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Since GST rollout in July 2017, Rs 45,682.83 crore fraud detected

Since GST rollout in July 2017, Rs 45,682.83 crore fraud detected

A total of 9385 cases of tax fraud involving amount of Rs 45,682.83 crore has been detected by the tax authorities under the Goods and Services Tax (GST) regime since its rollout from July 1, 2017, government data showed. Out of this, 1,593 tax fraud cases involving an amount of Rs 6520.40 crore have been detected in April-June, the first three months of this financial year.

In a response to a question regarding tax frauds under GST, Minister of State for Finance Anurag Thakur said tax fraud worth Rs 37,946.41 crore was detected in 7368 cases in 2018-19.

Also, in 2018-19, Rs 11,251 crore worth of cases of tax credit availment by issue of fake invoices were detected by the tax authorities and Rs 2,805 crore in April-June of the current fiscal, Thakur said in his written reply.

Just five cases of tax credit availment by fake invoicing were detected by Central GST formations in the first year of the GST implementation (July 2017 to March 2018) involving an amount of Rs 12.67 crore and two persons were arrested.

The government said it has taken various measures to curtail these types of fraud. “Field formation(s) of CBIC, are sensitized to keep check on these kinds of activities and take necessary action.

A specialised Directorate within the Central Board of Indirect Taxes and Customs (CBIC) engaged in Data Analytics & Risk Management disseminates analytical reports and intelligence inputs to field formations of CBIC for the purpose of scrutiny, audit and enforcement, to check GST evasion in general and fraudulent credit availment in particular,” Thakur said in his reply.

In 2018-19, 1,620 cases of fake invoicing were detected involving Rs 11,251.23 crore, and 154 persons were arrested. Between April-June of 2019-20, 666 cases of fake invoicing were detected and the amount involved stood at Rs 2,804.98 crore. A total of 41 persons were arrested.

To a query on tax fraud cases after the GST rollout, Thakur said 424 cases involving Rs 1,216 crore were detected between July-March period of 2017-18. Another 7,368 cases involving Rs 37,946.41 crore were detected in 2018-19 and 1,593 cases of Rs 6,520.40 crore were detected in April-June of 2019-20.

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Source: Indian-Express
GST rate on cement, steel, pipes, roofing sheets and other building materials: Implications on housing sector

GST rate on cement, steel, pipes, roofing sheets and other building materials: Implications on housing sector

The Indian cement industry is the second largest cement producer in the world. The Government of India is focussing on developing affordable housing. However, due to high GST rate of 28%, the cementindustry is not being able to work on low economies of scale resulting in a higher cost for the affordable housing sector. The government should take serious note of reducing the GST rate from 28% to 18% to boost the cement industry which would provide an ultimate boost to the infrastructure and housing sectors.

In the pre GST era, the rate of tax on steel was around 19.5% (Excise rate 12.5%, VAT 5%, CST 2%). After the implementation of GST, with effect from July 1, 2017, the rate of GST for steel is 18% and for some of the input used by the steel industry like iron, coal & transportation services, the GST rate is as low as 5%. As a result of the low tax rate, the overall cost of steel will decrease. This will have a positive impact on the housing sector.

Most of the pipes used for the construction of buildings were earlier taxed at 28% and later the rate was reduced to 18%. But still the rates are higher, and the government should reduce the rate to 12%. This will give a boost to the housing sector.

Roofing sheet is one of the most useful items for the construction of buildings. The GST rate for roofing sheets is 18%.

GST rate for bricks is in the range of 5% to 28% depending upon the nature of the bricks. Building bricks and bricks of fossil meals attract 5% GST. On the other hand, multicellular or foam glass in blocks, panels, plates, shells or similar forms attract a 28% GST.

Tiles like bricks attract GST rate in the range of 5% to 28%. Roofing and earthen tiles attract 5% GST whereas glazed ceramic flags, paving, hearth or wall tiles attract 28% GST. In the case of bamboo flooring tiles, the GST rate is 18%.

For other items like bathroom fittings GST rate is mainly 28% except for pipe fittings for which, as mentioned above, it is 18%. GST for wallpapers is 28%. Interior products GST rate is between 18% and 28%. In the case of painting and other similar items, the GST rate is 28%.

A person should keep in mind the varied GST rate applicable on inputs and accordingly make a suitable decision. For example, the GST rate varies from 5% to 28% on bricks, marbles & tiles. Also, a person can take benefit of the reduced GST rate on steel. Apart from that, a mix of materials like cement, steel, roofing sheets and others can be used to minimise higher GST input cost on the housing sector.

Source: Economic Times.

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Over 2 lakh new registrations in Haryana under GST

Over 2 lakh new registrations in Haryana under GST

Haryana Finance Minister Capt Abhimanyu on Tuesday said that over two lakh new registrations have been added under the GST in the state since its roll-out to the existing base of 2.25 lakh payers under the erstwhile VAT.

The Finance Minister said the progress of implementation of GST right from its roll-out in July 2017 was constantly reviewed in the state. Extensive training programmes were conducted for the training of all stakeholders.

“Workshop, seminars, conferences and interactive sessions with the taxpayers are regularly organised. The State has particularly stressed upon the expansion of the tax base,” an official statement quoted Capt Abhimanyu, as saying.

He said that Haryana is contributing handsomely in the GST collections. A total of Rs 36,815 crore was collected from the State under State GST, CGST, IGST and cess for the eight months of GST implementation during 2017-18.

“It is Rs 4,601 crore per month on an average,” he added.

He said that with regard to the state collections under GST, the state collected Rs 10,178 crore including provisional IGST settlement in the financial year 2017-18.

Capt Abhimanyu said that the protected revenue of the state for the year 2017-18 was Rs 13,200 crore. The total shortfall of the state GST revenue after taking into consideration the recoveries of erstwhile Vat and CST was Rs 1,933 crore in the financial year 2017-18.

The state received Rs 1,199 crore from compensation and Rs 667 crore from provisional IGST settlement during this period.

The Finance Minister said that in the financial year 2018-19, the state collected Rs 55,231 crore under state GST, CGST, IGST, and cess contributing Rs 4,602.56 crore per month on an average.

The total collection for Haryana under all the GST Acts is Rs 55,231 crore as against Rs 11,77,370 crore for all the states in the country.

Source: Business-Standard.

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GST on Electric Vehicles Reduced to 5 Percent, Tax Benefits Upto Rs 1.5 Lakh on EV Loan: Union Budget 2019

GST on Electric Vehicles Reduced to 5 Percent, Tax Benefits Upto Rs 1.5 Lakh on EV Loan: Union Budget 2019

Finance Minister Nirmala Sitharaman has announced the reduction of GST on electric vehicles from 12% to 5%. She said that the government has already moved GST council to lower the GST rate on electric vehicles (EV) from 12% to 5%. Also to make EVs affordable for consumers, the government will provide additional income tax deduction of Rs 1.5 lakh on the interest paid on the loans taken to purchase EVs.

Presenting the Budget for 2019-20, Finance Minister Nirmala Sitharaman said the government has already approved Rs 10,000 crore for FAME II scheme on April 1, 2019, to encourage faster adoption of electric vehicles by providing right incentives and charging infrastructure. FM also said there will be a comprehensive restructuring of National Highways Programme to ensure the creation of National Highways Grid of desirable capacity.

While presenting the Economic Survey yesterday, Sitharaman said the country must emphasize on electric vehicles (EVs) as these represent the next generation in sustainable mobility and appropriate policy measures are needed to lower the overall lifetime ownership costs to make them an attractive alternative to consumers.

Source: News 18.

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Businesses to declare mismatch in GST returns form, outward supplies in annual returns: Finance Ministry

Businesses to declare mismatch in GST returns form, outward supplies in annual returns: Finance Ministry

The Finance Ministry Wednesday said any mismatch in GST monthly sales return and outward supply details will have to be reported in the annual return form and due taxes should be paid.

In a clarification on annual returns and reconciliation statement, the ministry said it has received queries from businesses asking whether the primary source of data for the filing of the annual return and the reconciliation statement should be GSTR-1, GSTR-3B or books of accounts.

While form GSTR-1 is an account of details of outward supplies, GSTR-3B is where the summaries of all transactions are declared and payments are made.

The ministry said information in form GSTR-1, GSTR-3B and books of accounts should be synchronous and the values should match across different forms and the books of accounts.

If the same does not match, there can be broadly two scenarios, either tax was not paid to the government or tax was paid in excess.

“In the first case, the same shall be declared in the annual return and tax should be paid, and in the latter, all information may be declared in the annual return and refund (if eligible) may be applied through Form GST RFD-01A,” the ministry said.

Further, no input tax credit can be reversed or availed through the annual return. If taxpayers find themselves liable for reversing any ITC, they may do the same through Form GST DRC-03 separately, it added.

It also said if a taxpayer has not paid, short paid or has erroneously obtained/ been granted a refund or has wrongly availed or utilized ITC then before the service of a notice by any tax authority, the taxpayer may pay the amount of tax with interest. In such cases, no penalty will be levied on such taxpayer.

“Therefore, in cases where some information has not been furnished in the statement of outward supplies in Form GSTR-1 or in the regular returns in Form GSTR-3B, such taxpayers may pay the tax with interest through Form GST DRC-03 at any time. In fact, the annual return provides an additional opportunity for such taxpayers to declare the summary of supply against which payment of tax is made,” it added.

GSTR-9 is the annual return form for normal taxpayers, GSTR-9A is for composition taxpayers, while GSTR-9C is a reconciliation statement. The last date for filing an annual return in August-end.

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Source: Economic-Times
GST collections dip below Rs 1 lakh crore in June

GST collections dip below Rs 1 lakh crore in June

Goods and services tax (GST) collections dipped below the Rs 1 lakh crore mark in June for the first time in the current fiscal in what is seen as an impact of the sluggish demand across several sectors, with tax consultants also blaming evasion for the drop in the mop-up.

The numbers, released on the second anniversary of the indirect tax reform measure, coincided with a government warning to evaders, especially those generating bogus invoices to make fraudulent claims. “The menace of fake invoices needs to be checked as it affects honest taxpayers and causes a loss of revenue to the government. Imaandaar traders se Bair Nahin, fake invoice waalon ki Khair Nahin (we have nothing against honest traders, but there will no peace for those generating fake invoices),” junior finance minister Anurag Thakur said at the GST Day event.

‘Expect increased audit and scrutiny over the next few months’

Using technology, the government has detected thousands of traders, many of whom were using shell companies to generate fake invoices and claim tax credits and refunds. Sales of durables and cars, as well as consumer goods, have taken a beating in recent months, which analysts said is reflecting in tax data.

Although tax collections have dipped in June, Thakur said the government would meet the GST collection target set for the fiscal year. During 2019-20, the government is targeting to collect Rs 6.1 lakh crore through Central GST and a shade over Rs 1 lakh crore via compensation cess on luxury and sin goods such as cars, tobacco, aerated drinks, and coal. The IGST balance has been estimated at Rs 50,000 crore.

During June, Central GST collections were pegged at Rs 18,366 crore, while State GST mop-up was pegged at Rs 25,343 crore, the finance ministry said in a statement.

“More than the amount, it’s important to note that it (growth) is only 4.5% higher than the corresponding period of last year, which should be below the government’s expectations… (it) will be a concern and we should expect some tangible measures in the form of increased audits and scrutiny over the next few months. In addition, the government may explore options as to how consumers can be incentivized to be more vigilant on tax compliance,” said Pratik Jain, partner at PwC India.

EY tax-partner Abhishek Jain said the steps planned by the government in the coming days — such as up-gradation of e-way bills and launch of e-invoicing — will help check evasion even as revenue secretary Ajay Bhushan Pandey promised more reforms in the coming months.

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Source: Times-of-India.
Sitharaman urged to bring cigarette taxation to pre-GST level

Sitharaman urged to bring cigarette taxation to pre-GST level

The Federation of All India Farmer Associations (FAIFA) has urged Finance Minister Nirmala Sitharaman to correct an error in cigarette taxation under the new tax regime, which did not account for the cascading effect on excise duty that existed in the pre-GST system.

FAIFA is a non-profit organisation that represents the cause of farmers and farm workers of commercial crops across the states of Andhra Pradesh, Telangana, Karnataka and Gujarat.

In a letter written to the Finance Minister, which has also been submitted to various concerned Ministries including the PMO, Ministry of Health and Family Welfare, Ministry of Agriculture, Ministry of Commerce and Industry, Ministry of Labour, the association has highlighted that error in cigarette taxation has inadvertently increased compensation cess rates that has resulted in additional taxes of around 13 per cent above the pre-GST levels.

“Any additional burden caused by the increase in compensation cess rates will put further pressure on the livelihood of Indian tobacco farmers. As observed in the past that increase in taxes have resulted in the inflow of huge quantities of illicit cigarettes in the market,” the FAIFA letter to Sitharaman said.

The legitimate cigarette industry size in India, which was at 110 billion sticks in 2011-12 as per industry estimates, has dropped by 25 per cent to about 83 billion cigarettes in 2016-17. In contrast, the illegal, duty-evaded cigarette segment has grown to about 26 billion cigarettes in 2017, i.e., almost one-fourth of the industry.

To ensure livelihood support for tobacco farmers, FAIFA has appealed to roll back tax increase so that taxes on the sector comes back to pre-GST revenue neutral rates. The federation has also said that government should have a tax policy that disincentives illicit trade of cigarettes. It has also urged for reinstatement of tobacco export incentives to boost the economy of Indian Flue Cured Virginia (FCV) farmers.

“… we would like to underline that the principle of revenue neutrality has been reiterated time and again by the government in respect of fixation of tax rates in the GST era,” Javare Gowda, President, Federation of All India Farmer Associations (FAIFA), said making a case for restoring taxation to pre-GST levels.

The entire legal cigarette value chain is presently reeling under penalising taxation on account of continuous increases in excise duties and compensation cess on cigarettes, which have cumulatively gone up by 202 per cent between 2011/12 and 2017/18 leading to shrinkage of cigarette volumes by more than 25 per cent since 2012/13, FAIFA has said.

Murali Babu, General Secretary, Federation of All India Farmer Associations (FAIFA), said: “We have tried out various alternative crops and burnt our fingers. The chilli crop as an alternate to tobacco has miserably failed during last season. In fact, since 2013-14, the earnings of FCV tobacco farmers have shrunk cumulatively by more than Rs 4,000 crore due to drop in production (refer graph) of tobacco for the manufacture of domestic legal cigarettes. For the first time, 22 FCV farmers committed suicide and many are under huge debt in the states of Andhra Pradesh and Karnataka.”

According to FAIFA, a steep increase in excise duty in the recent past has led to growth of smuggling of cigarettes in India due to the high tax arbitrage.

There has been a 32 per cent increase in illegal cigarette trade, increasing from 19.5 billion sticks in 2011 to 25.7 billion sticks in 2017, making India the 4th largest illegal cigarette market in the world (as per Euromonitor International) and further supported by an independent study done by FICCI.

It has resulted in revenue losses of approximately Rs 13,000 crore and is growing annually.

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Source: Business-Standard.
Government rules out bringing oil products under GST for now

Government rules out bringing oil products under GST for now

The Centre has virtually ruled out including petroleum products within the ambit of GST immediately, turning down repeated demands from the aviation sector and oil companies.

Even the petroleum ministry had taken up cudgels for the sector that has been arguing that the benefit of GST is not accruing to them as companies cannot claim an input tax credit. The credit can only be claimed if the entire chain from inputs to the final product pays GST.

The Centre is, however, of the view that the change in the regime may not pass muster with the states, which want to retain flexibility in taxing a few items that they have control over. Stamp duty on real estate, excise on alcohol and petroleum products are among the handful of items on which states still have control after the introduction of GST.

At the time of the introduction of GST two years ago, the states and the Centre had decided to pool their powers, which now vests with the GST Council. The panel headed by the Union finance minister now decides the rates and the indirect tax regime, leaving only a few items with the state FM.

In any case, the overall levy is not going to reduce significantly as the government will impose cess above the 28% rate on petrol and diesel to ensure that there is no loss to the exchequer.

Besides, sources told TOI, politically too the Centre is not keen on moving to GST for products such as aviation turbine fuel (ATF) or jet fuel, despite the high-decibel lobbying unleashed by airlines.

The government believes that the taxes on ATF, which airlines say is among the highest in the world, is passed on to consumers. To ensure that the transition to GST is tax-neutral, the Centre and the states will have no option but to raise the levy on air tickets. “There will be no change for the flyers,” said a source.

Over the past two years, the government has discussed the possibility of shifting to a GST regime for sectors such as real estate, where under-construction units face the levy but on receipt of the completion certificate, stamp duty is levied. But the Centre and the states have refrained from expanding the ambit, opting for the new tax mechanism to settle down.

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Source: Times-of-India
Traders’ body urges Centre to lower GST rate on auto parts, aluminium utensils

Traders’ body urges Centre to lower GST rate on auto parts, aluminium utensils

A traders’ body has urged the Finance Ministry to lower Goods & Services Tax (GST) on various items, including auto parts and aluminium utensils. These are among the 28 items that attract GST at the rate of 28 per cent, the highest slab rate.

This was part of a white paper, prepared and submitted by the Confederation of All India Traders (CAIT) to Finance Minister Nirmala Sitharaman. The paper presented views for simplification and rationalisation of the GST tax structure.

Praveen Khandelwal, Secretary General of CAIT, told reporters that he urged the Finance Minister to review items placed under different tax slabs under GST as many of the items are overlapping. “As a matter of policy, the tax rate of raw material should not be more than the tax rate of finished goods,” he said.

The white paper talked about simplifying Form GSTR 9 and 9C (Return Forms) as it demands information which was not prescribed earlier and hence traders are unable to comply with the same.

It also raised many issues such as Advance Ruling, Reverse Charge Mechanism, Rectification of GST Returns, clarification of jurisdiction of CGST & SGST, HSN code issues, Abolition of Form ITC-04, return of expired drugs to be treated as supply, etc. The CAIT also urged to reduce the tax rate for items like hardware, mobile covers, food items, dry fruits, ice cream, food grains, malt/cereal based health food drinks, paints, marble, used vehicles, two-wheelers, agricultural equipments, roasted chana, etc.

Simplify tax procedure

According to a statement issued by CAIT, Sitharaman assured its delegation that she will look into the issues raised by the traders’ body. The intention of the government is certainly to simplify the tax procedure so that more and more people can easily comply with the same.

The trading community being the last mile contact with consumers plays an important role in collection of the revenue and it will be ensured that no undue hardship is faced by traders. The Minister urged the traders to streamline their existing business formats and ensure timely compliance with the law. There is also demand for appointing GST Lokpal in each State and the Centre.

Digital payments

Talking about other issues related to traders in their day-to-day affairs, Khandelwal suggested that in order to encourage adoption & acceptance of digital payments, the bank charges levied on card payments should be subsidised by the government directly to banks and neither the traders nor the consumers should be charged any bank charges on card payment transactions.

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Source: The-Hindu-Business-Line
All You Need to Know About the New Monthly GST Return Filing System

All You Need to Know About the New Monthly GST Return Filing System

The government on Tuesday unveiled the new goods and services tax (GST) return forms that will make the process of filing monthly returns simpler for taxpayers.

The finance ministry has also put in place a transition mechanism which allows taxpayers to try the new return filing forms during July-September, but it will become mandatory only from October. Here is everything you need to know about the new monthly GST return filing mechanism:
– Currently, companies and businesses file tax returns via GSTR-3B or summary form and GSTR-1, which entails details of outward supplies.

– The new return mechanism will have three forms – one main return form (Form GST RET-1) and two annexures (Form GST ANX-1 that will capture details of outward supplies and Form GST ANX-2 that will be the purchase form). The new mechanism comes with some offline tools as well.

– From July 2019, businesses would be able to upload invoices using the Form GST ANX-1 offline tool on trial basis for familiarisation.

– They would also be able to view and download, the inward supply of invoices using the Form GST ANX-2 offline tool under the trial programme. The summary of inward supply invoices will also be available for view on the common online portal.

– Additionally, from August, users can import their purchase register in the offline tool and match it with the downloaded inward supply invoices to spot mismatches.

– It is important to note that this trial would have no impact at the back end on the tax liability or input tax credit of the taxpayer during July-September. In this period, taxpayers shall continue to fulfil their compliances by filing GSTR-1 and GSTR-3B. Failure to do so will attract penalties.

– Large taxpayers, with aggregate annual turnover over Rs 5 crore in the previous fiscal year, would upload their monthly Form GST ANX-1 from October 2019 onwards.

– Small taxpayers, who have a turnover of up to Rs 5 crore and file returns quarterly, will need to file the first compulsory Form GST ANX-1 only in January 2020 for the quarter ended December 2019.

– Invoices can be uploaded in Form GST ANX-1 on a continuous basis both by large and small taxpayers from October 2019 onwards.

– Form GST ANX-2 may be viewed simultaneously during this period, but no action shall be allowed on such form.

– During October and November 2019, large taxpayers would continue to file Form GSTR-3B on monthly basis. They would file their first Form GST RET-01 for the month of December 2019 by 20 January 2020.

– Small taxpayers would stop filing Form GSTR-3B and would start filing Form GST PMT-08 from October 2019 onwards. They would file their first Form GST-RET-01 from 20 January 2020 for the quarter December 2019.

– From January 2020 onwards, Form GSTR-3B shall be completely phased out and all taxpayers shall be filing Form GST RET-01.

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Source: News18.