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GST: 1 year on, firms yet to set up infra for compliance

GST: 1 year on, firms yet to set up infra for compliance

‘There is a need to transform outlook’

Corporates are now realizing that coming to terms with GST means a more drastic change to their tax infrastructure than the basic compliance-related changes they have made so far, Vishal Parekh, regional head, South Asia, Thomson Reuters said in an interview.

“In the last several months, we have had discussions with CFOs and tax heads, and post one year of GST, there is a very different mood around tax and finance,” Mr. Parekh said.

“The entire focus was in just trying to get an infrastructure in place so that there was compliance in GST.”



Using tech teams

Most IT companies had either people on the bench to help them get their returns in place or had utilized their existing bandwidth and teams in their technology departments to help get them through the compliance process.

“Now that the one year has passed, there is a growing realization that without having a systematic way to deal with this in terms of processes, workflows, and technology, this is not sustainable,” Mr. Parekh added.

“That’s where we have seen a growing awareness, that where they are today is good for the first year of GST, but that they really need to start thinking about a transformation in the way they look at tax.”

This transformation, he explained, means different things to different companies.

Mid-to-large segment companies, for example, could be looking at simply upgrading the GST module of their existing tax and finance infrastructure.

“Some others, which are fairly global in scale, are looking at their entire workflow and seek to upgrade their entire tax workflow, be it direct tax, transfer pricing, indirect tax, compliance, and they want to automate all of that in one go, even if it takes two years to do so,” Mr. Parekh said. Compliance in India is likely not a harder process than in other major tax jurisdictions, Mr. Parekh added.

“The US and Brazil when it comes to indirect tax and sales tax, are probably some of the most complex jurisdictions I have seen,” he said. “Tax in today’s world is complex everywhere. In India, with GST coming in, I think a lot of people would argue that it has become easier as they don’t have to deal with excise duty, checkpoints, octroi tax.”


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Sources: The Hindu
Some GST-laden private banks up charges on remittances

Some GST-laden private banks up charges on remittances

Private banks that are being charged GST on transactions undertaken by their business correspondents are starting to increase their charges on remittances, two people aware of the development said.

At least two large private sector lenders in the domestic money remittance business have increased charges by at least 20 basis points, they said, declining to name the banks. A basis point is one-hundredth of a percentage point. Some banks have sought legal opinion on the matter and are looking to arrive at an understanding with tax authorities, ET has learned.


Business correspondents, or bank mitras, as they are popularly referred to, provide fund transfer, withdrawal, and cash deposit services on behalf of banks in far-flung areas.

“As a direct result of the tax notices slapped on few private banks, two major players in this space have increased the cost of these services by 20 basis points, taking the rate to 1.2% of the transaction amount,” said Anand Kumar Bajaj, chief executive officer of PayNearby and cochair for communications at the Business Correspondents Federation of India.

“The increase in cost will eventually get passed on to the consumers, who, in this case, are ones without direct access to full banking channels.”

Banks can charge up to 1.5% of the transaction amount from their customers. But because of high competition in the space, multiple players reduced their charges to 1%, Bajaj said. Bankers say that for them to pay tax on fees made by the retailers at the end-point would cause a huge burden. The issue of pricing has cropped up mainly with private banks that offer remittance services. A top executive with a business correspondent agency said that unlike public sector banks, private banks do not have a huge spread of branches.

“Therefore, we have to rely on local branches of other banks for cash management services and we used to charge customers according to the cost that we incurred,” he said. “Now, levying GST on the sponsor bank for the entire charge is causing trouble.”

Nihal Kothari, leader, indirect tax practice, at law firm Khaitan and Co., said a GST of 5% could be levied on this space since it helps promote financial inclusion, and that full input credit on the sponsor bank would help ease the pain. “The decoupling of various modules of financial services is the way forward in the era of the value-added tax regime, under which each service provider in the value chain should contribute GST on his/her service component at applicable GST rate,” he said.

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Sources: Economictimes.indiatimes
GST refunds worth Rs 22,000 cr pending with govt: FIEO

GST refunds worth Rs 22,000 cr pending with govt: FIEO

As much as Rs 22,000 crore GST refund is pending with the government, creating a liquidity problem for exporters and impacting overseas shipments, FIEO said.

Federation of Indian Export Organisations (FIEO) President Ganesh Gupta said the delay in refund is mainly impacting small exporters who provide jobs in labor-intensive sectors.


“Refunds of about Rs 7,000 crore are pending on account of IGST (integrated GST) and about Rs 15,000 crore ITC (input tax credit) as of September 30. This is impacting small exporters,” Gupta told reporters.

 He said that liquidity is a major area of concern particularly for MSME exporters who constitute the bulk of exports in employment-intensive sectors.

While refund process has improved in the last six months, the refund can be claimed only after manufacturing of goods and exports with a lead time of about three-nine months depending on the production cycle, he added.

He demanded that exemption from GST should be provided on inputs required for export production to provide the necessary competitiveness to exports.

“At present, ITC refund is partly electronic and partly manual. The exporter files refund application at the portal takes a printout along with acknowledgment and carries it to GST authorities in hard copy along with required documents which to varies from authority to authority,” Gupta said.

Talking about credit woes, he said the cost of exports has increased by about 5-6 percent and the big exporters are now using letters of credit (LCs) in place of letters of undertaking.

“The immediate concern of the export sector is with regard to the flow of credit from the banking sector. Even getting a renewal of limits is taking abnormal time with huge documentation requirement. The export credit declined by 26.4 percent in the financial year ending March 2018,” he said. Technically, export credit is under the priority sector lending but through a complex mechanism, he said, adding the cost of credit is also an issue as interest rates are moving northward.

On rupee, Gupta said the limited intervention by the RBI has not been able to contain the volatility as it is a global phenomenon.

The rising crude prices, northward movement of Fed rates in the US, pullout by FIIs and increasing current account deficit which is expected to touch 3 percent of GDP as estimated by the IMF are bound to put pressure on the rupee, he said.

“Contrary to general perception, such depreciation has not benefited exports to the extent anticipated,” he said.

Further, he said the federation has suggested a barter system trade with Iran.

He has suggested setting off/adjustment of export receivables against import payable from the same entity in Iran.

“Though the RBI guidelines allow such transactions, which are also recognized in the Foreign Trade Policy, banks are not clear whether this facility is applicable for exports/imports to/from Iran,” he said.

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Source : Moneycontrol
Central, State officials can act against GST evaders irrespective of jurisdiction: CBIC

Central, State officials can act against GST evaders irrespective of jurisdiction: CBIC

The Central Board of Indirect Taxes and Custom (CBIC) has made it clear that irrespective of assessees assigned under the Goods and Services Tax (GST) regime, officials from the Centre or State can initiate enforcement action against tax evaders and take it to its logical conclusion.


The directive will remove the ambiguity on initiation of enforcement action by the Central tax officers in case of taxpayers assigned to the State tax authority and vice versa. It is also meant to end jurisdictional disputes.

In a communication sent to senior Central tax officials, Mahender Singh, Member, CBIC, said: “It is accordingly clarified that the officers of both Central Tax and State Tax are authorized to initiate intelligence-based enforcement action on the entire taxpayer’s base irrespective of the administrative assignment of the taxpayer to any authority.”

The move will also help in higher revenue collection which is still in the range of 93,960- 1,03,459 crore while the estimate is between 1-10 lakh crore. Anita Rastogi, an Indirect tax Partner at PwC, said that intelligence-based enforcement action has taken a new importance considering that GST revenue has not really seen the increase as expected by the Government coupled with some sector-specific tax evasions being noticed recently. “Businesses would now need to deal with both Centre and State in specific situations,” she said.

The communication further read that the authority which initiates such action is empowered to complete the entire process of investigation, issue show cause notice, adjudication, recovery, the filing of appeals etc. In other words, if an officer of the Central tax authority initiates intelligence-based enforcement against a taxpayer administratively assigned to the State tax authority, the officers of Central tax authority will not transfer the said case to its State tax counterpart and will themselves take the case to its logical conclusion. The same system will follow for State tax authorities.

The Goods and Services Tax Network (GSTN) is making changes in the IT system to facilitate the new mechanism to work smoothly. So far there is nearly 1.14 crore business registered under assessees.

The whole issue arose due to the present system for distribution of administration. Of the total number of taxpayers below 1.5 crore turnover, all administrative control over 90 percent of the taxpayer’s vests with the State tax administration and 10 percent with the Central tax administration. In respect of the total number of taxpayers above 1.5 crore turnover, all administrative control is divided equally in the ratio of 50 percent each for the Central and the State tax administration. The division of taxpayers in each State has been done by computer at the State level based on stratified random sampling and could also take into account the geographical location and type of the taxpayers, as may be mutually agreed.

For the new registrants, the mechanism says that they shall be initially divided one each between the Central and the State tax administration and at the end of the year, once the turnover of such new registrants is ascertained, those units with turnover below 1.5 crore shall be divided in the ratio of 90 per cent for the State tax administration and 10 per cent for the Central tax administration and those units above the turnover of  l.5 crore shall be divided in the ratio of 50 per cent each for the State and the Central tax administration.

XaTTaX – World Class Automated eSolution for Return filing and e-Waybill

Source: TheHinduBusinessLine


GSTN makes PIN code must for transporters, businesses for e-way bill

GSTN makes PIN code must for transporters, businesses for e-way bill

Tightening the norms for issuance of the e-way bill, the GST Network has made it mandatory for businesses and transporters to mention PIN codes of places of loading and unloading of consignments.


Quoting of PIN codes, according to officials, will help in calculating the correct distance and determine the validity of the electronic way or e-way bill, which is used by businesses to transport goods worth over Rs 50,000 both within and outside a state.

So far, businesses and transporters are required to broadly mention the distance and place of loading and unloading of consignments for generating an e-way bill.

As the validity of the e-way bill depends upon the distance mentioned by the businesses, it was feared that this could lead to tax evasion by transporters making multiple trips on the basis of the same e-way bill.

The validity of the e-way bill is one day if the distance to be covered is less than 100 km. For every additional 100 km or part thereof, the validity of the bill goes up by one day.

Under the revised procedures for obtaining e-way bill, the GSTN has introduced the facility of auto-population of state name based on the PIN code entered at consignor or consignee addresses, an official statement said Wednesday.

The move would further smoothen the experience of users generating e- waybill, the Goods and Services Network (GSTN) said.

Another new feature now available on the e-way bill portal now alerts the generator of the e-way bill through a pop-up and SMS message, in case the total invoice value entered by them is very high, to avoid making mistake, GSTN said.

“The new features are part of GSTN’s continuous efforts to improve user experience and make the e-way bill generating process easy and convenient for users. These new features have been developed and introduced in response to feedback from both users as well as tax authorities to make generating of e-way bill easier,” GSTN said.

Between April 1 when the system came into force and September 30, a total of Rs 253.2 million e-way bills have been generated. Of this, the interstate transport of goods has accounted for 121.4 million of the bills while the intrastate transport has contributed to 131.2 million.

As many as 245.3 million taxpayers and 31,232 transporters have registered with the e-way bill system so far.

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Source: Business Standard
GST policy on e-commerce may make life difficult for cab startups: Experts

GST policy on e-commerce may make life difficult for cab startups: Experts

A Bengaluru-based startup has filed an appeal questioning a July 27 ruling by GST authorities in Karnataka which said app-based cab aggregators must pay GST on trip fares collected by private cab drivers/owners tied to their e-commerce platforms.
Opta Cabs, a startup that plans to offer app-based cab hailing services, has preferred an appeal to the ruling by the GST Authority on Advance Ruling in Karnataka. Its founder Chandrakaladhar Reddy (44) said: “This kind of regulations impose huge legal costs, and create an entry barrier for startups like us. The policy needs to change.”

Sections of GST experts believe the GST policy requiring aggregators to pay GST on fares collected by cab drivers will hurt startups as “it affects their liquidity and increases their operational risks and costs.”

The provisions of law and notifications are detrimental to the interest of e-commerce players, especially startups, engaged in the business of providing taxi hire services through marketplace model, said M.A.Maniyar, GST consultant and former Deputy Commissioner of Commercial Taxes, Karnataka. A former tax commissioner, not willing to be identified, too felt the GST policy approach seemed to skew in favor of deep-pocketed aggregators, and not budding platforms.

PV Srinivasan, a mentor for indirect tax expert committee at Bangalore Chamber of Industries & Commerce (BCIC), felt the GST policy, in this case, militates against the government’s policy of encouraging self-employment. “The policy looks discriminatory against small entrepreneurs, and imposes a tax cost on e-commerce cab aggregators on a consideration that they don’t collect.”

The GST legislation has indirectly led to taking away the benefit of the GST exemption available to individual/small taxi operators for annual turnovers below Rs 20 lakh, said Vivek Pachisia, tax partner at EY. According to Maniyar, aggregating the fare collected by all the taxi drivers/owners and subjecting the same to tax at the hands of the e-commerce operator is unreasonable.

Like it does with e-commerce retailers, the GST policy could have asked app-based cab aggregators too to collect 1% TCS (tax collected at source), instead of transferring the entire burden on the e-commerce company, Srinivasan said. “When the transport sector is already paying steep taxes with fuel price steadily increasing, I think if this additional GST on e-commerce platforms needs a relook.”

EY’s Pachisia, however, said the government has in a way expanded the tax-base by indirectly including even small service providers within the GST net because they provide the services through an e-commerce platform while the same service would not be taxable if they were to provide it without platform support. “Eventually, the impact of GST is borne by the customers and taxi-operators and not e-commerce platform operator,” he said.HG Kumar, former Additional Commissioner of Transport, Karnataka, clarified that small e-commerce players with less than 100 cabs can operate just with a radio taxi license while those above 100 cabs require aggregator license. Only Uber, Ola and Utto have taken aggregator license in Karnataka.

An Uber spokesperson, in an email, said: “Basis the legal requirements as stipulated and verified with the concerned authorities, Uber ensures GST compliant receipts are generated for every trip taken. Separately, as a company, Uber also makes the relevant GST payments and complies with the requirements and necessary disclosures.”

XaTTaX – World Class Automated eSolution for Return filing and e-Waybill

Source: economictimes.indiatimes
GST cheer for government as states’ shortfall drops

GST cheer for government as states’ shortfall drops

Amid a sense of doom and gloom spread by the falling rupee, rising oil prices and widening current account deficit, the government has at least one reason to cheer: compensation due to state governments for loss of revenue stemming from introduction of the goods and services tax (GST) in July 2017 is dropping sharply.


Latest calculations by the ministry of finance show the shortfall in revenue of states because of GST, or compensation due to the states from the Centre, stands at around Rs 4,500 crore a month on an average against the Rs 5,300 crore paid in the same period last year, officials with knowledge of the matter said.

Last year, when India moved to the one-nation-one-tax regime, the Centre promised to compensate individual states for any loss of revenue from the introduction of GST, which subsumed a raft of indirect levies.

North Block is in the process of completing an exercise to calculate the amount due to states. The figures are startling. Compared to Rs 48,000 crore paid last year (for the period from July 1, 2017, to March 31, 2018) to states as compensation for revenue loss, this year (April to July) the Centre has had to pay about Rs 18,000 crore, or Rs 4,500 crore, a month.

“The gap — shortfall in revenue of states — is likely to reduce even more in the days to come,” an official involved in the process said, asking not to be identified.

The improvement is an indication of a widening tax base and that the initial glitches in implementing the indirect tax regime are behind the government.

Additional steps to boost revenue collection may lead the shortfall to narrow further.

“The inherent characteristic of GST is that it would result in tax buoyancy. This buoyancy would not only come from widening of the tax base but also from imported compliance and competitiveness of trade and industry. So, therefore, it would be but natural to expect the requirement of compensation to States for loss of revenue going down from year to year,” Shaktikanta Das, the former Union economic affairs and revenue secretary and member of the 15 Finance Commission, said.

Among other things, the introduction of electronic way-bills (e-way-bills) — an electronic documentation detailing the movement of goods above a certain amount — has led to increased transparency and better collections.

Documents prepared by the GST Council, which is overseeing the implementation of the indirect tax regime, reveal that the number of entities filing tax returns has slowly grown.

In December 2017, about 66% of the entities enrolled under the regime filed their returns. Subsequently, the numbers dipped. For July, 2018, however, 68% of entities had filed their tax returns.

“The compensation amount has reduced due to better implementation, widening of tax base and better implementation. It has resulted in better revenue collection. It is expected that state governments will take more steps to boost their revenue collection further which would further reduce the amount compensation from the centre in the near future,” additional director general (media and communication), DS Malik, said.

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Sources: hindustantimes
Govt may extend term of GST anti-profiteering watchdog

Govt may extend term of GST anti-profiteering watchdog

The government may extend the term of the National Anti-profiteering Authority (NAA) beyond its original two-year mandate, with policymakers arguing that the watchdog needs to function for a longer period in light of the frequent rate changes in the goods and services tax (GST) and the unfinished task of bringing petroleum products under the new indirect tax regime.

anti profiteering

Policy makers believe that the benefit of tax rate cuts on 178 items from 28% to 18% announced last November in one of the biggest rounds of tax rate reductions in the GST regime have not been fully passed on to consumers. This has forced the NAA to step up efforts, which include asking tax officials in the field to make sure businesses make suitable price revisions and pass on tax cut benefits to buyers at the beginning of the supply chain itself, rather than waiting for the end consumer to file complaints.

“NAA was established to address profiteering concerns during the (two-year) GST transition period. It was believed that market competition would ensure that businesses pass on benefits of tax reduction to consumers. But experience so far shows that regulatory force is needed to achieve that goal,” a finance ministry official said on condition of anonymity.

The need for NAA’s continuation beyond two years is also felt because the tax rates have been rationalized several times since GST was rolled out in July 2017.

Finance minister Arun Jaitley has on many occasions signalled that eventually, the 12% and 18% tax rates could converge so that there are fewer tax slabs. This and the possibility of eventual inclusion of five key petroleum products in GST that will unlock large amounts of tax credits, the benefit of which needs to be passed on to consumers, would warrant the continuation of NAA, said the official quoted above.

The two-year term for NAA has been specified only in the anti-profiteering rules rather than in the central or state GST Acts, making an extension of term easier, said another government official on condition of anonymity.

The GST Council’s tax rate revisions were in response to changing consumer patterns, as well as to accommodate populist sentiments ahead of crucial state elections.

On 21 July, the council slashed tax rates on several commodities, including refrigerators, television sets and air conditioners, from 28% to 18%.

Since the roll-out of the tax reform in July 2017, tax rates of 384 goods and 68 services have been cut, leading to a revenue loss of more than ₹70,000 crore to the exchequer.

The eventual aim of the government is to bring down the number of slabs under indirect tax structure from five to three and to do away with the 28% slab or make it as lean as possible.

Over the last 15 months, the GST Council has strived to reduce the number of items in the 28% slab. The share of items in the slab has come down from more than 17% at the time of GST’s rollout to 3% after the last round of rate cuts in July this year.

NAA follows a simple test to judge if benefit of tax cuts are passed on to consumers—comparing the prices of individual items or stock keeping units (SKUs) immediately before the tax cut and the price at which the item is sold after the tax revision. Industry players, however, find it easier to ensure compliance on the total output of the organization rather than on individual items. SKU refers to specific quantity of a particular product sold at a particular price, for example, 500 gram of a particular energy drink. A producer who lowers the price twice the extent the tax cuts warranted on one SKU, say 500 gram pack and none in a 200 gram pack, will still get caught for profiteering even if the company as a whole has passed on the benefit to consumers. That is because, consumers file complaints with respect to specific SKUs.

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Sources: Livemint
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