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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.

XaTTaX: Cloud and On-Premises Based GST Filing Software For India

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
SC upholds Compensation to States Cess under GST constitutionally valid

SC upholds Compensation to States Cess under GST constitutionally valid

The Supreme Court Wednesday upheld the constitutional validity of Goods and Services Tax (GST) Compensation to States, Act saying it was not beyond the legislative competence of the Parliament.

The top court said the Compensation to States Act, enacted by the Parliament in 2017, is not a “colourable legislation”.

A bench of Justices A K Sikri and Ashok Bhushan said the Act does not violate the Constitution (One hundred and first amendment) Act, 2016 nor is against the objective of Constitution (One Hundred and First Amendment) Act, 2016.

It held that the levy of ‘Compensation to States’ Cess is an increment to goods and services tax which is permissible under the law.

The bench while dealing with constitutional validity of the (Compensation to States) Act said that the expression ‘cess’ means a tax levied for some special purpose, which may be levied as an increment to an existing tax.

“The Scheme of Compensation to States Act, 2017 as noticed indicate that the cess is with respect to goods and services tax. There are more than one reason to uphold the legislative competence of Parliament to enact the Compensation to States Act, 2017,” it said.

The bench said that Article 248 read with Articles 246 and 246A clearly indicate that the residuary power of legislation is with the Parliament.

It said that in the present case, no contention has been raised that the subject matter of legislation was within the competence of State Legislature, and that the Parliament had no competence to legislate.

The bench said that after Constitution (One Hundred and First Amendment) Act, 2016, as per Article 270, Parliament can levy cess for a specific purpose under a law made by it.

It said that when Constitution provision empowers the Parliament to provide for Compensation to the States for loss of revenue by law, the expression “law” used therein is of wide import which includes levy of any cess for the above purpose.

“We, thus, do not find any merit in the submission of the counsel for the petitioner that Parliament has no legislative competence to enact the Compensation to States Act, 2017,” it said.

Dealing with second question, whether the Act transgresses the Constitution, the bench said that the Preamble of Compensation to States Act, 2017 expressly mentions the Act to provide for compensation to the States for the loss of revenue arising on account of implementation of GST in pursuance of the provisions of the Constitution (One Hundred and First Amendment) Act, 2016.

“Thus, the Compensation to States Act, 2017 has been enacted under the express Constitution (One Hundred and First Amendment) Act, 2016. We, thus, also do not find any force in the submission of the counsel for the petitioner that Compensation to States Act, 2017 transgresses the Constitution (One Hundred and First Amendment) Act, 2016,” it said.

The court said it does not agree with the submission that Compensation to States Act, 2017 is a “colourable legislation”.

“We having held that Parliament has full legislative competence to enact the Act and the Act having been enacted to implement the Constitution (One Hundred and First Amendment) Act and the object being clearly to fulfil the Constitution (One Hundred and First Amendment) Act’s objective, we reject the submission of the petitioner that Compensation to States Act, 2017 is a colourable legislation”, it said.

With regard to the question, whether levy of Compensation to States Cess and GST on the same taxing event is permissible in law, the bench said that GST imposed under the 2017 Acts and levy of cess on intra-State supply of goods and services or both as provided the CGST Act and supply of goods and services or both as part of IGST Act are two separate imposts in law and are not prohibited by any law so as to declare it invalid.

“We, thus, do not find any substance in the submission that levy of Compensation to States Cess on same taxable event is not permissible,” it said.

The bench also refused to set off payments made towards clean energy cess payment of Compensations to States Cess.

The apex court verdict came on an appeal filed by Centre against the Delhi High Court order passed in a case of Mohit Mineral Pvt Ltd which has challenged the validity of the Goods and Services Tax (Compensation to States) Act, 2017 and the Goods and Services Tax Compensation Cess Rules, 2017.

The Delhi High Court in its interim order provided that additional levy on the stocks of coal on which petitioner Mohit Minerals Ltd had already paid Clean Energy Cess in terms of Finance Act, 2010, shall not be required to make any further payment.

It had said however that on stocks of coal on which no Clean Energy Cess under the Finance Act, 2010 was paid any payment in terms of the Act would be subject to the result of the petition before it.


GST Ready Invoicing Software – Generate GST Compliant Invoice

Sources: Economic Times
Last date to file IT returns is Oct 15: Know what all documents you need

Last date to file IT returns is Oct 15: Know what all documents you need

It is now essential for every business or professional, to provide GST details in their income tax returns. While the compliances are relatively less for proprietors and individual businessmen, companies have been asked to give a split of their expenses, between payments made to GST registered and not registered entities for the FY 2017-18.

This makes the financial statements and GST filings inter-connected. There is substantial cross-reporting between the two, let’s understand this further.

The GSTIN and turnover/gross receipt as per GST must be reported while filing ITR-4. This, of course, applies only if you are registered under GST. Details of CGST and SGST or IGST paid on Sales/ Purchases/ Expenses must be given in the profit and loss account, by all those who are filing ITR-3, ITR-5 and ITR-6. Additionally, the amount of input tax credit remaining unclaimed as of 31st March 2018 should be disclosed in ‘Schedule OI'( Other Information ) of the ITRs listed above.

As per the Income Tax Act, 1961, companies are required to furnish their returns in the ITR – 6 form, except for those earning income from property held for the charitable purpose, who must file ITR-7. These companies while filing the ITR-6, have to disclose the break-up of their total expenditure including purchases from entities which may or may be not registered under GST.

This requirement is applicable to all companies whether or not required to get their books of accounts audited under section 44AB. Earlier, GST related reporting in Form 3CD was relaxed until 31st March 2019. But this relaxation has not been extended to ITR-6. Being the first filing season post the GST implementation, an interim relief was expected until the GST system settles in.

The assessees under the GST schedule of ITR-6 must declare the following:

  • Total summary expenditure: The assessee must state the total amount of expenses made during the year after GST was implemented; the break-up of the aggregate of the expenditure as reported in the schedule Part A – Profit & Loss/ Profit & Loss as per Indian Accounting Standards between July 2017 up to March 2018.
  • Purchases from or expenditure made to entities registered under GST must be reported. This is done by giving break up of expenses into 3 buckets – for goods and services exempt from GST, purchases from composition dealers and balancing figure will be reported purchases/expenses under ‘other registered entities’.
  • Expenditures relating to entities not registered under GST.
  • Companies need to report the breakup of the total purchase and expenses booked in the Profit and Loss Account (P&L) in the GST schedule. There should be a clear bifurcation of expenditure that attracts GST and those that do not attract GST. Such expenditure may include the purchase of inputs, consumables, freight, repairs, rents, audit fees, etc.
    These assessees are required only to give a summary of the expense details, and not report on the GSTIN level. The objective behind this is to gauge in total the transactions taking place under registered GST and unregistered GST entities.

With regards to the ITR to be filed by businesses opting for presumptive tax scheme, declaring GSTIN-4 will have significant relevance. An assessee opting to presumptive taxation scheme must have turnover below 2 crores if doing a business (Section 44AD) and under Rs 50 lakh if pursuing specified professions (under Section 44ADA). The GSTIN disclosure gives IT Department a source to verify the turnover with that declared under GST system.

In conclusion, company assessees are inconvenienced with little clarity on how this data may be used and what to expect in the coming months on compliance. The data so reported by assessees may be subject to changes later and this may need a revision too; this means that the data being reported in the income-tax returns and the GST returns must be aligned to avoid potential disputes in the future.

There is still time for GST return filing for the month of September 2018, which is due on 20th October 2018. But reconciliation for FY 2017-18 by businesses between GST returns and books of accounts is of utmost importance even before filing of Income tax returns for AY 2018-19 (now due on 15th October 2018). Since the management and the auditor will sign off on the financial statements which include GST numbers. Timely reconciliation will save assessees from pain and revisions later.


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Source: Economic Times