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GST returns non-filers grow faster than tax base

GST returns non-filers grow faster than tax base

The number of tax filers failing to file their returns has been increasing in the 17 months of GST implementation until November 2018, according to an answer submitted by the Finance Ministry in the Lok Sabha.


While the number of people required to file monthly returns has grown 32% from July 2017 to about 98.5 lakh in November 2018, the number of people not filing these returns has grown 167% during that time, the latest Goods and Services Tax filing data showed.

The data also shows that this is not just the case for monthly filers, but also for those under the composition scheme, which allows for quarterly return filing.

While the number of people required to file quarterly returns increased about 55% from July 2017 to 17.74 lakh in November 2018, the number of people who have not filed returns increased about 162% during this period.

In other words, the number of people failing to file returns has grown faster than the tax base itself for both regular and composition filers.

Tax analysts say the reasons are varied, including some taxpayers having too low a turnover, and others getting registered onto GST only due to the insistence of their large clients, and yet others simply daunted by the filing process.

“While the increase in the proportion of non-filers is a matter of concern, it must be borne in mind that several GST registrants may be having nil or low turnover and some others may have taken registration on their customers’ insistence,” M.S. Mani, a partner at Deloitte India, said. “Some of the initial challenges faced by smaller business on the GST portal may also have deterred some of them from attempting to file online returns.”

However, other tax analysts point towards a more serious situation where small businesses are systematically and fraudulently evading tax in the hope that they are too small for the taxman to notice.

“What happens is that a lot of small vendors get onto the system because their large clients force them because the client can avail of input tax credits only if their supplies are from a GST-registered vendor,” a tax analyst with a large consultancy told The Hindu on the condition of anonymity.

“However, these small vendors try to fly below the tax radar. They charge the GST rate on their supplies, but then keep this as their own profit margin instead of paying tax to the government.”

These vendors base these activities on the fact that the taxman will take 2-3 years to notice this activity since invoice matching is still not activated on the GST portal, the analyst added.

“By the time they are noticed, the vendor has already changed their name and GST number and is carrying on their business,” the analyst said.

‘Government loses’

“They have been doing this for 15 years under VAT and are simply transferring that practice to GST. The government loses because it has to pay ITC to the big corporate and doesn’t even get its tax revenue from the small vendors.”

Another analyst explained that, in reality, there are a relatively small number of taxpayers that fall below the ₹20 lakh threshold for filing returns.

“A ₹20 lakh income per year works out to about ₹5,500 a day,” the analyst explained. “Even your corner grocery store or Kirana store would do more business than this in a day. They just don’t file their returns because they are scared to draw the attention of the taxman.”

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Source: The Hindu
Finance Ministry allows businesses to claim GST input credit benefit for FY’18 till Mar 2019

Finance Ministry allows businesses to claim GST input credit benefit for FY’18 till Mar 2019

The Finance Ministry has allowed businesses to claim input tax credit benefit for the first financial year of Goods and Services Tax roll out, till March 2019, provided it matches with the return filed by their suppliers. The deadline for claiming input tax credit (ITC) ended on October 25, 2018.

Tax experts said that ITC claims were allowed to businesses earlier provided businesses had generated an invoice, paid taxes and filed returns. However, in the recent order, the CBIC has mandated that ITC claims would have to be matched with GSTR-2A.

GSTR-2A is auto-generated by the systems based on sales returns filed by suppliers.

The Central Board of Indirect Taxes and Customs (CBIC) through a gazette notification issued an order stating that ITC claims for the maiden year of Goods and Services Tax (GST) rollout (July 2017 to March 2018) will be allowed till March 31, 2019.

GST was rolled out from July 1, 2017.

Besides, the CBIC has also allowed businesses to correct any error or omission in filing of final sales return or GSTR-1 for the period July 2017-March 2018. Now businesses can correct the errors in the returns to be filed for January-March 2019.

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Source: Money Control
Govt cuts GST rate on 23 items: Here’s what will get cheaper

Govt cuts GST rate on 23 items: Here’s what will get cheaper

In a Christmas bonanza to the common man, the GST Council  on Saturday reduced tax rates on 23 goods and services, including movie tickets, TV/monitor screens and power banks, and exempted frozen and preserved vegetables from the levy.

The reduced rates are likely to come into effect from January 1, 2019, finance minister Arun Jaitley told reporters after the 31st meeting of Goods and Services Tax (GST) Council in the national capital.

Of the 23 goods and services on which rates have been slashed, tax rate on seven items in the 28 per cent slab has been brought down. With this, only 28 goods are left in the highest 28 per cent tax bracket.

Here are the items that will get cheaper:

GST slashed from 28% to 18%

  • Pulleys, transmission shafts and cranks, gear boxes etc., falling under HS Code 8483
  • Monitors and TVs of up to screen size of 32 inches
  • Re-treaded or used pneumatictyres of rubber;
  • Power banks of lithium ion batteries. Lithium ion batteries are already at 18%. This will bring parity in GSTrate of power bank and lithium-ion battery.
  • Digital cameras and video camera recorders
  • Video game consoles and other games and sports requisites falling under HS code 9504.

28% to 5%

Parts and accessories for the carriages for disabled persons

GST rate reduction on services

  • GST rate on cinema tickets above Rs. 100 shall be reduced from 28% to 18% and on cinema tickets up to Rs 100 from 18% to 12%.
  • GST rate on third party insurance premium of goods carrying vehicles shall be reduced from 18% to 12%
  • Services supplied by banks to Basic Saving Bank Deposit (BSBD) account holders under Pradhan Mantri Jan Dhan Yojana (PMJDY) shall be exempted.
  • Services supplied by rehabilitation professionals recognised under Rehabilitation Council of India Act, 1992 at medical establishments, educational institutions, rehabilitation centers established by Central Government / State Government or Union Territories or entity registered under section 12AA of the Income-tax Act shall be exempted.
  • Services provided by GTA to Government departments/local authorities which have taken registration only for the purpose of deducting tax under Section 51 shall be excluded from payment of tax under RCM and the same shall be exempted.
  • Exemption on services provided by Central or State Government or Union Territory Government to their undertakings or PSUs by way of guaranteeing loans taken by them from financial institutions is being extended to guaranteeing of such loans taken from banks.
  • Air travel of pilgrims by non-scheduled/charter operations, for religious pilgrimage facilitated by the Government of India under bilateral arrangements shall attract the same rate of GST as applicable to similar flights in Economy class (i.e. 5% with ITC of input services).

GST rate reduction on other goods

18% to 12%

  • Cork roughly squared or debagged
  • Articles of natural cork
  • Agglomerated cork

18% to 5%

Marble rubble

12% to 5%

  • Natural cork
  • Walking Stick
  • Fly ash Blocks

12% to Nil

Music Books

5% to Nil

  • Vegetables, (uncooked or cooked by steaming or boiling in water), frozen, branded and put in a unit container

Vegetable provisionally preserved (for example by sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions), but unsuitable in that state for immediate consumption.


  • Exemption from GST on supply of gold by Nominated Agencies to exporters of article of gold Jewellery.
  • Exemption from GST on proceeds received by Government from auction of gifts received by President, Prime Minister, Governor or Chief Minister of a State and public servants, the proceeds of which is used for public or charitable cause.
  • Exemption from IGST/Compensation cess on vehicles imported for temporary purposes under the Customs Convention on the Temporary importation of Private Road Vehicles (carnet de passages-en-douane).
  • Rate of 5%/18% to be applied based on transaction value of footwear
  • Uniform GST rate of 12% on Flexible Intermediate Bulk Container (FIBC) from existing 5%/12% (depending on the value)


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Source: Times of India
Jewellers seek removal of GST on exhibition items

Jewellers seek removal of GST on exhibition items

The gems and jewellery industry is not only facing headwinds for exports but also feeling the heat of the tax burden. While the exporters have long been demanding to remove the 3% GST on unsold products brought back after participating in overseas exhibitions, the 3% GST coloured stones for using jewelry in the domestic market has been an irritant for the manufacturers.

“There is no logic on levying 3% GST on unsold products back to the country. Jewellers participating in overseas exhibitions cannot sell all their products. Some of the items come back. While the government rule says when the products are sold, the exporters will get back the products, lot of money is locked up in the system adding to the working capital woes of the exporters,” said Rajiv Jain secretary of JJS, which will be held this year from December 21 to 24.

Similarly, for the domestic use diamonds are taxed at 0.25% while coloured stones attract 3% GST. The anomaly has been there which needs to be corrected. “Since most of the coloured stone business is concentrated in Rajasthan, it has not attracted the attention of the GST council. We have drawn the attention of the government to this anomaly but are still awaiting for the rationalization,” added Jain.

Gems and jewellery exports during April-November have declined by 7% and the domestic market demand is yet to pick up. But organizers of the annual Jaipur Jewellery Show (JJS) said that the event still remains a crowd-puller.

Vimal Chand Surana, chairman of JJS, said that over 500 top retailers of India will be participating in the in the show, which has ‘Reflection of Royalty and Creativity’ as its theme this year.

This is most apt keeping in mind that Pink City is the land of royalty and gems and jewellery is a significant element of the same. JJS serves as a platform to guide traders and policy makers as well as inspire scope for creativity. Media coordinator of JJS Ajay Kala said the show already has around 30,000 online registrations with 28,000 repeat registrations and 2,000 new registrations. The show will have 825 booths this year pread over 2 lakhs sq ft area, added Kala.

“The number of repeat exhibitors at the show continues to grow every year. This year too, the show will feature different sections for costume jewellery, silvery jewellery and artefacts, gold jewellery, institutions, allied machinery, etc,” added Kala.

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Source: Times of India
GST helped you save Rs 320 per month: Analysis

GST helped you save Rs 320 per month: Analysis

You are saving up to Rs 320 every month on your common-used daily item including soaps, food items, cosmetics after implementation of GST since July 2017, a finance ministry source said citing an analysis.

According to an analysis of household expenditure on before and after implementation of GST, the tax rates have come down on 83 common used items including food and beverages as well as daily use goods like hair oil, toothpaste, soap, washing powder, and footwear.

As per analysis, a household would be saving Rs 320 every month on their monthly spend of Rs 8,400 on 10 goods — cereals, edible oil, sugar, chocolates, namkeen and sweets, cosmetics and toiletries, washing powder, tiles, furniture and coir products, and other household products, the PTI quoted a source referring to the expenditure analysis.

In comparison, the analysis highlights that the GST on the Rs 8,400 spending comes out to be Rs 510, which is less than Rs 830 charged before the implementation of GST, resulting into a saving of Rs 320 every month.

As per the analysis, an array of items like spices, wheat, rice, nutrition drinks like Horlicks/Bournvita, pasta, idli dosa batter, mineral water, milk powder, curd, and buttermilk are currently taxed at a lesser rate under the GST than previously.

In the old tax system before GST, the central government would levy excise duty when a good is produced in a factory and the state governments would charge VAT on top of this. This meant that consumer not just paid VAT on the basic price of the good but also on the excise duty charged by the center.

With the introduction of GST, that pattern was eliminated. The GST is levied at the consumption end or when the final consumer buys the product or service.

After the introduction of GST in many other countries, it was seen that the inflation rose post-GST rollout due to change in tax structures, but the trend has not seen in the Indian case as the GST council has revised rates on numerous occasions.

wheat and rice have been exempt from tax under the GST as against 2.50-2.75 percent tax incidence previously. Similarly, tax on milk power is down to 5 percent from the previous 6 percent.

Similarly, sugar confectionery is taxed at 18 percent post-GST, as against 21 percent in the earlier indirect tax regime.

The tax rate on sugar and edible oil has come down to 5 percent under the new tax system, from 6 percent earlier. Also, namkeens and sweets are now taxed at 5 percent, as against 12 per cent/7 percent earlier.

Also, the tax rate on washing powder and tiles has come down to 18 percent from 28 percent earlier.

In the case of furniture, 5/18 percent GST is applicable on various kinds of products, while in the earlier regime the tax rate was 12/28 percent.

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Source: Economic Times.India
GST council may look at reducing tax on third party insurance premium

GST council may look at reducing tax on third party insurance premium

The Goods and Services Tax (GST) Council may consider cutting the tax rate on payment of third-party vehicle insurance premium in order to “ease the burden on consumers”, The Times of India reported.

The newspaper quoted sources as saying that the Prime Minister’s Office (PMO) has asked the finance ministry (Department of Financial Services) to look into the issue and “prepare a proposal that can be placed before the GST council”.

Third-party insurance premium is taxed at 18 percent right now, and it is mandatory for every vehicle owner to have a policy.

“There was a unanimous view that the GST rate needs to be rate needs to be rationalised in this case since the vehicle owner has no choice than buying the policy,” a government official told the newspaper.

The GST council is expected to meet in the next 10 days to consider various contentious issues, including bringing petroleum and aviation fuel under its ambit.

Moneycontrol had earlier reported that the Insurance Regulatory and Development Authority of India (IRDAI) was considering cutting third-party vehicle insurance premium by 10 percent.

Commercial vehicle owners have been asking for a rate cut as the mandatory tax makes the vehicles expensive. They believe that a reduction in tax rate will also help increase the insurance cover, which at present is only 50 percent of all vehicles.

“Since it serves a greater social cause and has a large impact, we are still hopeful that the government will do away with the GST. This will bring down the premium of a big truck by Rs 5,000-7,000 on an average and will bring some relief,” Bal Malkit Singh of All India Motor Transport Congress told the paper.

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Source : Money Control
No GST on sale of properties with completion certificate

No GST on sale of properties with completion certificate

The finance ministry on Saturday said buyers of real estate properties for which completion certificate is issued at the time of sale will not have to pay GST. However, Goods and Services Tax (GST) is applicable on the sale of under-construction property or ready-to-move-in flats where completion certificate is not issued at the time of sale.

“It is brought to the notice of buyers of constructed property that there is no GST on sale of complex/ building and ready-to-move-in flats where sale takes place after issue of completion certificate by the competent authority,” the ministry said in a statement.

The ministry also asked builders to reduce prices of properties by passing on the benefit of lower GST rate to customers. “Builders are also required to pass on the benefits of lower tax burden to buyers of property by way of reduced prices/ installments, where effective tax rate has been down.”

Affordable housing projects, including the Jawaharlal Nehru National Urban Renewal Mission, Rajiv Awas Yojana, Pradhan Mantri Awas Yojana or any other housing scheme of state governments attract 8% GST, which can be adjusted by builders against its accumulated input tax credit (ITC), the ministry said.

“For such (affordable housing) projects, after offsetting ITC, the builder or developer in most cases will not be required to pay GST in cash as the builder would have enough ITC in his books of account to pay the output GST.”

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Source: Live Mint
Govt clears Rs 91,149 cr GST refunds to exporters so far; Rs 6,053 cr still pending

Govt clears Rs 91,149 cr GST refunds to exporters so far; Rs 6,053 cr still pending

The finance ministry said Rs 91,149 crore has been issued so far to exporters as GST refunds, which are 93.77 percent of total claims with the tax authorities.

In a statement, the ministry said Rs 6,053 crore worth GST refund is still pending with the government and that is being “expeditiously processed”.

“Total GST refunds to the tune of Rs 91,149 crore have been disposed of by CBIC and state authorities out of the total refund claims of Rs 97,202 crore received so far. Thus, the disposal rate of 93.77 per cent has been achieved,” the ministry said.

 Giving break-up for the refund figures, the ministry said that Rs 48,455 crore of IGST refunds has been disposed of as on November 28, which is 95 per cent of the total such claims.

As much as Rs 2,473 crore worth of IGST refund claims is held up on account of “various deficiencies” which have been communicated to exporters for remedial action.

With regard to refund of input tax credit claims, the ministry said of the total claims of Rs 46,274 crore, the pendency as on December 3 stood at Rs 3,580 crore.

“Provisional/final order has been issued in case of (ITC) refunds amounting to Rs 37,406 crore. In claims amounting to Rs 5,288 crore, deficiency memos have been issued by respective GST authorities,” the statement said.

The ministry said pending GST refund claims amounting to Rs 6,053 crore are being expeditiously processed so as to provide relief to eligible claimants.

“Refund claims without any deficiency are being cleared expeditiously,” it added.

Efforts are being made continuously to clear all the pending refund claims, where ever requisite information is provided and found eligible, it said.

“Co-operation of the exporter community is solicited to ensure that they respond to the deficiency memos and errors communicated by Centre and State GST as well as Customs Authorities and also exercise due diligence while filing GSTR 1 and GSTR 3B returns as well as Shipping Bills,” the statement added.

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Source: Money Control.
GST collection: Couple of highs, but way short of Rs 12 trillion target

GST collection: Couple of highs, but way short of Rs 12 trillion target

The collections from goods and services tax (GST) was projected to be Rs 12 trillion in the current financial year. In other words, each month is expected to yield Rs 1 trillion from GST on an average. However, only two months — April and October — have so far hit the monthly target. In fact, average monthly target stood at Rs 970 billion in the first seven months of FY19. To meet the yearly target, each of the next five months has to yield Rs 1.107 trillion GST collections.

So far, none of the months have given this much revenue. In other words, average monthly revenues will have to rise at least 14 per cent in the next five months than what was achieved in the first five months to hit the target.

For fiscal deficit, Central GST is more important. CGST collections have to rise to Rs 3.4 trillion in the next five months against Rs 2.6 trillion in the first seven months. In other words, the average monthly CGST collections have to increase to Rs 60 billion in the next five months against Rs 37.7 billion in the first five to meet the budget target of Rs 6.04 trillion for FY19. The task seems impossible, even as the finance ministry seems confident that certain factors, such as e-way bill, will help it garner more CGST in the rest of the year than in the first seven months.

GST collection: Couple of highs, but way short of Rs 12 trillion target


Any fall in collections on CGST will not burden the Centre alone as 42 per cent of it goes to the states under the devolution formula. Experts believe that the Centre might get 50-60 billion less from CGST and integrated GST this FY against the budget projections, a development that will force the Centre to look for other avenues to augment its receipts to meet the fiscal deficit target of 3.3 per cent of GDP in FY19.

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Source: Business Standards.
Government Now Owns GST Network

Government Now Owns GST Network

With the onset of the new single uniform tax process which has subsumed a number of previous multiple tax regimes including excise duty, additional excise duty, service tax, value added tax, sales tax, octroi, luxury tax, etc. Goods and Services Tax (hereinafter referred to as “GST”) is a single tax on the supply of goods and services. It is essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with setoff benefits at all the previous stages.

Dual system of GST allows imposition of levies on goods and services. The collection of GST by Centre is covered under Central Goods and Services Tax (hereinafter referred to as “CGST”), while the States levy and collect the tax in accordance to the State Goods and Services Tax (hereinafter referred to as “SGST”).

The GST Network

GST Network (hereinafter referred to as “GSTN”) is a not for profit company established under the provisions of the Companies Act, 2013. It has been set up primarily to provide information technology infrastructure and services to the Central and State Governments, tax payers and other stakeholders for implementation of the Goods and Services Tax (GST). With the objective of providing a user interface shared with the Government, GSTN works to capture, processing and exchange of information amongst the stakeholders with view to ensure effective enforcement of GST laws.

New approach…

Uptil now the ownership stakes GSTN has been non-Government private limited company whereunder Centre and the states together held 49% interests. However, the Government on September 26, 2018 cleared a proposal to convert GSTN into a government-owned company.1

The new modification in the ownership orientation of GSTN aims to permit the Centre to own a 50% stake in the GST Network and the remainder will be held by the states on a pro-rata basis in the new entity.

The former structure of GSTN had been allowing majority shareholding to vest in the private sector expecting it to provide flexibility in its hiring and operational freedom. Faced widespread criticism after the portal crashed several times and businesses found it difficult to file returns, the Government evaluated for the need for transformation in the organizational setup and acquisition of the control of GSTN to forbid any failure of its purpose and goals. This modification in is expected to yield better result in terms of facilitation of compliance towards the novel taxation laws.

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Source: Mondaq

Author: S.S. Rana & Co. Advocates