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GST Council meet: Rate cut for auto sector may not be easy; relief on hotel tariffs, biscuits on the cards

GST Council meet: Rate cut for auto sector may not be easy; relief on hotel tariffs, biscuits on the cards

The GST Council meeting, as per the agenda paper, may take up automobiles, hotels, biscuits, matchsticks and outdoor catering segments for resetting of the GST rates. However, all listed items may not see GST cut due to various complexities involved

With the government desperate to reverse the prevailing economic slowdown, the GST Council is all set to make major announcements on Friday. The high-powered GST Council will discuss the agendas on tax cuts for sectors with the high-consumer interface or high distress amid a significant fall in demand and sales.

The GST Council meeting, as per the agenda paper, may take up automobiles, hotels, biscuits, matchsticks and outdoor catering segments for resetting of the GST rates. However, sources suggest all listed items may not see the GST cut due to various complexities involved.

The automobile sector, which is virtually driving the current economic slowdown, has been demanding a reduction in GST on cars to 18 percent from 28 percent for long. The auto players feel the GST meet is happening at the right time — in a few days from now, the festive season will kick-start and companies will roll out offers to boost sales. They say a rate cut along with festival offers could reinvigorate the auto sector. Several states, including Kerala, which fear it’ll lead to a drop in revenue, have opposed the move. The GST Council’s fitment committee had assessed the rate cut impact on the auto sector and also said it would seriously hurt the GST collection, as auto sales contribute almost Rs 50,000-60,000 crore to the total GST collection.

Sources, however, say it’s more of a political call the govt has to take. The Centre may also explore the possibility of a significant cut for a certain period to assist the sector. But the industry players feel a limited period offer will not address the persisting crisis, as prices are likely to shoot up again with the introduction of BS-VI compliant vehicles. This will again push the sector towards a crisis, which is why the auto manufacturers are pushing for a long-term solution. They have also demanded a significant GST cut for low engine capacity two-wheelers, which are not luxury items.

There could be some cheer for the hotel industry. The government is likely to provide relief to the luxury hotel category, which charges Rs 7,500 per night or more and invites a 28 percent levy. A source said with the government’s added emphasis on tourism, including Prime Minister Narendra Modi’s call to travel to different destinations in India, the GST Council might raise the ceiling for the 18 percent tax category to Rs 10-12,000 per night.

Outdoor caterers, who are charged 18 percent tax, may also get some relief. The matchstick and matchbox industry has been struggling due to the two kinds of GTS taxes, and the Council may provide some relief to them too.

Sectors such as cement and textiles may also get some good news in terms of GST cut.

With the GST collection dipping to sub Rs 1-lakh crore mark last month, the Council is also considering raising the taxes on items, which are unofficially called “sin goods”, like tobacco. The move could help the Centre increase its revenue.

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Source: - businesstoday.in
GST boost in real estate on finance ministry’s radar

GST boost in real estate on finance ministry’s radar

On Sunday, finance minister Nirmala Sitharaman held two separate meetings — the first with realtors’ associations, and the second with homebuyers’ groups — to discuss how to strengthen the realty sector.

The Union government is planning to incentivise homebuyers and create demand in the sluggish real estate sector with a slew of measures, including a proposal by homebuyers that would marginally increase Goods and Services Tax (GST) on housing projects but bring down the overall cost, people aware of the development said on condition of anonymity.

On Sunday, finance minister Nirmala Sitharaman held two separate meetings — the first with realtors’ associations, and the second with homebuyers’ groups — to discuss how to strengthen the realty sector.

Homebuyers who met the minister proposed that GST on premium housing projects be increased from the existing 5% (excluding input tax credit) to 8% (including input tax credit) — a move that would eventually reduce the cost of a project substantially, said one of the persons aware of the development.

“Needless to say, that the present GST regime of 5% without ITC [input tax credit] is actually translating into a tax burden of around 14% for consumers… An 8% tax with ITC will offset tax paid by builders on building materials such as tiles, cement and sanitaryware, and bring down the cost,” said Abhay Upadhyay, the president of the Forum for People’s Collective Efforts (FPCE), a pan-India forum for homebuyers. Upadhyay was present at the meeting with the finance minister.

Input credit means a builder can deduct the tax paid on inputs and pass on the reduced tax liability to the buyer of an apartment at the time of paying tax on output (the final product).

The group of homebuyers suggested that such a move, if implemented, would encourage people to invest in properties, a second official said. He clarified that any such decision would require approval of the GST Council, which comprises representatives of states.

The developers, for their part, raised three major issues: liquidity problems, taxation issues and completion of stalled projects.

Niranjan Hiranandani, president of the National Real Estate Development Council (NAREDCO), who was present in the meeting, said real estate and infrastructure growth was a must to boost the economy and create jobs.

The Confederation of Real Estate Developers’ Associations of India (CREDAI) said the Sunday meeting indicated a sense of “earnestness and urgency” in a formal statement.

In its 33rd meeting in February, the council reduced GST rates on under-construction affordable residential properties (valued up to Rs 45 lakh) to 1% from 8% without input tax credit, and to 5% from 12% for the premium segment housing.

Then finance minister and chairman of the council, Arun Jaitley, said at the time that the move would “give boost to housing for all and fulfil aspirations of neo and middle classes”. It was a revenue-neutral decision that was taken because some builders were not passing on the benefit of tax rebates to customers.

On Sunday, Sitharaman assured both builders and homebuyers that the government will take further steps to resolve policy issues, particularly liquidity problems faced by the industry as well as project delays, a third government official present at the meeting said.

First, real estate developers made a presentation and discussed their issues. Then, homebuyers took up their issues with Sitharaman after developers left the conference hall, the third official said.

Besides senior finance ministry officials, Hardeep Puri, the minister of state for home for housing and urban affairs, and Anurag Thakur, the minister of state for finance and corporate affairs, were present at the meetings.

Representatives of homebuyers who have paid money to developers and have been awaiting possession for several years asked the government to direct banks to treat them compassionately, and not like a business entity.

“The government should provide some relief either in terms of deferring EMI [equated monthly instalment] payments or provide some income tax rebate to protect consumers who are paying both rent and EMIs,” said Jayashree Swaminathan, who represented homebuyers of the Jaypee Group.

Source - hindustantimes.com

GST Council extends the deadline for realty firms to opt for old GST rate till May 20

GST Council extends the deadline for realty firms to opt for old GST rate till May 20

The GST Council had in March allowed real estate players to shift to 5 percent GST rate for residential units and 1 percent for affordable housing without the benefit of the input tax credit from April 1.

The GST Council Thursday extended by 10 days till May 20 the deadline for realtors to opt for old GST rates with input tax credit for ongoing projects or shift to new lower tax rates.

The GST Council, headed by Finance Minister Arun Jaitley and comprising state counterparts, had in March allowed real estate players to shift to 5 per cent GST rate for residential units and 1 per cent for affordable housing without the benefit of input tax credit (ITC) from April 1, 2019.

For the ongoing projects, builders have been given the option to either continue in 12 per cent Goods and Services Tax (GST) slab with ITC (8 per cent for affordable housing), or opt for 5 per cent GST rate (1 per cent for affordable housing) without ITC and communicate to their respective jurisdictional officers the same by May 10.

“The date for exercising the option for residential real estate project to either stay at old GST rate (8 per cent or 12 per cent with ITC) or to avail new GST rate (1 percent or 5 percent without ITC) is being extended to May 20, 2019, from May 10, 2019,” the GST Council said in a tweet.

The Central Board of Indirect Taxes and Customs (CBIC) has given the real estate companies a one-time option to choose either of the tax rates and once a realty developer chooses a particular tax rate for ongoing projects he would not be able to modify it.

In case, realtors do not exercise the option by May 20, they will be covered under the lower tax rate of 5 per cent and 1 per cent with effect from April 1, 2019, and will not be entitled to avail tax credit on inputs.

AMRG & Associates Partner Rajat Mohan said builders are still under the process of calculating the cost benefit analysis in relation to tax change scenario.

“Builders were facing challenges in finalizing the roll over the scheme to the new tax regime and in the light of new circular on this matter, the government in good faith has increased the date for opting,” he added

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Sources : businesstoday.in
Realtors seek clarity on GST exemption on development rights 

Realtors seek clarity on GST exemption on development rights 

Mumbai: Realty developers are seeking clarity on recent exemption offered from the goods & services tax (GST) levied on development rights, including transferable development rights (TDRs), development rights certificates (DRCs) and joint development agreements (JDAs).

Realtors’ body, the National Real Estate Development Council (NAREDCO), has written to the Ministry of Housing and Urban Affairs seeking clarity on this.

Last Sunday, the GST Council proposed that intermediate tax on development rights will be exempted only for such residential projects on which GST is payable.

The government decided to more than halve the GST rates for under-construction projects to 5% from 12%. The GST Council removed the input tax credit, while GST on affordable housing was reduced to a marginal 1% along with expanding the definition of such homes. Ready properties that have received occupancy certificate (OC) do not attract GST.

“What if some units are being sold after the project is completed? Being a completed project that has already received an occupation certificate, it will not attract GST. Will the JDA or TDRs used in this project still attract intermediate tax? We need to get clarity on this,” said Niranjan Hiranandani, national president, NARDECO.

The ministry has already announced that details of this scheme will be worked out by an officers committee and will be approved by the GST Council in a meeting to be called specifically for this purpose soon.

As the details of the scheme are yet to be worked out by an officers’ committee, the developers’ body has sought to make a representation to avoid confusions or litigations later on. NAREDCO is of the view that the condition to be fulfilled to receive the tax exemption — “only for such residential projects on which GST is payable” — may lead to litigations.

In its letter to the ministry earlier this week, the developers’ body has cited instances that can lead to confusion and litigations. These examples include that of a residential project with convenience and retail shops, smart and integrated townships tagged as mixed-use development, and sale of residential units post completion of the project.

The NAREDCO representation is that the wording should be: “Tax on development rights, such as TDR/ JDA, long-term lease (premium), FSI shall be exempted”. Effectively, there should be no levying of ‘intermediate tax’ and the exemption should not be restricted to just ‘residential property’, but to all segments and types of property including commercial.

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Source : economictimes.indiatimes.com
Taxpayers Alert! Check out these 8 new features at GST Portal: Here’s how easy GSTR filing gets for you

Taxpayers Alert! Check out these 8 new features at GST Portal: Here’s how easy GSTR filing gets for you

TDS/TCS Credit available for utilization

A new window has been enabled for claiming TDS/TCS credits. The taxpayer has the option of accepting or rejecting the TDS/TCS credits available and filing their return, after which the credits get transferred to the cash ledger and can be used for making GST payments.

This facility helps taxpayers easily identify such credits and take action accordingly.

E-way bill data can be imported for GSTR-1

The E-way bill (EWB) and the GST portal has now been integrated. The same gets automatically imported for the B2B and B2C (large) invoices sections as well as the HSN-wise-summary of outward supplies section. Users only need to verify the data and proceed.

This has definitely saved both time and effort for a business person, as it avoids unnecessary data-entry. However, many businesses were performing this sort of reconciliation themselves using smart tools to ensure accuracy of data.

List of preferred banks available for making payments

A taxpayer can choose from a list of 6 preferred banks that will be auto-saved at the time of making payments. If he makes payment through a 7th bank account, the same will get added, and the least used bank account will get removed. He has the option to delete the bank accounts at any point in time.

With this feature in place,the taxpayer need not enter bank details every time, as he can simply select a bank with the click of a button and proceed to make payment.

Refund applications can be filed monthly for quarterly filers

There is good news for taxpayers opting to make payments on a quarterly basis. They now do not have to wait for the quarterly filing of refund applications, as the same can be done monthly. However, a prerequisite for the same would be to ensure that GSTR-1 for the quarter has been filed.

This will definitely help mobilise the working capital flows of business as there is no longer a need to wait till the end of a quarter to apply for a refund.

Appeals can be filed online and system-generated acknowledgment will be issued

A taxpayer can file an appeal against an order passed by an appellate authority, or against an advanced ruling by an appellate authority on the GST portal. He even has the option to file an application with the appellate authority in the case of rectification of a mistake in order passed.

In the event of an appellate authority failing to issue a final acknowledgment within the stipulated time, then a system generated final acknowledgment will be issued with the remark “subject to validation of certified copies”. This has simplified the process of filing appeals and also helps to track the status of the same.

Composition taxpayers can reply to SCN online for compulsory withdrawal

For composition taxpayers, there is a simpler way to reply to show cause notices(SCN) now. This is in the case of a show cause notice being issued for compulsory withdrawal from the composition scheme, and if proceedings are initiated against the composition taxpayer, he now has the option to reply to show cause notices on the portal.

Bank account details not mandatory at the time of registration

Declaring bank account details are now optional at the time of registration for Normal, OIDAR and NRTP taxpayers. Previously, this was a mandatory requirement. The bank account details can be updated at a later date, which will be at the time of the first login.

Hence, a GST registration number can be obtained without the same. New businesses who are in the process of obtaining bank accounts can simultaneously proceed with GST registration, thus saving time.

Claiming of ITC and amendment of B2B invoices of 17-18 are re-opened up till March 2019

Users can now amend B2B invoices of FY 2017-18. The facility to amend the GSTR-1 details of FY 17-18 was closed on filing the September 2018 return. The same has been made available while filing returns for the months of January to March 2019. The input tax credit of FY 2017-18 that was omitted and hence unclaimed up till September 2018 can be claimed now up to March 2019 as well. This was a much-needed remedy for taxpayers who made errors reporting any invoice in the past or previously missed out claiming genuine credit.

While there are updates being rolled out from time-to-time, users are still hoping to see a smooth system that is completely online and indefectible. In the future, users can look forward to more new updates that would familiarise taxpayers with the new return system that is likely to be introduced by July 2019

 

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Source: zeebiz.com
Guest house for employees a perk, cannot claim GST input credit rules Odisha AAAR

Guest house for employees a perk, cannot claim GST input credit rules Odisha AAAR

A new ruling by the Appellate Authority of Advance Ruling (AAAR) can open a Pandora’s Box when it comes to an employer, employee relationship and the nature of perquisites being provided.

The case came up when the National Aluminum Company Limited (NACL), a manufacturer of aluminum metal, decided to appeal against the ruling pronounced by the Odisha Authority for Advance Ruling.

NACL has townships at Angul, Damonjodi, and Bhubaneswar for its employees and also runs hospitals at Damanjodi and Angul for its employees along with guest houses for touring employees and guests. The bone of contention was that NACL wanted to claim input credit in maintaining hospitals, residential colonies and guest house and also the upkeep of garden in the residential colonies, mine and office premises. When the case went to the Odisha Authority for Advance Ruling (AAR), input credit was disallowed for some activities.

According to the AAR, inward supplies received by way of management, repair, renovation for furnishing the residential colony does not qualify for the input tax credit as residential accommodation is an exempted supply.

The input tax credit is also not admissible in respect of services and goods procured for maintenance of hospitals and pharmacy outlet as such services, being nil rated also fall under exempt supplies. Similarly, the service availed in relation to plant & garden in the residential colony will also not qualify for input tax credit

NACL was, however, entitled to input tax credit of the tax paid on inward supply of input and input service for maintenance of the guest house, transit house & training hostel. Also, services availed in relation to plantation and gardening within the plant area including mining area and the premises of other business establishments will also qualify for input tax credit.

Following the order by the AAR, the Commissioner (CX &GST, Bhubaneswar) interestingly also preferred to appeal against the order, challenging that the order is not legal and proper to the extent it has allowed credit for maintenance of guest house, hostel and service utilized for plantation and gardening within the plant area, administrative building.

Justifications by NACL in its appeal:
The AAR has wrongly held that the company’s activities of management, maintenance or repair of the townships are not for or in relation to its core business while denying the credit of the tax paid on the goods and services used for management, maintenance or repair of the township of its employees, and horticulture in township. NACL said it undertakes such activities for its business in the course or furtherance of business and, therefore, it is entitled to take credit of tax paid on such services.
The infrastructure of township at Angul, Damanjodi and Bhubaneswar are necessary to run large scale business of manufacturing, where thousands of employees are working.
In terms of GST laws, not only the manufacturing activity but any incidental or ancillary activities thereof are also covered within the expression “business” in the GST laws. Maintenance of various facilities in residential townships is integrally related to the business activities of the appellant and not a welfare activity undertaken by the appellant.

Contentions by the Commissioner:
Residential colonies are built for the welfare and benefit of the employees and extending any sort of benefit to the employees cannot be treated as something used or intended to be used in the course or furtherance of business
Similarly, the ruling of the AAR that utility of service provided through plantation & gardening within the plant area including mining area will be eligible for credit is also not legal and proper as it does not do not pass the legal test, which is used or intended to be used in course or furtherance of business.

Final ruling of the Appellate Authority of Advance Ruling (AAAR):
After considering the legal provisions and facts of the case, the AAAR held as follows:
The ruling of the AAR that inward supplies received by NACL for management, repair, renovation, alteration or maintenance service or goods received for furnishing the residential colony will not qualify for input tax credit is found to be correct.
Expenditure incurred by NACL towards construction, reconstruction, renovation, additions or alterations or repairs to the residential colony including plantation and gardening is not eligible for input tax benefit as it is nothing but a perquisite. “This ruling is likely to open the debate on whether an expenditure incurred by employee qualifies as a perquisite or a business expense incurred during the course or furtherance of business. This is because credit for former is not available while for later it may be available. It is time to re-look at the employment contracts,” says Harpreet Singh, Partner, KPMG India.
However, the AAAR held that the ruling of the AAR entitling NACL to input tax credit of the tax paid on inward supply of input and input services for maintenance of guest house transit house and trainee hostel is found to be not correct as the same is also a perquisite in favour of the employees.
The AAAR, however, allowed credit to NACL on services availed in relation to plantation and gardening within the plant area including mining area and the premises of other business establishments citing that it is a business necessity for controlling pollution as well as atmospheric temperature.

The same is also mandated in various laws under which the Applicant conducts its business such as the Forest Conservation Act, the Environment Protection Act, etc. Therefore, such activities are integral to the business activity and hence can be treated as activities in course or furtherance of its business.

“This is a positive order for the industry as, while allowing input credit of services availed in relation to plantation and gardening within factory premises, the authorities have not only considered whether such expenditure was warranted by any statutory law, but also taken cognizance of the expenditure being a business necessity for controlling pollution, temperature and preventing soil erosion,” added said Singh.
There is a thin line between perquisite and business expenditure and the ruling does not do anything to reduce confusion. For businesses, it will be a setback that facilities like guesthouse that carry certain expenditure, does not qualify for input credit. In considering maintaining and running a guest house as a cost-to-company, the AAAR has stated it in not in furtherance of the business nor is it integral part of the business. The debate on employee benefit and business expenditure is likely to continue.

 

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Source : economictimes.indiatimes.com
GST collections pegged at Rs 7.61 lakh crore for FY20; FY19 budgeted target missed

GST collections pegged at Rs 7.61 lakh crore for FY20; FY19 budgeted target missed

New Delhi: GST collections by the Centre missed the budgeted target set for the current fiscal by Rs 1 lakh crore, while total mop-up from the indirect tax has been pegged at over Rs 7.61 lakh crore for 2019-20.

The government had budgeted to collect over Rs 7.43 lakh crore from Goods and Services Tax (GST) in the current fiscal ending March. However, in the revised estimates, the revenue mop-up has been pegged at over Rs 6.43 lakh crore.

So far, in the 10 months (April-January) of the current fiscal, total GST collections by the Centre and states stood at over Rs 9.71 lakh crore.

For the full fiscal 2018-19, the GST collection target of the Centre and states was Rs 13.48 lakh crore.

Presenting the Interim Budget for 2019-20, Finance Minister Piyush Goyal said in spite of major rate reductions and relaxations, revenue trends are encouraging.

“The average monthly tax collection in the current year is Rs 97,100 crore per month as compared to Rs 89,700 crore per month in the first year,” Goyal said.

The state revenues, he said, are improving with guaranteed 14 percent annual revenue increase for the first five years from the implementation of GST.

The Goods and Services Tax (GST) was rolled out on July 1, 2017, and has consolidated 17 central and state levies.

Goyal added that GST has resulted in the increased tax base, higher collections, and ease of trade.

“This will reduce the interface between the taxpayer and the government for day-to-day operations and assessments. Now returns are fully online and e-way bill system is in place,” he said.

Goyal said with the introduction of GST, inter-state movement of goods has become faster, more efficient, and hassle-free with no entry tax, check posts, and truck queues.

The minister also said that the GST rate has been continuously reduced, providing relief of about Rs 80,000 crore annually to consumers.

Most items of daily use for the poor and middle class are now in the zero percent or 5 percent tax slab, he said.

“Our government wants the GST burden on home buyers to be reduced and accordingly we have moved the GST Council to appoint a group of ministers to examine and make recommendations in this regard at the earliest,” he added.

Further, he said more than 35 lakh small traders, manufacturers, and service providers will benefit from the trader-friendly measures.

“Soon, businesses comprising over 90 percent of GST payers will be allowed to file a quarterly return,” Goyal said.

GST collection stood at Rs 1.03 lakh crore in April, Rs 94,016 crore in May, Rs 95,610 crore in June, Rs 96,483 crore in July, Rs 93,960 crore in August, Rs 94,442 crore in September, Rs 1,00,710 crore in October, Rs 97,637 crore in November, Rs 94,725 crore in December 2018 and over Rs 1 lakh crore in January 2019.

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Source: economictimes.indiatimes.com
GST entry error proves costly to company

GST entry error proves costly to company

But High Court has stepped in to save a firm that was deprived of credit of nearly Rs 10 crore, by asking the nodal officer to decide on a correction

The High Court has directed a GST nodal officer to consider the corrections sought by a company which had made a mistake while filing a GST form. This had led to the deprivation of credit to the tune of nearly Rs 10 crore. The company said it was a bonafide error which should be corrected.

Pragati Automation Pvt Ltd approached the HC with a petition seeking direction to the GST authorities to permit it to correct an error in the GST Tran-1 form it had filed. Due to the “bonafide error which has crept in while filing the form,” the company was “deprived of the transitional credit of an amount of Rs 9,74,57,802 in their electronic credit ledger”.

Considering the problem on hand the HC noted, “It is the contention of the petitioner that after the GST regime has been implemented in India, the petitioner filed GST TRAN-I claiming the credit of Rs 9,74,57,802 in Column-5 of Table 5(a) of Form GST TRAN-1 well within the time prescribed by the statute. Revised Form GST Tran-1 was filed by the petitioner on 27.12.2017 after including the details of goods sent to job worker and held in stock on behalf of the principal manufacturer in terms of Section 141 of CGST Act credit pertaining to job work.

However, credit claim was indicated only in Column-5 of Table 5(a) but not in Column-6. The electronic credit ledger reflected the credit of Rs 5,89,346.”

The nodal officer is obligated to consider the complaint and take a decision in the matter.

–High Court

The company made several complaints to the GST nodal officer but these were not considered, forcing it to file the petition before the High Court. The HC said that the nodal officer is obligated to consider the complaint and take a decision in the matter. Since it was not done, the HC ordered the nodal officer “to consider the complaint/representation made by the petitioner to the writ petition and take a decision in accordance with the law in an expedite manner.”

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 Source: Bangalore Mirror Bureau

 

CGST Amendment Act – Key changes in the GST made effective from 1 February 2019

CGST Amendment Act – Key changes in the GST made effective from 1 February 2019

  • Out-and-out sales and high sea sales outside the ambit of GST:Transactions, where goods are physically moved from a place outside India to another place outside India, without such goods entering the territory of India (known as out-and-out sales in trade parlance), have been declared neither as supply of goods nor supply of services under as Schedule III of the CGST Act. Transactions of high sea sales are also included under Schedule III.
  • Reverse charge on procurements from unregistered dealers:Rather than a blanket levy of tax on procurements from unregistered dealers under reverse charge mechanism, Section 9(4) has been amended to levy tax only on procurements by notified assessees. It remains to be seen which class of assessees will be notified for this purpose
  • Ambit of input tax credit widened:Section 17 of the CGST Act has been amended to expand the scope of input tax credit to include motor vehicles having a capacity of more than 13 persons. Credit on other motor cars is also available if they are used for the specified purposes. Further, credit on health insurance, outdoor catering, etc. will be available if such services are required to be provided to employees by the assessee in terms of any law for the time being in force (e.g. Factories Act, labor laws, etc.).
  • Multiple registrations in one State:Earlier, separate registrations could be obtained in one State only if the assessee had distinct ‘business verticals’ in that State. This concept has been done away with by amending Section 25 and now, assessees may choose to obtain separate registrations in the same State irrespective of whether they qualify as distinct business verticals or not.
  • Flexibility in issuing debit/credit notes:Earlier, the law, as well as the GSTN portal, accepted a single credit note or debit note against one invoice. However, assessees faced practical difficulties since certain debit/credit notes were to be issued against thousands of invoices. Section 34 has been amended to permit issuance of a single debit/credit note against multiple invoices. This will obviate the difficulty faced by assessees, especially in the cement, steel and automobile industries
  • Simplification of GST returns:The GST Council approved putting in place system of filing a single monthly return in place of the existing 3 monthly returns. However, the existing system of filing GSTR-3B and GSTR-1 will remain in place until such a time the new monthly return is notified. Section 43A has been inserted in the CGST Act to carry out this change. However, this provision will not take effect from 1 February 2019 but will come into force only when the new system of returns is ready
  • Order of set-off: Section 49 of the CGST Act, SGST input tax credit can be set off against IGST liability only if CGST input tax credit balance is insufficient for this purpose. Hence, the order of set-off of input tax credit is strictly laid down under the CGST Act itself. Further, SGST or CGST credit balance can be utilized against IGST liability only after IGST balance has been exhausted. Earlier, while the law was ambiguous on this point, the GSTN portal allowed set-off of SGST only after CGST balance was exhausted
  • Transitional credit to exclude cesses: Section 140 of the CGST Act has been retrospectively amended to exclude cesses such as Krishi Kalyan Cess. This issue was hotly debated with the AAR denying the benefit of such credit in Re Kansai Nerolac Paints Ltd. [2018-VIL-11-AAR]

  • Amendment in place of supply provisions: The place of supply of transactions of transportation of goods to a place outside India will be the destination of goods in terms of the amendment made to Section 13 of the Integrated Goods and Services Tax Act, 2017 (the IGST Act). Consequently, the Indian logistics firm will be able to take advantage of this provision to claim export benefits. Further, the place of supply in case of job work services has been excluded from the performance-based rule. Hence, job workers based in India will be able to claim export benefits

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Source: mondaq.com
Government faces shortfall in GST collection

Government faces shortfall in GST collection

GST collection reached ₹1 lakh crore only in two months out of nine in the current financial year, according to government data.

One of the months where the revenue crossed ₹1 lakh crore was October, which marks the beginning of the festive season. Hence, a higher collection was expected. The other month was April. However, a government release in April cautiously noted that this “cannot be taken as a trend for the future” as people usually pay arrears of the previous months in March/April.

The chart below shows the GST collection trend in this financial year.

According to a CARE rating report published on January 2019, the government has already exceeded its fiscal deficit target, with the deficit reaching 114.8% of the budgeted amount during April-November 2018. The report also states that the monthly GST collections during Apr-Dec ’18 amounted to ₹8.7 lakh crores, which implies that the Central government and the States will have to collect ₹3.85 lakh crores in the remaining three months in order to meet the budgetary target of ₹12.6 lakh crore.

With the exception of Andhra Pradesh, Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim, all other States have experienced a shortfall in GST collection according to the data published by the government.

The government has taken several measures to increase revenue collected through GST, such as the introduction of an e-way bill, measures for simplification of tax return filing, increasing the tax base and rationalisation of tax rates to improve tax compliance and collection.

Tax officials have been appointed to check for overuse of input tax credit, as the current system of GST allows a time gap between input tax credit claim and realisation of tax, providing leeway for more input tax credit being claimed through fake invoices. The introduction of the new filing system is said to aid the tax department in matching invoices and real time tax paid.

Further, it is important to note that tax collection may undergo volatility due to the recent tax cuts imposed by the government in December on 17 items and six services.

The recent increase in the threshold of tax payment for MSMEs to a turnover of ₹1.5 crore or more against the previous threshold of 1 crore, according to the government, will bring down compliance cost whilst leading to a revenue loss of around ₹5,500 crore.

The impact of the various cuts and relaxations can only be gauged once tax revenue from the last three months of the financial year is realised.

Source: thehindu.com