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GST: Evasion, returns and revenue boosting measures to feature at officers’ meet Monday

GST: Evasion, returns and revenue boosting measures to feature at officers’ meet Monday

Tax officers from the states and the Centre will get together for a day-long meeting on Monday to discuss administrative, legal, revenue and implementation-related issues under the indirect tax regime.

This will mark a first of its kind interaction between central and state tax officers, delinked from the agenda of the Goods and Services Tax (GST) Council meeting. Usually, officer-level meetings have always taken place a day before the GST Council meetings, mainly to discuss measures outlined in the Council’s meeting agenda.

As slowing revenues under the GST have become a concern, officials from the states and the Centre will discuss measures for anti-evasion, revenue augmentation, compliance, returns filing and online system, officials said. The rates of goods and services will, however, not be discussed since those pertain to the GST Council, they said.

Officials said this meeting would be more broad-based, wherein states and the Centre would have a common platform to discuss measures to streamline and regularise many pending issues under the GST. The tax officials are expected to take up issues related to e-way bills, delay in filing returns, IT matters, pending legislative changes, and methods to ensure greater coordination between states and Centre under GST, they said.

“This method to have a common platform for discussion between states and Centre is being tried for the first time. The idea was not to club it with a GST Council meeting and have an open agenda meeting. This was felt necessary so as to develop a mechanism for similar discussions going ahead. The officer-level meetings before Council meetings, otherwise, have too many agenda items and not everything gets discussed in detail,” one of the officials said.

Apart from the administrative- and implementation-related issues, pending legal changes would also be discussed. Another official said many states have not followed up on the amendments in the Central GST (CGST) Act with changes in their respective State GST (SGST) Acts, so much so that in some places there is a time lag of six months. “Such issues need to be prioritised since they are creating a hurdle in proper implementation of GST and would be raised in the meeting,” the official said.

The plan to hold this meeting comes even though the Council last month constituted a committee of officials from states and the Centre for revenue augmentation and looking into wider range of reforms such as systemic changes in the GST, including checks and balances to prevent misuse, measures to improve voluntary compliance, improved compliance monitoring and anti-evasion measures. The committee, which was earlier supposed to submit its report within 15 days, has so far met only once and is now likely to be given an extension of 1-2 months, officials said.”The committee has a wide range of topics in its terms of reference, so it would take time,” an official said.

GST collections in October contracted by 5.29 per cent to Rs 95,380 crore from Rs 1,00,710 crore in the year-ago month, marking the third instance of a contraction since the July 2017 roll-out of the indirect tax regime.

Source: indian-Express

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Nirmala Sitharaman promises further GST simplification to help India improve business ranking

Nirmala Sitharaman promises further GST simplification to help India improve business ranking

Finance minister Nirmala Sitharaman on Thursday said efforts will be made to further simplify goods and services tax (GST), and expressed hope that it will help in further improving India’s ranking in the World Bank’s ease of doing business index.

India has jumped 14 places to rank 63rd out of 190 countries in the World Bank’s ease of doing business 2020 report on account of significant improvement in resolving insolvency and obtaining construction permits.

The other parameters where the country has done well include trading across borders, registering property, paying taxes, getting electricity connections and starting a business.

However, the improvement in the remaining three parameters — getting credit, protecting minority investors, enforcing contracts — are not impressive.

Sitharaman said that the effort will be now to achieve the target to reaching within top 50 rank.

She added that as there is just one rank improvement in the parameter of starting a business, enough effort will be made to improve on this scale, as it is a “very critical” in a cycle of an industry.

“In GST, it is an ongoing process to understand where the difficulties are…We are also looking at what were the glitches in using online filing of returns. So, GST is an ongoing process in improving. Even now for the next meeting, as and when it happens, we want to make sure that several steps are taken to simplify compliance,” she said.

On income tax front, she said: “At this stage, there may not be much to say.”

The minister also said from next year two more cities – Kolkata and Bengaluru – will be included in the preparation of the ranking index. Currently, the report covers Delhi and Mumbai.

“Till now two cities in India were covered all these years. For a large country and regional diversity being so distinct, we were impressing upon the World Bank that having just two cities may not be adequately representative. So, from the coming year Kolkata and Bengaluru will be added to the list of cities,” she told reporters here.

With this, the World Bank will take views of industry from these two cities while formulating the ranking index.

The minister said that there is a significant jump in the parameter of resolving insolvency, “but that does not make me complacent”.

“We have to go within top 50th. So, all efforts from now will be moving in that direction,” she said.

She added that on obtaining electricity connection parameter, work has to be done at state level.

“In trading across borders and registering property, improvement can be even much more,” the minister said.

Speaking on the parameter of getting credit, chief economic adviser Krishnamurthy Subramanian said the current outreach programme being undertaken by the banks has helped in improving credit access.

“Close to Rs 80,000 crore credit has been given, of which 43 per cent is new term loans. One lakh MSMEs have been sanctioned loans close to Rs 8,500 crore, three lakh loans to agri, which is close to about Rs 4,600 crore,” Subramanian said.

India has continuously improved its ranking from 142 in 2014 to 63rd this year – out of 190 countries, which are ranked by the bank’s ‘Doing Business’ 2020 report.

Source: Times-Of-India.

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23% GST payers can file returns via SMS from April

23% GST payers can file returns via SMS from April

One in five GST payer will get away without having to file monthly or quarterly returns from April. Instead of filling up the form online, all that those with ‘Nil’ returns will have to do is to send an SMS to a specified number and confirm it using a one-time password.

The move is part of the overall exercise to simplify compliance as many of the ‘Nil’ return filers, who account for almost 23% of the 1.2 crore GST base, had registered to be eligible for contracts from government and other agencies but do not undertake any business.

Once the new returns kick in from April, over 70% of those registered for GST can make do with quarterly filing of returns as their turnover is less than the specified level of Rs 5 crore. “Only 7% of the taxpayers with annual turnover of over Rs 5 crore will have to file monthly returns,” said Prakash Kumar, chief executive of GST Network that provides the IT backbone for the indirect tax regime and has developed the new forms.

More than 51% of the taxpayers can use the SMS-based compliance tool or opt for Sahaj, the form meant for those entities with B2C transactions and have an annual turnover of less than Rs 5 crore.

GST, which was launched over two years ago, had faced severe criticism as businesses, especially the smaller ones, complained of stiff compliance burden that required three-stage filing. Through the new forms, the government has sought to reduce the compliance burden with smaller businesses required to file quarterly returns, although taxes will have to be paid on a monthly basis.

Source: Times-of-India

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GST Network starts online refund processing

GST Network starts online refund processing

GST Network, the IT backbone of the indirect tax system, on Thursday unveiled an online refund process as decided by the GST Council.

With the deployment of online refund functionality, taxpayers can now file refund application (in RFD 01 form) easily and tax officers can process the same online, GST Network said in a statement.

All communications between taxpayers and tax officers will also be online. The online refund process has become effective from September 25, 2019, on the GST portal, it said.

Earlier, the refund processing was done for both Central and State GST by one tax authority to whom the taxpayer was assigned administratively but disbursement was done by accounting authorities of central and state tax departments separately.

This was leading to a delay on account of sharing of sanction order with counterparty accounting authority through that tax authority, it said.

The new system has done away with this and after processing is completed by the tax officer, the sanctioned amount will get credited to the bank account of the Taxpayer through PFMS System, it said.

GST Network CEO Prakash Kumar said the new refund process will create a seamless experience for both taxpayers and tax officers.

“This will boost the disbursement speed of refunds and further improve the GST compliance. Taxpayers can view the various stages of processing of their refund application on the GST Portal and can give replies to notice, if any, online on the GST Portal now,” he said.

They will also be given information via SMS and Email, at important stages of processing of their refund application, he said, adding most importantly, the payment of amount will now be done from one disbursement authority i.e. PFMS unlike the earlier method where sanction was done by one authority but payment was made by State and Central Authorities separately.

Meanwhile, all refund applications filed before September 26, 2019 will be processed manually as done under the old refund process.

Source: Live-Mint.

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GST compliance regime not yet simple, says CAG

GST compliance regime not yet simple, says CAG

The government has failed to put in place a simplified tax compliance regime and non-intrusive e-tax system remains elusive even after two years of the Goods and Services Tax’s (GST) roll-out, according to official auditor, Comptroller and Auditor General of India (CAG).

“The complexity of return mechanism and the technical glitches resulted in roll back of invoice-matching, rendering the system prone to ITC frauds. Thus, on the whole, the envisaged GST tax compliance system is non-functional,” the CAG has said a report tabled in Parliament on Tuesday.

The new indirect tax regime had kicked in July 2017. The transformation tax structure is aimed at reducing tax cascading, ushering in a common market for goods and services and bringing in a simplified, self-regulating and non-intrusive tax compliance regime.

The CAG said that one significant area where the full potential of GST roll out has not been achieved is the roll out of the simplified tax compliance regime.

While it was expected, the auditor said, that compliance would improve as the system would stabilise, all returns being filed showed a declining trend of filing from April 2018 to December 2018.

According to the report, the filing percentage of GSTR-1 returns (monthly returns on outward supplies) were throughout less in comparison to the corresponding filing of GSTR-3B returns (summary self-assessed return). The introduction of GSTR-3B resulted in filing of returns with ITC claims which could not be verified and it appears to have disincentivised filing of even GSTR-1.

“Since filing of GSTR-1 is mandatory, short-filing is an area of concern and needs to be addressed,” the CAG noted.

GSTR-3B being only a summary return, short-filing of GSTR-1 implied that the tax departments did not have complete invoice level details as filed by the suppliers, which could be used to verify details given in GSTR-3B or to arrive at turnover.

During the audit, the CAG found that system validations were not aligned to the provisions of the GST Act and as a result, there were some crucial gaps in the registration module. Among various gaps, the system failed to validate and debar ineligible taxpayers from availing Composition Levy Scheme.

Source: Economic-Times

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GST Council mandates e-ticketing for cinemas, industry players say no impact on business

GST Council mandates e-ticketing for cinemas, industry players say no impact on business

Last week during the 35th GST Council meeting, electronic ticketing system was made mandatory for multiplexes. The move is to keep a check on possible Goods and Services Tax (GST) evasion and to put an end to the sale of coloured tickets that a few cine complexes are still using.

According to the GST Council, multiplexes will be required to issue a tax invoice electronically and for this purpose, the electronic ticket issued by them shall be deemed to be a tax invoice.

So, what does the government mean by e-ticketing?

E-ticketing means computerised ticketing. A computerised ticket is where the information can be stored digitally.

There are operators that issue manual coloured-paper tickets. Despite, having GST numbers, it has been difficult to track the tax calculation.

Hence, the GST Council has asked all multiplex operators to maintain a digital record of all the transactions, which is possible only when they issue computerised tickets.

The council has mandated mentioning the GST invoice number, the GST number and the SAC code (Services Accounting Code) in the computerised ticket. This would help in the digital storage of the aforementioned elements, making it is easy to monitor and pull out data as compared to manual tickets.

While the move will bring greater tax compliance, the question is how will it impact multiplex players?

Talking to Moneycontrol, Mukta A2 Cinemas Business Head Sachidanand Shetty said, “The impact will be positive as we’d have to do away with the dependency on manual tickets. We’re already e-ticketing compliant.”

He added that the move is a step towards realistic sales with better control and swift reconciliation of box office revenue.

This means that selling GST compliant movie tickets will lead to transparency and it will tell the actual collection of the Indian film industry.

However, most of the multiplexes are already selling e-tickets.

According to Miraj Cinemas MD Amit Sharma, “E-ticketing is more symbolic in nature as over 90 percent cinemas and 100 percent multiplexes have already been doing e-ticketing for years.”

“Maybe the government is looking at it (mandatory e-ticketing for multiplexes) as a case model for other B-to-C (business to customer) places for implementation.”

Inox Leisure, one of India’s largest multiplex chains, is also e-ticketing complaint.

Inox Leisure CEO Alok Tandon said, “We have been issuing computerized movie tickets ever since Inox’s inception due to which making ticketing and billing systems GST compliant was a matter of hours for us.”

“100 percent of our ticketing is computerized and GST compliant as it bears all the details like GST number, GST Invoice number and the SAC code,” he added.

Impact of mandatory e-ticketing on online ticket booking business

On whether mandatory e-ticketing will have an impact on the online movie ticket booking business, Shetty said that it “should boost the same by about 5 percent to the current sales of Mukta A2 Cinemas.”

“While multiplex chains more or less follow the same in all markets – Tier I, II and III – now the new rule will ensure compliance all across,” he added.

In terms of online ticket sales, Inox sells 40-50 percent tickets online whereas, Mukta A2 cinemas is in the range of 35-40 percent.

Multiplexes are welcoming the move saying that e-ticketing will help maintain records in a digital manner, leading to more accurate computation of industry revenue and estimation of due taxes to be levied.

TRA Research CEO N Chandramouli, however, has pointed out another aspect of this move.

He said, “While better tax compliance has been the objective of all governments, from even before democracies were popular, today it has become rigid, inflexible and obdurate.”

“Tax is an earning of the government for services it provides, but businesses are left helpless if they have no room to negotiate the services they get for taxes they pay. If businesses become afraid of doing business because of the tax regime, I think the purpose is defeated at all ends,” he added.

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Source: Money-Control.
FADA to GST Council: Charge late fine on net tax liability, not gross

FADA to GST Council: Charge late fine on net tax liability, not gross

The Federation of Automobile Dealers Associations (FADA) has written to the GST Council, asking that the interest charged on automobile dealers in case of late GST payment, should be calculated on net tax liability instead of gross liability.

The association said interest charged on gross amount in an event of late payment has led to undue hardship to dealers across the country, who are already under pressure due to poor sales and high interests on loans for operational purposes.

FADA president Ashish Harsharaj Kale said many small businesses located in tier 2 and tier 3 towns face difficulties in GST compliances due to system mismatches. “We have requested that the interest provided should be calculated on net tax liability instead of gross tax liability which will help auto dealers in ease of doing business,” Kale said.

The proposal to charge interest on net of ITC value instead of gross had been already recommended by the GST Council in its 31st meeting held in December 2018. However, the same could not be passed due to Parliament dissolution for four months.

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Source: Financial-Express.
GST compliance: Govt plans to go easy on businesses till polls

GST compliance: Govt plans to go easy on businesses till polls

Tax authorities have put on hold for a few months scrutiny of goods and services tax (GST) compliance by businesses and traders, despite a gaping hole in revenue receipts this fiscal year, and an ambitious 18% growth forecast for 2019-20. The authorities will, however, continue to collect data on transactions from various sources, which will be useful once enforcement measures are scaled up.

The pause on anti-evasion measures till early July will help the government in several ways, especially to avoid unsettling the business and trading community before the crucial national polls due in April-May, a government official said, requesting anonymity.

Besides, tax authorities will also have the annual returns, as well as audit report, for the first year (2017-18) of the tax reform by July. India would also have completed the two-year transition period of the largest tax reform since Independence.

“After the elections, enforcement will be stepped up. Now a long rope has been given. All data about registered businesses, the volume of transactions and those who do not file returns are captured by GST Network (the company that processes tax returns),” he added.

A scale-up of anti-evasion measures is crucial for the Union government to achieve the over 18% rise in total GST collection projected for FY20 at ₹7.6 trillion. The government lowered its projection for FY19 by a massive ₹1 trillion to ₹6.4 trillion in the interim budget.

Another senior official, who also spoke on the condition of anonymity, sounded more cautious about tax evasion measures. “We no longer speak in terms of ‘enforcement’. We speak about encouraging compliance. We have reduced tax rates. That itself will increase compliance. Besides, we have the data available about non-filers.” He added that central and state governments will take steps to increase compliance.

At present, only two-thirds of the 11 million businesses registered under GST—excluding the 1.7 million entities in the concessional flat tax scheme—file monthly returns. Officials said a key anti-evasion feature of GST—matching the invoices of buyers and suppliers—has now been suspended. Details of goods transported in the e-way bills, invoices of transactions, data captured by transport authorities and details of turnover declared in income tax returns filed by businesses will form a comprehensive set of data for the authorities to crack down on tax evasion.

“We know which registered business is not filing returns and who is short paying taxes. When the time is appropriate, we will hold them accountable,” the first official added.

Experts said it was only a matter of time before central and state authorities went on a drive against tax evasion. “The action on non-filers and those paying lower taxes compared to the transactions undertaken by them is expected to increase after the GST annual returns for 2017-18 are submitted by 30 June. This will also signify two years of GST and the government believes that enough time has been given to businesses to settle down and become compliant,” said M.S. Mani, partner, Deloitte India.

Policymakers said the numerous rounds of tax cuts and rule changes, including the rollback of some of the anti-evasion provisions, such as invoice matching, was essential to make GST a workable model, from what was originally conceived as an ideal one. In the latest such move, federal indirect tax body, the GST Council, doubled the sales threshold for businesses to get registered to ₹40 lakh. This is expected to theoretically make about 2 million taxpayers eligible for opting out of registration, although many may prefer to stay put. Big companies prefer to source supplies from registered entities.

A third government official, also requesting anonymity, said ideally all businesses should be registered, but the process may have led to some pain. Also, small traders, who were not used to filing returns, had developed a mental block. “Besides, revenue receipts from small businesses are not significant. There has to be a balance in achieving the optimum tax base and in ensuring that compliance does not become too rigorous. Raising the turnover threshold for registration was the best possible way to do that.”


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Source: live Mint.
One lakh students to be trained in GST accountancy, govt to fund fees

One lakh students to be trained in GST accountancy, govt to fund fees

The Institute of Cost Accountants of India (ICAI) would provide training to about one lakh students on the soon-to-be-launched GST Accountants course, a senior official said Thursday.

The government is coming out with Goods and Services Tax (GST) Accountants course and plans to train about 1 lakh GST Accountants over the next one to one-and-half year.

The course fees would be fully funded by the Government of India, ICAI president Amit Anand Apte told reporters here.

The objective of the programme is to ensure that compliance as far GST is concerned increases especially in the SMEs sector, he said adding the intention was to serve the sector because there was a gap between availability of trained resources and requirements.

“GST Accountants programme will be launched very soon.. about 1 lakh accountants will be trained specifically on GST compliances.

We are working out the modalities with theMinistry of Corporate Affairs and the course would be tentatively launched by February end,” Apte said.

The biggest challenge before the government is that most of the SMEs are not able to comply with the provisions of the (GST) law because they are not equipped enough with right kind of trained accountants who can adhere to the various GST provisions, he said.

The concept is to train 1 lakh accountants across the country who will be able to serve the SMEs sector.

Once these accountants are trained they will be able to serve all the SMEs and the compliance from the field would also improve substantially, Apte said adding this proposal was discussed with the Ministry of Corporate Affairs and then taken up with NITI Aayog which has approved it.

The course content is almost ready and it would be a 50-hours classroom training.

Besides, there would be a 10-hour practical training wherein the government would impart live training in the form of computerized filing of the returns in various GST offices across the country, he said.

Those from commerce stream could undergo this course and an entrance exam would be conducted by ICAI shortly and those candidates who qualify the exams would be eligible to undertake this GST Accountants course, he said.

The course would be conducted through ICAI’s 98 chapters and about 300 extension centers across the country, he added.


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Source: Business standard.
CBIC to focus on taxpayers’ behaviour patterns to improve GST compliance

CBIC to focus on taxpayers’ behaviour patterns to improve GST compliance

Soon, GST officers will study the behavioural pattern of certain taxpayers to nudge them to comply with tax laws, in a departure from the current practice of focussing only on deterrent action to check evasion.

The Central Board of Indirect Taxes and Customs (CBIC) has set up a ‘Nudge Team’ to formulate a strategy on studying behavioural patterns of taxpayers and use segmented approach to encourage them to pay taxes, an official said.

The plan is based on ‘behavioural interventions’ or ‘non-deterrence approach’ adopted by countries like the UK, Australia and Mexico to frame policies and increase tax collections.

“On the basis of the behavioural pattern, the department will segregate taxpayers into different categories like ‘disengaged’, ‘resisters’, ‘triers’ and ‘supporters’,” the official told PTI.

Elaborating on the plan, the official said in cases of non-wilful defaulters, the tax department would adopt a soft approach to persuade them to comply with tax laws by sending them personalised emails reminding them about the default in tax payment cycle.

Efforts will also be made to educate these taxpayers about provisions like payment of taxes in instalments in case of liquidity crunch, and other benign provisions of the tax laws to enable them to comply with statutory provisions.

Those who do not comply with tax laws and deliberately evade their responsibility would be categorised as ‘disengaged’, while those who view the system as oppressive but can be persuaded if their concerns are addressed will fall under the category of ‘resisters’.

‘Triers’ will be those who are willing to comply but face difficulties in paying taxes due to various factors. ‘Supporters’ will be categorised as those who willingly comply with tax laws and support the system.

“Tax officers will adopt a different approach to deal with different categories of taxpayers based on behavioural pattern,” the official said, adding the ‘Nudge Team’ will sensitise the field officers about the new approach to persuade entities to comply with tax laws.

The first meeting of the ‘Nudge Team’ will be called soon by the Principal Director General GST to decide on the strategy to adopt the new approach at the field level. The official said that as part of the ‘behavioural interventions’, emphasis ought to be on social norms, perceptions of fairness and tax morale while maintaining a ‘non-deterrence’ approach.

Indirect tax reform Goods and Services Tax (GST) was rolled out on July 1, 2017. With GST systems now stabilising, the focus of CBIC is now on increasing compliance and checking evasion.


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