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GST compensation paid to states declines to Rs 11,900 cr in Aug-Sept

GST compensation paid to states declines to Rs 11,900 cr in Aug-Sept

 GST compensation paid to states by the Centre has declined to over Rs 11,900 crore during August-September, an official said. The bi-monthly GST compensation paid during the June-July period was Rs 14,930 crore, nearly four-fold jump from Rs 3,899 crore paid in April and May.

“Over Rs, 11,900 crores has been released to the states from GST compensation fund during August-September after the regular and ad-hoc settlement of IGST fund,” an official told PTI. The government collected a record Rs 1,00,710 crore from Goods and Services Tax (GST) in the month of October.

 The returns filed and taxes collected in October reflect purchase and sale activities of September.

The government has settled Rs 15,107 crore to states GST from Integrated GST (IGST) as the regular settlement. Further, Rs 15,000 crore has been settled with the states from the balance IGST available with the Centre on a provisional basis at the end of October.

Total revenue earned by the state governments after the regular and provisional settlement was Rs 52,934 crore in October.

Ten states which are facing maximum revenue shortfall during April-August are Puducherry (42 per cent), Punjab and Himachal Pradesh (36 per cent each), Uttarakhand (35 per cent), Jammu and Kashmir (28 per cent), Chhattisgarh (26 per cent), Goa (25 per cent), Odisha (24 per cent), Karnataka and Bihar (20 per cent).

The states faced an average 16 per cent shortfall in GST mop-up in the first year of implementation (July 2017-March 2018), which has come down to 13 per cent during April-August of the current fiscal.

Finance Secretary Hasmukh Adhia has already held discussions with tax officials in six states — Punjab, Himachal Pradesh, Puducherry, Jammu & Kashmir, Bihar and Uttarakhand– to shore up revenues.

While only six states — Mizoram, Arunachal, Manipur, Nagaland, Sikkim and Andhra Pradesh — are facing revenue surplus in the current fiscal, 25 states are staring at a revenue shortfall and have to be compensated by the Centre.

In 2017-18, the Centre had released Rs 41,147 crore to the states as GST compensation to ensure that the revenue of the states is protected at the level of 14 per cent over the base year tax collection in 2015-16.

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Source: Times ET now news.
GST: CBIC to Monitor Grievances of MSMEs on a Daily basis

GST: CBIC to Monitor Grievances of MSMEs on a Daily basis

The GST grievances of the Micro, Small and Medium Enterprises ( MSMEs) will be monitored by the Central Board of Indirect Taxes and Customs (CBIC) as part of efforts to resolve issues being faced by small businesses in the new indirect tax regime.

The move comes at a time when the government has initiated a major support and outreach programme for MSMEs to ensure growth and expansion of the sector.

The Government has already set up GST help desks in all the 80 districts where a 100-day support and outreach programme for the micro, small and medium enterprises have been launched by the government on November 2.

The CBIC has now decided to set up a Feedback and Action Room (FAR) under the Directorate General of GST to record and process all grievances raised by MSMEs.

The GST help desks will have nodal officers for trade facilitation who would guide the small businesses on their queries surrounding the GST.

These nodal officers would report all the grievances on a real-time basis to the FAR, which would then provide the solution.

“The FAR would comprise of officers from Delhi and NCR. They would compile a master record of all grievances at various stages of resolution, and send a summary report to the Board on daily basis,” an official told PTI.

The Prime Minister, on November 2, had launched a slew of measures for the MSME sector, including faster sanction of loans and easier compliance with environmental rules.

Also, GST-registered MSMEs will get a 2 per cent subvention or subsidy on a new loan or incremental loan of up to Rs 1 crore.

The MSME sector constitutes a vast network of over 63 million units and employs 111 million people, contributing around 30 per cent to the GDP. It accounts for about 45 per cent of manufacturing output and around 40 per cent to total exports.

The GST Council, chaired by the Finance Minister Arun Jaitley and comprising state ministers as members, had in July allowed companies with a turnover of up to Rs 5 crore to file GST returns quarterly, up from the Rs 1.5 crore threshold fixed earlier. The move benefited about 93 per cent of the GST registered taxpayers.

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Source:Tax Scan
Ahead of festive season, GST collections cross Rs 1 lakh crore in October

Ahead of festive season, GST collections cross Rs 1 lakh crore in October

Ahead of the festive season, the Goods and Service Tax collections have crossed Rs 1 lakh crore mark in October.

Finance Minister Arun Jaitley said, “GST collections for October 2018 have crossed Rs 1 lakh crore. The success of GST is lower rates, lesser evasion, higher compliance, only one tax and negligible interference by taxation authorities.”

The revenue from GST was Rs 94,442 crore in September. The collections stood at Rs 94,016 crore in May, Rs 95,610 crore in June, Rs 96,483 crore in July and Rs 93,960 crore in August.

GST mop-up had crossed the Rs 1 lakh crore mark for the first time in April and since then it has remained above the Rs 90,000 crore level.

The Finance Ministry had targeted monthly GST collections to be Rs 1 lakh crore for this fiscal.

The Goods and Services Tax was rolled out on July 1 last year, in an effort to subsume multiple indirect taxes with a single comprehensive tax.

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Source: Business Today
Commerce Ministry to take up exporters’ complaints on GST refund with Finance Ministry

Commerce Ministry to take up exporters’ complaints on GST refund with Finance Ministry

The Commerce Ministry has taken note of exporters’ complaints that the input duty refund under the duty drawback scheme claimed by some last year was much lower than the IGST (Integrated Goods & Services Tax) refunds due to them and it may ask the Finance Ministry to address the issue.

“Exporters have said that they are willing to pay back the drawback with interest and they should be instead given IGST refund which is a much higher amount. The DGFT is likely to take up the matter with the Customs Department,” a government official told BusinessLine.

Last year, when the GST regime was implemented, exporters were given the option of continuing with the popular duty drawback scheme (at a higher rate for some items) for three months (July-September) if they agreed to forego refund of IGST paid by them.

After a number of exporters opted for the duty drawback option, they discovered that the IGST paid by them on inputs was much higher and opting for refunds under IGST would have been a better deal.

‘Initial confusion’

“In the initial period everyone was confused about GST impact. A number of exporters were not aware of the implications and chose to be compensated for input taxes under the duty drawback scheme. Now when they understand that GST refund would give them a much higher amount for many items, the government should oblige,” said Ajay Sahai from the Federation of Indian Export Organisations (FIEO). Giving an example, Sahai said that for vegetables the drawback rate is 1 per cent. So, if an exporter is shipping say cauliflowers to West Asia at 40 per kg, he will get 40 paise as drawback. However, air freight is 100 per kg for cauliflowers and if the exporter is paying 5 per cent GST of 5 on that, then by opting for 40 paise of duty drawback, he is losing out on the 5 as GST refund. “What is the problem in not giving him the 5 as GST refund if he is willing to refund the duty drawback he got together with interest. The exporter is asking for what is rightly his,” Sahai said.

While the Finance Ministry has once refused to allow exporters to switch their stated preference, Commerce Ministry officials say that they will take up the issue again. “Exporters need to be compensated fully for the input taxes paid as it is vital to help them stay competitive in the global market,” they said.

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Sources: The Hindu Businessline
GST Council met 30 times, took 918 decisions in 2 years: Finance Ministry

GST Council met 30 times, took 918 decisions in 2 years: Finance Ministry

The all-powerful GST Council, chaired by Finance Minister Arun Jaitley, has met 30 times and taken 918 decisions related to laws, rules and rates for the new tax regime within a span of just over two years, the Finance Ministry said Sunday.

The Goods and Services Tax (GST) Council, which comprises state finance ministers and Union Minister of State in charge of Revenue as members, was set up on September 15, 2016, as the country’s first ‘federal institution’.

“Till date, GST Council has taken 918 decisions related to GST laws, rules, rates, compensation, taxation threshold etc. More than 96 per cent of the decisions have already been implemented through 294 notifications issued by the Central Government,” the ministry said in a statement.

The remaining decisions are under various stages of implementation. Almost equal number of corresponding notifications have been issued by each state, it added.

The working of GST Council has ushered in a new phase of cooperative federalism where the Central and state governments work together to take collective decisions on all issues relating to indirect tax regime of the country, it said.

Besides, tax officers of the Centre and states met ahead of the GST Council meetings to enable the council members to fully discuss the issues under consideration.

The Council has held discussions in a “harmonious and collaborative spirit” in the 30 meetings that have taken place so far, it added.

The detailed agenda notes for the 30 GST Council meetings ran into 4,730 pages, while the minutes of the meetings ran into 1,394 pages, the statement said.

After 17 tumultuous years, a nationwide GST was rolled out at the stroke of the midnight hour on July 1, 2017, overhauling India’s convoluted indirect taxation system.

The GST, which replaced 17 central and state levies including factory-gate, excise duty, service tax and local sales tax or VAT, is India’s biggest tax reform in 70 years of independence and will help modernise Asia’s third-largest economy.

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Sources: Economic Times



Are GST norms posing hurdle in listing of RVNL, other PSUs?

Are GST norms posing hurdle in listing of RVNL, other PSUs?

The definition of a ‘government entity’ under the goods and services tax (GST) regime is proving to be an impediment for stock market listing of companies such as Rail Vikas Nigam (RVNL) and could also hit similar plans of a clutch of other entities such as the National Highways Authority of India (NHAI), which executes construction works awarded by the government.

As per the conditions, an entity in which the government stake is above 90% is liable to pay 12% GST for work contracts executed on behalf of the Central government, state government or any local authority. However, if the government holding goes below 90%, the applicable GST rate is 18%.

So, in the case of RVNL, a company which executes only Indian Railway contracts, while 10% equity shares will be offered to the public under its proposed IPO. An additional around 0.5% will be offered to employees, as has been done in the case of another railway PSU Ircon International, effectively bringing the government holding in the firm to less than 90%.

 So, when RVNL gets listed since it raises bills to the railways, the cash-starved transporter’s cost of projects will go up by 6 percentage points. This will add to the operational cost of the railways which reported its worst operating ratio since 2000-2001 last fiscal at 98.5.

According to sources, even if no shares are offered to employees and the government holding is kept at 90% for now, the percentage of public holding has to be increased to 25% within three years once a company is listed, as per the Securities and Exchange Board of India (Sebi) norms, eventually increasing the cost of projects.

“The ministry of railways has written to DIPAM (department of investment and public asset management) to request the finance ministry to sort the issue,” a source said.

DIPAM, part of the finance ministry, oversees the disinvestment process of government PSUs.

While railway arms RITES and Ircon have already been listed during the current financial year, plans to list RVNL and Indian Railway Finance Corporation (IRFC) is in limbo. “RVNL and IRFC were scheduled for the third quarter (of the current financial year), but they may get listed as of now,” said the source.

In case of IRFC, while the corporate ministry has given a clearance that all future deferred tax liabilities starting 2018-19 will be counted in the company’s net worth, there is still no decision on the backlog of around Rs 6,000 crore of deferred tax liability already in its books.

The government’s disinvestment target for FY19 is Rs 80,000 crore, but mid-way through the year, it is woefully short of the target and has managed a meagre Rs 10,000 crore.

Deferred tax liability is kept aside for payment of future tax liability. So, though a company has money, it cannot be shown in its net worth. It affects IRFC as its borrowing capacity is assumed to be 10 times its net worth, a deferred tax liability impedes its borrowing capacity.

“The above-mentioned GST rule will not affect the company as it will pass on the applicable tax to the contract owner. So, while the government will be the ultimate beneficiary, the railways will be affected as it manages its own finances. And since RVNL is 100% dependent on railway work contracts, the transporter may think of contracting other government entities in order to save cost,” the source said, adding that companies which will be hit most by the rule will be those which only execute government work contracts.

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 Sources: Financial Express
Vehicle owners to pay 18% under GST for pollution check

Vehicle owners to pay 18% under GST for pollution check

Vehicle owners will have to pay a GST of 18 per cent to get a pollution certificate for their vehicles, the Authority for their vehicles, the Authority for Advance Ruling (AAR) has said.

The Goa bench of the AAR passed the ruling on an application filed by Venkatesh Automobiles on whether the service provided for issuing ‘Pollution Under Control’ (PUC) certificate on behalf of the state government is exempted from the Goods and Services Tax (GST).

“The activity of issuance of Pollution Under Control certificate for vehicles issued by the applicant is not covered under SAC (Services Accounting Code) 9991 and is covered under residual entry and hence, should be taxed @ 18 per cent GST,” the AAR said.

Every vehicle plying on roads need a PUC certificate, which indicates that the emissions are in alignment with pollution norms and are not harmful to the environment.

The AAR said that the government has authorised the applicant to issue PUC certificate on payments. “It is the service provided by the applicant to the customers on payment of service charges. Since the services of testing of pollution are provided on payment of service charge, GST is payable at the applicable rate,” the ruling said.

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Sources: Times of India
Finance Ministry extends deadline for filing Sept GST returns to Oct 25

Finance Ministry extends deadline for filing Sept GST returns to Oct 25

The Finance Ministry Sunday extended the deadline for filing summary sales return GSTR-3B for the month of September by five days to October 25. With this extension, businesses which wish to claim Input Tax Credit (ITC) benefit for July 2017-March 2018 period can do so till October 25.

The Central Board of Indirect Taxes and Customs (CBIC), under the Finance Ministry, said trade and industry had expressed apprehension relating to October 20 due date for claiming ITC under GST for July 2017-March 2018.

“With a view to give some more time for the same, the last date for furnishing GSTR-3B for the month of September 2018 is being extended up to 25th October 2018,” the CBIC tweeted. The GSTR-3B of a particular month has to be filed by the 20th day of the subsequent month.

The deadline for the September return filing was October 20. Businesses had expressed concern about the October 20 deadline, saying there would be trouble in reconciling their sales returns with the purchase returns filed by their suppliers. Since the ITC is availed on the basis of summary sales return or GSTR-3B filed, hence the deadline for ITC claims and GSTR-3B have been kept same.

Goods and Services Tax (GST) was rolled out on July 1, 2017. AMRG & Associates Partner Rajat Mohan said the date extension comes as a shock for compliant payers, whereas it would be a tax bonanza for late filers, non-filers and tax evaders. “It seems that the government has given a date extension (after expiry) only for lifting public perception rather than creating a conducive environment for businesses to nurture,” he said.

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Sources: Financial Express
Calamity tax under GST: Panel gives states 3 options to raise extra funds

Calamity tax under GST: Panel gives states 3 options to raise extra funds

A panel, headed by Bihar Deputy Chief Minister Sushil Modi, on Monday put on table three options to raise additional funds under the goods and services tax (GST) to help Kerala and other states in their post-disaster relief and rehabilitation work.

The levy could either be a state-specific tax levied as state GST, or there could be a supplementary disaster response fund, parallel to the existing national disaster response fund (NDRF). As a third option, the group of ministers (GoM) would consider strengthening the existing NDRF.

The GoM concluded its first meeting on Monday. It will submit its report in November.

It will also decide whether the levy would be a cess or an increase in the GST rate and whether it should be levied across the country or only in the state facing the calamity.

“The existing funds cater to the relief and rehabilitation aspects of disaster mitigation, but the reconstruction, which is also costly, suffers from lack of funds. This tax will predominantly address reconstruction,” a senior official in the finance ministry told Business Standard.

The GoM will send a questionnaire comprising about 20 questions to all states to understand their preference on the nature of the levy and discuss its outcomes in the subsequent meeting.

While the central tax officials are keen to establish a supplementary entity, states are keen to have a state-specific levy, especially since the costs of reconstruction differ across states. They think that leaving the disaster-funding decisions to the GST Council may delay and complicate the process.

“While we prefer the state-specific levy, the end result could be a combination of the same along with a supplementary disaster response fund,” Thomas Isaac, Kerala’s finance minister, told Business Standard.

“While it costs Rs 100,000 to reconstruct a damaged house in India, the cost for the same in Kerala turns out to be four times that. Thus, the need for a state-specific levy,” he added.

States have their own state disaster response fund (SDRF), apart from the NDRF, to finance disaster response. While the former is funded in a 90:10 ratio by the Centre and the state, the latter is funded through the national calamity and contingency duty (NCCD) levied as Customs and excise duty on certain products.

On the one hand, the NDRF kitty via NCCD has been reducing over the years due to the taxes on certain products getting subsumed under the GST. NCCD used to be levied on mobile phones and cars in the pre-GST regime. Now, only crude oil and some tobacco products remain.

As a result, the inflow of funds to the NDRF reduced from Rs 57 billion in 2015-16 to Rs 65 billion in 2016-17, down to Rs 37 billion in 2017-18 (FY18).

On the other, the central government recently accepted the 14th Finance Commission (FFC) recommendation to pay 90 per cent of the share to fund SDRFs. For the first three years of the FFC period, Centre paid only 60 per cent of the share.

In addition, the Centre failed to adequately fund the SDRFs due to the revenue shortfall. As against an allocation of Rs 122 billion to SDRFs in FY18, the release was Rs 94 billion.

“The reason for the new tax is that both the avenues are falling short,” said the official quoted earlier.

In the subsequent meetings, the GoM will discuss whether there would be a permanent fund under the levy, what would be the norms for disbursement, and which entity will manage the fund.

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Sources: BusinessStandard
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