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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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Pay up interest for delay in paying GST refunds: Gujarat High Court

Pay up interest for delay in paying GST refunds: Gujarat High Court

The Gujarat High Court has directed the authorities to pay interest for delay in paying GST refunds.

The authorities were asked to pay the interest at the rate of nine per cent per annum.Saraf Natural Stone, a partnership firm, had filed a claim of GST refund. However, there was substantial delay by the authorities in granting of refund.

Following this, the firm approached the high court by way of writ and demanded interest from the authorities for the delay. It submitted that the authorities are required to grant a provisional refund of 90 per cent of the amount claimed within seven days of filing of the claim.

The firm said the authorities have not provided any reason for the delay and it was never in receipt of any deficiency notice, which could have transpired such a delay.

It further submitted that the delay has impacted its working capital and hence it is entitled to receive interest on such delayed payment.

However, the authorities — the revenue department, the Central Board of Indirect Taxes and Customs (CBIC) and the GST Network — submitted that there was no express provision made for entitlement of interest to the firm and hence there was no merit in this petition.

The high court held that the position of law is quite well settled wherein the provisions relating to interest on delayed payment of refund have been consistently held as beneficial and non-discriminatory.

Hence, it said the authorities are liable to pay simple interest on the delayed payment at the rate of nine per cent per annum.

Harpreet Singh, partner at KPMG, said, “This is an important development as often pending refund claims adversely impact working capital of exporters.”

He said the ruling should open doors for claimants who can now rightfully demand interest from authorities where there has been a substantial delay for no fault of the assessee.

Source : Business-Standard

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Fake invoices to evade GST pose a big challenge, tax officials looking at different strategies to curb menace

Fake invoices to evade GST pose a big challenge, tax officials looking at different strategies to curb menace

Faced with the big challenge of tackling fake invoicing in GST regime, tax officials are looking at different strategies to curb this menace and shore up revenue collections.

Central Board of Indirect Taxes and Customs (CBIC) Member (Investigation) had recently said that between April and February 2018-19, GST evasion to the tune of ₹20,000 crore was detected, of which ₹10,000 crore was recovered.

Officials estimate that evasion through fake and under-invoicing could be pegged at anywhere between one percent and five percent of the collection.

Tax officials at both the Centre and States have regularly been busting such rackets “This is just the tip of the iceberg,” said an official, who did not wish to be named.

CGST and SGST officials are also looking at the use of data analytics from the GST Network for variation in returns, variation in e-way bills and are also looking at trends in various sectors to understand where such evasion is taking place.

Setting up of fake cos

According to people in the know, one of the popular ways of generating fake invoices is setting up of fake companies to which businesses issue invoices for sales or by issue invoices to companies within the group or known persons for sales. Issuing invoices allow them to claim an input tax credit.

“Companies have to file annual returns by June 30, 2019, and these are likely to be taken up for scrutiny only by 2020. By then, many of these companies would have shut down or vanished,” said a person familiar with the development, adding that enforcement is a big challenge.

Invoice matching

One expert pointed out that there is no proper invoice matching under GST until now. Another handicap is that visiting the businesses premises prior to granting GST registration is not followed fully.

“There has to be a control on the invoice matching process to weed out fake invoices. While the introduction of an E-Way bill would have helped to some extent, there is a need to introduce non-invasive system level checks at this stage itself to ensure that the magnitude of the problem is curtailed,” said MS Mani, Partner, Deloitte India.

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Source:  The Hindu Business Line
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.
GST Return Filing: Why are central staff lagging states, asks Union Finance Secretary Hasmukh Adhia

GST Return Filing: Why are central staff lagging states, asks Union Finance Secretary Hasmukh Adhia

With the GST Network, the IT backbone for the goods and services tax (GST), turning out to be a repository of centralised data on taxpayer compliance, a facility that was not available in the previous regime, the performance of tax authorities has come into sharper focus. After reviewing the GSTN data,GST: Hasmukh Adhia Union finance secretary Hasmukh Adhia has recently written to the Central Board of Indirect Taxes and Customs (CBIC), lamenting that “the performance of central government officers in all states except Arunachal Pradesh is lower than the state government officers in return filing %age for the tax period April (up to 26th May 2018)”. Adhia asked the CBIC to review the performance of central government officers and to make sure that their performance is superior to those of state governments.

The finance secretary’s directive is seen against the backdrop of lower-than-expected buoyancy in GST collections. The number of filers improved from 63% of the taxpayer base in February to 69% in March and 72% in April, but the revenue is not growing fast enough to meet the Centre’s budget targets and most states still need compensation. The GST revenue for April (collected in May) came in at Rs 94,016 crore, 4.5% higher than the monthly average achieved in the last fiscal year. The central GST (CGST) collected for April was Rs 28,797 crore; assuming half the balance integrated GST collected for the month also goes to the Centre’s kitty, the CGST collection for the month may eventually go up to Rs 40,800 crore. However, even this figure is a fifth short of the budget estimate for CGST of Rs 50,325 core per month. As for state GST, Rs 34,020 crore was collected for April.

The Union finance ministry compared the performance of tax officials on four criteria: Percentage of return filing in April, revenue collection growth in April over an average of January and February, refunds sanctioned as a percentage of claims and registrations as a percentage of applications. Last year, the GST Council arrived at a formula for sharing of GST jurisdiction between the Centre and the states. According to this, 90% of taxpayers with annual revenue below Rs 1.5 crore come under the state government’s jurisdiction while 10% of them are with the central government. The remaining taxpayers are equally divided between the Centre and states.

An Indian Revenue Service official, speaking on condition of anonymity, said that one of the reasons for the poor performance of the Centre’s staff could be that in several states, the state-level officials had divided the taxpayer pool in a manner that those which are conventionally more compliant are with them.

However, several state government officials refuted this while speaking with FE. One official said that state officials have traditionally been more hands-on with taxpayers even in the previous tax regime than their counterparts at the Centre. For instance, he said, even a senior state official would not hesitate to call a non-compliant taxpayer and offer assistance in resolving issues while a central official might be content with sending notices to such assessees. The latter approach doesn’t always yield the desired results in nudging dealers to be more compliant, another official added.

“Any transaction under GST has a central and state component. While the Centre is assured of central GST component, the state GST component could accrue to a different state if the dealer doesn’t report the transaction properly. This ensures that state officials are more vigilant and scrutinise invoices closely,” a third official said, explaining the performance gap.

In his letter to the CBIC, Adhia also wrote that it was a mystery that the rate of refunds sanctioned could be more than claims as shown in cases of Jammu and Kashmir, Meghalaya, Daman and Diu, Dadra and Nagar Haveli, and Tamil Nadu.

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Source :  Financial Express

GST trouble: Assessees told to explain mismatch of ITC claimed in GSTR-3B, GSTR-2A

GST trouble: Assessees told to explain mismatch of ITC claimed in GSTR-3B, GSTR-2A

A large number of assessees under the GST have received notices from the tax department asking them to explain the mismatch of input tax credit (ITC) claimed in the self-declared summary return GSTR-3B GST trouble: Assessees told to explain mismatch of ITC claimed in GSTR-3B, GSTR-2Aand the auto-generated, but currently suspended, GSTR-2A. The notices have granted a period of 10 days to explain the discrepancy, failing which proceeding would be initiated against the taxpayers. Although the department has intensified its enforcement effort in the last month which is reflected in the spurt of notices received by taxpayers, it is the first time they have used a return form, which is not being used by taxpayers since it was suspended in November last year.

Also Read: What is Input Tax Credit under GST? And how to claim it?

GSTR-2A is generated by the system on the basis of information received from GSTR-3B and GSTR-1 (sales details). When the sellers of assessees file GSTR-1 in any particular month, its details are captured by GSTR-2A thus providing the details of purchases of the assessee concerned. Since ITC claimed in GSTR-3B should ideally match ITC available on all the purchases made by an assessee, a mismatch can be detected by comparing the details in these two forms.

However, experts say that a mismatch doesn’t necessarily implicate a taxpayer and several other factors could be responsible for the same. “Numerous reasons could be attributed to these discrepancies which include, contradicting circulars over a period of time, frequent changes in law, suspension of GSTR-2, technical incompetence at GSTN.

Policymakers need to assure that tax officer pursue such notices in a non-coercive manner and appreciate the practical difficulties faced by taxpayers in the filing of tax returns,” Rajat Mohan, partner, AMRG & Associates, said. In the past month, taxpayers have received notices for non-filing of GSTR-3B, and mismatch in details between GSTR-3B and GSTR-1. The latest batch of notices suggests that tax department is using all possible tools at its disposal to detect evasion, a tax official said.

Read More: Companies get scrutiny notices for the mismatch in GST returns

The tax department’s move of using GSTR-2 was expected among assessees and tax practitioners as reported by FE earlier. These assessees had also started using GSTR-2 and GSTR-2A to ensure that the ITC claimed in GSTR-3B was being reconciled. GSTR-2 helps them provide evidence of tax contents in the goods and services they consumed, and thereby validate the credits claimed.

The GSTR-2 form provides business details on the status of suppliers’ tax filing and gives the entity greater control over choosing a vendor. This also allows a firm to ensure that its suppliers are paying taxes on time so that it can claim ITC without any hurdle.

Taxpayers are now mandated to file only the outward-supply return GSTR-1 and a simple summary interim return GSTR-3B, with which they pay tax and claim input tax credits. Filing of comprehensive returns with the attendant invoice-matching facility was suspended following complaints. Taxpayers had complained of huge compliance burden and also the GST Network’s inability to handle the traffic. The widespread use of GSTR-2 is despite the GST Network not providing the facility of filing it right now.

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Source: Financial Express

 

GSTN to rope in private entities for tax payer profiling, fraud analytics

GSTN to rope in private entities for tax payer profiling, fraud analytics

GST Network has invited bids from private entities for “360-degree” profiling of Fraud Analytics : GSTNtaxpayers for early detection of fraud as it seeks to transform into an end-to-end platform for checking GST evasion, from being just a tax collection portal.

The analytics company to be roped in will have the mandate for designing and developing a Fraud Analytics System. GST Network has however barred Infosys from bidding for the project to avoid conflict of interest.

The system will take about a year to be operational and leverage existing data pertaining to GST registration, return filing and e-way bill, along with the information from other external sources such as Financial Intelligence Unit (FIU), Central Board of Direct Taxes (CBDT), banks and state tax departments.

According to the eligibility criteria, the interested bidder will need to have a turnover of Rs 300 crore and should have posted a profit in the past three financial years. Also, it should have experience in implementing Advanced Analytics, the GSTN said in the Request For Proposal (RFP).

The fraud analytics company would be tasked with establishment of taxpayer’s identity. “Based on information available within GSTN as well as third party information, it is expected to reliably establish the identity/360 degree view of the taxpayer and key members of its management,” said the RFP.

It would also establish taxpayer’s risk profile by analysing information on purchasers and sellers as part of returns data, whether the taxpayer deals with sensitive or evasion prone commodities, history of the owner of the company as well as a rapid change of promoters, among others.

The company, to be appointed for 6 years, would also be required to suggest ways to prevent revenue leakages and forecast revenue growth and other econometric analysis for policy formation.

It can also suggest changes in laws, rules/ procedures based on fraud detection to plug loopholes and identify material/evidences which may be shared with tax authorities for prosecution of fraudulent taxpayers.

To ensure that there is no conflict of interest, the GSTN has barred Infosys from bidding for the fraud analytics project.

Infosys had in 2015 won the Rs 1,380-crore deal for developing and running GSTN’s backend software and hardware. The indirect tax reform, GST subsumed over a dozen local taxes and was rolled out from July 1, 2017.

GSTN has in the bid document mandated that the bidder should develop adequate capability for data storage and calculating the complexity of data.

“In the near future, GSTN is likely to experience an ‘explosion’ in the amount of data in its transactional systems,” the GSTN said.

“The figure of data is likely to have quantum jump when the system such as E-way Bill data, external agency data like CBDT, information from banks, Ministry of CorporateAffairs, Shops and Establishments Department, other Government and non-government agencies etc. which will be integrated with the GST fraud analytics system,” it added.

To ensure full confidentiality of data, GSTN has mandated that the eligible bidder would have to ensure a separate section within their office premises for undertaking the fraud analytics project.

GSTN may also place one or two of its employee there for monitoring. “GSTN may, in case required, provide desktops and laptops for day-to-day operations for carrying out fraud analytics,” said the RFP.

Besides, the people involved in the project would not be allowed to “carry any storage device such as USB sticks etc. to GSTN premises”.

The GST Council, chaired by Finance Minister Arun Jaitley and comprising state counterparts, last week approved converting GSTN into a wholly owned government company. Currently, 51% stake in GSTN is held by private entities and 49% by the Government.

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Source: ET
Govt made 376 changes related to GST in 10 months: Export promotion council for SEZs

Govt made 376 changes related to GST in 10 months: Export promotion council for SEZs

The government has made 376 changes in the Goods and Services Tax (GST) since its inception in July last year by amending rules, issuing clarifications and circulars related to refund, the exemption and rates, Export Promotion Council for EOUs & SEZs (EPCES) has said.gst seva kendra

“The government has made 376 changes to the tax system by issuing circulars and coming out with clarifications about change in rates or exemptions,” said Vinay Sharma, chairman, EPCES at an open house meeting with exporters to discuss issues related to GST.

Of these, 73 changes are related with the exemption and 65 with rates.

Exporters flagged concerns related to refunds, exemption of GST, classification of Goods and services and place of supply for service exports and GST Network at the meeting.

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Complaining that delay in GST refund has blocked their working capital, exporters have claimed that over 60% of their refunds are stuck with the government. The government has sanctioned GST refunds to exporters to the tune of Rs 17,616 crore till March.

They also discussed the option for SEZ units to claim a refund of the GST charged by suppliers. At present, a supplier can provide goods and services to units in SEZ under a legal undertaking or LUT without payment of IGST, alternately they can reclaim the refund. Many suppliers do not want to go for LUT or refund process and charging GST in their invoice which is a cost burden for SEZ Unit. Under the existing law, there is no option for SEZ unit to claim the refund of the same.

“We have also suggested treating SEZ as outside India (deemed foreign territory) for the purpose of the place of supply rule under IGST for service export,” Sharma said.

Exporters also said that the rules are in English which makes it difficult for those who are not well versed with the language to understand and comply with the norms, especially in far-flung areas.

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Source: ET

 

GSTN to be owned by govt? FinMin looking at issues related to proposal

GSTN to be owned by govt? FinMin looking at issues related to proposal

The Finance Ministry is examining various issues, including the overhaul ofGSTN procurement procedures and the salary structure of employees as part of the proposal to convert GST Network (GSTN) into a government company.

These two issues, along with other transitional and operational nuances, would be placed before the Union Cabinet for consideration once the GST Council clears the proposal of turning GSTN into a majority or fully-owned government entity, a source told PTI.

Finance Minister Arun Jaitley had earlier this month asked Finance Secretary Hasmukh Adhia to “examine the possibility” of converting GSTN into a majority government company or a 100 per cent government company. GSTN provides the IT backbone for the new indirect tax regime.

Currently, five private financial institutions — HDFC, HDFC Bank, ICICI Bank, NSE Strategic Investment Co and LIC Housing Finance Ltd — hold 51 per cent stake in GSTN, which was incorporated on March 28, 2013, in the erstwhile UPA regime.

The remaining 49 per cent stake is with the centre and states.

The current structure of GSTN where financial institutions hold the majority 51 per cent stake gives the entity flexibility in quick procurement through tendering process.

However, turning it into a government entity would mean that procurement — that currently occurs on a real-time basis — will have to be in sync with those of PSUs and state-owned companies, a source said.

Another aspect that would come into play could be salary structure. Currently, the employee remuneration is at par with those in the private sector, but transforming GSTN to a government entity would change that, the person privy to the development added.

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These issues are currently being discussed by the officials within the Finance Ministry, the source said, adding the ministry is hopeful of a seamless transition given that the goods and services tax (GST) collections have stabilised over the last 9 months and businesses are familiar with the systems.

The government stake in GSTN was initially kept at 49 per cent and incorporated as a private company to “allow adequate flexibility and freedom” to “ensure timely implementation of the IT infrastructure” prior to the GST roll out.

GST, which subsumed over a dozen local taxes, was rolled out on July 1, 2017. Over one crore businesses are registered on the GSTN portal.

GSTN is a Section 8 company under the new Companies Act and hence is a not-for-profit entity.

The source said that there are no hindrances from the private shareholders in selling their stake to the government because GSTN does not give dividend.

The Finance Ministry is in favour of making GSTN a wholly-owned company with 100 per cent shareholding, but a final call would be taken by the GST Council, headed by Jaitley and comprising state counterparts, in its next meeting.

After GST Council’s clearance, the proposal would go to the Union Cabinet.

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Source: PTI
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