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Govt notifies rate at which tax is to be collected by E-Commerce operators under GST

Govt notifies rate at which tax is to be collected by E-Commerce operators under GST

Central Board of Indirect Taxes & Customs (CBIC) has issued a Notification No. 52/2018- Central Tax dated 20th September, 2018 to notify that every electronic commerce operator shall collect tax @ 0.5% (each under Central tax and State tax – to be notified separately by each State) of the net value on intra-state taxable supplies of goods and/or services.

Similarly, Notification No. 02/2018-Integrated Tax has been issued to notify that the electronic commerce operators shall collect tax at the rate of 1% as an integrated tax of the net value on inter-State taxable supplies.

Government notifies rate at which tax is to be collected by E-Commerce operators under GST.

Source: Central Board of Indirect Taxes & Customs
Easier tax refund regime for exporters in the works

Easier tax refund regime for exporters in the works

The government is examining the tax refund mechanism for exporters under goods and services tax (GST) Easier tax refund regime for exporters in the worksand may announce some measures over the next few days to streamline the process and speed up repayments. “Some measures are being looked at…,” a senior official told ET, adding that these could be unveiled by the weekend.

Exporters say delay in refund under GST impacts business and raises working capital cost. Last week, Finance Minister Arun Jaitley had said the government would take steps to boost exports.

The Central Board of Indirect Taxes and Customs (CBIC) has taken several steps to ease the process of refund for exporters, but some issues persist. It has had a detailed discussion with industry representatives on the issues faced by them in getting refunds seamless.

The government is now looking at all the procedures, as also execution issues at the central and state government levels, which are impacting exporters.

According to the official, it could consider some procedural relaxations to make tax refund seamless and easier. The restriction on inputs imported under some exemption notifications retrospectively is in focus, the official said, adding that the government could consider restricting refund of taxes only for those exports that use inputs under some exemption notification.

GST exemption notification

Industry representatives say challenges are more on account of state tax authorities lacking familiarity with some export schemes. State officers, they said, demand different set of documents and withhold refunds even after they have been sanctioned by the Centre. This is especially so in cases of services exports.

Sometimes refunds are rejected due to minor issues such as a change in the jurisdiction of officers. The jurisdiction office appearing on the GSTN portal may be different from the actual jurisdiction in the record of the department, and that sometimes leads to issues despite instructions from the CBIC that the issue should not hold up refunds.

The official said the government could look at providing a reconciliation mechanism for exporters to understand against which claims they have received the tax refund amount for integrated GST rebate claim.

Experts say the government must provide some new formulation to assuage exporters’ concern on refunds.

“Integrated GST refunds have streamlined largely except for internal container depots, but input tax credit refund still remains an issue,” said Ajay Sahai, director-general of Federation of Indian Export Organisations. “The government needs to address the situation expeditiously.”

Anita Rastogi, partner at PwC, said, “It is an expectation from the government to formulate a solution to eradicate the concern of businesses.

Ideally, the methodology may be prescribed where the restriction shall be applicable only on those outputs which are exported after using the inputs procured under the said notifications.”

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Why the government must move fuel to GST

Why the government must move fuel to GST

Fuel prices have hit all-time highs. Petrol crossed Rs 80 a litre. Diesel hit new records too. Fuel prices are technically supposed to be market driven, linked to international crude prices and foreign exchange rates. Practically, they are not. Both central and state governments tax fuel; the rates have varied wildly over the years. Why the government must move fuel to GSTRounding off for simplicity, the Centre taxes petrol at Rs 20 a litre. State taxes vary, but say for Delhi, they are around Rs 17 a litre. Hence, taxes amount to Rs 37 a litre. Without these, petrol at pumps would cost only Rs 43 per litre. This implies a whopping 84% tax on petrol, way higher than even the high-end slab of GST (28%), the supposed catch-all tax for goods and services in the country.

While tax on fuel has always been high, the last few years have been exceptional. Four years ago, central tax on petrol was around Rs 9 per litre (vs Rs 20 now), while state taxes were Rs 14 a litre (vs Rs 17 now). If we simply went back to those levels, the current petrol price would be just Rs 63 per litre.

So what happened in the past four years? Well, crude oil prices fell. As per policy, pump prices should have dropped, reaching Rs 40 a litre. However, the government interfered and raised taxes, cleverly ensuring that final petrol prices at pumps remained unchanged. As a result, you the consumer lost the benefit of lower crude prices. The consumers didn’t notice. Maybe they were just happy the prices didn’t rise. The government, meanwhile, had a windfall as fuel-related revenues doubled. Rough estimates suggest the Centre now makes around Rs 3 lakh crore from taxes on petrol products, and the states another Rs 2 lakh crore. To put it in perspective, the entire Union budget is around Rs 24 lakh crore, making fuel taxes a nice chunk of the government’s income.

Now, depending on whose side you are on, you may like or dislike this move. Some may say this was the only way the government could have fiscal discipline, which we never had in the past few decades. The extra money can be used to reduce our debt and increase welfare schemes. Detractors will say the fuel tax increase was a ploy to gouge more out of the middle class, which is fleeced at any given chance. Of course, all these discussions should have happened a few years ago when tax rates were changed, but somehow it didn’t attract much notice then. Until now, when the low crude oil price party has ended.

Crude prices shot up again. The rupee fell. Now, the taxes raised a few years ago seem like a huge burden on the consumer. The opposition took the issue head on, striking a chord with the middle class. Whether the BJP government will buckle or not remains to be seen. So far they haven’t. Maybe they think the angst people feel is temporary — either crude prices will fall again or people will just accept the hike and move on.

However, to think record fuel prices will have no political cost would be a mistake. Almost every political party takes the middle class for granted. Robin Hood style, they take from the middle class and pass it on as welfare schemes to the poor. By doing this, they hope to win more votes than the people they upset. However, fuel prices matter to all Indians now more than ever before. The jump in prices not only affects affluent voters with big vehicles, but also those with bikes. It also eventually causes inflation, which directly affects the poor. Taxation has its limits, and when an essential commodity like fuel is taxed at 84%, people do see it as unfair.

Also Read : Why GST on petrol and diesel prices may not lower fuel prices

The ideal solution is to bring fuel under GST, anyway the right thing to do if you go by the spirit of GST as a universal indirect tax. If fuel moves to GST, petrol prices will be a mere Rs 55 a litre at current prices. Imagine the joy it would give to millions. Imagine the love GST would get, and the boost it would give to the economy.

Of course, a reduction in fuel taxes from 84% to 28% will mean a big hit to government revenue — of around Rs 2-3 lakh crore, or 10-15% of its spending. However, the government could, and should, have more creative ways to raise money — higher disinvestment, land sales, growing GDP faster and widening the tax net, for instance. Scaling back expenses and pulling out of schemes that don’t work can also help cover some of the shortfall. Finally, while deficit control is always important, sometimes it is important to let go. Loosen the purse strings when people are suffering too much.

The long-term solution, and something that could have prevented all this, is to consider fuel hedging, or locking in future purchase prices when crude prices are low.

Lowering fuel taxes is a chance for the government to give relief to the consumer, make the GST more comprehensive and take the arbitrariness out of taxation. While it won’t be easy to bridge the revenue gap, it’s about time we found more innovative ways to raise money than just taxing the middle class some more.

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Alert! TDS, TCS under GST next month; Know what is the difference

Alert! TDS, TCS under GST next month; Know what is the difference

Surprising industries, the government has now taken one step ahead in its Goods and Services Tax (GST) drive. TDS and TCS under GSTIt has brought in section 51, which is about tax deducted at source (TDS) and section 52 about tax collection at source (TCS) under the regime. The government has kept October 01, to implement this new provision under the GST law. This new development is expected to make it mandatory for e-commerce companies in collecting taxes at the source and also to help in tracking down sellers on platforms like Amazon and Flipkart. Further, it will also give a boost to government companies in deducting GST at a specified rate. Both TDS and TCS were kept in abeyance as the government wanted their newly GST which was launched on July 01, 2017, to settle down.

Now that less than two weeks are left, let us understand about what is TDS and TCS.


Who is required to deduct TDS? 

  • a department or establishment of the Central Government or State Government
  • local authority
  • Governmental agencies
  • such persons or category of persons as may be notified, by the Central or a State Government on the recommendations of the Council

When is it required to be deducted? 

Where the total value of supply under a contract exceeds Rs 2,50,000 then a supplier of taxable goods or services is liable to deduct TDS. The rate at which TDS can be deducted is set at 2% under GST.

It needs to be noted that, TDS deductors, whether or not separately registered, are required to compulsorily register in GST irrespective of threshold limits.

TDS certificate

A deductor must furnish to the deductee a certificate in Form GSTR-7A (made electronically available), within 5 days of crediting the amount so deducted to Government, mentioning details like contract value, the rate of deduction, the amount deducted and an amount paid to the Government.

Amount of TDS shall be paid to the Government by the deductor within 10 days after the end of the month in which such deduction is made.

As for the deductee can claim credit, in his electronic cash ledger, of the tax deducted and reflected in the return of the deductor furnished under Section 39(3).

The due date for filing GSTR-7 is on 10th of the following month.


Who is required to collect? 

Every electronic commerce operator (“operator”), who is not an agent, is eligible to collect TCS at the prescribed rate when taxable supplies are made through it by other suppliers and the consideration with respect to such supplies is to be collected by the operator.

Companies like Amazon, Flipkart, Jabong, Snapdeal, Shopclues, etc. are the ones operating in India. As per the law, it is compulsory for every e-commerce operator register in GST irrespective of threshold limits. Further, it is mandatory for every person who supplies goods/services through an e-commerce operator to get registered under GST.

The rate of TCS is levied at 1% under CSGT, 1% under SGST and 2% under IGST.

An operator must pay the amount of TCS to the government within 10 days after the end of the month in which such collection is made.

Furthermore, the operator is required to furnish a monthly statement in Form GSTR-8 by the 10th of the following month. Not only this, they are also required to file an Annual statement in Form GSTR-9B by the 31st of December following the end of every financial year.

Every tax collected by the operator must be credited to the cash ledger of the supplier who has supplied the goods/services through the operator. Later the supplier can claim credit of the tax collected and reflected in the return by the Operator in his [supplier’s] electronic cash ledger.

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Source: Zee Business
Streamlining of GST compliance fast becoming a long row to hoe

Streamlining of GST compliance fast becoming a long row to hoe

A slew of contradictory advance rulings by the various tax benches has made GST compliancethe already complicated world ofgoods and services tax (GST) more complex.

A bunch of varied interpretations of the GST law by different Authorities for Advance Ruling (AAR) on the same subject is the latest addition to compliance challenges for businesses. For instance, recently, the Maharashtra AAR said that the process of installing solar equipment would attract 18% GST, while the Karnataka bench ruled that a 5% rate would apply.

In another matter on taxing printed advertisement materials, the Telangana AAR and West Bengal AAR not only gave conflicting verdicts, but also used different methodologies to arrive at their conclusions. That litigation would escalate in the GST-era was already anticipated. However, the pace at which applications are being filed is alarming, considering that it has only been 15 months since GST has been implemented.

The latest report issued by the GST Council, on applications received and rulings passed by the states authorities for the advance ruling (AAR) revealed that 363 applications have been filed so far across India.

Of that, 224 applications were yet to be decided as on June 2018.

GST Council Report

As the chart alongside shows, Maharashtra tops the list with 68 applications, followed by Karnataka, Gujarat, Delhi and Tamil Nadu. Tax experts foresee this number rising in the months to come. Although there have been reports that the government may consider setting up either a centralized authority or four regional authorities, there is no clarity on the timeline as yet.

While setting-up of a National Appellate Authority is the need of the hour, what also needs to be taken care of is that there is a judicious mix of people from the revenue department and law officials for a balanced judgement, tax experts said. Here, the government needs to take a leaf out of the advance ruling system practised in the excise/sales tax regime, where the decisions given were fairly reasonable, they add.

A delay in sorting out this issue would result in further increase in the compliance cost for businesses and hamper the ease of doing business in the country—a key feature widely tom-tommed when introducing GST.

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Source : Livemint
TDS, TCS Provisions Under GST To Come Into Effect From Oct. 1

TDS, TCS Provisions Under GST To Come Into Effect From Oct. 1

The government has notified October 1 as the date for implementing the tax deducted at source and tax collected at source provisions under Goods and Services Tax  (GST) law.

TDS, TCS Provisions Under GST To Come Into Effect From Oct. 1

As per the Central GST Act, the notified entities are required to collect TDS at 1 percent on payments to goods or services suppliers in excess of Rs 2.5 lakh. Also, states will levy 1 percent TDS under state laws.

E-commerce companies will now be required to collect up to 1 percent TCS while making any payment to suppliers under the GST. States too can levy up to 1 percent TCS under State GST law.

“The e-commerce companies for TCS and various Government Companies for TDS would need to quickly gear up their ERP systems to comply with these provisions from 1st October,” said Abhishek Jain, Tax Partner at EY. “With audit reports as well being notified, the industry would now really need to buckle up, given the short time frame.”

Rajat Mohan, a partner at AMRG & Associates, said the government has notified operation of TDS provisions on payments made by government agencies and TCS provisions for specified e-commerce operators effective October 1, 2018.

“These twin provisions are expected to further deepen the penetration of tax authorities in the economy, and it is likely to carve out widespread tax evasion of not only indirect taxes but also direct taxes,” Mohan said.

The GST, which subsumed over a dozen local taxes, was rolled out on July 1, 2017. However, to make it simpler for businesses in the initial months of the rollout, TDS/TCS provisions of GST laws were kept in abeyance till June 30. Later on, it was deferred until Sept. 30, 2018.

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Source: Bloomberg Quint
Opinion | Why GST on petrol and diesel prices may not lower fuel prices

Opinion | Why GST on petrol and diesel prices may not lower fuel prices

Over the last few days, there has been a strong body of opinion advocating the case for bringing oil products under the goods and services tax (GST). GST on petrol and DieselThere is no gainsaying the fact that petrol and diesel are one of the most heavily taxed products in India. For instance, about 45 percent of the price that a consumer pays for a litre of petrol at the pump go as taxes to the Centre and states.

GST, so the argument goes, will help sharply cut taxes in the two transport fuels, making it cheaper for people to tank up their vehicles. The basic assumption in this line of argument is that the GST rate for petrol and diesel will be fixed at the highest slab of 28 percent. Since GST, by definition will be a consolidated single levy, such a move will lower the tax incidence by about 17 percent, pulling down retail prices by several rupees a litre.

Such a deduction, elegant as it may appear, can be misleading.

For one, it disregards the states’, and the Centre’s, fiscal fixation for maintaining “revenue neutrality”. A revenue neutral rate (RNR) is the tax rate that results in similar tax earnings for the government despite changes in design or structure of the levies imposed.

One of the primary reasons why GST’s implementation took more than a decade was lack of consensus on the likely RNRs on many products.

Successive governments, both at the Centre and states, have used petroleum products as milch cows. In 2017-18, the Centre earned Rs 2.29 lakh crore from central excise duty on petroleum products, which is about 11 percent of the Centre’s total gross tax revenues of Rs 19.46 lakh crore earned during the year. Of course, a part of this was shared with states as part of an agreed devolution formula.

Likewise, states earn significant revenues from taxing petroleum products. This is particularly true for the richer or the so-called industrialised states such as Karnataka and Maharashtra.

In 2017-18, Karnataka, which levies a state value-added tax (VAT) of 30.28 percent on petrol and 20.23 percent on diesel, earned Rs 13,307 crore from taxes on petroleum products. This accounted for 14.5 percent of the states’ total tax revenues of Rs 91,718 crore, or for every Rs 100 that the Karnataka government earned in 2017-18, Rs 14.5 came from petroleum products alone.

Similarly, for Maharashtra. The state, which levies close 40 percent as VAT on petrol and about 25 percent on diesel, earned Rs 25,611 crore from taxes on petroleum products in 2017-18, which translated into 15 percent of the state’s total tax revenues of Rs 164,979 crore during the year.

The pattern is more or less similar across most states, illustrating how a disproportionately high amount of tax revenues are coming from just one set of products, both for the Centre and the states.

Given this historical peculiarity, states are unlikely to settle on a GST rate that would be lower than the RNR. What could be the possible revenue neutral GST rate for petrol and diesel? It would probably be in the range of 40-45 percent. Will a GST rate of 40-45 percent on the two fuels bring down their retail prices? Unlikely, because in the final analysis, the tax component on petrol and diesel prices at the fuel station remain the same.

The high tax structure in petroleum pricing is a painful legacy issue in a rather flawed design of India’s energy economics. States are unlikely to let go of their fiscal powers to tax petrol and diesel, and also settle for lower revenues. The Centre could also end up losing substantial earnings and may have look at other sources to reimburse states for their revenue loss.

At 40-45 percent, GST has nothing for the consumer. At best, it will help in tidying up the system by subsuming a welter of local and central levies into a combined tax.

A lower GST on fuel will have to come bundled with higher rates on some other products and services. One possible option could be to significantly hike the tax rates or cess for luxury, demerit and `sin’ goods. It will help offset revenue losses for the states and the Centre, fix a lower GST for petrol and diesel and also lower prices at the fuel station. After all, not many would mind GST at 28 percent for fuel, at the cost of higher tobacco prices. It will make tanking up cheaper, even if smoking becomes dearer.

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Source: Money Control
Suppliers liable to pay penalty for not passing GST rate cut benefits: NAA

Suppliers liable to pay penalty for not passing GST rate cut benefits: NAA

In a first of its kind ruling, the National Anti Profiteering Authority (NAA) Monday ruled that suppliers National Anti Profiteering Authority (NAA)will be liable to pay penalty for not passing the benefits of  GST rate reduction on the sale of goods.

The NAA gave its ruling in a case against Jaipur-based Sharma Trading Company, wherein it was alleged that the supplier had not reduced the price of ‘Vaseline’ in line with the reduction of GST rate and thus indulged in profiteering in contravention of Section 171 of CGST Act.

The application, which was filed by a Departmental Store was examined by Standing Committee on anti profiteering and was referred to Directorate General of Anti Profiteering (DGAP) for detailed investigation.The DGAP found that the quantum of benefit was not passed to the departmental store by the supplier on November 15, 2017 following reduction of GST rate to 18 percent from 28 percent.

Sharma Trading Company, the distributor and stockist of Hindustan Unilever Ltd, had contended that it has purchased from HUL the product on which GST was levied at 28 percent and sold the same to the departmental store. It also contended that profit was made by HUL and not Sharma Trading.

Read More: Companies not passing benefits of GST cut rates to customers, govt plans to hike penalty

The NAA, in its 24-page order, said that Sharma Trading will be liable to pay penalty under section 122 of CGST Act.

As per Section 122 supplier of any goods or services without issue of invoice or incorrect / false invoice is liable to pay “a penalty of Rs 10,000 or an amount equivalent to the tax evaded or the tax not reduced under section 31 or short-deducted or deducted but not paid to the government…, whichever is higher”.

However, before imposing the penalty, the NAA has given a notice to Sharma Trading Company as to why it should not be imposed on the company.

Commenting on the order, AMRG & Associates Partner Rajat Mohan said: “This ruling by NAA has made it clear that anti-profiteering provisions apply to each supplier for its supplies, and in no case burden can be shifted to any other person in the supply chain. This would bring small traders and shopkeepers also under the umbrella of anti-profiteering regulations”.

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Source: Live Mint
September last month to fix GST return filing errors, claim credit for FY18

September last month to fix GST return filing errors, claim credit for FY18

September is crucial for taxpayers under the new goods and services tax (GST) regime, as it will be the final month for taxpayers GST Return Filingto claim credit for invoices issued in 2017-18 as well as to rectify errors in their tax return forms for the year.

GST was implemented on 1 July 2017, and with taxpayers still getting used to the new return filing system under this indirect tax regime, there have been instances of errors including incorrect or inflated claims of credit or in some cases under-reporting of tax credit claims. There are also instances of omissions in reporting of transactions. All these can be corrected in the September tax return form.

According to GST rules, if the taxpayer forgets to claim input tax credit for an invoice pertaining to FY2017-18, the time limit for availing it is the due date for the September 2018 returns. Similarly, if the taxpayer has missed reporting details of any credit or debit note issued in 2017-18 in the earlier monthly GST return forms, he can do the same only in this month’s tax returns.

Also, according to the rules, no rectification of error or omission in respect of the details furnished in the GST returns filed earlier in 2017-18 will be allowed later than the GST returns filed for September 2018 or furnishing of the relevant annual return, whichever is earlier.

Archit Gupta, founder and chief executive officer of Cleartax, said the September GST returns are significant for taxpayers and they need to make sure that the input tax credit is accurate. “Taxpayers will require advanced reconciliation algorithms so that potential notices are avoided,” he said.

Currently, taxpayers fill a GST return form 3B detailing total purchases and sales and GST return form 1 detailing outward supplies.

The GST Council is in the process of bringing out new tax return forms, which are expected to be rolled out effective 1 January 2019. These forms will give the tax authorities powers to detect tax evasion by cross-verification of claims made by suppliers and buyers through invoice matching.

Source :  Livemint
FinMin simplifies GST refund claim process for businesses

FinMin simplifies GST refund claim process for businesses

Easing compliance burden for businesses, the Finance Ministry has said GST refund GST refundcan be claimed by simply submitting a printout of ‘GSTR-2A’ form to tax authorities instead of giving all purchase invoices of a month.

GSTR-2A is a purchase return auto-generated by the system based on the transaction between a business and its supplier.

“The proper officer shall rely upon form GSTR-2A as an evidence of the account of the supply by the corresponding supplier in relation to which the input tax credit has been availed by the claimant.

“…There may be situations in which Form GSTR-2A may not contain the details of all the invoices relating to the input tax credit availed, possibly because the supplier’s Form GSTR-1 was delayed or not filed.

“In such situations, the proper officer may call for the hard copies of such invoices if he deems it necessary for the examination of the claim for refund,” the Ministry said in a clarification.

In the clarification to Principal Chief Commissioners, the GST Policy Wing in the Ministry said the proper officer shall not insist on the submission of an invoice (either original or duplicate) the details of which are present in GSTR-2A of the relevant period submitted by the claimant.

The GST Policy Wing further said a few cases have come to notice where a tax authority, after receiving a sanction order from the counterpart tax authority (Centre or State), has refused to disburse the relevant sanctioned amount calling into question the validity of the sanction order on certain grounds.

“It is hereby clarified that neither the State nor the Central tax authorities shall refuse to disburse the amount sanctioned by the counterpart tax authority on any grounds whatsoever, except under sub-section (11) of section 54 of the CGST Act.

Also Read: Finance ministry notifies annual return forms under GST for 2017-18

“It is further clarified that any adjustment of the amount sanctioned as GST refund against any outstanding demand against the claimant can be carried out by the refund disbursing authority if not already done by the refund sanctioning authority,” the Ministry said.

AMRG & Associates Partner Rajat Mohan said it is clarified that the remedy for correction of an incorrect or erroneous sanction order lies in filing an appeal against such order. “Recipient officer cannot withhold disbursement of the sanctioned amount on any pretext,” he said.

Mohan said so far invoices relating to inputs, input services, and capital goods were to be submitted for processing of claims.

“Trade and industry felt that it is cumbersome and increases their compliance cost, especially where the number of invoices is large in an entity. It has now been decided that the refund claim shall be accompanied by a printout of FORM GSTR-2A of the claimant for the relevant period for which the GST refund is claimed,” he added.

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Source: Business Today