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June GST collections stand at Rs 90,917 crore

June GST collections stand at Rs 90,917 crore

Goods and service tax (GST) collections for June 2020 clocked Rs 90,917 crore at gross levels, 9% lower than the same month last year, the department of revenue said Wednesday.

The collections are higher than those recorded in April and May – the peak months of lockdown due to the Covid 19 pandemic – where GST collection for April was Rs 32,294 crore and Rs 62,009 crore for May.

However, for both months, the collections were lower than those in 2019. Collections in April were down 72% on-year and 38% down on-year in May.

For the month of June, of total collections of Rs 90,917 crore, CGST was Rs 18,980 crore, SGST was Rs 23,970 crore, IGST was Rs 40,302 crore, including Rs 15,709 crore collected on import of goods and Cess was Rs 7,665 crore, including Rs 607 crore collected on import of goods.

The government said GST collection for the first quarter of the year was 41% less than the revenue collected during the same quarter last year, but a large number of taxpayers still have time to file their return for the month of May, 2020 till early this month.

“Since government has allowed a relaxed time schedule for filing of GST returns, returns of the month of April, March as well as some returns of February got filed during June, 2020 and some returns of May, 2020, which would have otherwise got filed in June, will get filed during first few days of July,” the department said.

Source: Economic-Times.

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FM asks GST officers to proactively address issues faced by biz in tax compliance

FM asks GST officers to proactively address issues faced by biz in tax compliance

Finance Minister Nirmala Sitharaman on Wednesday asked GST officers to foresee the issues faced by domestic businesses and address them proactively so that they can compete on a global scale and build a self-reliant India.

In a message to tax officers on the third anniversary of Goods and Services Tax (GST), Sitharaman also said there is scope for easing compliance further for taxpayers, especially MSMEs.

Asking taxmen to focus on the clarion call by Prime Minister Narendra Modi for an ‘Atmanirbhar Bharat’, she said for this motto of self reliance tax, especially GST, administration will have a large role to play.

“We must foresee the issues faced by our business community and proactively address the same to enable them to compete on a global scale. Only by this proactivity can we ensure much needed economic growth in near future,” she said in the message on the occasion of GST Day, 2020.

GST, which subsumed over a dozen local taxes, was introduced on July 1, 2017. Since then the GST process has been simplified and return filing made easy especially for small businesses.

The GST administration has also introduced SMS-based return filing system for ‘NIL’ filers.

Sitharaman said more efforts are required to ease tax compliance further for taxpayers and made an assurance that the government is committed to continuing these reforms in future as well to facilitate taxpayers.

“We must strive to make the tax administration so simple that taxpayers find it easy to comply with all their tax obligations. This is the true essence of ‘ease of doing business’ as far as tax administration is concerned,” she said.

The Minister also said the COVID-19 pandemic has led to some disruptions in the economic activities in the country.

She also congratulated Central Board of Indirect Taxes and Customs (CBIC) and its officers for handholding taxpayers during this crucial time and disbursing record amount of refunds to ease their cash flow.

Source: Economic-Times.

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Nil Late Fee on GSTR-3B: System not Updated, Excess Amount would be re-credited soon

Nil Late Fee on GSTR-3B: System not Updated, Excess Amount would be re-credited soon

The Goods and Services Tax portal has today said that the system has not been updated according to the change in the late fee for the delay in GSTR-3B. The Central Board of Indirect Taxes and Customs ( CBIC ) has notified that late fees on GSTR-3B would be waived off with Nill Liabilities. In a Notification issued by CBIC said that, For the period from July 2017 to Jan 2020, which is prior to the COVID period, a lot of Return Filing has been pending. For all those who have no tax liabilities but who have not filed their returns between July 2017-Jan 2020, there will be zero late fees.

Responding to the new change, the portal today tweeted “the change in late fee amount made vide notification no. 57/2020 dated 30-06-2020 has been incorporated on the GST portal. Late fee paid in excess than prescribed in the notification shall be re-credited in due course.”

As per the notification, for the taxpayers having an aggregate turnover of more than rupees 5 crores in the preceding financial year, who fail to furnish the return in FORM GSTR-3B for the months of May 2020 to July 2020, by the due date but furnish the said return till the 30th day of September 2020, the total amount of late fee under section 47 of the said Act, shall stand waived which is in excess of two hundred and fifty rupees and shall stand fully waived for those taxpayers where the total amount of central tax payable in the said return is nil”. Small taxpayers whose aggregate turnover is up to ₹ 5 crores will be provided a waiver of late fees and interest if they file the form GSTR-3B for the supplies affected in months of May, June, and July 2020, by September 2020, no late fee or interest.

Source: TaxScan.

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CBIC waives off late fee on late GST return filing

CBIC waives off late fee on late GST return filing

The Central Board of Indirect Taxes and Customs (CBIC) has notified waiver of late fee, capping of late fee at Rs 500 in some cases, interest payable on late payments and extension of due dates for businesses to file goods and service tax (GST) returns for the Covid-19 impacted period, till October.

The decisions were taken by the GST Council on June 12.

Taxpayers who do not have any tax liability but were yet to file returns for the period from July 2017 to January 2020 – prior to the Covid period – no late fee will be charged, the notification issued Wednesday said.

For taxpayers having liability but not having filed their returns, they can do so with a late fee of maximum Rs 500, if returns are submitted by July 1, 2020.

Small taxpayers whose aggregate turnover is up to Rs 5 crore will be provided a waiver of late fees and interest if they file the form GSTR-3B for the supplies affected in months of May, June, and July 2020, by September 30, 2020, the notification added.

During Covid period of February, March and April 2020, interest rate on late return filings by small taxpayers with turnover up to Rs 5 crore, will be reduced to 9% from 18%, if returns of inward supplies are filed till September 30.

Taxpayers having aggregate turnover of up to Rs 5 crore in the previous financial year, whose principal place of business is in the states of Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana, Andhra Pradesh, the Union territories of Daman and Diu and Dadra and Nagar Haveli, Puducherry, Andaman, and the Nicobar Islands or Lakshadweep, the returns for August has to be filed by October 1, 2020.

For taxpayers with turnover more than Rs 5 crore, in Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand or Odisha, the Union territories of Jammu and Kashmir, Ladakh, Chandigarh or Delhi, the return for August has to be filed by October 3, 2020.

Source: Economic-Times.


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Kerala becomes the first State to adopt second-level verification for new GST registrations

Kerala becomes the first State to adopt second-level verification for new GST registrations

In an effort to curb ‘benami’ businesses under the Goods and Services Tax (GST) regime, Kerala has become probably the first State to introduce second level verification of registration granted on or after June 1.

This verification will be done for both State and central assessees.

In case of services, GST registration would be mandatory for all businesses with turnover of ₹20 lakh or more, with the exception of Manipur, Mizoram, Nagaland and Tripura, where this threshold would be ₹10 lakh. Registration is done mainly on the basis of Permanent Account Number (PAN). As on date, there are nearly 1.22 crore registered assessees in the country.

A circular issued by Kerala’s Commissioner of State Tax, State Goods and Services Tax Department said the Registering Authority has the primary responsibility of ensuring proper paper work.

“Considering the present situation, it is decided to conduct a second level verification by the intelligence wing,” it said.

Details on portal
Further, it mentioned that once registration is granted, all details will be made available on the GST portal and the Deputy Commissioner (Intelligence) of each jurisdictional district will collect and assign the Enforcement Squad for verification.

Squads will conduct detailed enquiries and check the background of proprietor/partners/directors. They will also confirm whether the applicant is genuine or a benami. Then a report will be submitted to District Joint Commissioner with a recommendation whether the registration is to be cancelled or not along with giving reasons for that.

“This verification and furnishing report is to be completed within seven days of receiving the details by each squad,” the circular said. The same mechanism will be adopted for Central assessees but the report will be submitted to the Deputy Commissioner of Central Goods and Services Tax.

The circular noted that despite the instructions issued for ensuring utmost care while granting new registration, bogus and benami registrations are being reported in the State.

This is very critical especially in the case of evasion-prone commodities such as lottery, iron and steel, flooring materials, glass, timber, hill produce, plywood, arecanut, cardamom etc. Since, the system automatically approves the application within three days of filing, many unscrupulous persons misuse the system. This is being done to claim fake input tax credit or taking and supplying credit through circular trade.

Interestingly, the Central Goods and Services Taxes (CGST) rules prescribe physical verification of the place of business of a registered person after the grant of registration, in case of doubt or incomplete Aadhaar authentication.

Accordingly, a report is to be submitted within 15 days. However, as on date no such mechanism has been developed at the State level for re-confirming or verifying the credentials of applicants but now Kerala seems to have taken the lead.

This exercise is critical for all States as all administrative control over 90 per cent of taxpayers having turnover below ₹1.5 crore vests with State tax administration and the remaining with Central tax administration.

Further all administrative control over taxpayers having turnover above ₹1.5 crore shall be divided equally between the Central and State tax administrations.

Source: The-Hindu-Business-Line


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GST mop-up hit by Covid, ‘act of God’: Centre

GST mop-up hit by Covid, ‘act of God’: Centre

Amid the chorus for GST compensation from states, the Centre has conveyed that there is a need to factor in the “abnormal situation” due to the coronavirus pandemic, which it described as an “act of God”, indicating that there was no insurance for 14% growth in GST collections during these times.

Three years ago, while introducing GST, the Centre had promised to compensate states for “revenue loss”, if collection growth was under 14% in a year. “Compensation is a larger issue. The Centre is not going back on its promise, but should it not enforce the force majeure clause since this is an event triggered by things beyond anyone’s control? It is an ‘act of God’,” an official told TOI.

Data presented at the GST Council meeting on Friday showed that GST collections had shot up to over Rs 62,000 crore in May — almost twice the level seen in April — but 38% lower than a year ago. A large part of the sequential jump was attributed to payments for April spilling over into May given the extended deadline. In any case, the actual numbers will only be known after a few months as the Centre is not enforcing the payment and filing deadline.

While collections during April and May have been around 45% of monthly average (of a shade over Rs 1 lakh crore), is it fair for the states to demand 114%?” said a source. “Haven’t their VAT, excise and property tax collections suffered,” added another source.

The Centre has, however, agreed to look into the issue of compensating states after finance minister Nirmala Sitharaman suggested in March that the Council could look at the option of market borrowings. On Friday, her party colleague and Bihar deputy chief minister Sushil Kumar Modi is learnt to have pointed this out.

A state finance secretary told TOI that “invoking the force majeure clause” was not provided for in the statutes, although the Centre has made it clear that the GST Council needs to arrange for the compensation. “Technically, they (Centre) are right. They are in no position to pay, given that there was a shortfall last year too,” the official said.

A state finance minister conceded that it may not be possible for the Centre to compensate if a state fails to achieve 14% annual growth in GST collections. “Pre-lockdown too, there was a massive gap because 14% growth was assured. The gap will rise given the economic situation,” the minister said.

In fact, during the GST Council meeting in Goa too, the issue had been flagged since the average GDP growth had slowed down from the earlier highs. “To achieve 14% GST growth, with GDP growth of 6% is tougher than at 8-9%,” a state revenue secretary added.

Source: Economic-Times

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Government gives leeway to MSMEs from penalties, interest for GST non-compliance

Government gives leeway to MSMEs from penalties, interest for GST non-compliance

The government on Friday announced some leeway for small and medium companies in the Goods and Services Tax (GST) framework during the GST council meeting. The relief came in the form of reduced penalties and intrest for small and medium companies.

The government has announced relief by the way of waiver or reduced late fee and interest for delayed filings and payment of taxes by the dealers who have a turnover of less than Rs 5 crore. Tax experts say that many companies were unable to comply with the regulations and slapping them with interest and penalties was a double whammy for them.

The government also allowed tax credit on the corporate social responsibility, which many say would go a long way at a time when many companies are looking to spend more on Covid related relief work.

“Allowing input tax credit for goods and services used in CSR expenditure, GST paid on additional health insurance premiums due to COVID-19, masks, hand sanitizers etc. to be used in offices, was one relaxation/ clarification that the businesses were looking forward to. Guess, one would now need to wait for the next meeting, to get clarity on this critical business expenditure,” said Harpreet Singh, Partner – Indirect Tax, KPMG in India.

Industry trackers say that the government is trying to do a balancing act as it needs more revenue through GST but also doesn’t want to create hurdles for companies in terms of compliance. The government is worried that it would face a major shortfall in revenue collections due to Covid pandemic at a time when even companies are facing major issues with their revenues and cash flows.

“The Government is faced with a tough balancing act. On one hand, it needs robust GST collections to help meet its regular plus the extraordinary nature of expenses during the pandemic. On the other hand, businesses are looking for reliefs from the Government to help them tide the major disruptions, loss of revenue and uncertainties. The announcements made in today’s GST council meeting are a reflection of the tight balancing act that the government has on hand,” said Saloni Roy, Senior Director.

All the announcements are set to benefit the smaller organisations more than the larger ones, say experts.

Abhishek Jain, Tax Partner, said, “While there was not much for larger businesses, the late fee waivers and additional moratorium for smaller businesses is quite a welcome move. With the current financial flu, smaller businesses were aggressively seeking stimulus and some of their requests have been well considered by the council.

Source: Economic-Times.

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New GST registrations hit by lockdown: Industry Insider

New GST registrations hit by lockdown: Industry Insider

New registrations under goods and service tax (GST) have been getting delayed to as much as 60 days or more during the lockdown period, compared to the regular turn-around time of about a week, said industry insiders.

While several applicants have faced delays going up to a few weeks, some of the applications filed before the lockdown began on March 25 are yet to be issued registration numbers. The issue, which is being faced by taxpayers across different states, has been raised by many businesses with the Central Board of Indirect Taxes and Customs (CBIC).

Besides new businesses starting up, interim resolution professionals (IRPs) or resolution professionals managing companies undergoing corporate insolvency resolution have been grappling with getting new registrations. Rules mandate IRPs to file for fresh registrations in all states where the company was earlier registered.

“Delay in grant of registration is acting as an active restraint for IRP/RP’s appointed under IBC laws, slowing the revival process for debt laden companies,” said Rajat Mohan, senior partner at AMRG Associates.

Last week, CBIC enabled a separate registration facility for IRPs on the GST portal.

According to officials, the delay in issuing new registration numbers has been due to far fewer number of tax officers across various jurisdictions having remote or virtual private network (VPN) access to process the applications.

“In many places the jurisdictional officers of the area where a business is situated are working from home, and may not have VPN access or digital signature certificates,” said an official, asking not to be named.

GST Network had said in April that it had provided secured access to over 1700 tax officers in 18 states and union territories to work remotely. Over 10,000 new registrations were issued between March 25 and April 3, it had said. GSTN did not respond to ET’s queries on new registrations post this period.

Source: Economic-Times.

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GST Council eases compliance burden for businesses

GST Council eases compliance burden for businesses

The Goods and Services Tax Council on Friday decided to further ease compliance burden of businesses by providing relief on late free and interest payable on late payments.

It reduced late fee and interest for those with tax liabilities and waived off late fee completely for those with no tax liabilities.

Finance minister Nirmala Sitharaman said that GST collections had fallen to about 45%, aggravating the problem of compensation to states, even as states demanded they be funded through market borrowing. The Council will meet again in July to specifically discuss this issue.

“For all those who have no tax liabilities but have not filed their returns between July 2017 and January 2020 there will be zero late fees,” FM Nirmala Sitharaman said.

“For people who have tax liability, maximum late fee for non-filing of GSTR-3B returns for period July 2017 – January 2020 has been capped to Rs 500,” she added.

Companies having no tax liability will not be fined any late fee if they have not filed returns, since July 1, 2017. Those with tax liabilities will now be able to pay a late fee of Rs 500 per month, per return, far lower than Rs 10,000 per month.

During Covid period of February, March and April 2020, interest rate on late return filings by small taxpayers with turnover up to Rs 5 crore, will be reduced to 9% from 18%, if returns of inward supplies are filed till September 30.

The late fee and interest will be waived for the months of May, June and July, if returns are filed by September 30.

“Providing compliance relief, even beyond September if required, to all businesses is essential at the present stage where the primary focus has to be on business revival and working capital management,” said MS Mani, partner at Deloitte India.

Taxpayers can file for restoration of GST registrations that have been cancelled till June 12, 2020, through a one-time extension being offered till September 30.

Compensation Cess
The GST Council will meet again in July to discuss exclusively compensation cess which has to be given to the states. The fund shortfall remains an issue even with the Centre having released Rs 36,400 crore to states as compensation cess for December to February period, while states have asked the GST Council to raise money through market borrowings.

“If there has to be a borrowing, how and who’s going to pay for it… it will be discussed,” Sitharaman said.

The total outgo to states stands at Rs 1.51 lakh crore for FY 2019-20, with installment of March remaining. Between April and November 2019, the government had released Rs 1.15 lakh crore as funds to states. About Rs 12,500 crore more needs to be paid to states for the month of March.

GST Collections
The impact of coronavirus followed by the lockdown has hurt GST collections, with the April and May collections falling well short of targets of Rs 1 lakh crore per month.

“States understood what the collections are, they’re at 45% only,” Sitharaman said.

The Government is faced with a tough balancing act, as on one hand it needs robust GST collections to help meet its regular and extraordinary expenses during the pandemic, while on the other hand, businesses are looking for relief to help them tide the major disruptions, loss of revenue and uncertainties.

“Collections are done by states as well, and every state is fully aware of how much money they’re getting every month. Discussion is happening together, revenues we got are not final,” said revenue secretary Ajay Bhushan Pandey.

A complete picture will emerge after collections for April, May and June are taken into account, he added.

Rate rationalisation
The Council however postponed rationalisation of GST rates for textiles, footwear and fertiliser, even though principally all members agreed that the duty rates need to be corrected as these products faced inverted duty structures.

“The minister for UP wanted to take call on brick-klins and pan masala. This meeting will be taken up in the next GST Council meeting,” Sitharaman said.

Source: Economic-Times.

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CBIC settles controversy over imposition of GST on directors’ income

CBIC settles controversy over imposition of GST on directors’ income

The Central Board of Indirect Taxes and Customs (CBIC) on Wednesday clarified that remuneration to directors — whatever name they are referred to as (independent directors or whole time directors) — would attract goods and services tax (GST) in case they are not employees of the concerned companies. GST will be imposed on them on a reverse charge mechanism (RCM). This way, CBIC has settled an ongoing controversy related to the matter due to conflicting rulings by the authority for advance rulings (AARs).

Normally, a person or entity providing services pays tax to the exchequer, and recovers it from the receiver of the service.

But under RCM, the receiver of the service pays the tax by deducting it from the service provider’s compensation. In case they are employees of companies, part of their remuneration would draw GST, while the other part will not attract it. The CBIC relied on the Income Tax Act for the purpose of GST.

While independent directors have to be from outside the company concerned, the whole-time directors could be company employees or those rendering services from outside.

It said part of the employee directors’ income, which is declared as salary in the books of companies concerned and tax is deducted at source (TDS) under Section 192 of the I-T Act, would not draw GST. However, that part which is declared as “other than salaries” and TDS is imposed under Section 194 (j) would draw GST. This remuneration would be treated as fees for professional or technical services.

The clarification came amid contradictory rulings of the authorities for advance rulings (AARs).

Amit Maheshwari, managing partner , said, “We were seeing contradictory AAR rulings on this matter and there was confusion in the minds of taxpayers on how to treat director remuneration. Linking it with the treatment under the I-T Act would result in consistency across both the laws, providing more certainty to tax payers.”

Abhishek Jain, partner,  said this clarification was sought for most businesses, especially on account of the contrary advance rulings and potential impact for businesses.

Earlier, the Karantaka AAR had ruled that remuneration of executive directors are not liable to GST since he is an employee of the company. It said non-executive directors will pay GST through RCM.

The order has stirred a controversy as other state AARs held that all directors are liable to pay GST.

In the case related to Craft, the Rajasthan AAR had ruled that the services rendered by a director to a company for which consideration is paid to him under any head is liable for GST under RCM. The situation would remain the same even when the director is a part-time director in another company. The AAR did not distinguish between executive director and non-executive director as was done by its Karnataka counterpart.

In a case relating to Consulting Engineers (India), the Karnataka AAR, in 2017, had also ruled that the consideration paid to a director in the form of remuneration is in relation to services provided by him or her to the company. Thus, the company is required to pay GST under RCM on remuneration paid to the director, it had held.

Source: Economic-Times.

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