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News Indirect Tax-GST

  • Feb 04, 2023
  • How automated notices under GST is leading to proliferation of disputes and litigations

    The Goods and Service Tax (GST) has been one of the most complex yet progressive indirect tax reforms implemented in the history of India. The reform involved the integration of the nation’s diverse indirect tax horizon into a single indirect taxation code bringing about a massive responsibility of developing a robust, unified and interactive IT architecture to not just integrate the taxation platform of 36 States, Union Territories and the Union Government, but also to sculpt a single interface structure for all the taxpayers for compliances and reporting.

    The Goods and Services Tax Network (GSTN) was entrusted with the complex and herculean task of building the platform to service the needs of diverse stakeholders, be it taxpayers, tax authorities or other governmental agencies, featuring interoperability with other systems such as that of Customs authorities. The responsibilities included the taxpayer migration from the erstwhile regime to GST, registrations, filings, tax remittance, refunds, validating appropriateness of Input Tax Credit (ITC), etc.

  • Feb 03, 2023
  • Tax base to be widened with stricter audits: CBIC Chief Vivek Johri

    After record goods and services tax (GST) collection, the Central Board of Indirect Taxes and Customs (CBIC) is preparing a roadmap to widen the tax base with stricter audits and scrutiny.

    There is much scope to widen the tax base and check tax evasion with active use of digital forensic tools and use of data integration and artificial intelligence, CBIC chairman Vivek Johri said in a post-budget interaction with ET.

    So far, the board has detected a revenue shortfall of ?22,000 crore from the tax audits of 51,000 GST return filings and ?2,200 crore from tax scrutiny of 31,000 GST returns. "We are looking at actively using audits and scrutiny for improving compliances. We have been able to achieve a big breakthrough in return filing percentage but it is not enough," Johri said. "We also need to look at the quality of data that the values taxpayers are putting in the return."

  • Feb 03, 2023
  • Major GST Proposals Announced in Union Budget 2023-24

    The indirect tax proposals announced by the Finance Minister Nirmala Sitharaman aim to reduce tax burden and improve tax administration. On the customs front, several rates have been rationalised. Some of the major proposals of the Finance Bill under the GST law have been summarised below

  • Feb 02, 2023
  • Input Tax Credit cannot be claimed on goods/services used for CSR activities: Budget 2023

    The Budget on Wednesday proposed certain amendments in GST Act and said that input tax credit cannot be claimed on goods/ services used or intended to be used for Corporate Social Responsibility (CSR) activities. The amendments in the Central GST Act has been brought through the Finance Bill, 2023.

    The amendments propose to decriminalise certain offences under the indirect tax law and double the threshold for launching prosecution under the tax law to Rs 2 crore. It, however, retained the limit at Rs 1 crore for fake invoicing cases.

    KPMG in India Partner, Indirect Tax, Abhishek Jain said the Finance Bill proposes to restrict input tax credit paid on goods and services used for CSR activities.

  • Jan 25, 2023
  • How to resolve mushrooming GST disputes

    The Goods and Services Tax (GST) was introduced with a stated objective to rationalise the indirect tax ecosystem of India creating a common national market for goods and services. ‘Ease of doing business’, economic growth and price rationalisation were the cornerstones of this ‘one nation-one tax’ initiative. The success and effectiveness of tax reforms largely depend upon a robust dispute settlement system, which caters to efficiency in the disposal of disputes, while keeping litigation costs low.

    Under GST, disputes arise from differences in tax paid by the assessees and the computation of tax liability by authorities. Such tax disputes can arise due to various reasons during assessment, audit and/or scrutiny of records/accounts, viz. rate of tax, a claim of tax exemption, the claim of an input tax credit, incorrect determination of place of supply, nature of supply (composite or mixed supply), classification of goods and services, etc. While GST is touted to remedy the proliferation of tax disputes and simplify tax administration, early experiences point to the contrary.

  • Jan 25, 2023
  • Advisory on facility of ‘Initiating Drop Proceedings’ of Suspended GSTINs due to Non-filing of Returns

    Recently, a functionality of "Automated Drop Proceedings" of GSTINs suspended due to non-filing of returns has been implemented on the GST Portal. This functionality is available for the taxpayers who have filed their pending returns i.e. 6 monthly or 2 Quarterly returns.

    If such taxpayers have filed all their pending returns, the system will automatically drop the proceedings and revoke suspension.

    If the status of the GSTIN does not automatically turn ‘ACTIVE’, then taxpayers are advised to revoke the suspension once the due returns have been filed, by clicking on ‘Initiate Drop Proceeding’ for which navigation is as follows:

    "Log on to GST Portal > Services > User Services > View Notices and Orders > Initiate Drop Proceeding"

    In case the system does not automatically drop the proceedings or taxpayer is unable to revoke the suspension by clicking on ‘Initiate Drop Proceeding’, then taxpayer is advised to contact Jurisdictional Officer.

  • Jan 18, 2023
  • Direct recovery of GST in case of discrepancies between GSTR-1 and GSTR-3B

    As an outcome of the recent 48th GST council meeting, the manner of dealing with difference in liability reported in statement of outward supplies (GSTR-1) and that reported in return (GSTR-3B) has been codified in the form of Rule 88C of the CGST Rules. This rule is likely to affect the taxpayers in case of any discrepancies between the supplies reported in GSTR-1 and GSTR-3B. The onus will be on the taxpayers to ensure compliance.

    The first question that arises in mind is whether this rule has got a statutory backing. The answer to this question apparently seems to be a yes. Section 75(12) of the CGST Act provides for direct recovery of unpaid or short-paid self-assessed tax as per GSTR-3B without following the demand procedures laid down under the CGST Act.

  • Jan 13, 2023
  • Advisory on “Initiating Drop Proceeding” by taxpayers

    Recently, a functionality of Automated Drop Proceedings of GSTINs suspended due to non-filing of returns has been implemented on the GST Portal. This functionality is for the taxpayers who have filed their pending 6 monthly or 2 Quarterly returns.

    Such taxpayers are advised to revoke the suspension once the due returns have been filed by clicking on “INITIATE DROP PROCEEDING” for which navigation is as follows...

  • Jan 13, 2023
  • Module wise new functionalities deployed on the GST Portal for taxpayers

    Various new functionalities are implemented on the GST Portal, from time to time, for GST stakeholders. These functionalities pertain to different modules such as Registration, Returns, Advance Ruling, Payment, Refund and other miscellaneous topics. Various webinars are also conducted as well informational videos prepared on these functionalities and posted on GSTNs dedicated YouTube channel for the benefit of the stakeholders.

  • Jan 11, 2023
  • Gift or not? The confusion over GST on promotional schemes run by businesses

    Businesses now-a-days are adopting new and innovative promotional schemes to attract customers. With increased competition, making space for a new business or even surviving in the market has become a challenge. However, for implementation of such schemes, tax implications are very critical and have been a matter of dispute under indirect tax regime.

    One of the important issues related to promotional schemes is availability of input tax credit (ITC) of tax paid on procurements made for promotional schemes. While the term ‘business’ has been defined under the Central Goods and Services Tax Act, 2017 (the CGST Act), there is no definite yardstick to find out whether an activity is carried out ‘in course or furtherance of business’.

    The advance ruling in M/s. Myntra Designs Private Limited (Myntra)case is an important example of such an anomaly in law. Myntra hadsought advance ruling on availability of ITC on vouchers and subscription packages procured from third-party vendors. Myntra proposed to run a loyalty program, by way of issuing loyalty points to the customers on fulfilment of certain terms and conditions. Such loyalty points, which are non-transferable, and have no monetary value, are redeemed by customers for vouchers and subscription packages. The Karnataka Authority for Advance Ruling (AAR)heldthat redemption of loyalty points by customers for receiving vouchers from Myntra implies that the vouchers are issued free of cost to the customers and amounts to disposal of vouchers by way of gift, which is blocked credit under Section 17(5)(h) of the CGST Act.

  • Jan 09, 2023
  • GST registration applicants’ details will be taken from IT database: CBIC

    The Central Board of Indirect Taxes and Customs (CBIC) said on Saturday those applying for Goods and Services Tax (GST) registration need not give their mobile phone number and email address.

    Instead, their permanent account number (PAN) will be verified through a separate one time password to be sent to the mobile number and e-mail address linked to it. PAN is issued by the Income Tax department.

  • Jan 07, 2023
  • Taxman can’t keep GST paid by mistake: HC

    In a move that will help assesses, the Andhra Pradesh High Court has said the Goods and Services Tax (GST) department cannot keep the taxes paid by them due to inadvertent error on their part while filing the GST forms. In a recent ruling on a writ petition, a division bench of Justices C Praveen Kumar and AV Ravindra Babu held that amounts that were paid by the taxpayer furnishing incorrect details cannot be taken as tax dues to the department. The department cannot claim that the taxpayer is barred by limitation.

  • Jan 04, 2023
  • BOT annuities brought under GST

    Concessionaires who receive annuities from the National Highways Authority of India and state authorities for construction and maintenance of roads and highways will now have to pay goods and services tax (GST) on the toll amounts received. Effective January 1, 2023, an exemption has been removed.

    A recent notification by the Central Board of Indirect Taxes and Customs has omitted section 23A and related entries dealing with this. The provision had exempted “service by way of access to a road or a bridge on payment of annuity”.

  • Jan 03, 2023
  • Dine-ins face 5% GST, not ready items

    The Gujarat bench of GST Authority for Advance Rulings (AAR) held in a recent ruling that a 5% rate is applicable for dining in, takeaways and even doorstep deliveries by a stand-alone restaurant.
    The AAR held that, irrespective of whether customers of Riddhi Enterprises (the applicant, which is a stand-alone restaurant) consumed food & beverages prepared and supplied to them in the restaurant itself or by way of a takeaway, it would qualify as a ‘restaurant service’. This attracts GST at 5% without input tax credit, it said.

  • Jan 02, 2023
  • GST revenues grow 15 pc to nearly Rs 1.50 lakh cr in December

    The collections from Goods and Services Tax (GST) grew by 15 per cent to over Rs 1.49 lakh crore in December 2022, indicating improved manufacturing output and consumption demand, besides better compliance.

    This is the 10th month in a row that the revenues have remained above the Rs 1.4 lakh crore mark. The collection in November was about Rs 1.46 lakh crore.

  • Jan 02, 2023
  • Spate of GST changes to come into effect from today

    Goods and services Tax will not have to be paid by a proprietor of a registered proprietorship on a housing unit rented for his residential usage.

    This, along with a number of tax changes, will come into effect from the New Year effective January 1, after notifications by the Central Board of Indirect Taxes and Customs (CBIC).

  • Jan 02, 2023
  • 2023: Five areas for small businesses to look at for GST compliance

    Ease of doing business for MSMEs: Sardar Patel architected “Ek Bharat” with a vision to merge India’s political boundaries and took up a visibly impossible task of unifying over 500+ princely states. On similar lines, to unify all States economically, the seeds for GST were sown in 2000 and a committee was constituted to design the GST model. Thereafter, GST was introduced in the budget speech by the then finance minister in 2006-07. The process was expedited and the central government resumed discussions with states in 2014. Finally, the idea of “One Nation – One Tax” came into reality and GST was implemented in July 2017. GST introduced the concept of uniform tax on the supply of goods and services, eliminated double taxation, and reduced the overall burden of indirect taxes on consumers.

  • Jan 02, 2023
  • GST not payable on house rented to proprietor for residential purpose, says CBIC

    From January 1, GST would not be payable on housing units rented to the proprietor of a proprietary concern for residential use only, the CBIC has said.

    The Central Board of Indirect Taxes and Customs (CBIC) also notified amendments in GST rates effective from January 1 for certain goods and services, according to the recommendations of the GST Council in its meeting on December 17.

    Ethyl alcohol supplied to refineries for blending with motor spirit (petrol) will attract 5 per cent GST from January 1, lower than the 18 per cent rate at present. Tax rate on husks of pulses has been cut to nil from 5 per cent.

  • Dec 29, 2022
  • No full GST recovery from firms under insolvency: CBIC

    The Central Board of Indirect Taxes and Customs has clarified that once a firm reaches the insolvency arena, it can’t be forced to cough up dues to the government like GST, in excess of the “reduced amount” determined. The move will bring more certainly for investors and banks.

    The CBIC said that if any government dues including Central GST demand has been reduced following IBC proceedings, then the Commissioner concerned will issue an intimation to the taxpayer and also the authority with whom the recovery is pending, intimating the reduction in demand.