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No GST on CXO salaries: Government set to clarify

No GST on CXO salaries: Government set to clarify

The government is looking to clarify that goods and services tax (GST) should not be applicable on salaries of chief executives sitting in head offices, two people in the know said.

This comes after the tax department started raising queries on how companies have dealt with this issue. ET had first written on November 14 that some of the top companies headquartered in Pune, Mumbai and New Delhi have started receiving queries from the tax department on cross-charging of CEO and CFO salaries.

According to a person close to the development the Central Board of Excise and Customs (CBEC), is set to clarify that common function like Human Resources should be out of the GST gamut.

“The intention of the GST law was never to tax salary and any other interpretation should be avoided as this would lead to prolonged litigation. Salary cannot be under the GST net and there is an urgent need for a clarification around this,” said Rohit Jain, partner, ELP, a law firm.

The tax department has started questioning top companies and banks if they were passing on some of the common costs like salaries of chief executives to their branch offices.

The department wants companies to proportionately distribute common costs from head office to branch offices and treat this as a supply. Once this is treated as a supply, 10% of it has to be added to the cost and 18% GST could be levied on the total amount.

Industry trackers say that ideally this would be a revenue neutral transaction but still impact the cash flows of the company.

Source: Economic-Times

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Source: Business-Standard.
Non-filers of GST returns may face cancellation of registration

Non-filers of GST returns may face cancellation of registration

The Goods & Services Tax (GST) Administration plans to act tough with non-filers of returns and cancel their registration. It has also decided to update the progress made in this regard on a daily basis.

Filing of returns helps tax authorities to estimate the tax liability and find out how much tax has been paid. The problem here is that nearly 20 per cent of assessees do not file their returns, which affects GST collections.

The Central Board of Indirect Taxes & Customs (CBIC) held a meeting with the Principal Chief Commissioner and Commissioner of GST & Customs on November 13. According to sources, PK Dash, Chairman, CBIC, expressed his displeasure in the progress of cancellation of registration of non-filers who have not filed GSTR 3B (showing tax payments) returns for six or more than six return periods and are liable to action under GST law.

“…the task of cancellation of registration of such non-filers of GST returns should be taken on priority basis and should be furnished by November 25, ” a communication sent from the office of the Principal Chief Commissioner of GST & Central Excise, Mumbai to Principal Commissioner/Commissioner posted in its jurisdiction. It has also asked for reports to be sent on a daily basis.

Conditions for cancellation
Section 29 of the Central Goods & Services Tax (CGST) Act prescribes conditions for cancellation of registration and fulfilment of any of these will invite action. These include contravention of the provisions of the Act, a composition scheme assessee not filing returns for three consecutive tax periods, any non-composition assessee not furnished returns for a continuous period of six months, not commencing business within six month from the voluntary registration, and registration obtained by means of fraud, wilful misstatement or suppression of facts. The Act clearly provides that registration will not be cancelled without giving the person an opportunity of being heard.

According to GST Law, a registered person will have to file returns either monthly (normal supplier) or on a quarterly basis (supplier opting for composition scheme). An ISD (Input Service Distributor) will have to file monthly returns showing details of credit distributed during the particular month. A person required to deduct tax (TDS or Tax Deducted at Source) and persons required to collect tax (TCS or Tax Collected at Source) will also have to file monthly returns showing the amount deducted/collected and other specified details. A non-resident taxable person will also have to file returns for the period of activity undertaken.

The law is very clear here that the cancellation of registration will not affect the liability of the person to pay the tax and other dues. Every registered person whose registration is cancelled will pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock or capital goods or plant and machinery on the day immediately preceding the date of such cancellation or the output tax payable on such goods, whichever is higher.

Source: The-Hindu-Business-Line

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Nirmala Sitharaman holds meeting on GST simplification

Nirmala Sitharaman holds meeting on GST simplification

Finance Minister Nirmala Sitharaman on Saturday held meeting with chartered accountants, traders and other stakeholders as part of efforts to further simplify Goods and Services Tax (GST) forms and make the filling process more user-friendly.

To highlight the problems faced by GST filers, the stakeholders attempted to file specific returns on a real-time basis in the meeting and tried to show where they are facing difficulties.

The finance minister assured the stakeholders that their suggestions on simplification of GST filing will be implemented soon, Revenue Secretary Ajay Bhushan Pandey said after the meeting here.

The minister also suggested to hold similar exercises in the entire country next month to understand the issues and concerns of GST filers, the secretary further said.

“Commissioner of a circle will call in some of assesses who will file in return and give suggestions. It was also decided that the GSTN and CBIC will interact regularly after December 7 as this is an evolving system and this kind of interaction are required for further improvement of the system,” he said.

New GST return is available on the portal for trial and consultations will be held all across the country on December 7 to get feedback on the new system, he said, adding about 85,000 returns on a voluntary basis have been filed so far although the new form becomes mandatory from April 1, 2020.

As a part of the ongoing efforts to address a concern raised on the process of filling GST forms, the finance minister invited Rajasthan Tax Consultants’ Association, ICAI, CAIT and Laghu Udyog Bharti and they attempted to file specific returns on a realtime basis and tried to present where they are having difficulties.

Some of the suggestions were with regard to change or amendment to entries in the filing, credit and debit note, he said.

“This meeting was fruitful. In some cases they were not aware of the existing instructions, in some cases they pointed out to confusion and some suggestion with regard to further easing were made,” he said, adding that some clarificatory circular would be issued wherever required and other suggestions would be implemented.

No major issues were found in the basic filing of return, he said.

CBIC Chairman, GSTN CEO, Member (Tax Policy), CBIC, AS (Revenue), Joint Secretary (Revenue), JS (TRU-1) and EVP- GSTN were also present in the meeting.

Source: India-Today

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GSTR-9, GSTR-9C gets simplified further, submission dates extended

GSTR-9, GSTR-9C gets simplified further, submission dates extended

The Government has to extend the due dates of filing of Form GSTR-9 (Annual Return) and Form GSTR-9C (Reconciliation Statement) for Financial Year 2017-18 to December 31, 2019 and for Financial Year 2018-19 to March 31, 2020.

It has also decided to simplify these forms by making various fields of these forms as optional.

The Central Board of Indirect Taxes & Customs (CBIC) on Thursday notified the amendments regarding the simplification of GSTR-9 (Annual Return) and GSTR-9C (Reconciliation Statement) which inter-alia allow the taxpayers to not to provide split of input tax credit availed on inputs, input services and capital goods and to not to provide HSN level information of outputs or inputs, etc. for the financial year 2017-18 and 2018-19.

CBIC expects that with these changes and the extension of deadlines, all the GST taxpayers would be able to file their Annual Returns along with Reconciliation Statement for the financial years 2017-18 and 2018-19 in time.

“Since the returns were not simplified, the extension is not a surprise. However, frequent extensions and delay in non-simplification has been a let down for businesses. Our sense is that businesses are ready to comply with GSTR-9 so they can move on and prepare for the new simplified return filing system,” said Archit Gupta .

Earlier the last date for filing of GSTR-9 and GSTR-9C for Financial Year 2017-18 was November 30, while that for Financial Year 2018-19 was December 31.

Source: Economic-Times

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Latest GST circular puts an end to confusion over new input tax credit rules

Latest GST circular puts an end to confusion over new input tax credit rules

In a big relief for GST taxpayers, the Union government on Monday clarified the new rules related to availing input tax credit under the GST. It said that a certain category of Input Tax Credit claims such as ITC in respect of the IGST paid on imports and GST paid under the reverse charge mechanism have been kept out of the scope of the new rules introduced last month. The new rules implemented by the CBIC limited input tax credit claims to 20% of the eligible amount where invoice matching has been done. However, the notification issued by the CBIC on October 9 caused a lot of confusion over the method of calculating this 20% amount, the cut-off date and also whether it was to be calculated supplier-wise or on a consolidated basis. These concerns prompted the CBIC’s GST policy wing to issue a new circular today clarifying all these aspects.

“This circular clarifies a few points and will be of help to GST payers,” said Pritam Mahure, a Pune based chartered accountant.

The circular issued by the Central Board of Indirect Taxes (CBIC) also clarified that this 20% cap on the eligible Input Tax Credit will not be calculated supplier-wise and GST payers can avail the input tax credit on a consolidated basis.

The Modi government had received complaints that some businesses were availing input tax credit by using fake GST invoices. In order to check the problem of misuse of input tax credit system, the CBEC, the nodal body to implement indirect taxes in the country, had last month made it compulsory to match the invoices uploaded by the suppliers in their GSTR1 forms before buyers can avail Input Tax Credit in their GSTR-3 returns. However, it also allowed the buyers to claim 20% more input tax credit over and above the eligible amount where invoice matching was done but the lack of clarity over the method of calculation created confusion among GST payers.

The CBIC’s latest circular is intended at clarifying all these aspects. For example, if a buyer is entitled to avail input tax credit of Rs 10 lakh on inward supplies (purchases) in a month but if his suppliers have only uploaded the correct invoices in respect of supplies of Rs 6 lakh only in the GSTR1 forms uploaded by them, then the buyer can avail ITC of Rs 6 lakh plus 20% of the eligible amount that is Rs 1.2 lakh. Therefore the buyer could claim a total ITC of Rs 7.2 lakh in the month.

It also clarified that the total amount of ITC, even after the addition of 20% input tax credit over and above the eligible amount where invoice matching has been done, cannot exceed the total amount of input tax credit that can be claimed.

For example, if a buyer is entitled to ITC of Rs 10 lakh on inward supplies and invoice matching is done in case of Rs 9 lakh then as per the 20% cap rule, he is also entitled to avail 20% over and above the eligible amount of Rs 9 lakh, which is 1.8 lakh in this case. However, this can take the total amount of ITC to be availed by him in the month to Rs 10.8 lakh, Rs 80,000 more than the total ITC amount that can be claimed. The new circular has clarified that in any case ITC claims will be restricted to the total amount due.

For example, if a buyer is entitled to ITC of Rs 10 lakh on inward supplies and invoice matching is done in case of Rs 9 lakh then as per the 20% cap rule, he is also entitled to avail 20% over and above the eligible amount of Rs 9 lakh, which is 1.8 lakh in this case. However, this can take the total amount of ITC to be availed by him in the month to Rs 10.8 lakh, Rs 80,000 more than the total ITC amount that can be claimed. The new circular has clarified that in any case ITC claims will be restricted to the total amount due.

The latest GST circular also clarified three distinct cases where the newly introduced rule to cap ITC to 20% over and above the eligible amount will not be applicable.

Where new GST Input Tax Credit rule will not be applicable
The cap of 20% on availing input tax credit under the GST rule 36, sub-rule (4) introduced on October 9 will not be applicable on three cases:

1. ITC in respect of the IGST paid on imports and these importers can directly avail the input tax credit;

2. The cap of 20% will also not apply to those cases where GST has been paid under the Reverse Charge Mechanism (RCM) and;

3. The ceiling of 20% on availing ITC will also not apply on Input Service Distributors (ISD), these are those businesses that receive invoices on behalf of the services used by their branches and subordinate offices.

Source: Financial-Express.

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GST taxpayers alert! CBIC is going to use this unique number from Friday, here’s how it will benefit you

GST taxpayers alert! CBIC is going to use this unique number from Friday, here’s how it will benefit you

In order to protect GST taxpayers from any harassment at the hands of errant tax officials, the Central Board of Excise and Customs (CBEC), is going to use a unique number in every communication with taxpayers from Friday. Initially, the department will use this unique document identification number (DIN) mostly for investigation related communications such as arrest warrants and search authorizations and it will be later expanded to cover all the communication issued by the officers of the board. All the communication issued on or after November 8 without a computer-generated document identification number will be invalid and deemed to have never been issued, said the CBIC in a letter issued to all the top officers on Tuesday.

The new document identification number to be used by the CBIC is similar to the one used by the CBDT since October 1 this year. GST taxpayers and recipients of summons, search warrants will be able to verify the genuineness of the document by visiting the CBIC’s website.

“The board in exercise of its powers under section 168(1) of the CGST Act, 2017 and Section 37B of the Central Excise Act, 1944 directs that no search authorization, summons, arrest memo, inspection notices and letters issued in the course of any inquiry shall be issued by any officer under the Board to a taxpayer or any other person, on or after the 8th day of November, 2019 without a computer generated Document Identification Number (DIN) being duly quoted prominently in the body of such communication,” said the CBIC in a letter issued on November 5, which was reviewed by the Financial Express Online.

The letter which was issued by the GST Investigation wing under the department of revenue, ministry of finance also made it clear that no communication issued on or after November 8 will be valid without a system-generated DIN number.

“The board also directs that any specified communication which does not bear the electronically generated DIN and is not covered by the exceptions mentioned in para 3 shall be treated as invalid and shall be deemed to have never been issued,” said the CBIC.

What is Document Identification Number (CBIC-DIN) in GST
1. In order to prevent the harassment of genuine taxpayers at the hands of tax officials, the government has decided to create a proper audit trail of all the communications issued by the Central Board of Indirect Taxes and Customs.

2. The 20 digit unique Document Identification Number (DIN or CBIC-DIN) will be computer generated and it will be prominently displayed in the body of the document issued by the officers under the board.

3. Only authorised officers will be entitled to generate CBIC-DIN from the utility developed by the Directorate of Data Management (DDM) hosted on the online portal of the CBIC.

4. Use of CBIC-DIN will be compulsory from November 8, 2019 and no communication without it will be valid.

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Source: Financial Express.
Commerce Ministry raises issue of notices to exporters for GST ‘violation’

Commerce Ministry raises issue of notices to exporters for GST ‘violation’

The commerce ministry has taken up the issue of Directorate of Revenue Intelligence (DRI) notices being sent to 1,000 exporters for alleged violation of Goods and Services Tax with its finance counterpart, an official said.

The commerce ministry has stated that the “overzealous revenue collection” move by DRI (Directorate of Revenue Intelligence) was against exporters.

The ministry has demanded integrated goods and services tax (IGST) exemption for inputs used in exports between October 2017 and January 2019, the official said.

In a letter to the Department of Revenue, the commerce ministry said that the demand of giving retrospective IGST exemption to exporters could be taken up by the GST Council, chaired by the finance minister and comprising state ministers.

“This department is of the view that enthusiasm of exporters should not be killed by overzealous revenue collection based on technicalities where revenue does not accrue in principle. You may consider placing these concerns before the GST Council for early resolution,” the ministry has said.

It has also stated that as on date, imports made under the advance authorisation scheme on both pre and post export basis are exempted from payment of IGST.

Exporters have raised concerns regarding litigation and penal action by DRI with regard to pre-import condition under the scheme.

DRI had sent notices to exporters for claiming post import IGST exemption between October 2017 and January 2019. During the period, this exemption was allowed only for pre-import of inputs.

But the exemption was allowed both for pre and post import from January 15 this year. The commerce ministry is seeking implementation of this notification from October 2017 itself.

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Source: Business-Standard.
GST: Evasion, returns and revenue boosting measures to feature at officers’ meet Monday

GST: Evasion, returns and revenue boosting measures to feature at officers’ meet Monday

Tax officers from the states and the Centre will get together for a day-long meeting on Monday to discuss administrative, legal, revenue and implementation-related issues under the indirect tax regime.

This will mark a first of its kind interaction between central and state tax officers, delinked from the agenda of the Goods and Services Tax (GST) Council meeting. Usually, officer-level meetings have always taken place a day before the GST Council meetings, mainly to discuss measures outlined in the Council’s meeting agenda.

As slowing revenues under the GST have become a concern, officials from the states and the Centre will discuss measures for anti-evasion, revenue augmentation, compliance, returns filing and online system, officials said. The rates of goods and services will, however, not be discussed since those pertain to the GST Council, they said.

Officials said this meeting would be more broad-based, wherein states and the Centre would have a common platform to discuss measures to streamline and regularise many pending issues under the GST. The tax officials are expected to take up issues related to e-way bills, delay in filing returns, IT matters, pending legislative changes, and methods to ensure greater coordination between states and Centre under GST, they said.

“This method to have a common platform for discussion between states and Centre is being tried for the first time. The idea was not to club it with a GST Council meeting and have an open agenda meeting. This was felt necessary so as to develop a mechanism for similar discussions going ahead. The officer-level meetings before Council meetings, otherwise, have too many agenda items and not everything gets discussed in detail,” one of the officials said.

Apart from the administrative- and implementation-related issues, pending legal changes would also be discussed. Another official said many states have not followed up on the amendments in the Central GST (CGST) Act with changes in their respective State GST (SGST) Acts, so much so that in some places there is a time lag of six months. “Such issues need to be prioritised since they are creating a hurdle in proper implementation of GST and would be raised in the meeting,” the official said.

The plan to hold this meeting comes even though the Council last month constituted a committee of officials from states and the Centre for revenue augmentation and looking into wider range of reforms such as systemic changes in the GST, including checks and balances to prevent misuse, measures to improve voluntary compliance, improved compliance monitoring and anti-evasion measures. The committee, which was earlier supposed to submit its report within 15 days, has so far met only once and is now likely to be given an extension of 1-2 months, officials said.”The committee has a wide range of topics in its terms of reference, so it would take time,” an official said.

GST collections in October contracted by 5.29 per cent to Rs 95,380 crore from Rs 1,00,710 crore in the year-ago month, marking the third instance of a contraction since the July 2017 roll-out of the indirect tax regime.

Source: indian-Express

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No GST on Collecting Exam Fee from Students and Remitting same to that Particular University: AAR

No GST on Collecting Exam Fee from Students and Remitting same to that Particular University: AAR

The Authority of Advance Ruling ( AAR ) in Karnataka has ruled that, the activity of collecting exam fee (charged by any university Or institution) from students and remitting the same to that particular university or institution without any value addition to it is a service as a pure agent and hence the value is excluded from the taxable value of the applicant as per Rule 33 of the Central GST Rules / Karnataka GST Rules, hence exempted from Goods and Services Tax ( GST ).

The Applicant provides coaching, learning and training services in relation to under-graduate, graduate and post-graduate degree, diploma and professional courses on a standalone bases to students or for any institution, corporate, company, institutes, universities and colleges in the subject and branches of all types of disciplines such as commerce, hardware, software, computer, science, arts, business management, engineering, medical, industrial, pharmacy, mining, military, dance, acting, sports, journalism and any other ‘field of education and set up of coaching and training classes/ centers in relation to the same.

The AAR observed that, “The applicant is collecting the exact amount payable to institute or college or universities as exam fee from the students (service recipient) and remits the same amount to the respective institute or college or universities (third party) without any profit element or additions, on the authorization of the student. This payment is separately indicated in the invoice issued to the respective students. The applicant providing this kind of services to the student in ‘addition to the services as training and coaching institute. Hence the applicant satisfies all the conditions of the pure agent as narrated in Rule 33 of the COST Rules, 2017. Therefore, amount of the fee collected by the applicant from the student as exam fee which is remitted to the respective institute or college or universities is excluded from the value of supply”.

Source: Taxscan

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Punjab and Haryana HC directs GST Department to Re-Open Facility to File or Revise Tran-1 either Electronically or Manually

Punjab and Haryana HC directs GST Department to Re-Open Facility to File or Revise Tran-1 either Electronically or Manually

The Punjab and Haryana High Court has directed Goods and Services ( GST ) department to file or revise Tran-1 either electronically or manually.

The High Court was hearing a bunch of Petitions, which Petitioners are registered under Central/State Goods and Services Tax Act, 2017 and seeking direction under Article 226 of Constitution of India to Respondents to permit carry forward of unutilized CENVAT credit of duty paid under Central Excise Act, 1944 and Input Tax Credit of VAT paid under PVAT Act, 2005 or HVAT Act, 2003 which could not be carry forwarded on account of non-filing or incorrect filing of prescribed statutory Form i.e. TRAN-1 by the stipulated last date i.e. 27.12.2017.

The division bench comprising of Justice Jaswant Singh and Justice Lalit Batra directed to permit the writ applicants to allow filing of declaration in form GST TRAN-1 and GST TRAN-2 so as to enable them to claim transitional credit of the eligible duties in respect of the inputs held in stock on the appointed day in terms of Section 140(3) of the Act.

The Court also ruled that, “the due date contemplated under Rule 117 of the CGST Rules for the purposes of claiming transitional credit is procedural in nature and thus should not be construed as a mandatory provision”.

While concluding the Judgment, the Court also directed Respondents to permit the Petitioners to file or revise where already filed incorrect TRAN-1 either electronically or manually statutory Form(s) TRAN-1 on or before 30th November 2019.

“The Respondents are at liberty to verify the genuineness of claim of Petitioners but nobody shall be denied to carry forward the legitimate claim of CENVAT / ITC on the ground of non-filing of TRAN-I by 27.12.2017”, the Court also added.

Source: Taxscan.

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