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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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CBIC issues Clarifications to allow Re-Filing of Refund Claim where NIL Refund Claim was filed inadvertently under GST

CBIC issues Clarifications to allow Re-Filing of Refund Claim where NIL Refund Claim was filed inadvertently under GST

The Central Board of Indirect Taxes ( CBIC ) has issued Clarifications to allow Re-Filing of Refund Claim where NIL Refund Claim was filed inadvertently under Goods and Services Tax ( GST ).

In a Circular issued by CBIC said that, “Whenever a registered person proceeds to claim a refund in FORM GST RFD-01A/RFD-01 under a category for a particular period on the common portal, the system pops up a message box asking whether he wants to apply for ‘NIL’ refund for the selected period. This is to ensure that all refund applications under a particular category are filed chronologically. However, certain registered persons may have inadvertently opted for filing of ‘NIL’ refund. Once a ‘NIL’ refund claim has been filed for a period under a particular category, the common portal does not allow the registered person to re-file the refund claim for that period under the said category”.

The CBIC also clarified that a registered person who has filed a NIL refund claim in FORM GST RFD-01A/RFD-01 for a given period under a particular category, may again apply for refund for the said period under the same category only if he satisfies the following two conditions:

  • The registered person must have filed a NIL refund claim in FORM GST RFD-01A/RFD-01 for a certain period under a particular category; and
  • No refund claims in FORM GST RFD-01A/RFD-01 must have been filed by the registered person under the same category for any subsequent period.
    It may be noted that condition (b) shall apply only for refund claims falling under the following categories:

1.Refund of unutilized input tax credit (ITC) on account of exports without payment of tax;

2.Refund of unutilized ITC on account of supplies made to SEZ Unit/SEZ Developer without payment of tax;

  • Refund of unutilized ITC on account of accumulation due to inverted tax structure;

In all other cases, registered persons shall be allowed to re-apply even if the condition (b) is not satisfied

While concluding the Circular, the CBIC also said that, “Registered persons satisfying the above conditions may file the refund claim under “Any Other” category instead of the category under which the NIL refund claim has already been filed. However, the refund claim should pertain to the same period for which the NIL application was filed. The application under the “Any Other” category shall also be accompanied by all the supporting documents which would be required to be otherwise submitted with the refund claim”.

“On receipt of the claim, the proper officer shall calculate the admissible refund amount as per the applicable rules and in the manner detailed in para 3 of Circular, No.59/33/2018-GST dated 04.09.2018, wherever applicable. Further, upon scrutiny of the application for completeness and eligibility, if the proper officer is satisfied that the whole or any part of the amount claimed is payable as the refund, he shall request the taxpayer in writing, if required, to debit the said amount from his electronic credit ledger through FORM GST DRC-03. Once the proof of such debit is received by the proper officer, he shall proceed to issue the refund order in FORM GST RFD-06 and the payment order in FORM GST RFD-05”, the department also added.

Click Here for Circular

Source: TaxScan.

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Indirect tax board removes circular on GST, but confusion remains.

Indirect tax board removes circular on GST, but confusion remains.

The indirect tax board had removed a “controversial” circular that imposed goods and services tax (GST) on post-sale discounts by dealers, but it has done little to clear the confusion around the many issues that arose with the circular.

In June, the Central Board of Indirect Taxes and Customs (CBIC) had issued a circular which said that dealers will have to pay 18 per cent GST on the post-sale discount that they get from the suppliers of goods, if the supplier asks them to pass on the concessions to the end consumer.

The circular came out with different situations where GST should be paid and where it should not.

For instance, imagine that a company sells a car to a dealer for Rs 10 lakh and later gives a discount of Rs 50,000. In doing so, the firm did not put any obligation on the dealer to pass on the benefit. So, the dealer need not pay any GST on Rs 50,000. However, if the company asks the dealer to pass on the benefit to the customer, then the dealer has to pay GST on the entire amount, including Rs 50,000.

The Confederation of Indian Industry (CII) had said This had irked industry, particularly the auto sector, which has already been reeling under the pressure of subdued demand.

this circular violated the cardinal principle of GST that the tax cost is to be borne by the ultimate consumer.

“This principle means that the supply of goods or service should suffer the tax only to the extent of consideration paid by the ultimate consumer,” the CII had said, demanding that this provision in the circular be changed.

It said additional discounts are generally given to liquidate the old inventories or push products under weak market conditions.

Following the hue and cry, the CBIC recently said: “Numerous representations were received expressing apprehensions on the implementation of the said circular. In view of these apprehensions… the Board… hereby withdraws, ab initio, the circular.”

But even after the withdrawal of the circular, the controversy over it has not ended. Experts demanded that a clarification be issued that there would be no GST on post-sale discounts as field officers continue to harass dealers.

Abhishek Jain, partner at EY, said industry expects that with the withdrawal of the circular, the government has accepted the industry’s position and this would put an end to the investigations and litigation at the field level.

Also, there is the issue of input tax credit.

ClearTax chief executive officer Archit Gupta said now there is confusion over how the situation of post-sale discounts should be dealt with.

The tax on the original invoice could have still been claimed as input tax credit and be adjusted using the credit note. This is now not perceived so by the withdrawal of the circular, he said.

“The festive season is here, and hence, there is a dire need for the CBIC to come back with a clear message for the businesses and the dealers in the supply chain to deal with the circular,” he said.

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 Yatra.com. “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
GST collection slips below Rs 1 lakh crore mark to Rs 91,916 crore in September

GST collection slips below Rs 1 lakh crore mark to Rs 91,916 crore in September

In another indicator of economic slowdown, GST collection has dropped below Rs 1 lakh crore mark to Rs 91,916 crore for September. The September collection is believed to be the lowest in nineteen months.

The revenue during September, 2019 has declined by 2.67% in comparison to the revenue during September, 2018. During April-September, 2019 vis-à-vis 2018, the domestic component has grown by 7.82% while the GST on imports has shown negative growth and the total collection has grown by 4.90%

CGST is Rs 16,630 crore and SGST is Rs 22,598 crore. IGST is Rs 45,069 crore (including Rs 22,097 crore collected on imports) and Cess is Rs 7,620 crore (including Rs 728 crore collected on imports). The total number of GSTR 3B Returns filed for the month of August up to 30th September, 2019 is 75.94lakh.

The government needs over Rs 1 lakh crore GST in order to meet its fiscal target and also to not compensate states for losses. It compensates states once in every two months for the losses they incur in the first five years of the implementation of GST.

The government has already transferred Rs 27,955 crore to the states in the form of compensation in June-July this year and Rs 17,789 crore in April-May.

Source: Economic-Times

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Goa records 26% deficit in GST collection

Goa records 26% deficit in GST collection

Chief minister Pramod Sawant on Tuesday said that there was 26 per cent deficit in the Goods and Service Tax (GST) collection in Goa. He added that the state government had asked the central government to extend its compensation scheme for GST for three more years.

Reacting to the recent decision of the Union government to slash GST on hotel room tariff, the CM said that the move would not cause much revenue loss for the state and that it would boost the economy.

He also said that if there was a revenue shortfall, then the central government would compensate the state for the next two years.

“At present, we will be compensated for the next two years and to fill the revenue gap, the central government will take alternate measures. The state government cannot bear such (26%) revenue losses. We have requested the finance commission to extend the compensation scheme for another three years till the revenue is stabilised,” the CM said.

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Source: Times-Of-India
Booked hotel room? Expect 10% GST refund if room rate exceed Rs 7500

Booked hotel room? Expect 10% GST refund if room rate exceed Rs 7500

Guests of luxury hotels are likely to gain from the recent government decision to slash goods and services tax (GST) on rooms priced at over Rs 7,500 to 18% from 28% now, and below that tariff to 12% from 18%. The new rates will be effective from October 1.

So, if a person books a stay in a luxury hotel with an average room rate of Rs 10,505, he will save Rs 1,050, or around 8%, under the new GST rate as he has to shell out a total of Rs 12,395 against Rs 13,446 under the existing tax regime.

The new rate will also be applicable to those who have already paid for bookings after October 1.

Typically, holidaymakers book hotel rooms in advance as tariffs are known to rocket during peak season in India, which begins in October and touches a high by the year-end.

One such vacationer, John Paul (name changed), has booked three rooms for a five-night stay in December at a luxurious Goa property. He shelled out Rs 2.6 lakh per room for five nights that included a 28% GST of Rs 57,540.

Days after his booking, the government slashed the GST and the 10-percentage-point reduction made a difference of Rs 20,550 per room to Paul’s bill.

The saving is equivalent to the price of a brand new Lenovo laptop.

Paul contacted the five-star chain for reimbursement of the balance GST amount and the hotel in an email said, “The difference of tax excess payments received will be used against extras consumed at the hotel.”

“If a customer has made part-payment while booking a room, then the adjustment will be done by the hotel at the time of final billing incorporating the revised GST rate. In case of full payment done by a customer in advance, the hotel will have to refund the balance amount to the customer. GST will be paid as applicable at the time of billing and not at the time of advance received,” said Pradeep Shetty, vice-president of Hotel & Restaurant Association of Western India (HRAWI).

Luxury hotels, which are twice as expensive to develop but command a premium pricing, account for 11% of the overall supply of 2.8 lakh rooms in India.

The GST rate reduction is likely to lead to customer savings of 5-8% on existing room rates across hotel segments, with luxury properties benefiting more, a recent Kotak Institutional Equities report said.

Interestingly, despite lowering of the GST on rooms priced at more than Rs 7,500 and also those priced between Rs 1,000 and Rs 7,500, industry executives said hotels in India continue to be the most taxed across the world.

Source: Times-Of-India

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CAIT says e-commerce portals avoiding GST during festival sales; seeks probe

CAIT says e-commerce portals avoiding GST during festival sales; seeks probe

Traders body CAIT on Sunday alleged that e-commerce portals during the festive sales are causing huge loss of revenue to the government by levying GST on the discounted price rather than on the actual market price of the commodity. The Confederation of All India Traders (CAIT) in a communication sent to Finance Minister Nirmala Sitharaman on Sunday charged that the e-commerce companies particularly Amazon and Flipkart through their festive sales are depriving the government with huge amount of GST revenue, a CAIT statement said.

CAIT has urged the Finance Minister to order an investigation into the business model of these companies. “Its irony that if a trader makes even a slight mistake during the course of his business, he is subjected to several penalties and even prosecution. However, these e-commerce companies which are authorised to do only Business to Business (B2B) activities are conducting Business to Consumers (B2C) sales right under the eyes and nose of the government and no action has been taken so far against them for such a blatant violation of FDI Policy,” it said.

CAIT National President B C Bhartia said during festive sales of e-commerce companies a large number of commodities are being sold at a much lesser price than the actual price thanks to deep discounts from 10 to 80 per cent which is nothing but a “predatory pricing”.

Moreover, the GST which is supposed to be charged on the actual market price of the commodity in normal case is now being charged on the price after deducting the discounts offered and this is nothing but underpricing of the commodity by these e-commerce portals thereby causing huge loss of GST revenue to the government, he added.

Bhartia said that its an open fact that deep discounts offered by these e-commerce companies are funded by their investors and in actual terms they are not the losers, the ultimate looser is the government in shape of revenue which it ought to have received on actual market price but due to open manipulations of these e-commerce companies, the government is denied of its due revenue.

It is very astonishing that these companies are running into losses since last so many years but still they are continuing with their business operations and holding festival sales and other sales round the year from time to time, he added.
Bhartia clarified that traders are not against e-commerce business and have a firm view that e-commerce is future mode of business in the country. But there has to be a level-playing field where there should not be any element of predatory pricing or deep discounting. 

Source: Times-Now-News

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Fin min urged to abolish GST reverse charge mechanism

Fin min urged to abolish GST reverse charge mechanism

The Tamil Nadu Foodgrains merchants’ association has urged the finance minister Nirmala Sitharaman to abolish the reverse charge mechanism way of taxation or extend the implementation date by a year from Sept 30, 2019.

According to a press release, president of the association, S P Jeyaprakasam has said that it has almost been two and a quarter year since the Goods and Service Tax act was implemented in the country. It is only now that the authorities are coming to know the hardship faced by traders and manufacturers.

The reserve charge mechanism was there in the country when GST was implemented. For example, expenses for coffee, tea and unregistered tiffin to customers, products purchased, services utilized from unregistered dealers by the registered stakeholders are levied under the reverse charge mechanism. Small manufacturers and traders are immensely affected by this way of taxation. After many representations were made the authorities by section 9(4) deferred the reverse charge mechanism way of taxation till Sept 30, 2019.

With the deadline nearing, all the expenditures and services under section 9(4) will be levied under the reverse charge mechanism. This should either be abolished, or the last date should be extended by another year, he said.

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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