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At Sept 20 Goa meet, GST Council to look into inverted duty structure issue

At Sept 20 Goa meet, GST Council to look into inverted duty structure issue

The Goods & Services (GST) Council is expected to resolve issues related with inverted duty structure for various sectors in its 37th meeting scheduled to take place in Goa on September 20.

The inverted duty structure, where there is higher duty on input(s) and lower duty on output, has caused two problems. First is the refund in the GST regime, and second such a structure encourages imports hurting the domestic industry. There are at least seven industries including textiles and railway wagon facing difficulties on account of inverted duty structure.

Senior Finance Ministry officials confirmed that efforts are on to resolves the problems especially related with refund and therefore rates related with inverted duty structure are being restructured under GST.

According to MS Mani, Partner with Deloitte India, there is a need to correct inverted duty situations in a few sectors to assist both suppliers of inputs and their buyers from a working capital standpoint. “In a situation where growth has tapered, all elements of cost, especially indirect taxes would be an area of focus,” he said.

Any registered assesee can claim a refund of unutilised input tax credit on account of inverted duty structure at the end of any tax period where the credit has accumulated on account of higher tax on input and lower tax on the output.

Exceptions to this are in four categories — if output supplies are NIL rated or fully exempt supplies except supplies of goods or services or both as notified; if the goods exported from India are subject to export duty; if the supplier claims refund of output tax paid under IGST (integrated Goods & Services Tax); or avails duty drawback or refund of IGST on such supplies.

The issue of refund came up before the Council at least twice — once during the 31st meeting held on December 22, 2018 and the second, during the 35th meeting held on June 21.

In the December meeting it was decided that clarifications will be issued on certain refund related matters like refund of ITC accumulated on account of inverted duty structure, disbursal of refunds within the stipulated time, time allowed for availment of ITC on invoices, refund of accumulated ITC of compensation cess etc.

The Central Board of Indirect Taxes and Custom (CBIC) issued a circular on December 31, 2018. It was clarified that refund of unutilised ITC in case of inverted tax structure is available where ITC remains unutilised even after setting off of available ITC for the payment of output tax liability.

Where there are multiple inputs attracting different rates of tax, the concept of ‘Net ITC’ as mentioned in the formulae prescribed under the CGST rules will be applicable.

This term covers the ITC availed on all inputs in the relevant period, irrespective of their rate of tax. However, industries complain that this circular has not resolved their issues completely.

The minutes of the 35th meeting said West Bengal Finance Minister Amit Mitra had written a letter to Finance Minister Nirmala Sitharaman regarding the inverted duty structure of ‘wagon industry’ and he had requested that it might be sent to the Fitment Committee.

Sithraman assured that it would be sent to the Fitment Committee.

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Source: The-Hindu-Business-Line.
No GST if maintenance paid to housing society is less than Rs 7,500 every month

No GST if maintenance paid to housing society is less than Rs 7,500 every month

The GST exemption on maintenance charges paid to a housing society by a member is available only if it doesn’t exceed Rs 7,500 per month, the Authority for Advance Rulings (Tamil Nadu) has ruled. If the charges exceed the sum, the entire amount is taxable.

In its order, the AAR bench provides a numerical illustration. If the maintenance charges are Rs 9,000 per month per member, GST shall be payable on the entire amount of Rs 9,000 at the rate of 18%. It shall not be payable on the differential of Rs 1,500 (Rs 9,000 minus Rs 7,500). The ruling has been recently made public and is in sync with a clarification issued (after the order) by the finance ministry on July 22.

Further, tax experts point out that if the annual collection of a housing society is less than Rs 20 lakh, it does not have to register for GST. Thus, it will not have to collect and pay GST even if the monthly amount of maintenance charges exceeds Rs 7,500 per month per member. It should also be noted that prior to January 25, 2018, the exemption limit was lower at Rs 5,000 per month.

Maintenance charges are collected by a housing society for various purposes like providing security, lift maintenance, maintenance of common areas like a lobby, garden, club house, swimming pool, to name a few instances. These charges are typically a reimbursement for expenses incurred by the housing society against payments made to third parties.

In this case before the AAR, a Chennai housing society – TVH Lumbini Square Owners Association – contended that if individual contributions towards maintenance exceeds Rs 7,500 per month, GST is liable to be paid on the differential, which is only on charges over and above this sum. The AAR ruled otherwise.

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Source: Times-of-India
Bring GSTR with invoice matching for all by January: Bengal FM

Bring GSTR with invoice matching for all by January: Bengal FM

West Bengal finance minister Amit Mitra has sought a probe into rampant goods and services tax evasion. In a letter to finance minister Nirmala Sitharaman, dated August 27, Mitra also sought the introduction of the new return system with invoice matching by October for large taxpayers and by January, 2020, for all tax payers.

Mitra further wrote that he had forewarned that giving up invoice matching would lead to widespread tax frauds and hawala transactions.

Citing the Minister of State for Finance Anurag Thakur’s response in Rajya Sabha, Mitra said that the fraud worth Rs 45,682 crore was not only alarming, but also understated. The figure did not include SGST frauds, and should they be included, the figure would cross Rs 1lakh crore, Mitra claimed.

“At the time of GST introduction, neither the statutory forms including GST Return were ready, nor the IT system was tested,” he said. The widespread tax fraud took place due to lack of veracity of claimed GST via input tax credit, Mitra said.

Source: Economic-Times

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GST Council to meet in Goa on September 20; no proposal to lower rates

GST Council to meet in Goa on September 20; no proposal to lower rates

The Goods & Services Tax (GST) Council will hold its 37th meeting on September 20 in Goa, but is unlikely to consider any rate reduction.

A senior Finance Ministry official told BusinessLine: “Many sectors are clamouring for a rate reduction. They range from automobile to cement to biscuit. Now, if it is done for one sector, it can open floodgates. We should not forget the revenue situation.” The automobile sector has requested the government to lower the duty for a brief period while biscuit companies are pressing for reducing GST from 18 per cent as consumers are thinking twice before buying even a ₹5 packet.

When asked about the demand for lowering the GST on biscuits, during her press conference last week, Finance Minister Nirmala Sitharaman said if State Finance Ministers have sensed that branded companies are shutting down because of GST, she would like to hear from them. “After all, the GST Council is not just the Union government. I would want many of the GST related issues discussed as issues that affect the States too and GST related decisions are not unilaterally taken by the Central government. So, I like to hear States Ministers much before all of us together take a call on it,” she had said.

The official said ‘as of now’ there is no proposal for lowering rate on any of the item. The Finance Ministry is having a tough time on the revenue front. The average revenue collection during the current fiscal is over ₹1 lakh crore. Certainly, this is sufficient to meet the scaled down target of GST collection as projected in the Budget.

The Finance Minister scaled down the GST collection target to ₹6.63 lakh crore, from ₹7.61 lakh crore. Accordingly, combined with State GST (SGST), the average monthly collection is now estimated at nearly ₹1 lakh crore as against ₹1.14 lakh crore (based on the data of Interim Budget). However, scaling down the target does not mean that the government wants less revenue. It needs more funds to meet the rising expenditure and contain fiscal deficit.

Review return filings

The official said the rules prescribe the GST Council to meet at least once in three months and since the Goa government had offered to host the meeting, it was accepted. The meeting is expected to review return filings and phased introduction of new return forms. It is also likely to consider action against non-filers which include debarring them for issuance of e-way bill. So far, on an average 20 per cent assessees do not file return by due date which affects overall revenue collection.

The Council has met 36 times and no occasion has arisen so far that required voting to decide any matter. Till its 34th meeting, the GST Council has taken 1,064 decisions which include 219 decisions taken by the GST Implementation Council (GIC). As on May 14, as many as 1,006 decisions have been implemented and only 58 decisions of the GST Council (of which 39 were unique issues) are yet to be implemented. In other words, 94.5 per cent of the decisions of the GST Council have already been implemented, which is a significant achievement, given the complicated nature and wide area of subjects/issues involved and the fact that all decisions were taken unanimously.

Source: The-Hindu-Business-Line

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Last date to file GST annual returns extended till 30 November

Last date to file GST annual returns extended till 30 November

The finance ministry on Monday said the last date for filing annual GST returns has been extended by three months to November 30 as taxpayers were facing technical problems in furnishing returns.

Earlier, GST taxpayers were to file required returns by August 31.

“It is hereby informed that the last date for furnishing of annual return in the Form GSTR-9 / Form GSTR-9A and reconciliation statement in the Form GSTR-9C for the financial year 2017-18 is extended from August 31, 2019 to November 30, 2019,” the Central Board of Indirect Taxes & Customs (CBIC) said in a statement.

GSTR 9 is an annual return to be filed yearly by taxpayers registered under the Goods and Services Tax (GST). It consists of details regarding the outward and inward supplies made or received under different tax heads.

While extending the date, the CBIC said “certain technical problems are being faced” by the taxpayers as a result annual return for the period July 1, 2017 to March 31, 2018 could not be furnished by persons registered under GST.

GSTR-9C is filed by those whose annual turnover exceeds ₹2 crore. It is a statement of reconciliation between GSTR-9 and the audited annual financial statement, while GSTR-9A is the annual return to be filed those who have opted for the Composition Scheme under GST.

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Source: Live-Mint.
Abolish GST on maintenance charges of apartments’

Abolish GST on maintenance charges of apartments’

The Visakhapanam Apartment Residents’ Welfare Association (VARWA) has urged Union Minister of State for Housing and Urban Affairs Hardeep Singh Puri to abolish GST on maintenance charges of apartment complexes, saying that it is adding to the burden of residents.

Referring to the Finance Ministry’s recent clarification, VARWA general secretary B.B. Ganesh said apartment owners need to pay a GST of 18 % if their monthly maintenance charges to the Residents’ Welfare Association (RWA) exceed ₹7,500 per month and even otherwise, the RWA should pay GST at that rate, if its turnover exceeds ₹20 lakh per annum.

Maintenance charges are collected by RWAs for meeting common expenses such as wages to security guards, sweepers, cleaners, gardeners, telephone and intercom service, electricity charges, municipal water, house-keeping, repairs and maintenance and etc., he said.

‘Additional burden’

“The RWAs pay GST on common expenses through the telecom service provider, intercom provider, man power agency and etc. Levying it on maintenance charges leads to double payment by apartment owners. GST on maintenance charges is taxing internal services of apartments many of which are supposed to be provided by civic bodies or government departments. But, the RWAs are providing them,” Mr. Ganesh contended.

Many people live in apartment complexes and gated communities for higher security and other services which are being provided by the RWAs. Paying charges for these would entail higher maintenance charges which in turn would bring RWAs into GST bracket, Mr. Ganesh said in an appeal sent to the Minister.

He said some apartment complexes provide shelter exclusively to senior citizens charging high amounts towards maintenance and it is unjust to levy GST on them, he opined. Mr. Ganesh sought the Minister’s intervention to ensure that GST on maintenance charges of apartments is abolished or at least senior citizens are exempted from it. He urged the Minister to take up the issue with the Ministry of Finance. Besides the rate of GST on maintenance should be reduced from 18 % to 5 %, he requested.

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Source: The-Hindu
Will request FM for extension in due date for filing income tax, GST returns

Will request FM for extension in due date for filing income tax, GST returns

Maharashtra Chief Minister Devendra Fadnavis on Monday requested Union Finance Minister Nirmala Sitharaman for extension in due date for filing income tax and Goods and Services Tax (GST) returns.

“I will request Nirmala Sitharman ji for extension in due date for filing income tax and GST returns,” the Chief Minister said during a press conference.

In a big relief to those affected by the deluge in the state, the Chief Minister announced, “Loans on flood-affected crops, up to 1 hectare will be waived or will be paid by the state government. Those who had not taken any loan will be compensated with triple the amount of normal compensation for the crops.”

He also promised that the houses damaged due to the floods in the state will be rebuilt under the Pradhanmantri Awas Yojna.

“Houses damaged due to flood will be re-built under the Pradhanmantri Awas Yojna. We will provide financial help of Rs 24000 for rented accommodation in rural areas and Rs 36000 in urban areas,” he said.

Earlier in the day, Fadnavis took to Twitter to thank Reliance Industries Limited and Bollywood actor Amitabh Bachchan for their generous contributions to the Chief Minister’s Relief Fund for rehabilitation work in the flood-ravaged western Maharashtraregion.

Large parts of the state have been reeling under the floods.
The death toll due to the floods and heavy rainfall in Pune division reached 54, an official statement said on August 16.

As per the statement from the Divisional Commissioner’s office in Pune, at least 4,74,226 people have been rescued from 584 villages and evacuated to 596 temporary shelters in Pune, Sangli, Kolhapur, Satara and Solapur districts. (ANI)

Source: ANI

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North eastern states witness over 30% growth in Apr-Jul GST collection

North eastern states witness over 30% growth in Apr-Jul GST collection

North eastern states registered over 30 per cent growth in GST collection during the first four months of the current fiscal 2019-20, much more than the increase witnessed in larger manufacturing states. Growth in Goods and Services Tax (GST) collection recorded by most of the seven sister states is over three times the national average of 9 per cent.

In absolute terms, the total tax collectionduring April-July of this fiscal year rose to Rs 3.56 lakh crore, as per the data accessed by .

Among the north eastern states, Nagaland registered highest growth of 39 per cent at Rs 393 crore during April-July period, the data revealed.

It was followed by Arunachal Pradesh with 35 per cent growth at Rs 514 crore and Sikkimwith 32 per cent increase to Rs 370 crore.

While Meghalaya clocked a growth of 30 per cent in GST collection at Rs 680 crore, Mizoram’s growth was a tad lower at 27 per cent with Rs 350 crore collection.

The laggard states of Tripura and Manipur too registered 16 per cent growth, more than double of large industrial states like Maharashtra, Haryana and Gujarat.

Out of 37 states and union territories, Delhi, Lakshadweep and Puducherry registered de-growth of 2 per cent, 17 per cent and 8 per cent respectively.

GST collection of Delhi declined to Rs 12,700 crore during April-July 2019, compared with a little under Rs 13,000 crore a year ago.

According to experts, Delhi has been adversely hit as the tax arbitrage on central sales tax (CST) has ended. In the past, Delhi imposed a lower CST of 1 per cent, prompting many companies to ship goods from the union territory by locating their offices here.

Big states like Maharashtra and Gujarat recorded a single-digit growth of 6 per cent in GST collection. Punjab clocked 7 per cent growth, while Haryana’s growth was at 9 per cent.

Tamil Nadu and Karnataka recorded 10 per cent and 11 per cent growth in GST collections, respectively.

In contrast, consuming states like Bihar, Odisha, Uttar Pradesh and Madhya Pradesh are faring better than the industrial states with double-digit growth. DP CS RVK

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Source: Economic Times.
Do RWAs need to pay GST on society fee?

Do RWAs need to pay GST on society fee?

Even after more than two years of its implementation, there are ambiguities that crop up regarding the implementation of the goods and services tax (GST). For instance, there was little clarity on the applicability of GST on maintenance paid by home owners to residents’ welfare associations (RWAs) for the upkeep of societies. The government recently clarified on this particular aspect.

In a notification dated 22 July 2019, the ministry of finance said that if RWA members contribute less than ₹7,500 a month each, the said RWA is exempt from paying GST, irrespective of the annual turnover.

Note that the rule is not new but was amended to increase the limit. “It is only the clarification that has come recently. The limit was earlier ₹5,000, which was increased to ₹7,500 in January 2018,” said Pratik Jain, partner and leader, Indirect Tax, PwC India. However, RWAs are required to pay GST on monthly subscriptions if the subscription is more than ₹7,500 per member and the annual turnover of the RWA—by way of supplying of services and goods—is ₹20 lakh or more. Also, this GST will be charged on the entire amount of maintenance and not just on the amount exceeding ₹7,500.

The RWA does not need to pay GST if the annual turnover is ₹20 lakh or above, but the members are paying less than ₹7,500 as maintenance charge per month each.

For instance, if a housing society has 100 apartments and the monthly maintenance charges are around ₹4,000 each unit, there will be no need to account for GST, as the monthly contribution is below ₹7,500, even though the annual turnover of the RWA is ₹48 lakh, which is over ₹20 lakh a year. Similarly, if the monthly contribution in a high-end housing society with 10 apartments is ₹15,000 per unit, the annual collection will be ₹18 lakh, which is less than ₹20 lakh a year, the contributions of its members will not attract GST.

GST rules also allow RWAs that have to collect GST on monthly contributions to claim input tax credit (ITC). ITC helps an entity to reduce the GST amount it has paid on goods or services from the amount of GST it has to deposit to the government.

“There were representations made to the government in this regard, and hence, they have clarified. Obviously it is a relief for the residents, particularly those who reside in smaller apartment buildings and complexes. Of course, if you look at the luxury segment, the maintenance amounts might be much higher than ₹7,500. At least it provides relief to a large section of society,” said Jain.

The government’s notification also states that by coming under the ambit of GST, RWAs could in fact lower their tax burden by availing the benefits of ITC, which they would have paid to their suppliers for expenses on goods such as buying generators, water pumps, lawn furniture, taps, pipes, or other hardware as well as for services such as repairs and maintenance.

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Source: Live-Mint
Auto industry to FM: Bring down GST, raise depreciation rate

Auto industry to FM: Bring down GST, raise depreciation rate

Representatives of the automobile industry, who met Finance Minister Nirmala Sitharaman on Wednesday, have sought a lower Goods & Services Tax (GST) and a higher depreciation rate to tide over the current crisis. They also impressed on Sitharaman the need for a host of others measures to help the sector ride out the rut.

The Finance Minister has been meeting representatives of various sectors to understand the issues concerning them even as several key agencies have lowered growth projection for India.

Wednesday’s meeting, the third in the series, was attended by RC Bhargawa, Chairman, Maruti Suzuki; Pawan Munjal, CMD, Hero Motors; Nirmal Mind, CMD, Uno Minda; Gurpratap Bopara, MD, Skoda India; besides the Presidents of three industry bodies — SIAM, ACMA and FADA.

According to sources, the government is expected to come out with a detailed action plan for boosting the economy.

The auto industry has been on the slow lane for the last one year.

The sale of passenger vehicles declined by 18.42 per cent in April-June 2019 over the same period last year. Within the passenger vehicles category, sale of passenger cars, utility vehicle and vans declined 23.32 per cent, 4.53 per cent and 25.66 per cent, respectively, in April-June 2019 over the same period last year.

2 lakh workers laid off

According to the Federation of Automobile Dealers Associations (FADA), around two lakh people have been laid off across automobile dealerships in the country in the last three months.

Auto companies, which feel that the GST rate of 28 per cent plus cess is hurting sales, have been demanding a reduction, at least temporarily.

However, according to a Finance Ministry official, the problem is that collection from the GST is already below expectations and any reduction now will further complicate matters.

Auto companies also want the depreciation rate raised from the present 15 per cent. A higher depreciation rate will have three consequences: First, the resale value will come down faster, which, in turn, will prompt the customer to replace the car sooner.

Second, a higher depreciation rate will bring down the insurance premium from the second year. And finally, higher depreciation will allow businesses to claim higher business expenses and thus lead to more tax benefits.

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Source: The-Hindu-Business-Line.