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28th GST Council meet on Saturday: Return simplification, law tweaks, setting up of tribunal on table

28th GST Council meet on Saturday: Return simplification, law tweaks, setting up of tribunal on table

The proposed amendments to the goods and services tax (GST)-related laws, simplification of GST returns, the creation of GST appellate tribunal and the revenue position of states will be among the key items slated for discussion in the upcoming 28th GST Council meeting on Saturday. 28th GST Council meet on SaturdayRate cuts and clarification for 40 handicraft items, 32 services and 35 goods including the exemption to marble/stone idols, sanitary napkins, sal leaves will also be discussed, alongside reports of six committees and ministerial panels on issues such as the imposition on cess on sugar and levies on the lottery, officials said.

A rate cut has been recommended from 28 per cent to 18 per cent for lithium-ion batteries, which are used to charge electric vehicles; for water coolers, ice cream machinery along with reduction from 28 per cent to 12 per cent for fuel cell vehicles; for bamboo flooring from 18 per cent to 12 per cent and handloom dari from 12 per cent to 5 per cent, they said.

Though items such as natural gas and aviation turbine fuel (ATF) have not been listed in the meeting agenda, a senior government official said that if time permits, the Council may discuss those items but a decision is unlikely given the revenue implications for states. “There are many listed items for the meeting, so only if time permits, natural gas/ATF could be discussed. The inclusion of natural gas is not contentious, but ATF may be a tricky item given that it contributes majorly to revenues of Delhi and Mumbai,” the official said.

The official further said that since most airlines fuel their planes in Delhi or Mumbai, the inclusion of ATF along with allowing input tax credit will result in less revenue for these two regions. “Smaller states do not earn significantly from ATF, whereas for places like Delhi and Mumbai, it is a major contributor. Allowing credit would result in the revenue stream from ATF getting split among all states instead of the current concentration in these two places. Mumbai may even recover from alternate revenue sources but for Delhi, it could mean a significant loss of revenue,” he said.

Finance Minister Piyush Goyal will chair the meeting of the Goods and Services Tax Council, his first time since taking charge of this portfolio. Officials said that it was considered that Union Minister Arun Jaitley may attend the meeting as a special invitee through video conferencing but it has been decided against since GST Council rules do not specify such exception and it may leave scope for the Council’s decisions getting challenged in courts later.

Apart from the rate considerations, the Council will also discuss reports of six committees and ministerial panels which include those on the lottery, Integrated GST (IGST), on creating an ecosystem for seamless road transport connectivity, digital payments, an imposition of sugar cess and reverse charge mechanism.

Given the high amount of unutilized IGST, the panel for it has recommended a change in cross utilization pattern to allow taxpayers to first use IGST credit for payment of CGST/SGST before using CGST/SGST credit. Unsettled IGST stands at about Rs 1.16 lakh crore, with two provisional settlements of Rs 35,000 crore in February and Rs 50,000 crore in June this year.

The panel on seamless connectivity has suggested doing away with check posts for pollution control certificate, payment of road tax along with the mandated recording of every instance of inspection along with recommending linking the VAHAN database with e-way bill system. The GoM on digital payments has suggested keeping the incentives on hold for now, while the panel on sugar cess has proposed a 1 per cent agricultural cess on certain commodities.

Finer details of the proposed returns simplification is also likely to be discussed. The new model proposes uploading of invoices by the supplier before 10th of next month that shall be subsequently posted in the viewing facility of the buyer by 12th of next month, who will then lock those invoices. The new returns filing model proposes single monthly return for all taxpayers except composition dealers, TDS/TCS and staggered return filing dates based on the turnover of the registered person.

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Source: Indian Express
GST tweak may see the return of retrospective amendments

GST tweak may see the return of retrospective amendments

The government is likely to retrospectively amend laws governing the goods and services tax (GST) to deny transitional credit to taxpayers against cesses levied in the earlier indirect tax regime.

If it goes through with its plan, GST tweak may see the return of retrospective amendmentsthe Narendra Modi government will be going back on its promise of not making retrospective amendments to tax laws that have an adverse impact on taxpayers.

The proposed amendment to the GST law seeks to explicitly exclude cesses levied in a pre-GST regime from allowable transitional credit that can be claimed by companies. Under the transitional credit provision, companies were allowed to claim the tax credit against levies such as value added tax and service tax on stock purchased before implementation of GST for a limited period.

Many companies availed the transitional credit facility seeking input tax credit also for cesses such as the Krishi Kalyan cess paid in the pre-GST regime through the TRAN-1 form.

However, the central government doesn’t want to give credit against the cesses. Mint could not ascertain the exact amount of transitional credit claimed against cesses.

It accordingly proposes to specifically amend the transitional provision in the GST law to only allow input tax credit against eligible duties and insert an explanation excluding cesses from the list of eligible duties.

The amendments will be tabled in the upcoming monsoon session of Parliament beginning 18 July.

“Excluding cesses from transitional credit will be the only amendment that will be retrospective as the transitional claims have already been filed through the TRAN-1 form. None of the other amendments proposed to the GST laws are retrospective,” said a government official, who did not want to be named.

Companies had claimed nearly ₹65,000 crore in transitional credit by mid-September, prompting the Central Board of Indirect Taxes and Customs (CBIC) to review the claims. CBIC asked taxpayers to file revised claim forms by 27 December or face action for what they believe are exaggerated claims. It has started the process of phase-wise examination of some of the highest transitional credit claims.

CBIC also warned taxpayers not to utilize disputed transitional credit against GST liability and said that it will recover the amount with interest and penalty.

“Such an amendment will have a financial impact on the business as the tax liability will increase. Industry expected that the cesses that were creditable in the pre-GST regime will be creditable in the GST regime as well. We could see advance rulings or the companies approaching courts,” said Suresh Rohira, Partner, Grant Thornton India LLP.

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Source: Live Mint
GST on land lease: High Court ruling upsets status quo

GST on land lease: High Court ruling upsets status quo

The Bombay High Court has ruled that the one-time premium payable for long-term lease GST on land lease: High Court ruling upsets status quo(30 years or more) of land would attract goods and services tax (GST) as it constituted ‘supply’ under the GST Act.Experts said that the order went against the accepted principle of considering long-term leases as “sale of immovable property”, which is outside the purview of GST.

Short-term lease (less than 30 years) are anyway subject to GST and had attracted service tax in the previous regime.

In the present case, the petitioners, who are builders and developers, won bids for leasing land from City Industrial and Development Corporation of Maharashtra (CIDCO) in Navi Mumbai and Panvel. But they questioned the GST levy on the one-time lease premium (along with monthly rentals that are taxable) when the allotment letter was issued. The revenue department contended that the grant of leases constituted ‘supply’ for a ‘consideration’ and was, hence, eligible for GST.

“Envisaging GST on one-time lease premium paid for acquisition of leasehold land may trigger yet another controversy questioning the applicability of GST on all transactions of leasehold land deals in the corporate arena,” said Rajat Mohan, partner, AMRG & Associates.

“This ruling challenges the tradition of treating a long-term lease of an immovable property as akin to sale of immovable property for the purposes of charging indirect taxes,” Mohan added.

Sale of land doesn’t attract GST even as states impose stamp duty and registration fees on such transactions. However, GST is payable on renting of immovable property or construction of a complex/building/civil structure. Put simply, sale of land will not attract GST and sale of the building after obtaining completion certificate or after its first occupation will not attract GST.

However, sale of the building before its first occupation or before issuance of completion certificate will be taxed under GST, and be treated as the supply of service.

The tax department issued a notification in 2016 exempting upfront amount (premium, ‘salami’, development charges, etc) received by state governments’ industrial development corporations for providing taxable services by way of granting a long-term lease of industrial plots to industrial units.

“At this stage, it is necessary to start discussions on the inclusion of the real estate sector including transactions involving land within the GST ambit so that issues in relation to leasing/renting of land are dealt with appropriately within the GST framework,” said MS Mani, partner, Deloitte India.

According to the GST Act, the sale of land doesn’t attract GST even as states impose stamp duty and registration fees on such transactions. However, GST is payable on renting of immovable property, construction of a complex, building, civil structure.

Source :  Financial Express
GST practitioners form national body to suggest changes

GST practitioners form national body to suggest changes

Practitioners of Goods and Services Tax (GST) from across the country have formed a Joint Action Committee (JAC) to suggest simplification in compliance GST practitioners form national body to suggest changesand filing of returns as well as to ensure that money (or businessmen) is not blocked in the form of refunds due to them. The JAC was announced on Sunday when the two-day national conclave of tax practitioners concluded in Ahmedabad.

The committee was formed to fill the gap of a nation-wide body to represent to the authorities the issues faced by businessmen and tax practitioners at the grass-root level. “GST is a national Act, which subsumes most of the Acts governing states and central taxes. There is no way local tax practitioners can represent their cases to GST Council. Such a national body is the need of the hour,” said Amit Dave, a tax practitioner from Indore.

Close to 200 delegates from 29 states and Union Territories participated in the conclave. Representatives from each state will be a part of the JAC. A core body within JAC will also be formed to coordinate the activities of JAC.

The conclave witnessed deliberations on a host of issues, and suggestions to simplify the system will be submitted to the GST Council. “The upcoming meeting of GST Council has suggested 46 amendments, the conclave deliberated on a wider range of issues. We were surprised with the kind of issues faced under GST in different parts of the country,” said Axat Vyas, one of the key organisers of the conclave.

Some of the major suggestions include single one-click monthly return, allowing rectification in returns and creation of an activity log for traders to trace their actions, among a host of others. The Conclave also deliberated on shortcomings of the Act.

Participants complained that the GST portal is not uniform across states and while it is functional in some states, it’s dysfunctional in neighboring states. Deepak Bapat, a tax practitioner from Maharashtra, said that the IT system is not robust enough and the Act is in place. “All commissioners are given an authority to extend the deadline to file taxes by three months, but they have never used this discretion,” said Bapat. Sreedhara Parthsarthy, a tax practitioner from Ballari, in Karnataka, advocated that traditional tax practitioners should also be allowed to audit GST returns. Under the GST regime, only Chartered Accountants and Cost Accountants are allowed to conduct audit reports.

Source :  DNA
GST worked well, generated sufficient revenue, says Piyush Goyal

GST worked well, generated sufficient revenue, says Piyush Goyal

GST Worked Well, Generated Sufficient Revenue: Finance Minister Piyush Goyal

Finance Minister Piyush Goyal has said that the Goods and Services Tax (GST) has worked well in past one year and has generated sufficient revenue.

Addressing the seminar organised by Chhattisgarh Chamber of Commerce and Industries (CCCI) under aegis Chhattisgarh State Infrastructure Development Corporation (CSIDC), Goyal said, “The GST in the past one year has successfully worked and has generated ample revenue. This year there won’t be a dearth of revenue if people continue to be a part of this system and pay their taxes. Just when people pay their taxes correctly, the government will be more empowered to reduce the rates even further, making the mechanism simpler.” The Union Minister further said that the tax-related cases in the Supreme Court will be withdrawn by the government.

“The government has decided to withdraw almost half of the Supreme Court cases relating to the taxation. Most of the cases in the Supreme Court are of small and medium scale businessmen,” he added. He also stated that the digitalisation of taxation has been done to stop the interference of Government in their business. In a major initiative to ease the tax system of the country, the Centre rolled out the GST on July 1, 2017. Under the GST regime, a regulated tax system was introduced in India.

Source: (ANI)
Govt will know if you evade GST, Sushil Modi warns traders

Govt will know if you evade GST, Sushil Modi warns traders

Bihar Deputy Chief Minister and GST Network panel head Sushil Kumar Modi on Saturday said that the traders should stop evading taxes as the government can now Sushil Modi : GSTtrack them down by using data analytics developed by Infosys. He said that the government – by using data analytics – has identified a large number of defaulters while filing GSTR3B and GSTR1.

“We will use data analytics to track GST tax defaulters through its network which has 360-degree view of online transactions to detect discrepancies,” Modi said after chairing the 9th meeting of the GSTN Group of Ministers (GoM). Modi heads the GoM which was set up to address the IT-related issues of the GSTN.

In last one year of GST regime, the revenue authorities have come across numerous cases of tax evasion where companies used fake bills to claim input tax credit – an option in the GST which allows the taxpayers to claim credit for the taxes paid on purchase. To exploit this option, traders bought fake bills which enabled them to claim input tax credit on the supply which never happened.

Last month, the GST department sent notices to about 200 firms after data mining revealed that they may have evaded the taxes by under-invoicing or selling their goods in cash. According to reports, the GST department raised red flags in cases where details in GSTR3B and GSTR1 didn’t match.

This year in May, GST officers sent scrutiny notices to several companies whose tax payments did not match the final sales return. The move had come after revenue authorities detected under payment of GST by about 34 per cent. As per an analysis done by the department, 34 per cent of businesses paid Rs 34,400 crore less tax between July-December while filing initial summary return (GSTR-3B).

Warning against this practice, Sushil Kumar Modi yesterday said: “Traders and dealers should not avoid or evade paying taxes that are due from them on their goods and services, as business intelligence software (third eye) will trace the defaulters easily.”

Asked to comment on Finance Secretary Hasmukh Adhia’s displeasure over technology failure in implementation of GST, Modi said the GoM is fully satisfied with Infosys and collectively solved the problems that cropped up in the past. “We would also continue to solve the existing problems in GSTN collectively. As on today, the number of returns filed is 124.8 million and number of payment transactions stands at 42.6 million. Therefore, Infosys performance is good,” he said.

The GST Council is scheduled to hold its next meeting in New Delhi on July 21.

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Source: Business Today
States slip on fiscal targets on farm loan waivers, GST: RBI

States slip on fiscal targets on farm loan waivers, GST: RBI

Higher expenditure on salaries and farm loan waivers, coupled with a revenue shortfall on GST implementation, led to a slippage of 0.35 per cent in states’States slip on fiscal targets on farm loan waivers, GST: RBI fiscal targets to 3.1 per cent in 2017-18, the RBI said today.

This is the third consecutive year where the states have failed to meet their gross fiscal deficit (GFD) target, the central bank said, adding this comes despite expectations of an improvement on higher devolution from the Centre.

For FY19, states are hoping for a 0.2 per cent revenue surplus as against a revenue deficit of 0.4 per cent as per the revised estimates, which will lead to an overall GFD of 2.6 per cent, against 3.1 per cent in FY18, it said.

At a country-wide level, farm loan waivers alone contributed to a third of the overall slippage worries, with a 0.05 per cent slippage of the overall 0.13 per cent on revenue expenditure, the RBI said in its study on state finances based on state budgets.

The apex bank reiterated its concerns on the “moral hazard” farm loan waivers, saying their track record for improving productivity is “unproven”.

Moreover, studies suggest that the debt waivers have also led to a shift to informal sources of finance, it said, adding that they also possess a risk to inflation.

Starting with Andhra Pradesh and Telangana in 2014, a slew of states including Tamil Nadu, Maharashtra, Uttar Pradesh, Punjab and now Karnataka have announced the sops.

In FY18, farm loan waivers touched 0.32 per cent of the GDP as against budget estimates of 0.27 per cent, it said, adding that more such moves are pending for the fiscals ahead.

States which have announced the waivers have also reported a decline in capital expenditure, it said, adding development has also been a casualty because of it.

“They (waivers) impact credit discipline, vitiate credit culture and dis-incentivise borrowers to repay loans, thus engendering moral hazard,” the study said.

Hikes in salaries, mainly as a higher proportion of states implement proposals in line with the seventh pay panel, resulting in 0.09 per cent slippage on the revenue expenditure.

There was a 0.27 per cent impact in the GFD on account of the revenue shortfall, and the study attributed the same to the implementation of the goods and services tax (GST).

“The decline in states’ tax revenues is essentially associated with the pending accounting issues related to GST implementation,” it said.

However, in his foreword, RBI’s executive director Michael Patra said that as the GST stabilises, it should boost states’ revenue capacity and support fiscal consolidation.

He, however, asked states to be more cognizant on the expenditure management in the future as “visible fiscal pressures” are emerging for several states on pay revisions, interest payments, and farm loan waivers.

“Given debt sustainability concerns associated with rising market borrowings, improved efficiency of expenditures and fiscal marksmanship may be necessary to sustain growth while maintaining fiscal prudence,” he said.

Source: The Economic Times
Tax Professionals to discuss GST glitches at two-day National conclave in Ahmedabad

Tax Professionals to discuss GST glitches at two-day National conclave in Ahmedabad

Close to 200 tax practitioners from about 26 states will GST practitionersdeliberate on the burning issues of Goods and Services Tax (GST) during a two-day conclave to begin in Ahmedabad on Saturday, July 14. Issues related to simplification of GST will be discussed and findings will be submitted to GST Council which is meeting on July 21 to simplify things.

This is the first ever, and the most widely represented meet of stakeholders at the grass-root to be held to review GST, which recently marked its first anniversary. “Returns, refunds, and recommendations are the main things on our agenda. Participants from almost all the states in the country will share the issues they are facing. This will be a win-win proposition for the government, country’s economy, businessmen and tax practitioners,” said Axat Vyas, an organizer.

Nigam Shah, former president of Gujarat Sales Tax Bar Association said even after one year of the roll-out of what is considered as the biggest ever indirect tax reforms in the country since independence, said there are issues like lack of registration, dual registration, not getting refunds and difficulties in filing returns among others.

“We want to highlight these bottlenecks. For example, GSTR-1 needs to be filed within 10 days, which is mostly impracticable. In Punjab, there are issues of traders getting multiple registrations… Refunds are being issued without verification – a dangerous thing as there could be a mismatch in actual refunds and refunds sought,” he said

Source :  DNA
GST: Employers may be able to claim input tax credit on food, transport

GST: Employers may be able to claim input tax credit on food, transport

The government has proposed 46 broad categories of amendments in laws related to the goods and services tax (GST) that include allowing taxpayers to make changes in returnsGST has positive impact on overall biz: CFOs survey to rectify inadvertent mistakes along with doing away with reverse charge mechanism.

As per the proposed amendments, employers will be able claim input tax credit on facilities like food, transport and insurance provided to employees under any law.

The amendments to the GST laws — Central GST, State GST, Integrated GST and Compensation of States Act — have been placed in public domain for comments from stakeholders by July 15, following which they will be presented in the GST Council for final approval. After that, the amendments would need approval from the Union Cabinet before being tabled in the upcoming Monsoon Session of Parliament and corresponding state legislatures.

The amendments also provide for modification of reverse charge mechanism, separate registration for companies having different business verticals, cancellation of registration, new return filing norms and issuance of consolidated debit/credit notes covering multiple invoices.

However, the amendments disallow transitional credit for pre-GST cesses.

As per the draft amendments, employers will be allowed to claim input tax credit (ITC) for supply of food, beverages, health services, life insurance, travel benefits renting or hiring of motor vehicles, given to employees, provided it is obligatory for them under any law. It, however, would not be available on membership of a club, health and fitness centre, and travel benefits extended to employees on vacation such as leave or home travel concession.

The amendments will increase the threshold for the composition scheme as was approved earlier by the GST council to Rs 1.5 crore from RS 1 crore. Also, manufacturers and traders supplying services will be eligible for the scheme if they supply services of value not exceeding 10 per cent of the turnover or Rs 5 lakh, whichever is higher in the preceding financial year. “This is a taxpayer-friendly measure and it is believed that small taxpayers would immensely benefit from this amendment,” the draft said.

Abhishek Jain, partner, EY, said, “Amendments like deletion of general reverse charge provisions on procurements from unregistered dealers, enabling provisions for new GST return filing process, allowing single debit/ credit note for multiple invoices, etc would aid in bringing quite an ease to businesses from a GST perspective. However, transactions like denial of credit on repair and maintenance, general insurance, etc for motor vehicles, transition of cess credits, and some more may need a revisiting of tax position adopted by some businesses.”

The amendments are being viewed as being beneficial for all businesses, especially small ones. “The expansion of the input tax credit provisions and the beneficial changes in compliance provisions such as issue of consolidated Debit/ Credit Notes, the proposed new return filing process, extension of the bill to ship to concept for goods to cover cases where the recipient of service is different from the payer etc would benefit all businesses,” M S Mani, partner, Deloitte said.

Source :  The Kashmir Monitor
More business-friendly: Govt proposes clutch of amendment to GST law

More business-friendly: Govt proposes clutch of amendment to GST law

To iron out issues concerning implementation of the goods and services tax (GST), the Centre on Monday proposed several pro-business amendments to GST laws suchGST Law as restricting GST liability under reverse charge basis on procurements from unregistered vendors to specified class of registered persons to be notified by the GST Council and allowing businesses to have separate registration for each place of business in a state. Also, the input tax credit entitlement on vehicles will be relaxed to cover the passenger vehicles having the seating capacity of not more than thirteen persons, in case these are used for specific (rather than personal) purposes. So ITC will now be available for dumpers, work-trucks, fork-lift trucks and other special purpose vehicles.

While the changes are termed business-friendly and supportive of ease of doing business, sections of the industry could be affected by the provisions relating to restriction on transfer of credit balance of education cess, secondary and higher education cess, Krishi Kalyan cess, additional duties of excise (textile and textile articles) etc. “Specific denial of transition of credit of cesses like education cess etc would be against the tax position that some taxpayers had taken,” said Abhishek Jain, tax partner, EY India.

Pratik Jain, partner and leader, Indirect Tax, PwC, said: It is a welcome step to invite public comments for the proposed amendments to the GST law. The amendments such as amendment in the definition of supply, widening of credits on vehicles and restricting reverse charge liability for procurements from unregistered vendors to the specified set of persons are welcome.”

He, however, added that the proposed amendments do not cover some of the amendments which were already highlighted to the GST Council such as the tax liability on services deemed to be provided by the branch offices to foreign offices/parents. “It would be interesting to see which provisions are proposed to be given retrospective effect and which are given effect prospectively, Jain said.

In all, the Centre’s draft proposals to amend GST laws contains 46 amendments on which the public could give their suggestions till July 15. Significantly, an option is proposed to be given to every person to obtain separate registration for each place of business in a state. Previously, a single registration is required to be obtained for all the places of business in a state, except when they were operating as a separate business vertical. Further, the provisions for individual registration of multiple SEZ units have also been proposed to be introduced.

In a tax-payer friendly amendment, it is now proposed to allow ITC in respect of food and beverages, health services and travel benefits to employees, which are obligatory for an employer to provide to its employees under law. Merchant sale transactions where the goods do not enter India, sale of goods stored in customs bonded warehouse and high sea sales transactions are specified as transactions which do not amount to supply of goods as well as services, resolving the ambiguity of treatment of such transactions.

As reported by FE recently, a group of ministers (GoM) led by Bihar deputy chief minister Sushil Modi is set to recommend to the GST Council that a section in the GST Act concerning the reverse charge mechanism be scrapped as “it discriminates against unregistered dealers while not adding much to the revenue.” Under the RCM rule, registered dealers are now required to make tax payments in case they procure goods from unregistered ones. This has been resisted by the registered small businesses as they find it cumbersome to comply when goods are purchased from dealers outside the GST ambit. Since the GST’s rollout in July last year, RCM has remained suspended and has recently been further deferred till September 30.

The amendments also seek to give effect to some of the decisions taken by the GST Council in the past like raising the turnover threshold for availing composition scheme increased from Rs 1 crore to Rs 1.5 crore. In the suggested amendments, definition of supply is proposed to be amended to remove specific inclusion of activities referred to in schedule II to remove an anomaly that in some cases, even though the activity specifically mentioned in schedule II did not amount to supply, due to deemed inclusion of such activities in definition of supply, it attracted tax.

Source : Financial Express