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News Indirect Tax-GST

  • Oct 23, 2021
  • Opinion: Southern States should coact on GST

    On 29 September, for the first time, five FICCI southern State councils — Karnataka, Kerala, Tamil Nadu, AP and Telangana — came together and organised a GST Southern State Finance Minister’s conclave. The industry Minister of Karnataka, and Finance Ministers of Kerala and Tamil Nadu shared their views. It was a very good start because the Southern States must reach a consensus on the GST issues.

    Five top issues faced by the industry were presented to the ministers. These were restructuring of the Advance Ruling Authority to make it more effective, making the GST officials more accountable, notification of the GST rating section of the CGST Act 2017, non-denial of Input Tax credit claimed on genuine transactions and constitution of the GST Appellate Tribunals immediately. Many of these recommendations are in the realm of the GST Council and the Central GST authorities

  • Oct 23, 2021
  • GST revamp: Group of state finance ministers for steps to eliminate fake input tax credit claims

    GoM decided to benefit from international experiences to improve compliance and reporting of B2C supplies, the official said. It was recognised that in order to improve analytics there is a need to take proper feedback from tax administrations to enable adequate learning by the systems in the place.

    The members of the GoM also agreed to have suitable checks and balances to tackle menace of fake invoicing so as to regulate input tax credit outflows. Central tax authorities had booked about 8,000 cases involving fake ITC of over Rs 35,000 crore in FY21. While misuse of the beneficial provision of ITC under GST regime was the most common mode of evasion under the GST law, the scale if this was worrisome, the government had stated earlier.

    The GoM also decided to call for inputs and suggestions from states on various GST system-related issues. The group has instructed the officers to examine the suggestions and present its analysis along with recommendations before the GoM within a period of one month, the official added.

  • Oct 22, 2021
  • Only goods supplier can seek GST advance ruling

    The Maharashtra bench of the GST Authority for Advance Rulings (AAR) has rejected an application filed by a Mumbai-based private company as it was not the supplier of goods or services, but the recipient. Additionally, it related to a supply that had already been completed as on the date of the application instead of being undertaken or proposed to be undertaken.
    In this case, the Mumbai company — USV — had entered into an assignment deed dated November 30, 2019, with Novartis, a Switzerland-based pharma company. The latter had agreed to permanently transfer the trademark rights related to the Indian territory for ‘Jalra’ and ‘Jalra M’. The effective date of the transfer was either December 10, 2019 or the date of the receipt of the entire consideration by the Swiss company, whichever is later. USV paid full consideration in two tranches before this date.

  • Oct 20, 2021
  • Canteen services for employees out of GST net

    Canteen charges collected from employees will now be outside the gamut of goods and services tax following a tax ruling that offers some relief to several large industrial and manufacturing units.

    In a recent ruling, the Gujarat Authority for Advance Ruling (AAR) said that GST is not applicable on the amount collected from the employees towards canteen charges, which is paid to the canteen service provider.

    Tax experts say this has been an issue of debate amongst several companies that have to provide food canteens as part of the existing law.

    In most cases, a token amount is collected from the employees.

    The AAR ruled that in cases where the company is not making any profits on this amount and merely acting as an intermediary, GST cannot be levied.

    In earlier two AAR rulings, a different view was taken by two different authorities.

    In the case of Tata Motors, the AAR had ruled that GST is not applicable on such an amount while in the case of Amneal Pharmaceuticals, a contrary view was taken in the ruling.

    "The provision of canteen services for employees and GST payment thereon has been a matter of discussion across the industry and various rulings have been pronounced in favour of and against the applicant in the said matter," said Rakesh Nangia, managing partner of Nangia Andersen India. "In the backdrop of differing opinions from various authorities, appropriate clarification from the Central Board of Indirect Taxes and Customs may put to rest this issue and enable the industry to adopt a correct clear view."

  • Oct 19, 2021
  • Advisory for taxpayers on Form GSTR-2B

    Form GSTR-2B is an auto-drafted ITC statement which is generated for every normal taxpayer on the basis of the information furnished by their suppliers in their respective GSTR-1/IFF, GSTR-5 (non-resident taxable person) and GSTR-6 (input service distributor). This statement indicates availability and non-availability of input tax credit to the taxpayer against each document filed by their suppliers and is made available to the taxpayers in the afternoon of 14th of every month.

  • Oct 18, 2021
  • Availability of Input Tax Credit (ITC) for FY 2020-21

    As per Section 16(4) of CGST Act, 2017, no taxpayer shall take input tax credit in respect records (invoices and debit notes) for supply of goods or services (or both) for Financial Year 2020-21 after the due date of furnishing the return for the month of September 2021. The due date for the GSTR-3B for September 2021 is either 20th October 2021 for monthly filers and 22nd or 24th October 2021 depending on the State/UT of registration of the taxpayer. In view of the same, the following may kindly be noted:

    i.)Records (invoice or debit notes) pertaining to Financial Year 2020-21 reported in GSTR-1 after due date of GSTR-3B of September 2021 will not reflect as “ITC Available” in GSTR-2B of the recipients. Such records will reflect in “ITC Not Available” section of GSTR-2B and such ITC shall in turn not be auto-populated in GSTR-3B.

    ii.) Records (invoice or debit notes) pertaining to Financial Year 2020-21 reported in GSTR-1 after due date of GSTR-3B of September 2021 will also not reflect as “ITC as per GSTR-2A” in Table-8A of GSTR-9 of the recipients.

    2.It is requested that the taxpayers may take note of the above and ensure that their records pertaining to Financial Year 2020-21 are reported on or before the due date of their GSTR-3B for the month September 2021, or for the quarter of July to September 2021 in case of quarterly GSTR-3B filers. Availment of ITC by the recipients contrary to the legal provisions in GST may entail action by the tax administrations in accordance with law.

  • Oct 16, 2021
  • SC stays GST on royalty paid by petitioner to state for mining rights

    The Supreme Court has stayed the imposition of GST on royalty paid mining rights given to a petitioner.

    GST at the rate of 18 per cent is imposed on royalty given to the state governments for mining rights.

    While the rate schedule was earlier amended to impose GST on this royalty from January 1, 2019, the tax research unit of the Central Board of Indirect Taxes and Customs (CBIC) recently clarified that the tax would also be applied from July 1, 2017 and December 31, 2018. GST came into force on July 1, 2017.

    Abhishek Rastogi, partner at Khaitan & Co, said any order by the Supreme Court on the issue would also have ramifications on other sectors such as casino and telecom, where GST is imposed on the license fee.

    "Royalty paid to the state government for mining rights is a statutory levy and accordingly the question of applicability of GST is subject to judicial review as there is no quid pro quo for the payment," he said.

  • Oct 16, 2021
  • 'Well, Wellness Centres too are under GST net'

    Is a wellness centre a hotel or healthcare facility? And should the services offered at these places - weight reduction, ayurvedic treatment or yoga - face the same tax treatment as those offered at top hotels?

    In what is set to increase the goods and services tax (GST) burden at several healthcare centres, a recent verdict by the Authority of Advance Ruling (AAR) has said that wellness packages offered by such centres will be covered under "composite supply."

    The issue of whether an item or service such as wellness that is supplied with, say, accommodation, be taxed is determined based on how the service is provided. Under the GST framework, the supply of such items can be defined as a composite supply or a mixed supply. The tax department's stand on various issues means that the tax rates on certain bundled items would vary.

  • Oct 13, 2021
  • GSTN blocks Rs 14,000-crore input tax credits of 66,000 taxpayers

    GST Network on Tuesday said it has blocked Rs 14,000 crore worth of input tax credit (ITC) of 66,000 businesses registered under GST.

    Responding to social media posts based on an RTI reply about the Rs 6.14 lakh crore of ITC blocked under Rule 86A of GST laws, GSTN tweeted that the figure includes erroneous data entries made by the taxpayers.
    “ITC of approximately Rs 14,000 crore involving 66,000 taxpayers stands blocked as on date. This is only 0.38 per cent (approximately) of average ITC utilised by all taxpayers in a financial year,” tweeted GSTN, the company that handles the technology backbone for goods and services tax.

    The government had introduced Rule 86A in GST rules in December 2019 giving powers to taxmen to block the ITC available in the electronic credit ledger of a taxpayer if the officer has “reasons to believe” that the ITC was availed fraudulently.

  • Oct 12, 2021
  • GST breather for gaming industry, casinos and racecourses operating in India

    In a major development for the online gaming industry, casinos and racecourses operating in the country, the GST Secretariat has asked GST Council to issue clarity on the GST rate and the applicability of the levy on these services, sources told CNBCTV18. This follows a directive from the Punjab Haryana High Court to the effect.

    The week before last, the Court had issued a stay order on any GST enforcement action against tax avoidance till the GST Council issued clarity on the GST rate and the applicability of the levy on these services.

  • Oct 12, 2021
  • India may consider higher GST and fewer rates

    India may look at increasing tax on some goods and services in a step toward moving to a simpler structure with fewer rates, according to people familiar with the matter.

    A panel on goods and services tax, headed by Finance Minister Nirmala Sitharaman, will likely meet in December to consider the overhaul from the current four-rate system, the people said, asking not to be identified as the discussions are private.

    India currently taxes good and services produced in the country at 5%, 12%, 18% and 28%, with some essentials such as food items attracting the lowest rate and sin and luxury goods ending up with the highest levy.

    The two lowest rates could be raised by a percentage point each to 6% and 13%, respectively, the people said. While the rates would eventually be pared to three as part of a phased reduction plan, a group of state finance ministers is expected to submit proposals by the end of next month, they said.

    A finance ministry spokesman didn’t immediately respond to a call seeking comments.

  • Oct 09, 2021
  • Will soon call first meeting of GoM set up to review GST rates: Karnataka CM Basavaraj Bommai

    The first meeting of the Group of Ministers set up for rationalising GST rates and to shore up revenue will be held soon, its chairman and Karnataka Chief Minister Basavaraj Bommai said on Friday after meeting with Union Finance Minister Nirmala Sitharaman.

    “Very soon, I will call the first meeting of GoM. I met her (Finance Minister) in this backdrop,” Bommai told reporters after the meeting.
    The Group of Ministers (GoM) has to submit a report in the next two months, Bommai said, adding he discussed important issues related to rationalisation of Goods and Services Tax (GST) taxes and ways to increase revenue with the Union Minister.

    Earlier, Bommai was to meet the finance minister late in the evening. However, the meeting was advanced.

    In September, the Goods and Services Tax (GST) Council had decided to set up two Groups of Ministers (GoMs) to shore up revenues.

    Bommai’s seven-member group constituted by the Finance Ministry includes West Bengal Finance Minister Amit Mitra and Kerala Finance Minister K N Balagopal, as well as GST Council members from Goa, Bihar, Uttar Pradesh and Rajasthan.

    Asked if the centre has released the pending GST compensation to Karnataka, the chief minister said it has been cleared till 2019-20 fiscal. For 2020-21 fiscal, the state was to get Rs 11,800 crore which is being released in phases.

    For the current fiscal, the Centre has sanctioned GST compensation of Rs 18,000 crore via loan, he said, adding a higher amount was sanctioned as the state GST collection has improved when compared to the last year.

  • Oct 08, 2021
  • GST: Breaking the tyranny of status quo

    Tax reforms are best implemented when revenue buoyancy is increasing. Considering this, the setting up of a seven-member Ministerial Panel for rationalising the GST rate structure chaired by the CM of Karnataka does not come a day sooner. The economy has been registering steady recovery, and with the settled technology platform tax compliance in GST has been showing improvements (revenue collection from GST reached Rs 1.17 trillion in September, the highest in last five months).

    The budget estimate of CGST (including central portion of IGST and excluding compensation cess) is Rs 5.3 trillion, and collections in the first half of the year works out to 50% of the budget estimate. With increased collections expected in the festival season, actual collection is likely to exceed the budget estimate if there are no disruptions. States, too, would have more robust collections of the tax, though it might require compensation payments. The recommendations from the panel are likely to receive traction from the GST Council and help to break the tyranny of status quo in rationalising the tax system.

    The increase in buoyancy of the tax not only reflects economic recovery but also the firming up of the technology platform. There was a steady increase in monthly revenue collections since last October to reach Rs 1.4 trillion in April 2021 due to improvement in tax compliance following the stabilisation of the tech platform making it easier to detect the misuse of input tax credit. The Covid-19 second wave plunged revenue collections to Rs 1.03 trillion in May and Rs 0.93 trillion in June, before reaching Rs 1.17 trillion in September. With better technology and enforcement, and due to the pent up demand for consumption during the festival season, revenues are likely to improve. Also, the stable GST tech platform will help in better collection of income tax as well, due to the possibility of cross-verification.

  • Oct 07, 2021
  • Ice cream supplied by parlours to attract 18% GST

    The Centre on Wednesday issued a circular clarifying that the supply of ice cream by parlours will attract 18% goods and services tax (GST) with an input tax credit. The GST Council had approved the proposal at its Lucknow meeting on September 17.

    “Earlier the advance ruling authorities in some cases, have concluded that the ice cream sold in ice cream parlour would be covered under restaurant services (except when sold in bulk orders) and therefore attract GST rate of 5% (without ITC). Whereas, the Circular now provides that since ice cream parlours sell already manufactured ice cream, they do not have the character of a restaurant and accordingly, ice cream would attract GST rate of 18% (with ITC),” said Abhishek Jain, Tax Partner, EY.
    While the Circular provides necessary clarity on GST treatment for ice cream parlours, it might open areas of doubt for other such food suppliers who sell already manufactured food items with only a certain ingredient of service, Jain said.

    In another circular, the Central Board of Indirect Taxes and Customs clarified that UPS inverter will be taxed at 18% and external battery at 28% GST when separate prices are known for the two products on the invoice.

  • Oct 05, 2021
  • Resumption of Blocking of E-Way Bill (EWB) generation facility.

    1. The blocking of E way bill generation facility had been temporarily suspended by Government on account of Covid pandemic. In terms of Rule 138 E (a) and (b) of the CGST Rules, 2017, the E Way Bill generation facility of a person is liable to be restricted, in case the person fails to file their return in Form GSTR-3B / statement in CMP-08, for consecutive two tax periods or more, whether Monthly or Quarterly.

    2. The blocking of EWB generation facility has now resumed on the EWB portal for all the taxpayers. Going forward, from the tax period August, 2021 onwards, the System will periodically check the status of returns filed in Form GSTR-3B or the statements filed in Form GST CMP-08 as per the regular procedure followed before pandemic, and block the generation of EWBs as per rule.

    3. To avail EWB generation facility on EWB Portal on continuous basis, you are, therefore, advised to file your pending GSTR 3B returns/ CMP-08 Statement on regular basis.

  • Oct 05, 2021
  • Doing WFH due to Covid no reason to cancel of GST registration: HC

    The Calcutta high court has set aside the GST authority's order cancelling the registration of a company on the ground that the firm was not operating from the registered place at the time of investigation due to Covid-19.

    The court directed the tax authorities to grant a hearing opportunity to the petitioner, International Value Retail Pvt Ltd, to place all relevant documents and evidence in support of its submissions and pass a reasoned order within four weeks.

    The company had filed the petition following rejection of its application for revocation of GST registration.

    The company said its application was rejected by ignoring the relevant materials which established that at the time of inspection, the assessee was following a work-from-home (WFH) model due to the nationwide pandemic and therefore was temporarily unavailable at its registered place of business.

  • Oct 01, 2021
  • ‘No GST input tax credit on CSR expense’

    The Gujarat bench of the Authority for Advance Rulings (AAR) recently held that corporate social responsibility (CSR) activities under the Companies (CSR Policy) Rules are excluded from the normal course of business. Its ruling came in a case where the applicant was a private limited company, Adama India. The AAR said Adama India would not be eligible for input tax credit (ITC) under goods and services tax (GST) laws.
    If this ruling is followed by GST authorities during assessments, it will be a big blow to India Inc which, in the backdrop of the pandemic, has spent heavily on CSR activities, such as providing medical relief by way of oxygen concentrators & sanitisers, to name a few instances.

  • Sep 28, 2021
  • Ministerial panels to review GST exempt list, identify evasion sources

    The Finance Ministry has set up two committees of state finance ministers which would rework rate slabs, review GST exempt items and identify potential evasion sources.

    Four years after the roll out of the national Goods and Services Tax (GST), which replaced the complex indirect tax structure, the centre and states have started work on moving towards a "simpler rate structure in GST" by reviewing the current rate slabs, including special rates and merger of rate slabs.

    The Group of Ministers (GoM) on rate rationalisation would also review items under inverted duty structure to help minimise refund payout, and review the supply of goods and services exempt under GST with an objective to expand the tax base and eliminate breaking of input tax credit (ITC) chain.

  • Sep 27, 2021
  • 18% GST on treated sewage water for industrial use

    The Maharashtra Authority of Advance Rulings has said purified or treated sewage water for industrial use will be charged goods and service tax at 18%, triggering yet another classification issue as natural water is tax exempt,

    The authority has reasoned that the treated water here is purified water. It is used within the applicant's factory - Rashtriya Chemicals & Fertilisers Ltd in this case - and the excess is sold to Bharat Petroleum for industrial use.

  • Sep 27, 2021
  • Group of Ministers formed to suggest GST system reforms

    The Union finance ministry has constituted an eight-member Group of Ministers (GoM), led by Maharashtra deputy chief minister Ajit Pawar, to identify potential sources of goods and services tax (GST) evasion and suggest changes in business processes and IT systems to plug revenue leakage.

    It will also identify possible use of data analysis towards better compliance and revenue augmentation, and suggest a mechanism for better coordination between central and state tax administrations and tax administrations of different states.