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Advance ruling: A useful tool for achieving tax certainty

Advance ruling: A useful tool for achieving tax certainty

Advance ruling can be obtained in respect of registration requirement, classification, determination of time and value of supply, admissibility of input tax credit and determination of the tax liability. Taxpayers need to exercise this option with caution, compared with other modes of obtaining certainty and dispute resolution, in view of the recent trend of adverse rulings.

India embarked on its journey of ‘One Nation One Tax’ with the introduction of the goods and services tax (GST) in July 2017. The landmark legislation, which has completed two years, is the biggest tax reform in India after independence. The GST Act subsumed erstwhile indirect taxes such as excise duty, value-added tax (VAT), service tax, etc.

In order to ensure uniformity in central and state GST laws, the GST Act promulgated setting up of a GST Council to recommend changes in the law for consistent implementation by the central and the state governments.

Being a new legislation, the GST law posed challenges for both the taxpayers as well as the tax practitioners in the form of interpretation of law, classification of goods and services, admissibility of input tax credit, applicability of exemption notification, etc.

In order to ensure faster disposal of these issues, the GST law borrowed one of the aspects from the erstwhile indirect tax legislation, ie the mechanism of obtaining an advance ruling. An advance ruling helps a taxpayer to obtain the required clarity on taxability of a transaction in advance thereby enabling it to avoid future disputes.

Under the GST law, an advance ruling can be obtained with respect to registration requirement, classification, determination of time and value of supply, admissibility of input tax credit of tax paid and determination of the liability to pay tax on any goods or services or both.

The Authority for Advance Ruling (AAR) has been constituted in each state/Union territory under the GST regime. An applicant seeking an advance ruling is required to file an application before the state/Union territory AAR providing required details such as the facts of the case, issues on which advance ruling is sought along with the contentions in relation thereto. The AAR is required to give its ruling within 90 days of the receipt of the application.

There is also an appellate forum created in each state in the form of Appellate Authority for Advance Ruling (AAAR). Any applicant aggrieved by the AAR’s ruling can appeal before the AAAR. The AAAR is also required to pass its order within a period of 90 days of the filing of the appeal.

The advance ruling process has gained considerable traction under GST with close to 1,000 applications made to the advance ruling authorities by taxpayers. In a short span of two years, the AAR’s have passed rulings on various critical tax issues like tax treatment on transfer of business as a ‘going concern’, provision of back office support services by Indian entity to overseas entity, treatment of interest free security deposits, etc. One should note that while the ruling passed by the AAR and AAAR are binding only on the applicant and the jurisdictional authorities, the same carries persuasive value for others.

Thus, it can be seen that the aim of the advance rulings framework is to provide certainty and clarity to the taxpayer with respect to its obligations under the GST Act in a time-bound manner.

However, this does not mean that advance rulings are free from imperfection. One key limitation of the AAR/AAAR is that there have been numerous instances of divergent rulings being passed by different state AARs on issues such as taxability of cross charges for common administrative and IT support services by employees of one unit to other units, differential tax rates in case of solar energy sector etc. Further, there have been instances where decisions of the authorities are contrary to the position settled under the erstwhile indirect tax regime.

The GST Council, in order to address these limitation, had recommended formation of a centralized appellate authority. The Union cabinet has recently approved the formation of a national bench of the GST Appellate Tribunal (GSTAT) at New Delhi to address tax disputes due to contradictory rulings. However, the procedural guidelines of the GSTAT are yet to be issued. Thus, one may reasonably infer that the government is actively trying to address the current limitation in the existing advance ruling mechanism.

To conclude, a taxpayer should tread the path of obtaining an advance ruling with caution. The taxpayer should not only be well versed with the available jurisprudence under the erstwhile indirect tax regime but also be cognizant of the rulings passed by other AAR/AAAR, if any, on similar fact pattern. Further, it has generally been observed that cases where taxpayers have maintained appropriate documentation to substantiate their claims stand a better chance of obtaining a favourable ruling from the AAR.

While AAR/AAAR is a good mechanism for the tax payers to address their concerns, the recent trend of adverse / different rulings should be kept in mind before a tax payer opts for such a ruling. It is anticipated that once the GSTAT is fully operational, some of these concerns would get addressed. Till then, tax payers should act with caution and take this dispute resolution mechanism with a pinch of salt.

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Source: LiveMint
Govt gives businesses four months to settle indirect tax disputes

Govt gives businesses four months to settle indirect tax disputes

Businesses can now settle their pending disputes relating to central excise duty and service tax within four months starting 1 September under the terms notified by the government on Thursday.

The finance ministry notified a scheme to settle the indirect tax disputes in the pre-GST era, named Sabka Vishwas legacy dispute resolution scheme, which was announced by finance minister Nirmala Sitharaman in the union budget for FY20.

The scheme offers attractive terms to settle disputes that are at different stages and also offers amnesty to those who wish to disclose any previously undisclosed tax liability and pay the tax amount involved without any penalty or prosecution.

An official statement said the government expects a large number of taxpayers to sign up for the scheme and close their pending disputes.

The amnesty offers an opportunity to the taxpayers to pay the outstanding tax and be free of any other consequence under the law. “The most attractive aspect of the Scheme is that it provides substantial relief in the tax dues for all categories of cases as well as full waiver of interest, fine and penalty. In all these cases, there would be no other liability of interest, fine or penalty. There is also a complete amnesty from prosecution,” said the statement.

Reducing tax litigation and improving ease of doing business is a priority for the government at a time businesses are facing an economic downturn.

For all the cases pending in adjudication or appeal—in any forum—the scheme offers a relief of 70% from the duty demand if it is ₹50 lakh or less and 50% if it is more than ₹50 lakh. The same relief is available for cases under investigation and audit where the duty involved is quantified and communicated to the party or admitted before 30 June, 2019.

In cases of confirmed duty demand, where there is no appeal pending, the relief offered is 60% of the confirmed duty amount if the same is Rs. 50 lakh or less and 40% if the confirmed duty amount exceeds ₹50 lakh.

In cases of voluntary disclosure, the person availing of the scheme will have to pay only the full amount of disclosed duty.

The statement said that since the idea is to free as large a segment of the taxpayers from legacy taxes as possible, the relief given is substantial and that it is tailored to benefit a large number of small taxpayers.

The scheme would continue till 31 December 2019.

Source: LiveMint

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GST boost in real estate on finance ministry’s radar

GST boost in real estate on finance ministry’s radar

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Source - hindustantimes.com

18% GST likely on back-end IT services as they don’t qualify as export

18% GST likely on back-end IT services as they don’t qualify as export

Most facilitation services the IT and ITeS sector offers at the back end, especially with respect to business process outsourcing, may attract an 18 per cent goods and services tax (GST) because the government has said those will not qualify as export.

Clearing the confusion related to exports of IT and ITeS services, the government said the services facilitating the supply of goods or services would not qualify as export and would be recognised as intermediaries, attracting an 18 per cent GST.

The move will have consequences for service providers in back-end services and post-sales support, among others.

Acting as facilitators between overseas parent companies and Indian customers by doing general marketing, answering basic enquiries, or providing post-sales support was, thus far, generally not being intermediaries, said Harpreet Singh, partner in KPMG.

“Unless the scope was substantive and involved concluding contracts, negotiating price, etc., tax was not paid, treating such services as export. This position needs to be re-visited now,” he said.

However, if service is given on one’s own account, it will be considered export.

Export is considered a zero-rated supply under the GST and a refund can be claimed.

The circular, issued by the Central Board of Indirect Taxes and Customs (CBIC), is aimed at putting to rest litigation and disputes related to export-related refunds.

However, experts have other views.

Atul Gupta, senior director, Deloitte India, said the CBIC circular mystified the issues and left open scope for litigation.

“It is going to be a detriment for the export of services because exporters no longer can claim input tax refunds on them,” he said.

Gupta said the circular was faulty and needed another look before it resulted in demand notices from GST field formations on outsourcing services.

Bipin Sapra, partner, EY, said certain grey areas continued but this would bring relief to a large section of IT and ITES exporters facing frivolous demands and denial of export benefits.

“The clarification will help in settling most objections regarding exports of services and the exporters will get refunds.”

The issue is important because strong representations were made by industry bodies such as Nasscom and Amcham for clarity on the subject.

Nasscom said it was studying the impact of the latest development.

The government has examined three broad scenarios, wherein a supplier of ITeS located in India supplies services for and on behalf of a client abroad, to clarify its treatment under the GST.

The Maharashtra Authority of Advance Ruling (AAR) had upheld back-office operations do not qualify as export.

Abhishek Jain, tax partner, EY, said though the circular addressed customary back-office operations, matters that involved back-end and facilitation remained a matter of concern.

In situations where a back end services provider uses his own account as well as arranges or facilitates supplying support services related to pre- or post-delivery on behalf of overseas clients, taxability will be ascertained case by case.

Source: Business-Standard

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GST Council to decide on tax cut on EVs this week 

GST Council to decide on tax cut on EVs this week 

The GST Council, chaired by FM Nirmala Sitharaman, will meet on July 25 and decide on lowering tax rates for electric vehicles, officials said. The 36th meeting of the Council, which will happen through video conferencing, is also likely to decide the valuation of goods and services in solar power generating systems and wind turbineprojects for the purposes of levying GST.

The Council, which has state finance ministers as members, in its meeting last month, had referred the issue relating to Goods and Services Tax (GST) concessions on electric vehicle (EV), electric chargers and hiring of electric vehicles, to an officers committee.

The recommendations of the officers committee is likely to be placed before the Council on July 25, officials said.

To push domestic manufacturing of e-vehicles, the Centre proposed to the Council to slash GST rates to 5 per cent from 12 per cent.

GST rate for petrol and diesel cars and hybrid vehicles is already at the highest bracket of 28 per cent plus cess.

The Council will also consider tax structure for solar power projects.

The Delhi High Court had in May asked the GST council to take a relook at the taxation structure following industry petition.

The government had earlier this year said that for the purpose of taxing solar power projects, 70 per cent of contract value would be treated as goods — taxable at 5 per cent, and balance 30 per cent as services — taxable at 18 per cent.

The solar industry has been pitching for a different ratio for splitting goods and services for levying GST.

Further, the Council may also look at taxation of lotteries. In the previous meeting, the Council had decided to seek legal opinion of the Attorney General for levying GST.

Currently, a state-organised lottery attracts 12 per cent GST, while a state-authorised lottery attracts 28 per cent tax.

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Source: Economic Times.
Seven indirect taxation-related laws being amended: FM Nirmala Sitharaman 

Seven indirect taxation-related laws being amended: FM Nirmala Sitharaman 

Finance Minister Nirmala Sitharaman Thursday said seven legislations under indirect taxation are being amended to ensure greater simplicity, as she moved the Finance Bill in the Lok Sabha. She told the Lower House that amendments to laws are being made through the Finance Bill in five major categories, including in the Goods and Services Tax (GST).

Apart from seven Acts related to indirect taxation being amended, the government would also be bringing changes to seven laws related to direct taxation. The changes would ensure that indirect taxation-related matter would have greater simplicity and be effective, she said. About proposed amendments to direct taxation-related laws, Sitharaman said those are being done for furthering the agenda of Make in India, adding the country needs a lot more manufacturing activities.

The GST alone has five different amendments that would also make compliance easier for the MSME (Micro, Small and Medium Enterprises) sector, she added. According to her, eight Acts pertaining to financial markets, including Sebi Act, are being amended. RSP member N K Premachandran objected to the Finance Bill having the provisions to amend a number of laws, including Benami Act, Sebi Act and PMLA Act, and urged Speaker Om Birla to disallow it.

A Finance Bill can only have taxation proposals, Premachandran said, soon after the finance minister stood up to move the bill for consideration and passage.

He also accused the government of bypassing Parliament to avoid discussion and scrutiny for amending existing laws by including them in the bill.

Sitharaman said rules and constitutional provisions cited by Premchandran do not rule out non-taxation proposals for inclusion in the Finance Bill but only say that it should be done only when imperative.

“The government considers it very imperative,” she asserted.

Birla, in his ruling, disallowed Premachandran’s objections and said there have been occasions earlier as well when non-taxation proposals were included in the Finance Bill.

Source: Economic-Times.

GST Cell, ni-MSME to conduct 3-day training program on GST

GST Cell, ni-MSME to conduct 3-day training program on GST

To impart the knowledge about Goods and Service Tax (GST) and procedures for implementation, GST cell in association with ni-msme has proposed to conduct training program on GST to have a better understanding about the new tax regime.

The three days certification program will start from July 29 here, and will end on July 31, 2019.

The objective of the program is to impart the knowledge about Model GST law and to provide valuable insights on impact of GST on Industry/Trade/ Services.

In addition, it will give practical knowledge of the different procedures required under GST Act and Rules such as Registration, tax invoices, Filing of Returns, availing Input Tax Credit, compliance, Refunds and other documentation requirements.

The target participants for the program are Entrepreneurs of Industry and trade, Key managerial personnel, Professionals, Tax consultants, Academicians and students.

On the successful completion of program, the participant will be able to understand the transitional issues relating to migration from Current indirect tax structure to GST regime.

GST is a game changing reform for the Indian economy by creating a common Indian market and reducing the cascading effect of tax on the cost of goods and services. GST has a large ramification on business processes and there is a grave necessity for the industry members, entrepreneurs of Industry/Trade, Managerial personnel, Finance managers and professionals to ensure compliance with the Act, and for benefitting from the seamless pass through of Tax to the final consumer.

Source: Knn-india.

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Nirmala Sitharaman Explains How GST Filing Will Be Simplified

Nirmala Sitharaman Explains How GST Filing Will Be Simplified

Finance Minister Nirmala Sitharaman on Friday said that the Goods and Services Tax (GST) processes were being further simplified while adding that businesses with less than Rs. 5 crore annual turnover will need to file quarterly GST return.
She also announced to increase special additional excise duty and road and infrastructure cess on petrol and diesel by one rupee each, hike in customs duty on gold and precious metals to 12.5 per cent and imposing nominal basic excise duty on tobacco products and crude.

The Union Budget 2019-20 also provides for exempting import of certain defence equipment from basic customs duty, reducing customs duty on certain raw materials and capital goods, and rationalisation of export duty on raw and semi-finished leather.

“The threshold exemption limit for a supplier of goods is proposed to be enhanced from Rs. 20 lakh to an amount exceeding Rs. 40 lakh. Taxpayers having an annual turnover of less than Rs. 5 crore shall file the quarterly return,” she said.

She said that a fully automated GST refund module shall be implemented. “Multiple tax ledgers for a taxpayer shall be replaced by one,” she said. The Budget proposes to move to an electronic invoice system wherein invoice details will be captured in a central system at the time of issuance.

“This will eventually be used to prefill the taxpayers’ returns. There will be no need for a separate e-way bill. To be rolled out from January 2020, the electronic invoice system will significantly reduce the compliance burden,” said Ms Sitharaman.

The Finance Minister said that the landscape of indirect tax has changed significantly with the implementation of GST.

Terming it as a “monumental reform”, Ms Sitharaman said the GST regime has brought together the centre and the states with the result 17 taxes and 13 cesses became one and a multitude of rates instantly became four.

“Almost all commodities saw rate reduction. Tens of returns were replaced by one. Taxpayers’ interface with tax departments got reduced. Border checks got eliminated. Goods started moving freely across states, which saved time and energy. The dream of ‘One Nation, One Tax, One Market’ was realised,” she said.

The Finance Minister said that GST rates have been reduced significantly where relief of about Rs. 92,000 crore per year has been given. “There is a need to unload the baggage and allow the business to move on, as more than Rs. 3.75 lakh crore is blocked in litigations in service tax and excise,” she said.

The budget proposes a dispute resolution-cum-amnesty scheme — Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 — will allow quick closure of these litigations. The relief under the scheme varies from 40 per cent to 70 per cent of the tax dues for cases other than voluntary disclosure cases, depending on the amount of tax dues involved.

Describing ‘Make in India’ as a cherished goal, the Finance Minister proposed an increase in basic customs duty on certain items so as to provide domestic industry a level playing field. These items include PVC, cashew kernels, vinyl flooring, tiles, metal fittings, mountings for furniture, auto parts, certain kinds of synthetic rubbers, marble slabs, optical fibre cable, CCTV camera, IP camera, digital and network video recorders.

She also proposed to withdraw exemption from customs duty on certain electronic items which are now being manufactured in India.

To encourage domestic publishing and printing industry, 5 per cent customs duty will be imposed on imported books. To further promote domestic manufacturing, the budget proposes customs duty reductions on certain raw materials and capital goods.

These include certain inputs of CRGO sheets, amorphous alloy ribbon, ethylene dichloride, propylene oxide, cobalt matte, and naphtha, wool fibres, and input for manufacture of artificial kidney and disposable sterilised dialyzer, and fuels for nuclear power plants.

The Union Budget proposes to increase special additional excise duty and road and Infrastructure cess each by one rupee a litre on petrol and diesel.

“Crude prices have softened from their highs. This gives me a room to review excise duty and cess on petrol,” she said.

Nirmala Sitharaman also announced an increase in customs duty on gold and other precious metals from 10 per cent to 12.5 per cent. The Budget also proposes rationalisation of export duty on raw and semi-finished leather to provide relief to the sector.

Ms Sitharaman said that tobacco products and crude attract National Calamity and Contingent duty which in certain cases is being contested on the ground that there is no basic excise duty on these items. To address this issue, the Budget proposes to impose a nominal basic excise duty on tobacco products and crude.

The Finance Minister proposed a few amendments to the >Customs Act. She said: “Recent trends reveal that certain bogus entities are resorting to unfair practices to avail undue concessions and export incentives.”

She announced that misuse of duty-free scrip and drawback facility involving more than Rs. 50 lakh rupees will be a cognizable and non-bailable offence.

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Source: NDTV.
GST proved to be consumer, assessee friendly’, writes Arun Jaitley on two years of rollout

GST proved to be consumer, assessee friendly’, writes Arun Jaitley on two years of rollout

Former finance minister Arun Jaitley, who introduced the Goods and Services Tax (GST) on July 1 in 2017, on Monday stated that the new tax regime “proved to be both consumer and assessee friendly.”

Jaitley, in a blog, wrote: “After two years, one can confidently argue, without fear of contradiction that GST proved to be both consumer and assessee friendly. The high taxation of pre-GST era pinched the consumers’ pocket and acted as a disincentive against tax compliance. The last two years have seen each of the meetings of the GST Council reducing the tax burden on consumers as the tax collections improved.”

jaitley

He mentioned that “the assessee base in the last two years has increased by 84%.”

Giving “response to certain misconceived ideas,” Jaitley said: “Many warned us that it may not be politically safe to introduce the GST. In several countries, governments lost elections because of the GST. India had one of the smoothest transformations. Within the first few weeks of the implementation, the new system settled down.”

On GST’s simplification and compliance, he said: “There is now a single registration system which works online and the procedures for the trade and business are reviewed and simplified regularly.”

Commenting on the pre-GST era, he stated that, “GST merged seventeen different laws and created one single taxation. The pre-GST rate of taxation as a standard rate for VAT was 14.5%, excise at 12.5% and added with the CST and the cascading effect of tax on tax, the tax payable by the consumer was 31%. The GST changed this scenario completely. Today, there is only one tax, online returns, no entry tax, no truck queues, and no inter-state barriers.”

He highlighted that the GST Council “worked on the principle of consensus” which “added to the credibility of the decision-making process.”

The former finance minister further stated that GST could become a “two-tier tax” process.

“Except on luxury and sin goods, the 28 percent slab has almost been phased out. Zero and 5 percent slabs will always remain. As revenue increases further, it will give an opportunity to policymakers to possibly merge the 12 percent and 18 or cent slab into one rate, thus, effectively making the GST a two-rate tax,” he said.

Source:Times-of-India.

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GST Council mandates e-ticketing for cinemas, industry players say no impact on business

GST Council mandates e-ticketing for cinemas, industry players say no impact on business

Last week during the 35th GST Council meeting, electronic ticketing system was made mandatory for multiplexes. The move is to keep a check on possible Goods and Services Tax (GST) evasion and to put an end to the sale of coloured tickets that a few cine complexes are still using.

According to the GST Council, multiplexes will be required to issue a tax invoice electronically and for this purpose, the electronic ticket issued by them shall be deemed to be a tax invoice.

So, what does the government mean by e-ticketing?

E-ticketing means computerised ticketing. A computerised ticket is where the information can be stored digitally.

There are operators that issue manual coloured-paper tickets. Despite, having GST numbers, it has been difficult to track the tax calculation.

Hence, the GST Council has asked all multiplex operators to maintain a digital record of all the transactions, which is possible only when they issue computerised tickets.

The council has mandated mentioning the GST invoice number, the GST number and the SAC code (Services Accounting Code) in the computerised ticket. This would help in the digital storage of the aforementioned elements, making it is easy to monitor and pull out data as compared to manual tickets.

While the move will bring greater tax compliance, the question is how will it impact multiplex players?

Talking to Moneycontrol, Mukta A2 Cinemas Business Head Sachidanand Shetty said, “The impact will be positive as we’d have to do away with the dependency on manual tickets. We’re already e-ticketing compliant.”

He added that the move is a step towards realistic sales with better control and swift reconciliation of box office revenue.

This means that selling GST compliant movie tickets will lead to transparency and it will tell the actual collection of the Indian film industry.

However, most of the multiplexes are already selling e-tickets.

According to Miraj Cinemas MD Amit Sharma, “E-ticketing is more symbolic in nature as over 90 percent cinemas and 100 percent multiplexes have already been doing e-ticketing for years.”

“Maybe the government is looking at it (mandatory e-ticketing for multiplexes) as a case model for other B-to-C (business to customer) places for implementation.”

Inox Leisure, one of India’s largest multiplex chains, is also e-ticketing complaint.

Inox Leisure CEO Alok Tandon said, “We have been issuing computerized movie tickets ever since Inox’s inception due to which making ticketing and billing systems GST compliant was a matter of hours for us.”

“100 percent of our ticketing is computerized and GST compliant as it bears all the details like GST number, GST Invoice number and the SAC code,” he added.

Impact of mandatory e-ticketing on online ticket booking business

On whether mandatory e-ticketing will have an impact on the online movie ticket booking business, Shetty said that it “should boost the same by about 5 percent to the current sales of Mukta A2 Cinemas.”

“While multiplex chains more or less follow the same in all markets – Tier I, II and III – now the new rule will ensure compliance all across,” he added.

In terms of online ticket sales, Inox sells 40-50 percent tickets online whereas, Mukta A2 cinemas is in the range of 35-40 percent.

Multiplexes are welcoming the move saying that e-ticketing will help maintain records in a digital manner, leading to more accurate computation of industry revenue and estimation of due taxes to be levied.

TRA Research CEO N Chandramouli, however, has pointed out another aspect of this move.

He said, “While better tax compliance has been the objective of all governments, from even before democracies were popular, today it has become rigid, inflexible and obdurate.”

“Tax is an earning of the government for services it provides, but businesses are left helpless if they have no room to negotiate the services they get for taxes they pay. If businesses become afraid of doing business because of the tax regime, I think the purpose is defeated at all ends,” he added.

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Source: Money-Control.