out of cesses levied on items under GST, for bridging the states’ revenue shortfall.

    “Whatever money comes in that (compensation) fund, only that money can be paid (to states). Now, if there is a shortfall (against states’ guaranteed revenue growth of 14%) which is more than what could be overcome by compensation fund, the GST Council will take a decision on what measures can be taken to either increase the cess amount or consider the rates or take any other measure”.

  • Mar 09, 2020
  • E-invoicing under GST may be deferred

    The government is considering deferring the implementation of e-invoicing under goods and services tax (GST) by three months to July 1, two officials aware of the development said, adding that the Goods and Services Tax Council may consider such a proposal at its meeting on Saturday.

    “It (deferment) is being considered… The Council has to take up the matter at the meeting… they may announce it after the meeting and consultation with states,” one of the officials said, asking not to be named.

    Trials to upload e-invoices on the GST Network (GSTN) — introduced in January — have seen lukewarm response, and barely 1% of registered businesses under the GST regime used it, the other official said.

    “We need feedback… if only a few companies upload e-invoices now, we will not know the shortcomings of the system. When it becomes mandatory from April 1, a deluge will inundate the system, and then people will say that the government’s systems are not working,” the official added, requesting anonymity.

  • Mar 04, 2020
  • GST officials bust fake invoicing racket

    GST officers in Delhi have busted a racket of fake invoicing worth Rs 7,896 crore using a network of 23 shell companies.
    The officers of Anti Evasion wing of Central Tax, Delhi West Commissionerate have busted a major racket of fake invoicing of Rs 7,896 crore involving fraudulent Input Tax Credit (ITC) of Rs 1,709 crore, using a network of 23 shell companies, Finance Ministry said in a statement.

    These companies procured and generated invoices without the actual supply of goods and availed as well as passed on input tax credit.

    Two persons were arrested on February 29, and were remanded to 14 days judicial custody.

    The accused persons were evading tax by creating several dummy firms for the purpose of passing on input tax credit by generating fake invoices.

    "They also used banking transactions to make input tax credit appear genuine. These firms issued the fake invoices to buyers, who availed fraudulent input tax credit without actually receiving any goods and defrauded the exchequer by way of availing ineligible input tax credit towards GST liability,” the statement added. PTI JD DRR DRR

  • Mar 03, 2020
  • GST receipts get a compliance boost as efforts to increase collections pay off

    Goods and Services Tax (GST) collections, in aggregate, are still way below the targets set by the authorities, but their efforts to improve compliance, check excessive use of input tax credits and frustrate frauds like fake invoicing are paying off, albeit gradually.

    Since the Centre cut its own budget estimate for GST by over 8% to Rs 6.1 lakh crore, it would likely meet the revised estimate, even with the current pace of collections; but in order to be able to meet the gross collections target, which includes fully compensating the states for any revenue shortfall from the assured annual-growth level of 14%, the March mop-up requires to be an impossibly high Rs 1.4 lakh crore. The compliance rate of monthly returns filing by the registered taxpayers rose to over 80% in February (for January transactions), from just 59% in May 2019. Since the filing of the GSTR 3B, the monthly return, involves discharge of the self-assessed tax liability, the increase in filing of these returns has pushed up collections, especially in the four months to February.

  • Mar 02, 2020
  • GST collections at Rs 1.05 lakh crore in February

    The government on Sunday said it has collected Rs 1.05 lakh crore as GST revenue in February, up 8 per cent over the same month last year.

    The collection from Goods and Services Tax (GST) in February was, however, lower than the Rs 1.10 lakh crore collected in January 2020.

    "The gross GST revenue collected in the month of February, 2020 is Rs 1,05,366 crore of which CGST is Rs 20,569 crore, SGST is Rs 27,348 crore, IGST is Rs 48,503 crore and Cess is Rs 8,947 crore," the finance ministry said in a statement.

    The total number of GSTR 3B returns filed for the month of January up to February 29 stood at 83 lakh—same as last month.

    The government has settled Rs 22,586 crore to CGST and Rs 16,553 crore to SGST from IGST as regular settlement.

    "The total revenue earned by Central Government and the State Governments after regular settlement in the month of February, 2020 is Rs 43,155 crore for CGST and Rs 43,901 crore for the SGST," the statement added.

    The GST revenues during the month of February from domestic transactions has shown a growth of 12 per cent over the same month last year.

    "Taking into account the GST collected from import of goods, the total revenue during February, 2020 has increased by 8 per cent in comparison to the revenue during February, 2019," the statement said.

    During this month, the GST on import of goods has shown a negative growth of (-) 2 per cent as compared to February 2019, it added.

    Meanwhile, Deloitte India Partner M.S. Mani said with the monthly collections now stabilising at over Rs 1 trillion per month, the GST authorities would now go all out to enhance the March collections so that the deficit is reduced to the extent possible.

  • Feb 29, 2020
  • GST: Changes and method to claim Input Tax Credit answered

    Ever since the GST came into effect on July 1, 2017, the Indian economy has seen a plethora of regulations implemented by the GST council. Now the department is using analytics to keep tab on the errant taxpayers who are claiming excess input tax credit or to track some taxpayers who are not serious about the matching of their GSTR - 3B with their GSTR - 2A. The Input Tax Credit (ITC) is one of those regulations that is causing some confusion among the masses. Here is a brief explanation of what ITC means, how it will affect the masses- especially small business owners, and what are the necessary steps needed to be taken.

    What is ITC?
    Input tax credit (aka ITC) is the subtraction of the tax money you have paid on inputs on the final output bill.

    Who can avail of ITC?
    ITC is available to an entity only when it is covered under the GST Act. Any manufacturer, supplier, agent or e-commerce operator aggregator must be registered under the GST if it is to become eligible to claim the ITC on their purchases which are used in the course and furtherance of business.

  • Feb 26, 2020
  • Indirect tax dept issues notices to companies over late input credit claim under GST frame

    The indirect tax department has issued notices to thousands of companies that had claimed input tax credit under the goods and services tax framework after missing the deadline to do so, and asked them to reverse the transaction.

    These companies had claimed the input tax credit for fiscal 2018 and 2019 after missing the September deadline. The tax department has asked them to reverse the transactions and pay interest on the wrongly claimed credit, people in the know said.

    Input tax credit is a mechanism whereby companies can set off GST paid on raw materials or input services against future tax liabilities.

    “It is noticed that you have filed returns after the due date specified for availing (of) input tax credit for discharging your tax liability. You shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date for furnishing of returns,” a tax notice seen by ET reads.
    Tax experts said these notices could be challenged in the court.

  • Feb 24, 2020
  • Lotteries to attract 28 per cent GST from March 1

    A 28% Goods and Services Tax (GST) will be levied on lotteries from March 1, according to a notification. Last year in December, the GST Council had decided to impose a single rate of 28 per cent on state-run and authorised lotteries.

    The revenue department notified the GST rate on supply of lotteries and amended its earlier Central Tax (Rate) notification.

    Accordingly, the Central Tax rate for supply of lotteries has been amended to 14 per cent and a similar percentage will be levied by the states.

    This will take the total GST incidence on lotteries to 28 per cent.

    "This notification shall come into force on the 1st day of March, 2020," the revenue department notification said.

    Currently, a state-run lottery attracts 12 per cent GST, while a state-authorised lottery attracts 28 per cent tax.

    There were demands that a uniform tax rate should be imposed on lotteries following which a group of ministers were set up to suggest the GST rate. Following this, the GST Council in December voted for a single rate of 28 per cent on supply of lotteries.