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CBDT defers till March 2019 GAAR, GST reporting under the new tax audit form

CBDT defers till March 2019 GAAR, GST reporting under the new tax audit form

The Central Board of Direct Taxes (CBDT) has put off till March 31, 2019, the proposed GST and CBDT defers till March 2019 GAAR, GST reporting under the new tax audit formGAAR reporting under the amended tax audit form. This dispensation would be available for tax audit reports to be furnished on or after August 20 but before April 1, 2019.

In a circular issued on Friday, the CBDT said representations had been received by the Board that the implementation of the reporting requirement under the proposed Clause 30C (pertaining to General Anti-Avoidance Rules or GAAR) and the proposed Clause 44 (pertaining to Goods and Services Tax compliance) of the tax audit Form No 3CD may be deferred.

“The matter has been examined and it has been decided by the Board that reporting under the proposed Clause 30C and proposed Clause 44 of the Tax Audit Report shall be kept in abeyance till March 31, 2019. Therefore, for Tax Audit Reports to be furnished on or after August 20, 2018 but before April 1, 2019, tax auditors will not be required to furnish details called for under the two clauses,” the CBDT circular said.

Expert take Anupam Jain, Executive Director, Nangia Advisors LLP, said the CBDT move is a welcome step, given the new reporting requirement and lack of any guidance on it.

“Ever since the revised audit format was circulated, there was much restlessness in the industry and auditors alike on the expansive import of the clause introduced on GAAR. It was indicative of loading tax auditors with an onerous responsibility to step into the shoes of a tax officer and determine if any transaction was an impermissible arrangement,” he said.

Further, even though the Act prescribes a threshold of 3 crore of tax impact, for a transaction to be categorised as an impermissible transaction, the proposed clause, at the first step wanted disclosure on any ‘impermissible transaction’ and then required quantification, said Jain.

Rahul Garg, Senior Partner, Tax and Regulatory, PwC India, said it would have been burdensome for companies to compile the enhanced requirements for tax audit after the close of the accounting period and statutory audits.

“The decision of the CBDT would save companies from the effort to go back to their closed and audited books to compile additional information for last year,” said Garg.

Sanjay Sanghvi, Partner, Khaitan and Co, said a fair decision has been taken by the CBDT.

“It was practically not possible for a tax auditor to provide those details/ remarks concerning applicability of GAAR,” said Sanghvi.

Ease Your GST Return Filing & Invoice with XaTTaX GST Software

Source:  The Hindu
SC upholds HC decision on ‘Form C’ availability after GST

SC upholds HC decision on ‘Form C’ availability after GST

The Supreme Court has upheld the decisionSC upholds HC decision on ‘Form C’ availability after GST of the Punjab and Haryana High Court that Form – ‘C’ should be made available to an assessee even after implementationof the goods and services tax (GST).

A Bench led by justice Ranjan Gogoi, while dismissing a Haryana government’s appeal, observed that “if you (Haryana government) poke industries like this, they will run away”.

The issue before the court was whether after the amendment to the Central Sales Tax Act, 1956, power company Caparo Power was entitled to be issued ‘C’ Forms in respect of natural gas purchased from Gujarat-based BPCL and IOC in the course of inter-state sales for generation of electricity.

The HC held that the sale tax law as defined in Section 2(i) of CST Act will mean the law for the time being in force in any state for levy of taxes on sale and purchase of goods. It further ruled that the definition is inclusive, and not restrictive, hence will include the HGST Act 2017 as well.

Form C is issued by a purchasing dealer to a selling dealer to avail of the benefit of the concessional rate of CST. The objectives of providing benefit vide C Form are to negate effect of high rate of taxation and to safeguard the consumers’ interest.

The Haryana government in its appeal said Caparo was not engaged in re-selling of these goods and its registration under the CST Act lapsed on the commencement of the HGST Act. So, the company was not entitled for Form C. It further said the provisions of the CST Act would apply only if it sold the same goods that it had purchased (natural gas).

However, the HC said the CST Act does not restrict the usage of Form C only for the purpose of resale, but can be used for resale, manufacture, processing or generation/distribution of electricity.

Caparo had challenged the Haryana government’s refusal to issue ‘C’ Forms on the grounds that there had been no change of law with regard to inter-state sale of natural gas in pre-GST or post-GST.

Stating that inter-state sales are outside the domain and control of any state, counsel Ankur Saigal, who appeared for Caparo, argued that the issuance of Form C is under CST Act and not under HVAT Act and the state government is only the implementing agency and has no discretion to refuse the Form C if all the conditions are satisfied, as the issuance of Form C does not impact purchasing dealer state’s revenue.

Source :  Financial Express
Inter-state office services to attract GST

Inter-state office services to attract GST

Is your human resource department hiring for your offices in other states? Or your finance department preparing payrolls for employees in other centres? These services by one office to branches in other states will be treated as “supply” and attract goods and services tax (GST), according to an order by the Karnataka Authority of Advance Rulings.

The ruling implies that companies with offices in many cities will need to raise invoices for in-house service functions and pay GST. Although the tax can be claimed as an input credit by the receiving location in most cases, it would substantially increase the compliance burden for businesses spread across states.

According to the ruling, a large business with its head office, say, in Mumbai, where the entire finance, IT and HR functions are centralised for its offices across states, would be deemed to be providing support services to other locations and hence need to raise invoices charging GST.

In cases where goods or services are fully or partially exempt from GST — such as hospitals and schools — this would be an incremental cost.

The AAR, in a ruling sought by Bengaluru-based Columbia Asia Hospitals, held that the employeremployee relationship in the corporate office exists only there and not with other office units, even if they are part of the same legal entity, as far as the GST law is concerned.

“The activities… shall be treated as supply as per Entry 2 of Schedule I of the CGST Act,” the AAR said. It also held that the employee cost incurred at the corporate office should be considered while arriving at the value of goods or services provided by such offices to other locations.

Tax experts said the ruling has wide ramifications for businesses, especially large ones with offices in various cities. “The government should therefore immediately look into this and provide a suitable clarification that at least the employee’s salary/cost should be excluded from the value of supply made by one office to another,” said Pratik Jain, leader, indirect taxes, at PwC.

Abhishek Jain, tax partner at EY, said: “This ruling opens a Pandora’s box, especially for those businesses that are into exempt or non-GST supplies, as these companies, with this Advance Ruling, may need to charge GST on notional head office employee costs as well, with credit of such GST not being available to the recipient branch or company.”

Jain said in sectors that are exempt or not within the ambit of GST, such as healthcare, education, petroleum and liquor, such inter-office activities should ideally not be considered as a service subject to GST and an exception should be carved out. There is also the issue of valuation of the service for levying the tax.

“While there has been clarity that cross-charge of expenses would be liable to GST, the challenge lies in its valuation. As the crosscharge is between the same entity, such expenses are cross-charged at cost without any mark-up. It would be interesting to see whether such valuation is acceptable to the tax authorities,” said Harpreet Singh, partner, indirect tax, at KPMG. AAR is a quasi-judicial body that allows assesses to get guidance on their potential tax liabilities in a transaction beforehand.

Its rulings are case-specific but they have a persuasive impact on tax assessment in the cases of other firms under similar circumstances.

Source :  The Economics Times
GST Return Filing Process Is Set To Get A Makeover

GST Return Filing Process Is Set To Get A Makeover

In the first year of the implementation of the Goods and Services Tax, one of the key issues that affected taxpayers and had kept the GST Council undecided was the return filing formats and process. Simplified GST ReturnsAfter much deliberation, the Council had approved the return filing framework last month and the formats were released for stakeholder consultation. The government has called the new process ‘sahaj’ and ‘sugam’, meaning easy and simple.

Chirag Mehta, the member of the Bombay Chartered Accountants’ Society, explained the proposed return filing requirements on BloombergQuint’s weekly law and policy show, The Fineprint.

Highlights Of Proposed GST Return Filing Process

  • Taxpayers with a turnover threshold of up to Rs 5 crores can file a quarterly return but the taxes will have to be paid monthly. Forms sugam — for B2B and B2C supplies — and sahaj — for B2B supplies — have been proposed for this category.
  • Taxpayers above this threshold will have to file a monthly return. The due date for the same will be the 20th of the next month.
  • Suppliers can upload invoices anytime during the month and this would be visible to the buyers.
  • Based on the uploaded invoices, buyers will be able to claim input tax credit.
  • Buyers will be able to claim input tax credit for those invoices that are uploaded till the 10th of that month.
  • Taxpayers will be able to file an amendment return twice for any tax period.

Once the new process gets notified, there will be a six-month transition phase during which buyers would be able to avail input tax credit on a self-declaration basis. Even if the supplier hasn’t uploaded all the invoices, buyers will be able to claim credit using ‘ITC for missing invoices’ facility.

The new process will have a unidirectional document flow, Mehta said. This is conceptually different from the earlier process where the seller was supposed to upload all the invoices and the buyer had to upload the purchase details, he said.

“Previously, the supplier would get missing invoices or incorrect invoices as a statement and this ended up being a month-long process,” Mehta said, adding, “Under the proposed scheme, the document flow will be from the supplier to the buyer.”

The buyer’s role is to keep an eye on missing and incorrect invoices and prompting the supplier to rectify them. Effectively, there’s no matching but a continuous monitoring by the buyer.

Chirag Mehta, Member, Bombay Chartered Accountants’ Society

The buyer’s input tax credit statement will be auto-drafted from what the supplier uploads, he said. “Uploading the invoices on a continuous basis and monitoring them to avail credit will throw up operational challenges.”

Source: BloombergQuint
IMF Advises India To Consider Simpler GST Rate Structure

IMF Advises India To Consider Simpler GST Rate Structure

The International Monetary Fund (IMF) today described the Goods and Services Tax (GST) as a “milestone reform” in IMF Advises India To Consider Simpler GST Rate StructureIndia’s tax policy, but pushed for a simplified structure, saying the multiple rate structure and other features could give rise to high compliance and administrative costs.

In its annual country report, the International Monetary Fund also said that a dualrate structure with a low standard rate and an additional higher rate on select items can be progressive and preserve revenue neutrality.

The GST is an indirect tax levied on the supply of goods and services in India. It came into effect on July 1, 2017.

The IMF said that GST is a milestone reform in India’s tax policy, taking the important step of unifying and harmonising numerous indirect taxes across all states of the federation and the central government.

“Yet, the GST has a complex structure with a relatively high number of rates (and exemptions), which could be simplified without sacrificing progressivity of the current GST and with potentially significant gains from lower compliance and administrative costs,” it said.

A dual rate structure with a low standard rate and an additional higher rate on select items can be progressive and preserve revenue neutrality, while streamlining exemptions would further contribute to progressivity and reduce compliance and administrative costs, the IMF recommended.

The IMF said that with the consumption basket of the rich taxed at higher rates than that of the poor, the GST as presently designed has an effective tax rate rising with household consumption. A revenue-neutral reduction in the number of rates would raise the effective rates for poorer households while reducing those for richer households. This is the key cost of moving to a simpler system, it argued.

In its report the IMF said the implementation of the GST led to the key step of harmonising indirect tax rates on goods and services that previously differed across different states and the centre, and brought services into the state tax net.

However, India belongs in a small group of five countries having four or more GST rates: four non zero rates of five per cent, 12 per cent, 18 per cent, and 28 per cent; special low rates of three per cent on gems and jewelry and 0.25 per cent on rough diamonds; and a GST “cess” levied on demerit goods. In comparison, among 115 countries with VATs, 49 have a single rate, and 28 have two rates, it noted.

“The multiple rate structure and other features of India’s GST environment could give rise to high compliance and administrative costs,” it said.

The goods and services tax created a unified national market for the first time by lowering internal barriers to trade – effectively establishing a free trade agreement for a market of over 1.3 billion people, said Ranil Salgado, IMF mission chief for India.

The tax is also expected to increase the amount of economic activity taking place in the formal sector of the economy – leading to better quality and more reliable jobs, he added.

“As a result, the goods and services tax should improve productivity and boost medium term potential growth, while also creating room for the government to increase much needed social and infrastructure spending,” Mr Salgado added.

Source : NDTV
Suspension of GST RCM till 30th Sep 2019

Suspension of GST RCM till 30th Sep 2019

Upon the recommendations of the GST council in its 28th Meeting held on 21st July 2018, GST Reverse Charge mechanism CBIC (Central Board of Indirect Taxes and Customs) has issued notification no. 22/2018-Central Tax (Rate) and 23/2018-Integrated Tax (Rate) on 06th August 2018.

The said notification has been issued on being satisfied that it is necessary in the public interest.

This notification is said to amend the Notification No 32/2017 dated 13th October 2017 and last amended vide Notification No. 13/2018 dated 29th June 2018. In the said notification, for the figures, letters and words “30th day of September, 2018”, the figures, letters and words “30th September, 2019 shall be substituted.


Through the said notification, CBIC notifies that the reverse charge mechanism applicability have been postponed till 30th September 2019. Earlier, CBIC had notified the applicability from 01st April 2018, later the same was postponed till 30th June 2018 and once again to 30th September 2018. This time the applicability has been cancelled for another one year i.e 30th September 2019.

Download Reverse Charge Mechanism (RCM) Notification No. 22/2018 – Central Tax (Rate)

GST Council may replace 12% and 18% slabs with 14-15% one: Sushil Modi

GST Council may replace 12% and 18% slabs with 14-15% one: Sushil Modi

GST Council might replace the 12 per cent and 18 per cent slabs with a 14-15 per cent one, Sushil Modi: GST Councilsaid Bihar Deputy Chief Minister Sushil Modi on Thursday.

While addressing a seminar on the GST, organized by the Institute of Chartered Accountants of India, Modi said this slab rationalisation was likely to be taken up only after the GST collections have reached Rs 1 trillion. Experts claim this might take nine months to a year to reach this target.

This would reduce the number of GST rates to four. Also, the GST rates of items such as refrigerators, washing machines, small television sets, and paint and varnish could go down further after they were cut from 28 per cent to 18 per cent recently.

Except for April, the GST has never yielded revenue of Rs 1 trillion.

This was also an aberration since arrears of the previous months were paid. In July, Rs 964.83 billion was collected, against Rs 956.1 billion in June and Rs 940 billion in May.

“Pruning the number of GST rate slabs is definitely a good idea. But I don’t foresee that happening in the next nine to 12 months till the tax collections consistently reach the desired Rs 1-trillion-per-month target,” said Harpreet Singh, partner at KPMG.

At present, around 49 countries use a single GST rate, 28 use two rates and four countries including India have more rates.

Source :  Business Standard
Note on the Draft of Simplified GST Returns approved by GST council

Note on the Draft of Simplified GST Returns approved by GST council

GST council has approved the GST return design in its 27th meeting, however, Simplified GST Returnsthe key features and the drafted formats were approved in its 28th meeting.

The main features of these monthly returns would be:

1. Single monthly return for large taxpayers (20th of next month)

2. Quarterly NIL returns & facility to file quarterly returns by an SMS.

3. Small Taxpayers (Turnover less than 5 Crores) shall file quarterly return though payments shall be made on monthly basis.

4. Continuous uploading of invoices & Viewing facility

5. Self-admitted liability in case of return not filed through the invoices was uploaded.

6. Unidirectional flow of document to claim input tax credit

7. Missing Invoice reporting with interest and penalty after 2 tax periods

8. Offline IT tool in excel along with filtering facility

9. No automatic reversal of Input tax credit & recovery shall be made through a due process

10. Locking of invoices indicating acceptance of entering the transaction reported.

11. Rejection of Invoices by the taxpayer in case the recipient wrongly mention the GSTIN

12. Pending & amendment of Invoices

13. Deemed locking and Unlocking of invoices

14. Capturing HSN up to 4 or more digits in regular return

15. Two main tables in the return – one for reporting supplies and other for availing Input tax credit.

16. Payment of multiple liabilities

17. Amendment return to address human errors

18. Amendment of missing invoices and other details

19. Payment of liability arose due to the amendment & higher late fee for amendment return

20. Monthly accounting & assessment facility on the common portal

21. Facility of uploading Shipping bill in case of exports

22. Transmission of data to ICEGATE

23. Input tax credit on self-declaration basis till data transmits from ICEGATE to SEZ online

24. Supplier’s side control in the best interest of the recipient

25. Profile-based return to show him only a few types of supplies to report based on his profile

26. Purchase information in the annual return

27. Suspension of registration in case the registered person applied for cancellation of registration

28. Sahaj (B2C outward supplies) & Sugam returns (B2B + B2C outward supplies)

This simplification of GST returns would benefit by reducing the compliance costs for taxpayers. Minor/clerical errors would not lead to the initiation of legal actions. A questionnaire would be available for the taxpayers for checking the eligibility to opt for quarterly filing and to enable the profile based returns. The drafted returns were made available online & they would be made available once they get approved.

Taxpayers have to wait and see as to how this simplification process is going to help them. Hope it will not make the filing more cumbersome as the GSTN is tuned up to handle volumes of data & the network experienced frequent crashes. Ending up the note with several questions in mind as to how the invoices pertaining to deemed sales will be treated in the returns.

GST Revenue collections for July 2018

GST Revenue collections for July 2018

The Total Gross GST Revenue collected in the month of July 2018 is Rs. 96,483 GST Revenue collections for July 2018crore of which CGST is Rs. 15,877 crore, SGST is Rs. 22,293 crore, IGST is Rs. 49,951 crore (including Rs. 24,852 crore collected on imports) and Cess is Rs. 8,362 crore (including Rs. 794 crore collected on imports). This is broadly on expected lines.

The total number of GSTR 3B Returns filed for the month of July up to 31st July, 2018 is 66 lakh compared to GSTR 3B Returns filed for the month of June up to 30th June, 2018 was 64.69 lakh.

Rs. 3899 crore has been released to the States as GST Compensation for the months of April-May, 2018.


Source: PIB
GST regime brings in nearly 50 lakh new taxpayers

GST regime brings in nearly 50 lakh new taxpayers

The Goods and Services Tax (GST) regime has seen a significant change in the assessee segmentation compared to the pre-GST era when VAT and Central excise were in place. There are fewer assessees now in the lowest and highest slabs while all the other slabs have seen an increase.

As on July 25, a total of 63.7 lakh taxpayers migrated from the old system, while 49.53 lakh new taxpayers became part of the indirect tax system taking the total number of taxpayers under GST to more than 1.13 crore. These include 17.66 lakh taxpayers who have opted for the composition scheme.

The government expects the total number of assessees to go up as the GST Council has decided to give businesses one more chance to migrate to the new system. To incentivise them, migrants may be allowed to file GST return for the July 2017-August 2018 period without any late fee.

GST: Percentage of Taxpayers

The GST regime requires any business with an annual turnover of 20 lakh or more (10 lakh in some North-Eastern States and hilly States) to get registered. Earlier, different States had different slabs for registration under VAT/ST, which was as low as 1 lakh and could go up to 10 lakh: the thresholds for service tax and Central excise were 10 lakh and 1.5 crore, respectively.

The GSTN study found that during the pre-GST regime, more than 60 per cent taxpayers were in the turnover slab ‘up to 20 lakh’. Post-GST, that came down to 52.24 per cent. Since some States earlier had a threshold of below 20 lakh or even below 10 lakh, many small businesses went out of the tax net, lowering their share in the total GST payers. The share of taxpayers with turnover of 5 crore or less has fallen to 93.29 per cent, against 94.25 per cent earlier.

The share of taxpayers in the 100-crore slab has fallen by eight basis points. This could be because some products are — crude oil, petrol, diesel, ATF and natural gas, and alcohol for human consumption — are still under the old regime.

Also, big taxpayers are smaller in numbers, so even if a few don’t come under the new regime, it will have a significant impact on the share of the highest turnover slab.

Source: The Hindu Business Line