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Govt records highest GST filing in October, Punjab tops the list in compliance

Govt records highest GST filing in October, Punjab tops the list in compliance

All eyes are on GST as Centre plans better social pension

The Goods and Services Tax (GST) Council’s efforts to sort out the sundry issues plaguing taxpayers during the initial rollout and the steady reduction in tax rates seems to be paying off in terms of compliance and tax collections. As many as 43.67 lakh businesses have filed the initial GSTR-3B returns for October, the highest monthly return filing within due date since the new tax was introduced on July 1, according to a GST Network statement. That’s around 56% of the registered taxpayers. Punjab saw over 73% taxpayers filing GSTR-3B returns, the highest among all the states.

In fact, there has been a steady increase in the number of taxpayers filing the initial sales return. Over 39 lakh returns were filed within due date for September compared to 28.46 lakh for August. This can be attributed to two major factors. “One is greater awareness and the fact that GSTR-3B is a simpler form. The second is that the GSTN portal has been performing much better, especially [for] GSTR-3B and GSTR-1,” said Pratik Jain, leader, indirect tax, PwC India in a quote to The Hindu. Incidentally, GST registrations overall has crossed 11 crore from around 60 lakh in late August.

Of course, given the typical Indian mindset of dithering till the last minute, November 20-the last date for filing the summary returns for the previous month without interest-saw over 14.7 lakh taxpayers log into the GST Network portal; a new record for maximum returns filed in a single day.

“But the gap between eligible taxpayers and those filing returns by the deadline has continued to hover around 30 lakh, which would be a concern for the government,” said Abhishek Jain, tax partner, EY to The Financial Express. Nonetheless, the numbers should fan the government’s confidence that GST will widen the tax base and yield higher revenue than ever before.


GST Ready Invoicing Software – Generate GST Compliant Invoice

Source :  Business Today in
Finance minister Arun Jaitley hints at further trimming of GST

Finance minister Arun Jaitley hints at further trimming of GST

Arun Jaitley : GST

Finance minister Arun Jaitley on Monday hinted at further rationalisation of goods and services tax (GST) rates, while slamming opponents who have been advocating a shift to a single-rate regime, in what was seen as a rebuff to Congress vice-president Rahul Gandhi.

“Rationalisation process in a transition (phase) will continue… Such rationalisation in future will depend on revenue buoyancy,” the finance minister said.

On Friday, the GST Council, led by Jaitley, slashed rates of over 200 items with the levy on 176 reduced from 28% to 18%, leaving just 50 in the highest slab. While state FMs have said this list will be pruned further, a change in lower slabs of 12% and 18% is also on the cards in the coming months.

Jaitley has repeatedly said over a period of time, these two rates will converge into one, something he reiterated on Monday but linked it to tax buoyancy.

Jaitley hopes GST rate cuts will reduce inflation

In what seemed to be a response to Rahul Gandhi’s claim+ that Congress will shift all products to a single bracket, Jaitley said: “Those who are speaking of a singlerate GST have no understanding of the tariff structure… they do not have elementary understanding of goods & service tax.”

With the rate cuts, the government is expecting the gains on a host of products — from cosmetics and razors to washing powder — to be passed on to consumers.

Jaitley said GST has brought down inflation. “This actually reduces inflation. This is one of the advantages of a more efficient tax system… Effectively, today, almost all items in the goods category are better off than they were prior to July 1,” he said.

The minister said that including central excise, state VAT and central sales tax, the levy on several items added up to 31%, which was reduced to 28% when GST was launched. Elaborating on it, he said the process of reduction in the top slab was under way since August. “This is a threefour month exercise… These are all consensus decisions of the GST Council and process started after GST implementation. It is juvenile politics+ to link it with either elections or political demands,” the minister said.

Also Read: GST Council prunes list of goods to be taxed at 28% to 50

He said the GST Council had opted for a structure where food items were exempted, while aam aadmi products were kept in the lowest bracket of 5%. “Wheat, rice or sugar can’t be taxed at the same rate as a Mercedes (car) or a yacht or tobacco. So, rates will have to be different.” In recent tweets and public meetings in Gujarat, Gandhi has talked about Congress reducing rates to under 18%, something that has been repeated by some of his party colleagues.

Jaitley said revamped filing mechanism that has been put in place, will ease the burden on taxpayers and going forward he wants the system to settle and apprehensions to disappear.

GST Ready Invoicing Software – Generate GST Compliant Invoice

Source :  The Times of India
Next step in GST recast: Lower end of tax slabs

Next step in GST recast: Lower end of tax slabs

Next step in GST

The next rejig of goods and services tax  (GST) will likely focus on the lower end of the rate slabs, as the country seeks to further streamline the structure by converging multiple rates into two or three. It will happen after the regime settles down and there is more clarity on revenue following the recast last week.

implification of laws, rules and procedures in line with industry’s feedback is also likely to top the GST Council’s agenda in the next few meetings.

The rates on some items such as cement and paint, still left at the highest rate of 28%, could be brought down if tax revenue remains robust.

A top official with a state government said the focus would now be to recast the lower 12% and 5% rate slabs.

Other issues to be considered by the council are inclusion of real estate and petroleum products under GST.

The government has set up a group with industry representation to review the tax regime, which has since its July 1 launch been criticised for having too many rates and being burdensome to comply with.

Also Read: Six Things You Must Know About the New GST Rates 

The latest recast, decided at a GST Council meeting in Guwahati last week, has seen the 18% rate emerging as the dominant slab with nearly half the goods, apart from most of the services, now taxed at that rate.

GST Councile meet towards better gst

The Guwahati meeting decided to move 178 items to the 18% rate from 28% and cut the GST on eating at restaurants to 5% from Monday, in a decision that would reduce tax revenue by Rs 20,000 crore.

It may have been possible to move some more goods to the 18% slab from 28%, but that would have resulted a bigger revenue loss. Officials said cement and paint alone would have cost the government more than Rs 20,000 crore had the two been moved a slab lower.

“We need revenue as well,” said the state government official.

But eventually, the 28% slab would be left with very few items, mostly in the luxury and sin-goods category.

Also Read: GST Council prunes list of goods to be taxed at 28% to 50

Other increasingly common-use items that are still in the 28% slab include air conditioners, refrigerators, washing machines, vacuum cleaners and digital cameras. In all, more than 50 items still remain on the 28% list.

A committee headed by chief economic adviser Arvind Subramanian had suggested a revenue-neutral rate of 15-15.5%, with a strong preference for the lower end of that range. It had recommended a standard rate — for services and most goods — of 17-18%, high or non-GST excise rate of 40% for items such as luxury goods and tobacco, and a low rate of 12% for essential goods.

With the latest recast, the rates have moved closer to this structure.

further recast of the 5% rate, moving some up to 12% and scrapping the tax on others will further simplify the GST structure.

Lesser rates will bring stability to the overall tax regime, said experts.

“GST needs to be a simple, transparent and stable tax system. Multiple rate slabs result in classification disputes as businesses attempt to classify their products in lower slabs,” said Pratik Jain, indirect taxes leader, PwC.

In most countries, including Australia, Malaysia and Singapore, there is one standard rate, or at best a lower rate in addition to a standard rate. “Single rate will remove complexity from the structure as also alleviate revenue concerns,” said Bipin Sapra, partner, EY.


Congress vice-president Rahul Gandhi in a tweet demanded that petroleum products and LPG cylinders be brought under GST.

He said the government should have a single rate that should not be more than 18%, and remove GST on products that the common man uses.

A day ahead of the council meeting in Guwahati, Congress-ruled states had demanded complete revamp of the GST structure.

Source :  The Economic Times

GST Network glitches: Traders body blames Infosys, demands CBI probe; company terms allegations ‘false’

GST Network glitches: Traders body blames Infosys, demands CBI probe; company terms allegations ‘false’

GST Network glitches: Traders body blames Infosys, demands CBI probe; company terms allegations 'false'
An association of traders has blamed Infosys for the glitches in the GST Network and demanded a CBI probe into its alleged negligences, a charge that India’s second-largest IT services firm vehemently denied.

Infosys in 2015 won a Rs 1,380-crore deal for developing and running Goods and Services Taxes backend, called GST-Network or GSTN.

The Confederation of All India Traders (CAIT) in a statement said it was “disgusted with the poor and dismal performance of GST portal” and held Infosys majorly responsible for it.

The traders body demanded a “CBI enquiry against Infosys and other companies who were assigned the work of creating, updating and maintenance of GST portal”.

Refuting the allegation, Infosys said they were “completely false”.

“Infosys is very proud to be associated with the prestigious GST project which is the largest tax project of its kind in the world. The system has already demonstrated success across several parameters,” it said in a statement.

Infosys, however, said a transformative large project has to deal with changes in both policy and stakeholder usability and some of these modifications have resulted in rapid changes to the system like its integration with Aadhaar and heterogeneous IT ecosystems.

Also Read: Steps to ease method of filing GST returns

“Given the complex nature of the project and rapid change management, there have been several stakeholder concerns that have also been raised. Some of our finest engineers are supporting the GSTN team as they work towards resolving these and serving all stakeholders,” it added.

CAIT said it needs to be investigated as to upon what conditions the work was awarded to Infosys and other companies and negligence in their part for non-performance of the contract.

“Even after four months of GST implementation, the GST portal which was supposed to function properly from July 1 itself is still working like an experiment project causing much harassment and concern to traders,” it said.

CAIT said more than three years and Rs 1,400 crore has already been spent on the portal with “no results”.

“The failure of the portal could be gauged from the fact that date for filing of GST return for even July month is extended upto November 30,” it said.

On the other hand, Infosys said the network has seen 37 crore invoices being uploaded till date while the system is designed to handle 300 to 320 crore invoices every month.

While 70 lakh tax payers have successfully migrated to the new system, 29 lakh new taxpayers have been registered.

“Central and state level tax regimes have been integrated with all 29 States and 7 Union Territories successfully migrating onto this system,” Infosys said adding the system has handled 1 lakh active users.

The system saw peak loads during the last two days of filing, with 50 percent of the filings done in that time frame and 70 percent of the collection achieved with just 25 percent of server utilisation, demonstrating the systems ability to manage scale, it said.

CAIT demanded a third party audit into technical and other issues related to the portal. It asked the government to release a White Paper on date status of GST portal.

It claimed that the poor functioning of portal has brought bad name for a good taxation system like GST and utter frustration to the traders who are mostly unable to make GST compliance on account of malfunctioning of the portal.

Ease Your GST Filing & Invoice with XaTTaX GST Software

Source : First Post
Here’s how much the govt panel recommends lowering of GST rates for SMEs

Here’s how much the govt panel recommends lowering of GST rates for SMEs

Here's how much the govt panel recommends lowering of GST rates for SMEs
There may be some good news for small and medium businesses as a ministerial panel has recommended the lowering of the goods and service tax (GST) rates for them. It is also looking to extend the benefits to more such units in an attempt to reduce their tax burden and improve compliance.

The GST Council will be meeting on November 9-10 and could accept the changes in order to provide relief to small enterprises, eateries and traders.

The ministerial panel proposes a 1% GST for traders, manufacturers and restaurants, instead of the 1%, 2% and 5%, respectively, according to a Live Mint report.

The panel further recommended the increasing the ceiling for eligibility to enterprises with an annual revenue of less than Rs 1.5 crore from Rs 1 crore earlier.

Also Read: GST Council may fix single tax rate for similar product categories

The GST Council had on October 6 took the decision to increase the current ceiling from Rs 75 lakh to Rs 1 lakh. It also extended the deadline for the signing up for the scheme to March 31, 2018.

The ministerial panel which made these recommendations include Assam finance minister Himanta Biswa Sarma, Bihar deputy chief minister Sushil Modi, Jammu and Kashmir finance minister Haseeb Drabu, Punjab finance minister Manpreet Singh Badal and Chhattisgarh minister of commercial taxes Amar Agarwal.

The panel has in its earlier meeting this month had proposed that there be no distinction between air-conditioned and non-air conditioned restaurants and that they should be taxed at 12% as against 18% now.

The report further quoted a GST Council official saying that the ministerial panel has recommended the GST Council let small traders pay either 1% on their revenue of taxable items such as loose rise, pulses, etc, are exempt from GST or 0.5% tax on the total turnover.

Also Read: Glitches in GSTR2 filing process a concern for cash flows

Sharma said that on the allowing of enterprises in the composition scheme to avail of input tax credits on business transactions, the panel could not reach a consensus and the matter will be referred back to the GST Council.

This lowering of GST rates comes after the government has come under severe criticism for the burden facing small business and traders over the implementation of goods & service tax and bringing more businesses under the tax bracket.

Source : Zee Business
Indirect taxes collection could fall short of target due to GST

Indirect taxes collection could fall short of target due to GST


Indirect taxes collection by the government may fall short of the target during the current financial year due to disruption caused by the GST rollout, Central Board of Excise and Customs (CBEC) chairperson Vanaja Sarna said on Sunday. For the fiscal year ending March 2018, the government had fixed a target of Rs 9.68 lakh crore for revenue collections from customs and goods and service tax. However, the CBEC chairperson said there was no plan to revise the revenue collection target for the year. The CBEC is the apex body for the administration of indirect taxes and forms part of the revenue department of the Ministry of Finance. The revenue collection target from customs and GST, which put together is Rs 9.68 lakh crore for the current fiscal, seems difficult for the department to achieve at the moment, keeping in view the recent GST rollout, the CBEC chairperson said in Mumbai.

Also Read: GST Council may fix single tax rate for similar product categories

She was talking informally to journalists on the sidelines of the half marathon organised by the customs department. Finance Minister Arun Jaitley also attended the event. However, Sarna said the government has made it clear that it has no plans to revise the target. Rather, it will wait for the GST rollout to settle down over the next five to six months. Goods & Service Tax was rolled out on July 1 Moreover, the department will not penalise traders for any default on tax payment at the moment, she said. Customs has done well but we have to wait till the GST rollout settles down, she added. In reply to a query, Sarna said close to Rs 200 crore has been disbursed by the department in the form of refunds to exporters so far. Right now, she said, the department wants to be a facilitator for the GST implementation. It is not our job to penalise traders at the moment. This is despite the fact that our intelligence officials are constantly keeping a close watch on the entire development related to goods and service tax, she added.

Ease Your GST Filing & Invoice with XaTTaX GST Software

Source:  Business Today
Inter-state supply may come under GST composition

Inter-state supply may come under GST composition

GST Composition scheme

The composition scheme for small taxpayers that offers easier compliance and a flat rate of tax looks set to be made more attractive as its ambit may be expanded to include inter-state supplies of goods. Besides, the facility of input tax credit may be made available under this scheme. A ministerial panel, led by Assam Finance Minister Himanta Biswa Sarma, is expected to finalise the contours of the revised structure in its next meeting on Sunday.

The five-member group of ministers (GoM) would meet representatives of small- and medium-scale industry on Sunday to seek feedback on improving the composition scheme. It would be the second meeting of the GoM, which decided to reduce rates for restaurants to 12 per cent from 18 per cent while withdrawing the input tax credit facility. The GoM’s decision would be put up to the GST Council at its next meeting in Guwahati on November 10 for approval.

“There was broad consensus in the meeting that the compliance burden needs to be reduced for small and medium enterprises in the GST. Taking the discussion forward, we will deliberate on extending the composition scheme to those undertaking inter-state supply of goods. This is a key demand from the sector,” said a state minister who is part of the panel.

He added the input tax credit facility may also be made available under the composition scheme in order to make it easier for smaller players to opt for it. “Many small and medium players are hesitant about opting for the composition scheme as they worry that large players will stop buying from them. This needs rectification,” he said.

“If input tax credit is to be given, the contours of the scheme will need to change wherein composition dealers will have to show tax on invoice and file regular GST returns, unless some kind of a deemed credit mechanism is worked out,” said Pratik Jain of PwC India.

Also Read: More relief for SMEs as GST Council set to reduce late filing penalties

The ministry of small and medium enterprises has been asked to discuss with industry representatives what they expect from the composition scheme and what more can be done to make it more attractive.

Inter-state supply may come under GST compositionThe other members of the GoM are Bihar Deputy Chief Minister Sushil Modi, Jammu and Kashmir Finance Minister Haseeb Drabu, Punjab Finance Minister Manpreet Singh Badal and Chhattisgarh Minister of Commercial Taxes Amar Agrawal.

The ministerial panel would look into whether the turnover of exempted goods can be excluded from the total turnover threshold for levying tax in the composition scheme. The final decision would be taken in the upcoming meeting ahead of the GST Council meeting.

The council, chaired by Union Finance Minister Arun Jaitley, raised the eligibility threshold for the composition scheme to an annual turnover of Rs 1 crore from the current Rs 75 lakh at its last meeting. The scheme offers a flat rate of tax and quarterly filing of tax returns. The window, that ended on October 1, has been extended till March 31. The scheme already received extensions twice earlier.

In the scheme, a trader pays the GST at one per cent, a manufacturer at two per cent and a restaurant owner at five per cent, but they are not allowed input tax credit.

So far, 1.5 million registered entities have opted for the composition scheme, which amounts to a sixth of 8.9 million GST assesses.

Anyone availing of the scheme cannot claim input tax credit. Such a dealer cannot issue a tax invoice. Hence, someone buying from a composition scheme dealer cannot claim input tax on the goods bought. Besides, one cannot undertake inter-state supplies in order to opt for the scheme.

Also Read: GST refund claims for exporters for August, September to start this week

A composition scheme dealer needs to furnish one return, i.e. GSTR-4, on a quarterly basis, and an annual return, Form GSTR-9A, as against three forms every month by a normal taxpayer. Besides, there is no requirement of invoice-wise details or HSN (harmonised system of nomenclature) codes in their returns.

The scheme is not available to manufacturers of tobacco and tobacco substitutes, pan masala and ice cream. Revenue Secretary Hasmukh Adhia had said in an interview to PTI that the government was considering easing the compliance burden on small and medium enterprises. “There is a need for harmonisation of items chapter-wise and wherever we find there is a big burden on small and medium businesses and on the common man, if we bring it down, there will be better compliance,” the report cited Adhia as saying.

At the previous GST Council meeting, small taxpayers with up to Rs 1.5 lakh turnover were extended the option of quarterly tax payment and filing of returns. Around 94-95 per cent of tax revenue comes from big taxpayers.


GST Ready Invoicing Software – Generate GST Compliant Invoice

Source :  Business Standard
GST rates need to be overhauled to reduce burden on small firms : Hasmukh Adhia

GST rates need to be overhauled to reduce burden on small firms : Hasmukh Adhia

Govt planning steps to ease GST compliance burden on SMEs: Hasmukh Adhia

Policymakers are considering steps to ease the compliance burden related to the goods and services tax (GST) on small businesses and to make product classification for taxation less complicated, said revenue secretary Hasmukh Adhia.

The simplification process may result in some readjustment of tax rates, including a possible reduction in some items that attract the highest tax slab of 28%.

Products are now classified into various subcategories—in many cases, different subcategories fall in different tax slabs—under a code called the harmonized system of nomenclature (HSN) that existed before GST was implemented on 1 July. Such a detailed classification is hard to follow for small and medium enterprises (SMEs).

Addressing concerns of SMEs and harmonization of items for better tax compliance is on the agenda, Adhia said in an interview.

Also Read: Items In 28% GST Rate Slab Needs To Be Pruned, Says Hasmukh Adhia

News agency PTI reported on Sunday said that the government is considering easing the compliance burden on SMEs. “There is a need for harmonization of items chapter-wise and wherever we find there is a big burden on small and medium businesses and on the common man, if we bring them down, there will be better compliance,” the report cited Adhia as saying.

The government’s willingness to calibrate the GST system is significant considering that tax compliance has been below expectations in the first three months since the new indirect tax was introduced. An easier compliance regime for SMEs is unlikely to impact the exchequer adversely as the lion’s share of indirect taxes comes from large corporations.

Mint reported on Saturday that a little over 3.94 million assessees paid the GST and filed returns for the month of September, slightly more than the 3.76 million returns received for the previous month.

The finance ministry had earlier said that it had expected 6.8 million returns for August.

“Adapting the HSN code to make it simpler will help everyone in the industry, especially SMEs. It could also result in rationalization of tax rates, including a possible reduction from the highest slab,” said Pratik Jain, partner and leader of indirect taxes, PwC India.

The GST Council is working on addressing the concerns of SMEs. A ministerial panel, which has been tasked with finding ways of making a liberal quarterly tax payment scheme for SMEs, is expected to meet on 29 October before presenting its proposals to the GST Council for approval. The council is scheduled to meet on 9 November in Guwahati.

Members of the ministerial panel include Assam finance minister Himanta Biswa Sarma, Bihar deputy chief minister Sushil Kumar Modi, Jammu and Kashmir finance minister Haseeb Drabu, Punjab finance minister Manpreet Singh Badal and Chhattisgarh commercial taxes minister Amar Agrawal.

Policymakers are focusing on easing the problems faced by SMEs as the tax reform implemented within a year of last November’s demonetization has rattled this segment, a major source of employment in the country.

SMEs also play a large role in economic growth, accounting for about 95% of industrial units in the country and about 40% of value addition in the manufacturing sector. According to a government survey published in 2011, SMEs account for about 80 million jobs in the Indian economy.

GST Ready Invoicing Software – Generate GST Compliant Invoice

Source: Live Mint

GST: Key questions and concerns

GST: Key questions and concerns

GST- Key questions and concerns

Four months since the launch of the goods and services tax (GST) a number of concerns and questions remain:

States’ rights

The GST Bill has not infringed on the rights of the state legislatures. In fact, the amendments to the Constitution have been made by consensus and all states have agreed to the GST scheme. It is also gratifying that all decisions of the GST Council have been unanimous so far. The state legislatures have obviously agreed to the GST scheme because the levy of value-added tax (VAT) on alcohol and petroleum products has been left out of it, whereby a substantial part of the revenue accruing to the states continues to be protected as state subjects. At the same time, accommodating the demands of the states has weakened the GST regime by making it complicated. It has also resulted in very high rates of taxation including GST rates of 28 percent and above.

Exemption limit

The announced exemption for firms with a turnover below Rs 20 lakh is very low and will not ensure the protection of the informal sector. Further, the reverse charge mechanism (RCM) is a serious blow to the informal sector and it has reportedly resulted in very small units being affected since larger units are reluctant to buy from them because of the RCM. Fortunately, this mechanism has been postponed until March 2018.

GST and GDP growth

The GST scheme was expected to increase GDP growth. But the complicated structure and the initial infrastructural problems have resulted in several units of all sizes facing difficulties in compliance. There are also reports that the manufacturing sector has experienced a slowdown and exports have been affected because of goods and service tax issues. The need for payment of the GST at the outset and for claiming the refund at a later point in time has also impacted cash flow. For the present, the GST scheme will not give any boost to GDP growth.

Gold bullion, real estate, and alcohol

Traditionally, the bullion and jewellery sector has been subjected to very low rates of tax because of difficulties in compliance and the largely unorganised nature of business in this area. The tax rate of 3 percent is a continuation of a similar rate that prevailed at an earlier point in time.

As far as the real estate sector is concerned, there is no justification for keeping it outside the ambit of the GST. Indeed, housing is an extremely important segment of the economy and including housing in the GST would have benefited housing projects for weaker sections. By excluding housing from the GST, the cost of individual apartments is bound to go up and this will particularly hit the lower middle class. When all inputs like cement and steel are subject to the GST and when renting of immovable property is also subject to the GST, there is no justification in disallowing GST on the ground that the houses which are constructed are immovable property.

At the same time, alcohol was kept out of the GST because of political compulsions and because it is a substantial source of revenue for most states. They would not have parted with the right to levy taxes on potable alcohol and without this concession the GST would not have been possible.

Gainers and losers

At present, it is still uncertain as to who will gain or lose in the long run from this major tax reform. It is likely that large sectors may benefit because of input credit on both goods and services and elimination of interstate trade barriers. This is a theoretical advantage but may get partly affected because of complex legal structures. For example, the e-way bill may create problems in transportation which will offset any benefit that has arisen because of abolishing octroi/entry tax or check posts. At present, the informal sector units are affected by the GST scheme as they do not have the capability of electronically complying with complex procedural requirements. Further, serial classification disputes are also likely to arise because of multiple tax rates.

Simplifying the tax system

The tax system will have to be simplified; the present complex system cannot continue. There is already an indication that multiple tax rates will have to be reduced and the maximum rate has to be brought down. Unless there is the procedural simplification, the compliance costs will become quite heavy. There is a need to eliminate several provisions which do not serve any purpose. For example, the need to file three monthly returns is a provision which does not exist anywhere in the world and there is no reason why Indian businesses should be burdened with this onerous requirement.

Are we ready for GST?

India was not ready for GST on 1 July 2017. It would have been better if the GST had been introduced on a trial basis or like a pilot project and then suitably amended to ensure a relatively painless transition to the new regime. Unfortunately, the entire nation was required to shift to a completely new regime which was procedurally complex. There was inadequate electronic infrastructure both with the assessees as well as the government. Further, frequent changes in the rules and rates of duty added to the difficulty in having a workable software system. It is hoped that these technical problems are sorted out in the next few months.


Originally Written By Mr Arvind Datar (senior advocate and legal scholar)
Source: Idea For India
Rs 8,000 cr released to states for GST related revenue shortfall: Revenue Secretary

Rs 8,000 cr released to states for GST related revenue shortfall: Revenue Secretary


There have been few national-level complaints over businesses tending to profiteer after the goods and services tax (GST) roll-out and so the proposed authority to check such practices might not be required, revenue secretary Hasmukh Adhia said on Thursday. In an exclusive interview with FE, he also said more than Rs 8,000 crore has already been released to the states for their GST-related revenue shortfall for July-August period, as “almost all states except one or two” have sought the constitution-guaranteed succour.

Calling invoice-matching the “heart” of GST, the official said it would have to start in right earnest sooner rather than latter, although the GST Council was still open to relaxing the schedule for filing the comprehensive returns (GSTR-1, 2 and 3) and concomitant invoice-matching after learning from the July cycle that is underway.

The review could mean that even larger businesses that are now filing returns on a monthly basis could get leeway to upload bills on the GST Network after longer intervals, say quarterly or half-yearly. Recently, the council allowed firms with a turnover below `1.5 crore (over 90% of the taxpayer base) to move to quarterly-filing mode from October.

Asked how much of the Rs 65,000 crore transitional credit claimed against input taxes (excise/service tax) paid in pre-GST regime was allowed against the claimants’ July GST liability, the revenue secretary said that these credits were difficult to segregate from the fresh credits for July purchases.

However, he added that the whole transitional claims will be exhausted “in six months” (starting July). “Some people may not have a big (tax) liability so they could continue (to utilise transitional credit)

for a few more months and reduce (government) revenue in the period to that extent,” he said.

Without hazarding a conjecture on the revenue potential of the GST in the present form, as “we may have to wait for at least six months” to make a reasonable conclusion, the secretary said the proposed rate convergence would not happen this year. On the highest GST rate of 28% (applicable on 19% of items under GST when it was launched in July; the rates were cut on a few subsequently) being pinching, he said: “We may move items from higher to lower tax slabs on the basis of certain principles enunciated in the approach paper approved by the council. A fitment committee will work on it and its proposals will be considered in the council.” However, he added that the council hasn’t yet started working on more rate cuts as the approach paper was approved only in its last meeting on October 6.

Asked whether it wasn’t a matter of concern that 40% of the 55 lakh businesses that filed the interim returns for July had paid nil tax, Adhia said it indeed was. “It is a large number. If enforcement is required, we will carry it out, but not in the nature of search and seizure. We may carry out discreet inquiries and hold meetings with such groups of taxpayers, trying to find out the reasons (for claiming no business activity).”

The official admitted that once invoice-matching is regularised, it could prove a bit painful for a couple of months or so (as deferment will have resulted in some accumulation), but the system will be a powerful deterrent to non-compliant suppliers as they “run the risk of being pushed out of business permanently”. “Such suppliers will be recorded and based on who is defaulting and how much, we will issue compliance rating to them. A buyer will then look at the rating and if it is bad, might decide not to buy from the seller. It is a self-policing system.”

Also read: Are businesses really facing problems or is it just another political stunt with GST?

Adhia hinted at the redundancy of dreaded Anti-profiteering Authority, considering the nature of complaints and their resolution so far. “Whatever (complaints) we have got are from restaurants and real estate and these too are small in nature. There are no national level complains as of now. If a state receives a complaint, it will be examined by the screening committee at its level and the complaint will come to the standing committee (at the Centre) only if the screening committee finds merit in it. The standing committee could refer the matter to the DG-safeguards which, upon probe, could refer to the authority,” he explained. The GST Council has cleared the setting up of the authority, but it is yet to be approved by the Union Cabinet, let alone take shape.

While about `15,000 crore has been collected via the GST cesses on demerit goods in the July-August period, the funds released to the states were lower at just over `8,000 crore. But Adhia hastened to add that the cess proceeds might not be in surplus. Because of the transition, states saw buoyant VAT revenues in July and almost the entire revenue shortfall for the first two months of GST was of August, he said, adding that cess revenue might even fall in the coming months.

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Source :  FInancial Express