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National Anti-profiteering Authority gets teeth to probe beyond the scope of DG’s complaint

National Anti-profiteering Authority gets teeth to probe beyond the scope of DG’s complaint

India has handed out more powers to the anti-profiteering watchdog, allowing it to widen a probe against a company to include goods or services not covered in an investigation report.

The government has notified the rule changes, inserting a provision in the goods and services tax rules to allow the National Anti-profiteering Authority, or NAA, to direct the Director General of Anti-Profiteering to further a probe if there is reason to believe that there has been contravention of norms in respect of goods or services not covered in the latter’s report.

The move comes on the heels of GST Council, the apex decision making body for the levy, extending the tenure of the NAA by two years. The Council had also approved imposition of an additional penalty of up to 10% of the profiteered amount if the companies don’t pay up a fine of ?25,000 in 30 days.

In the past, there have been cases where the DGAP had sought to widen an inquiry to other goods or services beyond the scope of a complaint. Tax experts said companies now need to prepare themselves better.

NAA

“This new provision now specifically allows the NAA to extend investigation to other products as well… From the industry standpoint, it means that the ambit of antiprofiteering proceedings might increase and hence there have to be adequate controls and documentation in place with respect to all products that a company is dealing in,” said Pratik Jain, national leader, indirect taxes, PwC.

The June 28 notification also empowers NAA to summon any person in relation to an inquiry. This was earlier limited to the DGAP or its officers only.

Further, the DGAP has been allowed to complete an investigation within six months from the date of receipt of reference from the standing committee instead of three months now. The DGAP will get additional time to complete any new investigation handed out by the NAA. The DGAP can continue to apply for a three-month extension from the NAA.

A standing committee can now apply for a one-month extension from the NAA, in addition to the two months allowed for examining a complaint or application. Similarly, the NAA can now issue its order within six months — instead of three months earlier —from date of receipt of report from the DGAP.

India put in place an anti-profiteering system to ringfence consumers from sudden spikes in prices after GST was rolled out in July 2017. Countries that implemented GST had witnessed an increase in inflation soon after doing so. It had studied mechanisms that Malaysia and Australia adopted as part of their GST framework.

The country went in for a three-tier structure to investigate anti-profiteering complaints from consumers. At the initial level are the state screening committees and a national standing committee to examine complaints. These committees refer complaints to the Director General of Safeguards, mandated to conduct a thorough investigation by seeking information from the companies concerned. The third and final level is the NAA, which examines the investigation report and hears the company and the complainant before pronouncing a final decision.

Source: Economice-Times

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Inter-state office services to come under GST net

Inter-state office services to come under GST net

The government is set to make it clear that services provided by an office of an organization in one state to another office in another state will face goods and services tax, or GST.

A circular to this effect, endorsed by the GST Council, will be issued soon, a government official told ET.

This is in line with the view taken by Karnataka Authority for Advance Rulings (AAR) that in-house functions such as human resources and payrolls if carried out from a center in one state for offices in other states, will face GST, for which invoice will have to be issued.

The circular will also lay down that emolument offered to service personnel will have to be included under this, the official said. Companies can claim an input tax credit for this, but for certain exempt sectors such as power, healthcare, liquor, and education, it will become a cost as a credit of tax charged would not be available, the person said. GST

The circular follows representations from the industry, seeking clarification on the taxability of activities performed by an office of an organization in one state to the office of the same organization in another state, regarded as distinct persons under the GST law and treated as supply of services between distinct persons.

The law committee under the GST Council has sought to clarify via the circular the issues dealing with distribution of input tax credit in respect of input services provided by the head office, but attributable to head office or various branch offices, treatment of expenses incurred by the head office on the procurement, distribution and management of common input services, treatment of services provided by head office such as common administration or common IT maintenance to its branch officers and their valuation.

The circular, which is in the form of frequently asked questions, will lay down as to how the input tax credit will be distributed between head office and branch officers as also that value of service will be equal to employee cost and establishment cost of supplying that service, said the official cited earlier.

Expenses will need to be apportioned using valuation principles laid down under the GST Law and generally accepted accounting principles.

Experts said the government needs to treat employee of a company as an employee of a single company irrespective of their location.

“It would be good if the government also looks at the intent behind the transactions and adopts a pragmatic approach to recognize that an employee is an employee of an organization as a whole and not of any particular location, hence there may not need to cross charge the salary costs between head office and branch office transactions,” said Harpreet Singh, partner at KPMG in India.

Experts also said the issue of cross charge is leading to a lot of confusion on the ground and avoidable paperwork.

“In most cases, it’s a revenue neutral exercise except where the output is either exempt or not within GST, where GST charged becomes a cost,” said Pratik Jain, national leader, indirect taxes at PwC.

The government should ideally make it optional where input tax is getting blocked in a particular state, Jain said, adding that employee salary should not be included as an employee is of an organization and not of a particular state or branch.

Case file 
The ambiguity over whether central administrative services provided by employees located at one location would tantamount to services being provided one location to another under the GST regime has led to litigations.

AAR, in a case pertaining to Columbia Asia Hospitals, had said such activities would qualify as a service provided by head office to other locations and hence companies are required to be cross charged and levy GST on the same. The matter has now been admitted in the Karnataka High Court and notice has been issued to the government.


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Source: Economic-Times.
GST Council to meet on 20 June, may fix Rs50 cr turnover threshold for e-invoice

GST Council to meet on 20 June, may fix Rs50 cr turnover threshold for e-invoice

The finance ministry is likely to propose ₹50 crore as the turnover threshold for entities to generate e-invoice on a centralised government portal for business-to-business (B2B) sales as it looks to curb GST evasion, an official said.

The GST Council, which will meet on 20 June, will take a final decision on the turnover threshold for issuance of e-invoice for B2B sales after consultation with states.

Analysis of return filing shows that as many as 68,041 businesses have reported a turnover of over ₹50 crore and accounted for 66.6% of total GST paid in 2017-18.

Further, while these businesses account for just 1.02% of GST payers, they make up almost 30% of the B2B invoices generated in the system.

“The turnover threshold for entities to generate e-invoice for B2B sales is likely to be fixed at ₹50 crore if the GST Council agrees. With this threshold, big taxpayers who are better placed technologically to integrate their software would have to generate e-invoice for B2B sales,” the official told PTI.

With e-invoice generation, entities with turnover above ₹50 crore would be saved from the twin activities of filing returns and uploading invoices. From the government’s side, this would help in curbing invoice misuse and tax evasion.

The official further said that under the current system, there is a gap between the time of generation invoices and filing of sales returns.

The number of entities filing monthly summary sales return GSTR-3B and paying GST is higher than those filing outward supply return GSTR-1, in which invoice-wise details have to be filed. Analysis suggests the gap could be either because of genuine difficulty in uploading invoices or with the intention of misusing Input Tax Credit (ITC), the official said.

The ministry is planning to roll out the e-invoice system by September.

The official further said that data analysis shows that as many as 3.9 crore B2B invoices worth above ₹50,000 are generated every month, which works out to be 12 lakh per day.

The number increases to about 1 crore per day if all B2B invoices generated irrespective of amount are taken into account.

The official said 1 crore invoice generation per day can be handled by GSTN/NIC as this would be similar to the number of e-way bills currently being generated on the portal.

The ministry feels that e-invoice would increase ease of doing business if it becomes part of using business process and there is no need for additional reporting, the official said.

AMRG & Associates Partner Rajat Mohan said, “Government must develop a risk profile of all the taxpayers and it can be easily figured out that big corporates are rarely involved in activities of tax avoidance, thereby anti-tax evasion measures should be eyed at tier-II and tier-III taxpayers in a phased manner.”

Source: Live-Mint.

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GSTN releases prototype of a new simplified return filing system

GSTN releases prototype of a new simplified return filing system

GST Network on Wednesday released a demo tool for the new and simplified return filing form which will be launched sometime later in the year.

The prototype available on webportal gives stakeholders a feel of what the new return filing system will look like. GSTN also sought stakeholder feedback on the proposed offline tool.

It will allow users to use functionality such as drop down menus, invoice upload, upload of purchase register for matching with system created inward supplies.

In the proposed system of new GST return filing, a normal taxpayer would have to file form GST RET-1 (Normal) or Form GST RET-2 (Sahaj) or Form GST RET-3 (Sugam) on either monthly or quarterly basis.

Annexure of supplies (GST ANX-1) and Annexure of Inward Supplies (GST ANX-2) will be filed as part of these returns. All the outward supplies will be detailed in GST ANX-1 while GST ANX-2 will contain details of inward supplies auto-populated mainly from the suppliers’ GST ANX-1.

Suppliers will have to file a detailed return in form GST RET-1.

Businesses which make supplies to only consumers (B2C) have to file return form ‘Sahaj’. It includes details of outward supplies and inward supplies attracting reverse charge as well as summary of inward supplies for claiming input tax credit (ITC).

Besides, businesses making supplies to both businesses (B2B) and consumers (B2C) have to file returns form ‘Sugam’. It includes summary of supplies made and tax liability, summary of inward supplies for claiming ITC, along with details of interest due and tax payment.

Stakeholders can share their comments on ‘feedback.newreturn@gstn.org.in’, said GSTN, the company which handles the technology backbone of Goods and Services Tax (GST) regime.

The new return filing format would replace the current requirement of filing final sales return GSTR-1; and summary sales return GSTR-3B.

The GST Council in July last year decided that the simplified GST return forms — Sahaj and Sugam — would be rolled out on a pilot basis from April 1, 2019, while mandatory filing across the country would kick in from July.

However, the pilot project was deferred as the systems were not finalised.

EY India Tax Partner Abhishek Jain said, “with this prototype being released, implementation of the new simplified returns is expected to be a reality soon.

“The companies would now need to ensure appropriate modifications are executed to their ERPs, business processes, etc. for culling out information to be disclosed and eligibility of input tax credits.”

AMRG & Associates Partner Rajat Mohan said “users and developers are expected to use the interactive tool and give feedback on the prototype, allowing users to use various functionalities including uploading of invoices and purchase registers”.

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Source: Live-Mint

GSTR 9 – Annual GST Returns Riddle

GSTR 9 – Annual GST Returns Riddle

Every registered entity is required to file annual return for goods and services tax (GST) by December of the next year. Since the form was not ready in time, the original due date of December 2018 is now extended up to 30 June 2019.

Registered persons, with more than Rs2 crore turnover, have to file GST reconciliation statement and certification (GSTR 9C) as well as annual returns or GSTR9 and audited financial statements. GSTR 9C is required to be certified by a chartered accountant (CA).

GST annual returns or (GSTR9) is a summary of details already reported in GSTR1 (sales returns) and GSTR3B (monthly/ quarterly), i.e., summary of sales and purchases along with tax payments. This, in theory, looks very simple as one-nation-one-tax GST; but when we try to actually fill the returns, there are multiple issues for which no clarifications are available or there are different interpretations by professionals. A few examples are given below:

1. In GSTR9, adjustments or amendments up to September 2018 are asked to be reported. However, the Central Board of Indirect Taxes and Customs (CBIC) has already extended this date up to March 2019. Consequent changes in the form are yet to be made.

2. Table 4 of GSTR9 asks for details of advances, inward and outward supplies made during the financial year on which tax is payable. This data is auto-populated as per GSTR1 filed. However, if some sales are not reported in GSTR1 but tax is already paid through GSTR3B then where to report it is not clarified.
3. The FAQs on this matter issued by CBIC read as under:

“In Form GSTR-9, can additional liability not reported earlier in Form GSTR-3B be declared? Yes, additional liability not reported earlier at the time of filing Form GSTR-3B can be declared in Form GSTR-9. The additional liability so declared in Form GSTR-3B is required to be paid through Form GST DRC-03.”

First of all, it should be GSTR9 and not GSTR3B in line 3. Further, it just information NOT info known but does not say which table and where to declare this liability.

4. Input reversals done in GSTR3B are shown as utilisation of input tax credit (ITC) in auto-populated table 9. Further, this field in not editable.

5. Headings of table 11 and 12 say that “Details of the previous financial year’s transactions reported in next financial year” are to be shown there. However, there is difference in language used in the help file and line item. The help file says, “Particulars for the previous FY transactions declared in returns of April to September of next FY or up to date of filing of annual returns for 2017-18, whichever is earlier.” Whereas individual line item for table 11 and 12 talks only about GSTR1. Now there is confusion as to whether changes made in GSTR3B in the next financial year can be reported here. There is no other table to report these changes either.

6. For those who are not supposed to file audit report in 9C, there is confusion about whether GSTR9 should be based only on returns filed or books of accounts. There is no mention of books of accounts anywhere in GSTR9 frequently asked questions (FAQs).

7. On tax paid on reverse-charge basis, in subsequent financial year through GSTR3B, where does one report in GSTR9? There are no final answers to this. If reported along with normal turnover, it will not match with books of accounts.

8. Table 7 of GSTR9 says, ITC reversed for the financial year is to be disclosed. However, it does not specify in which returns. If reversed during 2018-19 for 2017-18 then it may lead to double reduction while filing next year’s GSTR9.

9. Table 8 of GSTR9 about ITC related information has no column for IGST on import paid but goods still in bonded warehouse, hence credit not taken. Many persons have not taken this credit till goods are cleared. If we follow as per GSTR9 schema, this credit will lapse.

10. The harmonised system of nomenclature (HSN) wise summary of inward supplies where 10% or more of total inward supply is to be given. However, if the supplier has not provided the exact HSN code, it would be very difficult for the taxpayer to now search for it.

These are some of the issues that taxpayers are facing while filing GSTR9 annual return. There are many such issues in GSTR9C audit report form as well. The main issue is that the government has been very slow in giving clarifications and, since returns filed cannot be revised, people are waiting till the last date to file. We all know what happens to GSTN in the last few days of any due date.

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Source: Money Life.
(CA Nikhil Vadia has over 20 years of experience in direct and indirect taxation, internal audit, systems review and management consultancy.)
Automated GST refund for exporters by next month

Automated GST refund for exporters by next month

Exporters of goods and services, as well as suppliers to SEZ units, are likely to get GST refunds automatically from June as the revenue department plans to introduce faceless scrutiny of refunds and faster claim settlement, an official said.

Under GST, every person making a claim of refund on account of ‘zero-rated’ supplies has two options. Either he can export without payment of integrated tax under Bond/ LUT and claim a refund of accumulated Input Tax Credit (ITC) or he may export on payment of integrated tax and claim refund thereof.

Currently, the facility of automatic refund is available only for those exporters who have paid Integrated Goods and Services Tax (IGST) while exporting goods. Since the GST Network (GSTN) systems are integrated with Customs, hence, refunds are generally transferred to the bank accounts of such exporters within a fortnight.

However, manufacturing exporters and suppliers to SEZ, who want to claim a refund of ITC, have to file an application in Form GST RFD-01A on the common portal and thereafter manually submit a print out of the form along with other documents to the jurisdictional officer.

Once implemented, the time period for such refunds will come down to about a fortnight from months at present.

“The revenue department and GSTN is working to make the process of seeking tax refund by all exporters faceless by next month. It would make the process faster and also help in eliminating fake refunds,” an official told PTI.

GST refunds of exporters run into thousands of crores and any delay in the processing of refund claims blocks working capital of exporters.

AMRG & Associates Partner Rajat Mohan said fully computerized tax refund in case of export of services would be based on a comprehensively integrated GSTN system which connects with RBI servers to track the receipt of payments and link them automatically with invoice level information.

“Tax refunds for inverted duty structure could also be copiously automated in future, however, it would require GSTN system to be loaded with HSN-enabled invoice level information by every vendor, so that only eligible tax credits could be processed without any human intercession, he added.

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Source: Business-Standard.
Tax dept to share ITR data with GSTN to detect tax evasion by business persons

Tax dept to share ITR data with GSTN to detect tax evasion by business persons

Soon, the income tax department will be sharing the tax return data of business persons with the Goods and Services Tax Network (GSTN) officer. The move is aimed at spotting income anomalies or mismatches between their GST returns and income tax return (ITR).

Clearly, business persons need to ensure that their income tax returns and GST returns correlate. In simple terms, a business person whose income as per ITR is sharply at variance with what is declared in his/her GST returns would come under the lens.

Before GST was introduced, the department could not reconcile the data filed by the business persons in his/her sales tax return/service tax return and ITR. This was because sales tax return was filed at the various state levels and service tax return was filed at the national level. However, post the introduction of GST, such data will now be available at the central level which makes exchange of data between the two authorities easy.

This move will apply for all those assessees who have business income and file the returns specified for those with this income i.e. ITR 3 to ITR -7.

As per the order issued by the Central Board of Direct Taxes (CBDT) dated April 30, 2019, important financial fields such as – status of filing of ITR, turnover, gross total income, turnover ratio, gross total income range, turnover range and any other field which will be decided by the concerned authorities themselves will be shared by the income tax department with the GSTN officers.

Archit Gupta, CEO & founder, Cleartax.com says, “Government’s tax departments can now act in unison and review taxpayers and their submissions via information collected between them separately. Starting last year’s ITRs the government had begun collecting information in ITRs related to GST. With this request-based and automated sharing of data – government can do intensive analysis to pick up cases for further scrutiny. Turnover may not be a one-on-one match between the two direct tax return however several trends and compliance may be analysed in detail.”

As per the order, the exchange of data will be request-based as well as spontaneous and automatic. However, before sharing any information, the income tax authority shall determine that such information is necessary for the GSTN authority to perform its functions, says the order.

chartered Accountant, Naveen Wadhwa, DGM, taxmann.com says, “In earlier years, mismatch in the figures of turnovers furnished by SMEs in Income-tax returns and Sales returns were very common. Signing of an MOU between the I-T Dept. and GSTN will ensure that the taxpayers furnish same set of information in income-tax return and GST return. As more than 38% Income-tax returns filled for the FY 2017-18 include business income, such initiatives to reconcile the turnover of business would help the government to check the tax evasion.”

As per the order, for the exchange of information to take place, a Memorandum of Understanding (MoU) will be signed between Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) and nodal officer, GSTN.


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Source: Economic Times.
Non-filers of GST returns for 2 months to be barred from generating e-way bills from June 21

Non-filers of GST returns for 2 months to be barred from generating e-way bills from June 21

Non-filers of GST returns for two straight months will be barred from generating e-way bills for transporting goods effective June 21, the finance ministry said.

Businesses under GST composition scheme, however, will be barred from generating e-way bill if they fail to file tax returns for two consecutive filing periods, which is six months.

The Central Board of Indirect Taxes and Customs (CBIC) has notified June 21, 2019, as the day from which any “consignor, consignee, transporter, e-commerce operator or courier agency” would be barred from generating electronic way or e-way bill for failure to file tax returns for the stipulated time period as mentioned in the GST rules.

As per rules, a composition scheme taxpayer who has not furnished the returns for two consecutive tax periods and a regular taxpayer who has not filed returns for a consecutive period of two months would be restricted from generating e-way bill.

In the Goods and Services Tax (GST) regime, businesses have to file monthly tax returns by the 20th day of the subsequent month. However, businesses opting for composition scheme have to file quarterly returns by the 18th day of the subsequent month following the end of a quarter.

The Goods and Services Tax Network (GSTN) has put in place the IT system so that businesses which have not filed tax returns for the stipulated period would be barred from generating e-way bills.

The move, officials believe, would help check GST evasion. During April-December, there were 3,626 cases of GST evasion/violations, involving Rs 15,278 crore.

Touted as an anti-evasion measure, e-way bill system was rolled out on April 1, 2018, for moving goods worth over Rs 50,000 from one state to another. The same for intra or within the state movement was rolled out in a phased manner from April 15.

Transporters of goods worth over Rs 50,000 would be required to present e-way bill during transit to a GST inspector if asked.

With almost two years into GST implementation, the government is now focussing on anti-evasion measures to shore up revenue and increase compliance.

AMRG & Associates Partner Rajat Mohan said with this supplier, transporters and e-commerce operators would be forced not to sell or transport goods to non-filers

“E-commerce, logistics, FMCG companies, and businesses working on the franchise model, would have to immediately develop and implement an automated workflow whereby defaulting business partners are moved out from the supply chain on a real-time basis,” Mohan said.


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Source: Economic Times.
Govt extends deadline for GST sales return for March until Apr 23

Govt extends deadline for GST sales return for March until Apr 23

The government has extended the last date for filing summary sales return, GSTR-3B, for March month by three days until April 23.

“Due date for filing GSTR-3B for the tax period March 2019 has been extended to April 23, 2019,” a ticker on GST portal ‘gst.gov.in’ said.

The last date for filing summary sales return and payment of taxes for March is April 20, 2019.

AMRG & Associates Partner Rajat Mohan said, “Glitches in GSTN is leading to frequent extensions in the filing of tax returns. Tax filers also need to improve the habit of filing at the last date, leading to burden on the servers resulting in the collapse of the same.”


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Source: Economic Times
Gaps in e-way bill reporting mechanism may be closed

Gaps in e-way bill reporting mechanism may be closed

After detecting mismatches in some e-way bill submissions, the Centre is now examining more GST Network (GSTN) data to see if such evasions are increasing sufficiently enough to consider withdrawing the facility of generating multiple e-way bills on a single invoice, an official source said on Monday.

The Goods and Services Tax (GST) authorities are now sifting through GSTN data retrieved through return filings and e-way bills to match these with the summary reconciliation statements of estimated tax liability, thereby, forcing businesses to explain discrepancies like under-reporting distances, the official said.

He, however, said the officials are yet to come across any pattern of deliberate evasion by transporters during the exercise which is still at its early stages.

The reconcilation issues can also be due to typo errors, discontinued supply and the expiry of e-way bills before delivery, and not just owing to tax evasion, he said.

“We will seek clarification once we come across differences between the taxes paid and the liability which the tax officer has ascertained after analysing the sales return GSTR-3B and the e-way bill data for the period in question, and the assessee will be given time and opportunity to make his or her case,” he added.

Designed as an anti-evasion measure, the e-way bill system was rolled out on April 1, 2018, for moving goods worth over Rs 50,000 from one state to another.


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Source: Economic Times