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Gujarat HC serves notices on govt, GST council for breach of refund norms

Gujarat HC serves notices on govt, GST council for breach of refund norms

The Gujarat High Court has issued notices to the union government and the GST Council over the alleged breach of refund norms by field officers under the goods and services tax (GST) regime.

Under the Rule 92 of the Central GST (CGST) Act, the claim of the refund has to be made in the RFD 04 form. Thereafter, the officer concerned can accept or reject the claim after his investigations.

If the claim is accepted, he would issue refund in the form RFD 06. In case the refund is required to be adjusted, the officer would withhold it in the form RFD 07. If the refund is not admissible, partly or wholly, this would be communicated through the form RFD 08.

If the amount is rejected, it would be credited to the government account under the Rule 93 of the

Gujarat HC serves notices on govt, GST council for breach of refund norms CGST Act, but for that, due process of RFD forms has to be followed.
A petitioner moved the high court, saying the field officer concerned rejected his claim of refunds without resorting to RFD forms. He reversed it under the Rule 93, which, he argued, could not be done without following the due process.

Abhishek Rastogi, counselor of the petitioner and partner at Khaitan & Co, said many petitioners were keen to move the court over the lapses. “The law provides that the denial of the refund has to happen only after compliance with the procedure laid down. We have challenged the rejection order, which has not followed the due process of law,” he said.

Source: Business-Standard.

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Input tax credit under GST regime restricted to 20% of claims: CBIC

Input tax credit under GST regime restricted to 20% of claims: CBIC

Businesses will have to pursue their vendors on a monthly basis to upload their invoices to enable them to take the entire input tax credit (ITC) after the indirect tax board came out with a notification to restrict these credits to 20 per cent of the claims.

Concerned at dwindling revenues, the Central Board of Indirect Taxes and Customs (CBIC) put this condition on the claims where vendors have not uploaded their invoices within a month.

Experts said it would block cash flow of businesses and increase their compliance burden.

Though theoretically, businesses have to reconcile their ITC within 60 days, this clause was never implemented since the auto-populated form of purchases by suppliers — GSTR2 — has been suspended.

As such, businesses are supposed to reconcile their input tax credit at the time of annual returns. However, the deadline of annual returns even for the first year of the GST rollout — 2017-18 — have been deferred a number of times. This means that there was no restriction on the businesses to claim their input tax credit, provided they have the invoices to support their claims.

Now, businesses have to follow-up with non-compliant vendors on a monthly basis to upload their invoices in the form GSTR 2A.
Harpreet Singh, partner at KPMG, said, “Restriction of mismatched ITC by 20 per cent would necessitate undertaking monthly reconciliation of purchase, credit register with GSTR 2A, and hence may increase the monthly compliance burden.”

He said the move would also restrict credit, which was rightly availed of but did not get reflected in the GSTR 2A form, on account of default by vendors may result in adverse cash flow impact.

The GST collections fell to a 19-month low of Rs 91,916 crore in September, pointing towards deepening economic slowdown. It was the second straight month of revenue collections falling below the Rs 1-trillion mark, compounding the government’s revenue woes amid steep collection target for the fiscal. The target is over Rs 1.1 trillion a month.

In the first six months till September, GST grew by 4.9 per cent year-on-year.

The government in August had extended the date for filing annual GST returns for 2017-18 and 20018-19 by three months to November 30, as taxpayers were facing technical problems in furnishing returns. In fact, the government postponed the deadline a number of times. The original deadline of filing these returns were December 31, 2018.

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

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

The deadlines were extended after the businesses and experts complained about the complex nature of filing these returns and reconciliation of audited accounts with these returns. For instance, tax and legal consultants had said hundreds of amendments, notifications and circulars have made the GST Act very complex.

Officials of the Tax Bar Association, a body of over 400 members of chartered accountants, company secretaries, cost advocates and tax consultants, had said that the government has made the entire GST procedure and filing of returns very “confusing with hundreds of changes in the rules and taxes”.

Source: Business-Standard.

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Tourism ministry plans promotions around GST rate cut for hotels

Tourism ministry plans promotions around GST rate cut for hotels

The tourism ministry is planning to highlight the recent tax cut on room tariffs in promotional campaigns overseas to lure travellers ahead of the peak winter holiday season.

The India Convention Promotion Bureau (ICPB), which works closely with the tourism ministry on promoting India as a MICE (meetings, incentives, conferences and exhibitions) destination, said it will also look at raising awareness around the announcement of lower GST (goods and services tax) rates last month.

On September 20, the GST Council tweaked taxes on several products and services, including hospitality. The GST rate for room tariffs of Rs 7,500 and above was reduced to 18% from 28%, while those between Rs 1,000 and Rs 7,500 would have to pay 12%. Hotels with tariffs of less than Rs 1,000 do not attract tax as per an earlier decision. Earlier, the slab of Rs 2,500-7,500 attracted 18% tax.

“We were waiting for the official notification which has come now. We will be launching marketing campaigns across markets on the move. It’s a very big step for boosting tourist numbers and we will provide this widespread publicity,” said Rupinder Brar, additional director general at the tourism ministry. “This was one of the main demands of the industry. We are very sure that this will boost tourist numbers,” she added.

Chander Mansharamani, vice-chairman of ICPB, said, “When an international conference comes to India, the accommodation is booked by overseas agencies. We have sent a circular to all our clients saying GST on hotel accommodation has (been) reduced to 18%. We are looking to work out something where we can convey this message further.”

Online travel aggregators (OTAs) said bookings for the coming quarter are looking up as hotels have begun factoring in the tax benefits for bookings done for stay after October 1.

“We started displaying hotel bookings with revised taxes from September 27 onwards. Over the past few days, we have seen an uptick in bookings for four- and five-star properties where the impact is fairly significant,” said Sharat Dhall, COO, B2C at “The reduction of GST of 10% has definitely had an impact in terms of driving growth. We are witnessing an uptick in bookings for leisure destinations such as Goa and Rajasthan for the months of October, November and December.”

A spokesperson from MakeMyTrip said that with the revision in tax rates coming around the peak festive season, the company hopes to see a boost in tourist arrivals in Goa, Darjeeling, Jaipur and Gangtok—destinations that continue to remain favourites among domestic travellers.

Dipak Haksar, chief executive for ITC Hotels and WelcomHotel said ITC Hotels has implemented the new GST rates with effect from October 1, 2019 and has passed on all benefits to the consumers. “The rate reduction of GST will definitely result in an uptick in arrivals and hotel stays,” he said.

Sanjeev K Nayar, general manager at ITC WelcomHeritage Hotels said there has been an increase in the queries and also the bookings are getting materialised as well and that he is optimistic that this trend will now continue.

“We are very happy that a reasonable GST regime for hospitality comes at an opportune time as we are just getting into the high season and we would definitely see more traction and demand,” said Ankur Bhatia, executive director, Bird Group which runs Roseate Hotels & Resorts.

Balu Ramachandran, senior vice president at Cleartrip said any deduction in GST will be passed on and will ultimately benefit customers.

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Source: Economic-Times
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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e-Way bills curb tax evasion, but glitches remain

e-Way bills curb tax evasion, but glitches remain

There are numerous concerns on the functioning of the GST regime, launched two years ago. But the e-Way bill’s system is displaying good traction. While there are a few glitches, users mostly agree that e-Way bills have brought down under-reporting and increased transparency.

The system was rolled out for inter-State consignments in April 2018, and for intra-State consignments two months later, in a phased manner. e-Way bills generation for the period April-June 2019 was almost 40 per cent higher at about 15.65 crore, compared to 11.19 crore in the same period last year.

For transport companies, the system has saved considerable time, removing check-posts and facilitating the shift from a ‘departmental policing model’ to a ‘self-declaration model’. It has also helped in curbing tax evasion.

According to chartered accountant Chirag Chauhan, e-Way bills have reduced tax evasion by almost 80 per cent. He also points out that the drop in GST collections of just 2-5 per cent in the first quarter of FY20, against a sales decrease of 15-20 per cent, is proof that tax malpractices have come down.

Under the norms, every consignment worth above ₹50,000 (raised to ₹1 lakh in a few States as a temporary relief) should begin with the generation of an e-Way bill. The bill must be raised before the goods are shipped and should include details of the products, their consignor, recipient and transporter. Though check-posts have been abolished under GST, a consignment can be intercepted at any point for the verification of its e-Way bill. If found without one, or with invoice discrepancies, a penalty of ₹10,000, or tax sought to be evaded, or, in some cases, 200 per cent of the GST amount, can be levied. These provisions are helping in reducing the disparities between the actual value of the sale and that reported in e-Way bills. Every e-Way bill generated has to be matched at the invoice level with the entries uploaded by the manufacturers or traders in their monthly GSTR-1 returns for outward supplies. Also, the GSTR-1 of the manufacturer or trader gets auto- populated in the GSTR-2A of the purchaser, based on which the latter claims the input tax credit (ITC).

Due to such matching of invoices at multiple levels, there’s hardly any scope for the supplier to under-report sales.

Once the e-Way bill portal is linked to the centralised VAHAN portal, which contains vehicles details, generation of fake e-Way bills gets checked. Further, the system helps in increasing the overall GST compliance, as a recent notification bars a supplier or a recipient from generating an e-Way bill if the GST returns are not filed for two consecutive months.

Some challenges do remain. Complaints have been raised that the time limits prescribed for the validity of an e-Way bill are not in consonance with ground realities.

Time limit

“Genuine reasons for delays should be taken into account while fixing the time limits,” Bal Malkit Singh, former President of the All India Motor Transport Congress, told BusinessLine.

On consignment verification issues, he said: “State borders have paved the way for flying squads and, the vehicles are being stopped randomly on the pretext of checking for collateral extortion.” Another issue, he said, is the lack of flexibility in rectifying errors and changing the destination address.

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Source: The-Hindu-Business-Line
Ahead of GST Council meet, biscuit makers hope for rate cut

Ahead of GST Council meet, biscuit makers hope for rate cut

Biscuit makers are hoping for a lowered tax rate on widely consumed mass biscuits priced below ₹100 a kilo as an increased instance of GST has put additional burden on manufacturers.

The GST Council is expected to meet on 20 September and could consider tax revisions on various goods. Auto and biscuit manufacturers are hoping for a reduced tax burden amid a slump in consumer demand.

Mayank Shah, category head, Parle Products, and vice president, Biscuit Manufacturers Welfare Association said biscuit manufacturers are hoping for a reduced tax burden on lower-priced biscuits or those priced below ₹100 per kilo from the current 18% to 5%.

“Our request is to continue the distinction between two categories of biscuits ie those below and above ₹100 per kilo because the sub ₹100 per kilo biscuits are targeted at the middle class and lower strata of the society—the consumption is huge there,” Shah told Mint. “We are okay paying 18% GST on biscuits priced above ₹100 per kilo,” Shah added.

Biscuits priced below ₹100 per kilo include largely affordable biscuits such as glucose, and milk and account for 25% of all biscuit sales in India; these are typically priced under ₹10. Earlier in September, the Biscuit Manufacturers Welfare Association, which represents close to 40 biscuit makers, including Parle Products, made fresh petition to the government seeking a reduction on tax slabs.

To be sure, biscuit makers have been seeking a reduction in taxes on biscuits in the mass market segment since 2017, after the government clubbed them in the same tax bracket as premium cookies or those priced above ₹100 per kilo, thus doing away with a varied tax structure under the new GST regime.

This, companies added, has prompted manufacturers to reduce the size of biscuits offered per pack amid growing cost pressures and even take price hikes leading to a slump in demand. Shah added that in the first quarter of the current year premium biscuits or cookies grew between 7% to 8%; while mass biscuits or those priced below ₹100 per kilo declined by 8%, he said citing industry figures.

India’s biscuit market is estimated at over ₹31,200 crore and sees the participation of large companies such as Britannia Industries, Parle Products, ITC, Mondelez India, among others. It is among the largest categories of packaged foods sold in India.

But an increased instance of tax has burdened manufacturers who complain that they have had to resort to price hikes or cut the grammage of biscuits priced under ₹10 to ensure consumer demand is intact. Shah added that last December the company took measures to control costs and has since reduced the number of biscuits sold in its ₹2 to ₹5 packs, including Parle-G —India’s largest selling biscuit.

“We had absorbed the costs for a while, but then last December we started to reduce the quantity offered so that we don’t pass on the prices to consumers,” Shah said. He added that the company had to rule out price increase in ceratin packs as shoppers are “extremely value-conscious, they notice things like this and easily switch to cheaper alternatives.” For Parle, biscuits priced under ₹100 a kilo account for 40% of its sales.

Anmol Industries, which sells namkeen, butter and cream biscuits priced between ₹5 to ₹20, said it has been gradually reducing the size of some of its biscuit packs over the last two years as raw material prices, especially wheat, continue to climb. “Earlier we used to have a 60 gram pack at ₹5, today it has been brought down to 45 grams and if this continues we could soon be selling 40 grams,” said Gobind Ram Choudhary, managing director at the company.

Choudhary who is also part of the India Biscuit Manufacturers Association, an industry body of ten biscuit companies in the North, made representation to the government to reduce the GST on biscuits are priced below ₹150 per kilo to 12% about two months ago. “For us these account for 90% of our sales,” he added.

The move to push to lowered tax rates comes amid a slowdown in consumer demand largely aggravated by a slump in rural consumption where consumers are holding back on purchases of essentials such as household products and staples. This has spooked FMCG companies, which draw over 35% of sales from the hinterland.

In its quarterly update on the FMCG sector for the April-June quarter, research firm Nielsen said that categories such as salty snacks, biscuits, spices, soaps and packaged tea led the slowdown during the quarter. Nielsen also lowered its guidance for the sector for the full year.

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Source: Live-Mint.
At Sept 20 Goa meet, GST Council to look into inverted duty structure issue

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Source: The-Hindu-Business-Line.
GST trouble: Businesses reporting 20 per cent revenue fall receive notices

GST trouble: Businesses reporting 20 per cent revenue fall receive notices

GST-registered businesses that have reported decline in annual revenue by 20% or more over the previous year have received a flurry of notices over the last few weeks from the tax department, sources in the know told FE. While notices related to mismatch in declaration between GSTR-3B (summary return) and GSTR-1 (outward supplies detail) were common earlier, the department is now comparing firms’ earning under GST with that of erstwhile service and excise regime.

The notices have asked businesses to produce relevant documents and explain the reasons for decline in sales. The department believes that many such cases could point to possible evasion under the new indirect tax regime. Sources said that the government is sitting on a pile of data that wasn’t available to them before GST. This is further aided by integration of information from Customs and direct tax department. The GST IT system is now throwing up many red flags when tax returns under different tax regimes are compared.

However, the spate of notices are also targeting businesses that have genuine reasons for declining revenue which includes a slowing economy. In one instance, a service provider for multinational companies received a notice but its revenue had slacked due to expiry of certain contracts. In another notice seen by FE, the taxpayer was asked to produce input tax credit documents as it had paid a substantial portion of tax liability through accumulated tax credit.

“While genuine businesses are not worried over these notices, it does raise the cost of doing businesses for them,” Rajat Mohan, partner at AMRG & Associates, said. He explained that replying to notice under GST requires professionals and could cost as much as `1 lakh while earlier, the tax laws had been around for some years and most replies followed a set pattern that didn’t require professional intervention.

Although the GST system generates a lot of data to track evasion, the absence of a full-fledged return system means that there are areas prone to exploitation through fake invoices for claiming additional credit and bringing down tax liability. The Comptroller and Auditor General’s (CAG) report tabled in Parliament recently pointed this out. The new return system is likely to come into force only from next year.

Meanwhile, tax department has estimated that evasion worth as much `1.2 lakh crore may have taken place under GST regime. An official said that while the government had detected evasion worth over `12,000 crore since GST came into force two years ago, rule of thumb suggested that such detection were only 10% of the actual evasion taking place. The GST collection for central government in FY19 fell short of target by over `60,000 crore.

This prompted the government to set relatively modest budget estimate for the current fiscal at `11.89 lakh crore. This translates into an average monthly collection of just below `1 lakh crore. In the first four months of FY 20, the collection have kept pace with the required rate.

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Source: Financial-Express.
GST collection grows 5.8% in July to ₹1.02 trillion

GST collection grows 5.8% in July to ₹1.02 trillion

Central and state governments have collected Rs. 1,02,083 crore from Goods and Services Tax (GST) in July, 5.8% more than what they mopped up in the same month a year ago, an official statement said here.

This is the third time the combined central and state GST receipts crosses ₹1 trillion mark so far this fiscal. The union government is bound to compensate states for any shortfall in their revenue collection below an agreed 14% annual growth every year in the first five years of GST regime. Tax collected in July pertain to the transactions in June. After showing a 10% annual growth in April GST receipts, collections remained rangebound between 6.6 and 5.8% in subsequent months.

The statement said the union government collected ₹17,912 crore, while states collected ₹25,008 crore. Receipts from integrated GST (IGST) on inter-state sales stood at ₹50,612 crore and from GST cess at ₹8,551 crore. On account of the revenue shortfall in FY19 and the growth rate remaining below 14% so far in FY20, the central government’s requirement to compensate states continues and raises questions about states revenue position after the first five years of GST if the current trend continues. Central and states collected and average RS 93,114 crore a month last fiscal against a ₹1 trillion combined monthly target.

The GST shortfall could make the union government more dependent on cesses and surcharges on various taxes to find resources for compensating states for their revenue shortfall.

The Controller General of Accounts (CGA), the government’s internal auditor, said on Wednesday the central government’s gross tax revenue in the June quarter grew at a slow pace of 2.7% to ₹1.86 trillion from the year ago period. (ends)

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Source: Live-Mint.
GST: CBIC extends due date for filing FORM GST CMP-08

GST: CBIC extends due date for filing FORM GST CMP-08

The Central Board of Indirect Taxes and Customs ( CBIC ) has notified the extension for filing returns by the composition dealers in Form CMP-08.

According to the Notification, “Provided that the due date for furnishing the statement containing the details of payment of self-assessed tax in said FORM GST CMP-08, for the quarter April, 2019 to June, 2019, or part thereof, shall be the 31st day of July, 2019.”

The composition taxpayers shall furnish a statement, every quarter or, as the case may be, part thereof containing the details of payment of self-assessed tax in FORM GST CMP-08 of the Central Goods and Services Tax Rules, 2017, till the 18th day of the month succeeding such quarter.

“The said persons shall furnish a return for every financial year or, as the case may be, part thereof in FORM GSTR-4 of the Central Goods and Services Tax Rules, 2017, on or before the 30th day of April following the end of such financial year,”.

Under the GST regime rolled out from 1st July 2017, the composition scheme is an alternative method of tax levy under GST designed to simplify compliance and reduce compliance costs for small taxpayers. The main feature of this scheme is that the business or person who has opted to pay tax under this scheme can pay tax at a flat percentage of turnover every quarter, instead of paying tax at a normal rate every month.

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Source: Taxscan.
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