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No GST returns, no E-way bills! Centre to crack down on non-filers

No GST returns, no E-way bills! Centre to crack down on non-filers

Concerned with the dipping monthly collections of Goods and Services Tax (GST), the government and indirect tax department are now planning stricter measures against non-compliant taxpayers.

According to sources, the tax department is now planning to block the facility to generate e-way bill for taxpayers who do not file two consecutive GSTR-3B returns with effect from 17 November 2019. Once the taxpayer has filed one of the pending returns, the facility to generate e-way bill will be automatically restored.

GSTR-3B is monthly return that every registered GST payer has to file. It contains details of sales and purchases made by a business.

Sources told Business Today that the required connectivity between GST Network (GSTN) and the e-way bill system and development of an application to block and unblock facility has been developed and tested between two systems.

While a decision to this effect was taken by the GST Council in April, the reason for the ‘extreme’ step could be to check leakages of taxes. Non-filing of returns is still high and the tax department thinks this is a major cause for falling GST collections.

“With a continuous dip in revenue for the last few months, this is a step towards curtailment of tax leakage. Businesses need to ensure disciplined filing of GSTR-3B to avoid business disruption,” says Anita Rastogi, partner, indirect taxes, PwC.

According to the indirect tax department, as of 8 November 2019, 21.99 lakh taxpayers have been found to have not filed GSTR-3B returns of August and September 2019.

These defaulters now face possible blocking of the facility to generate e-way bill from 17 November. The department, however, is planning to send alert messages to such taxpayers if they come to e-way bill website, and ask them to file their returns by the 17 November.

The problem though is that integration testing of backend applications of few states with GST System is not yet completed. Unless the facility to unblock the e-way generation facility is developed, the department cannot go ahead with blocking the facility.

Rajat Mohan, a partner in chartered accountancy firm AMRG & Associates, said that deferment of implementation of tax provisions on the premise that technology is not ready indicates that the tax authorities are still not ready to identify and capture the culprits (evading tax) on a real-time basis.

In September 2019, the GST collection fell by 5.3% to Rs 95,450 crore as compared to a year-ago period. In August, the GST collections fell to Rs 92,000 crore, which was lower than the previous year collection by over 4%. With the average monthly collections so far this year at around Rs 98,000 crore, way below the required Rs 1.20 lakh crore, the government is looking at a large shortfall in GST collection.

With five more months to go in this financial year, the latest move is probably a last-ditch attempt by the government to revive GST collections.

Source: Business-Today.

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e-invoicing under GST may be made mandatory in future, says GSTN CEO Prakash Kumar

e-invoicing under GST may be made mandatory in future, says GSTN CEO Prakash Kumar

GSTN CEO Prakash Kumar on Thursday said that e-invoicing under GST will remain on a voluntary basis initially, however, it could be made mandatory in future if the council feels the need of doing so.

“The council has given us the date of January 1st to deploy it on voluntary basis; the way we have done for e-way bill — it will be on a voluntary basis for some time and after that, it will be made mandatory whenever the council thinks of,” said Kumar in an interview with CNBC-TV18.

The goods and services tax (GST) collection has remained subdued in October as well. GST mop-up, according to sources, stands at Rs 93,000 crore, significantly lower than Rs 1 lakh crore in October 2018.

“The applications which were filed were around 3.5 crore and 1,500 have already been issued; the sanctions and refund have already taken place,” said Kumar.

“If there is deficiency, it is returned back and the taxpayer is supposed to add those papers and that is treated as a fresh application,” added Kumar.

On simplification front, Kumar said, “The most important one is the new return which will be launched on April 1. In fact, we have already launched the offline tool which is available also in the online version which people have already started using.”

“The advantage is that once they use it, they will be familiar with the new system which is different from what we have today,” added Kumar.

He further said that automation will help bring the burden down.

Source: CNBCTV 18

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E-invoicing, a game-changer for GST

E-invoicing, a game-changer for GST

The GST Council, on September 29, 2019, has approved the introduction of ‘E-invoicing’ or ‘electronic invoicing’ for business to business (B2B) transactions from January 1, 2020. Once implemented, it can help arrest tax evasion as it enables pre-populating of GST returns with the e-invoice details. Return filing will also become simpler with reconciliation becoming easier.

Recently, a concept note explaining what e-invoice is and how it operates was released and made available on the GSTN website.

The document allayed the concerns of the tax payers and reiterated that there is no requirement to generate the e-invoice on a government’s tax portal. The taxpayer can continue to use his accounting system such as ERP, Tally and excel based tools for creating the invoice. The only requirement is that the supplier’s software should be able to generate the invoice in a specified template in JSON format.

E-invoicing, which is touted as more of a business reform than a tax reform will initially be made applicable for certain taxpayers having turnover or invoice value above the specified limits or on voluntary basis. This will subsequently be enabled for all tax payers in a phased manner.

The e-invoice schema and template, as approved by the GST Council, are available in the GSTN website at https://www.gstn.org/e-invoice/

Check on tax evasion

E-invoicing, if well implemented, reduces the compliance requirements to a great extent for it propels pre-populating of various returns such as GSTR 1 and e-way bills.

In addition, it standardises the invoice format ensuring interoperability of the data, eliminates fake invoices, provides complete trail of B2B transactions and enables system level matching of ITC and output tax.

As the system evolves, intercommunication of the transactions between the buyers’ and sellers’ software, e-way bill system and the banking systems is also mooted. This captures the complete transaction trail and can arrest tax evasion significantly.

But the tax experts are cautious about its implementation as it require updating the businesses’ existing accounting software.

PwC believes that e-invoice system will be a major development and would trigger changes in IT systems as well as the various processes involved in the business.

How does it work?
Step 1: The supplier or tax payer should report the JSON format of the invoice to the Invoice Registration Portal (IRP).

The IRP accepts the e-invoice only as a JSON file. So all the suppliers should have an accounting software that can generate the invoice in such format. The small and medium size tax payers (having annual turnover below Rs 1.5 Crores) not using any online tool to generate an invoice can make use of the accounting and billing software (online/offline) available on the GSTN website free of cost.

Step 2: The IRP will in turn generate a unique Invoice Reference Number (IRN) and digitally sign the e-invoice and also generate a QR code.

Once the invoice is uploaded, the IRP computes hash (an alpha numeric number) based on the supplier’s GST number, invoice number and financial year. The hash becomes the IRN (Invoice Reference Number). Hash is unique to each invoice for the entire financial year. Each hash will be saved in a central registry of GST system ensuring same invoice from the same supplier pertaining to same financial year is not being uploaded again.

The supplier can also generate the hash themselves for which a required feature should be incorporated into their accounting software. In this case, once the JSON invoice with hash is uploaded to the IRP, the hash uploaded by the tax payer will be validated by the hash that IRP generates.

Subsequently, the IRP authenticates the e-invoice by adding digital signature to the JSON. Only the e-invoice signed by the IRP is considered a valid invoice for GST purposes.The signing of e-invoice by seller is not mandatory.

IRP also creates a QR code that contains vital details such as GSTIN of seller and buyer, invoice number, invoice date, number of line items, HSN of major items contained in the invoice as per value and hash.

Step 3: IRP sends the e-invoice data with digital signature and QR code to the seller and buyer on the mail Ids provided in the invoice. IRP also shares the uploaded invoice data with GST and e-way bill system.

The GST System, after validation, makes the e-invoice data available in ANX-1 (annexure of outward supplies) for the seller, and in ANX-2 (annexure of inward supplies) for the buyer. Buyer has an option to accept or reject the transaction. GST system, further, will determine tax liability and input tax credit (ITC).

Meanwhile, e-way bill system creates Part-A of e-way bill using the received data. Only vehicle number have to be added in Part-B of the e-way bill.

On the point that only one invoice can be uploaded at a time into the IRP, Gupta says- “success of e-invoicing will be hugely dependant on the stability of the portal to handle multiple requests at one go on a real-time basis.” However, the concept note assures that based on data reported in GSTR1 for last two years, capacity of the IRP system will be built so as to handle the envisaged loads of simultaneous upload.

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Source: The-Hindu-Business-Line
GST Network to release new version of return filing interface on 22 October

GST Network to release new version of return filing interface on 22 October

GST Network (GSTN) will release improved version of GST return filing interface on 22 October with an aim to further simplify the process.

“Many of the suggestions were incorporated in version 2 which is in place right now. Version 3 is going to come on October 22 of this month,” GST Network CEO Prakash Kumar said at a seminar organised by IIT Delhi Alumni Association here.

GST Network provides IT infrastructure and services to central and state governments, taxpayers and other stakeholders for implementation of the GST.

Goods and Services Tax (GST) has reduced complexity in indirect taxation as its implementation has lowered the number of forms to be filed by businesses to just 12, from 495 under as many as 17 central and state laws in the pre-GST era, Kumar said. The indirect tax administration now shares data with the income tax department, a move that has helped in unearthing instances of tax evasion, he added.

Kumar said that income tax department confirms the range of turnover, not the exact data of tax payer, which has helped in detecting mismatches. At present, there are 12.3 million registered GST tax payers.

Speaking at the occasion, GST Council Special Secretary Rajeev Ranjan said that GST has also aided in cutting the logistics cost for businesses, while successive rounds of rate cuts in the new tax indirect tax regime reduced prices and helped keeping inflation under check.

GST has reduced the average tax incidence as well as prices, and was an important determinant in ensuring that inflation remained under control, he said.

“Prior to GST, about 14% of the total cost of goods accounted for logistics (in India), a large cost and friction in doing business, while it was 10-11% for Brazil, Russia, India, China and South Africa (BRICS nations) and 9-10% for developed countries,” Ranjan said quoting a 2014 study.

Now, logistics cost in India is about 10-12% of the value of goods, Ranjan said in his presentation.

“In pre-GST era, trucks used to cover about 225 kilometers a day and now it is 300-325 kilometers,” said Ranjan, adding that GST has ensured that there is no need to have a fragmented market.

Source: Live-Mint

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IHMCL, GSTN to ink pact to link FASTag with GST e-way bill system on Oct 14

IHMCL, GSTN to ink pact to link FASTag with GST e-way bill system on Oct 14

The Indian Highways Management Company Ltd (IHMCL) and Goods and Services Tax Network (GSTN) will sign a memorandum of understanding on Monday for integration of FASTag with GST e-way bill system.

The memorandum of understanding (MoU) will be inked at the ‘One Nation, One FASTag’ conference, which will be inaugurated by Road Transport and Highway Minister Nitin Gadkari.

FASTag is a simple to use, reloadable tag which enables automatic deduction of toll charges and lets vehicle pass through toll plaza without stopping for cash transaction.

An MoU will be signed between IHMCL and GSTN for integration of FASTag with GST e-way bill system, an official statement said.

The GST Council has already accorded ‘in-principle’ approval for this integration.

The integration of e-way bill system with FASTag will help revenue authorities track the movement of vehicles and ensure that they are travelling to the same destination that the transporter or the trader had specified while generating the e-way bill, the statement added.

“The conference will see the signing of MoUs with state departments/other agencies for bringing in a unified electronic tolling solution across the country,” it added.

This would mean enabling the use of the same FASTag, affixed on the windscreen of a vehicle, at every toll plaza in the country under jurisdiction of different states /agencies and other entities. This will help provide seamless services to consumers across the country, it said.

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Source: Economic-Times

GST Council Sets Up Panel To Boost Revenue Collection

GST Council Sets Up Panel To Boost Revenue Collection

The GST Council on Thursday constituted a committee of officers to improve revenue after the collections dropped to a 19-month low of Rs. 91,916 crore in September reflecting weak consumer demand. The second straight month of decline in the GST collections came amid a massive slowdown in the economy, visible in six year low GDP growth numbers for the April-June quarter.
“The committee shall submit its first report within 15 days to the GST Council Secretariat which shall coordinate the meeting of the committee to ensure finalisation of the inception report..,” the GST Council office memo said.

The GST Council, in a memorandum, said that that it has been decided that that a committee of officers from state as well as the Centre is “required to suggest steps to be taken to improve revenue collection”.

The Council expects the newly formed committee to look into “policy measures and changes in the law”, measures to “improve voluntary compliance and improved compliance monitoring and anti-evasion measures” among others.

The aim is to move to GST 2.0 and leapfrog tax reform to its second phase by bringing electricity, oil & gas, real estate and alcohol under its ambit and converging the rate structure into two-three slabs.

The members of the committee, as stated, were the Commissioners, SGST of Maharastra, Tamil Nadu, Uttar Pradesh, West Bengal and Punjab.

The members from the Centre would include Principal Commissioner, GST PW, Joint Secretary (TRU 1 and 2), ADG (ARM and Systems) and Joint Secretary, Revenue.

Besides, the Joint Secretary, GST Council Secretariat and Executive VP, GSTN will also be the part of the committee.

Source: NDTV-Profit.

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23% GST payers can file returns via SMS from April

23% GST payers can file returns via SMS from April

One in five GST payer will get away without having to file monthly or quarterly returns from April. Instead of filling up the form online, all that those with ‘Nil’ returns will have to do is to send an SMS to a specified number and confirm it using a one-time password.

The move is part of the overall exercise to simplify compliance as many of the ‘Nil’ return filers, who account for almost 23% of the 1.2 crore GST base, had registered to be eligible for contracts from government and other agencies but do not undertake any business.

Once the new returns kick in from April, over 70% of those registered for GST can make do with quarterly filing of returns as their turnover is less than the specified level of Rs 5 crore. “Only 7% of the taxpayers with annual turnover of over Rs 5 crore will have to file monthly returns,” said Prakash Kumar, chief executive of GST Network that provides the IT backbone for the indirect tax regime and has developed the new forms.

More than 51% of the taxpayers can use the SMS-based compliance tool or opt for Sahaj, the form meant for those entities with B2C transactions and have an annual turnover of less than Rs 5 crore.

GST, which was launched over two years ago, had faced severe criticism as businesses, especially the smaller ones, complained of stiff compliance burden that required three-stage filing. Through the new forms, the government has sought to reduce the compliance burden with smaller businesses required to file quarterly returns, although taxes will have to be paid on a monthly basis.

Source: Times-of-India

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Only 7% taxpayers will be required to submit monthly GST returns

Only 7% taxpayers will be required to submit monthly GST returns

About 93 percent of the goods and services taxpayers will be relieved of monthly return filing from the next fiscal year once the new simplified return system comes into effect from April 2020. The new return system will not only make compliance easier for businesses but also plug leaks with respect to input tax credit claims.

GSTN is currently conducting outreach programmes to make the industry familiar with the new return system.

Those with an annual turnover of less than Rs 5 crore will have the option of filing quarterly returns but will need to pay taxes on a monthly basis. Those with an annual turnover of over Rs 5 crore will need to file monthly returns.

“About 70 percent of taxpayers will get covered under quarterly return filing, taking the pressure off them. With 22 percent having nil turnover, it leaves just 7 percent taxpayers to file monthly returns,” said Prakash Kumar, chief executive officer, Goods, and Services Tax Network (GSTN), the technology backbone of India’s indirect tax regime.

The new return system requiring fewer details was earlier expected to be introduced from October, but the GST Council in its last meeting held in Goa decided to postpone it to April 1, 2020, to give time to taxpayers to adapt to the new system. Sahaj and Sugam are the two returns that could be filed by small taxpayers, having a turnover of Rs 5 crore or less, depending on whether they have business-to-consumer (B2C) or business-to-business transactions or a mix of both.

Of the 70 percent of taxpayers eligible for quarterly return filing (Return 1, Sugam, and Sahaj), around 28 percent of taxpayers are those that deal with only B2C supplies.

In the current system, taxpayers are required to file GSTR-1 for outward supplies and GSTR-3B, which is a summary return for sales and input tax credit. Taxpayers with a turnover of up to Rs 1.5 crore are allowed to file GSTR-1 on a quarterly basis but have to file GSTR-3B on monthly basis.

The last date for quarterly return filers will be the 25th of a month, whereas for monthly filers it will be 20th of every month.

Besides, a buyer will not be able to claim the input tax credit if the seller or supplier misses uploading the invoice. This will essentially plug the existing gap, which allowed buyers to claim input tax credit even for missing invoices, which was leading to higher input tax credit claims versus actual taxes paid on inputs.

In the existing system of return filing, the buyer is allowed to edit the invoice and send it back to the supplier, who, in turn, accepts or rejects the edited invoice, creating complexity in the return filing mechanism. “The new system will be a unidirectional one, which will not allow the buyer to make any changes in the invoice filed by the supplier. He will be allowed to only accept or reject and be sent back for amendments,” said Kumar.

GSTN is currently conducting outreach programs to make the industry familiar with the new return system. It has already covered 19 cities so far, with more than 3,000 participants.

Source -  business-standard.com 

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GST Network starts online refund processing

GST Network starts online refund processing

GST Network, the IT backbone of the indirect tax system, on Thursday unveiled an online refund process as decided by the GST Council.

With the deployment of online refund functionality, taxpayers can now file refund application (in RFD 01 form) easily and tax officers can process the same online, GST Network said in a statement.

All communications between taxpayers and tax officers will also be online. The online refund process has become effective from September 25, 2019, on the GST portal, it said.

Earlier, the refund processing was done for both Central and State GST by one tax authority to whom the taxpayer was assigned administratively but disbursement was done by accounting authorities of central and state tax departments separately.

This was leading to a delay on account of sharing of sanction order with counterparty accounting authority through that tax authority, it said.

The new system has done away with this and after processing is completed by the tax officer, the sanctioned amount will get credited to the bank account of the Taxpayer through PFMS System, it said.

GST Network CEO Prakash Kumar said the new refund process will create a seamless experience for both taxpayers and tax officers.

“This will boost the disbursement speed of refunds and further improve the GST compliance. Taxpayers can view the various stages of processing of their refund application on the GST Portal and can give replies to notice, if any, online on the GST Portal now,” he said.

They will also be given information via SMS and Email, at important stages of processing of their refund application, he said, adding most importantly, the payment of amount will now be done from one disbursement authority i.e. PFMS unlike the earlier method where sanction was done by one authority but payment was made by State and Central Authorities separately.

Meanwhile, all refund applications filed before September 26, 2019 will be processed manually as done under the old refund process.

Source: Live-Mint.

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The GST’s initial premise should be revisited

The GST’s initial premise should be revisited

When the GST was launched in July 1, 2017 with the promise to simplify our incredibly complex indirect tax system and unify the country through a single indirect tax, the nation supported the new disruptive tax regime the way it had supported demonetisation, setting aside the creeping doubts that were upsetting many businesses. The GST system was built on the simple premise of automatic matching of the invoices submitted by suppliers and buyers, enabling automatic processing of input tax credits (ITC) and refunds by the Infosys-built GST Network (GSTN) portal, the IT architecture that is the backbone of implementation. The GSTN was supposed to minimise frauds, curtail evasion, end harassment of taxpayers and corruption, and bring in transparency, leading to an increase in revenues, which would enable the government to lower rates and converge slabs, finally culminating in a single rate, one nation-one tax system, making it truly a “good and simple tax”.

Two years down the line, most of the promises, however, still remain only on paper. The GSTN has turned out to be miserably inadequate to fulfil its role due to the inefficiencies of the software. The automatic matching of invoices was junked only after a few months, when the returns for outward supplies (GSTR-1) and inward supplies (GSTR-2) could not be matched by the GSTN, and hence the refund of the ITC could not be processed, blocking scarce capital for millions of taxpayers. For easier transition to the new regime, a simple return — the GSTR 3B — was introduced only as a temporary measure while the GSTR-2 was suspended, so that the ITC refund could be made by using only the GSTR-1 and GSTR-3B.

The 3B return, however, has no validation whatsoever in the system, making it open to frauds and evasion that the automatic and complete matching between the GSTR-1 and GSTR-2 was supposed to have eliminated. In fact, the CAG, citing numerous instances of false ITC claims in his Report No, 11 of 2019 has said as much, emphasising that the rollback of invoice matching without any safeguards had rendered it prone to frauds. The self-correcting mechanism of complete invoice matching is a critical requirement of the system, in the absence of which the ITC is claimed by the taxpayer purely on a self-assessment basis without any system validation.

Curbing tax evasion

There have even been efforts to rationalise the incompetence of the system and institutionalise its inefficiencies. A former member of the Central Board of Indirect Taxes & Customs (CBIC) has argued that no country in the world has a complete invoice-matching system which is impractical. It is further asserted that major taxpayers such as public enterprises and private players like the Tata group, the Birla group, Mahindra & Mahindra, Hero, Infosys etc, who together pay 80 per cent of the GST, are not tax-evaders; hence, instead of wasting system resources on universal invoice matching, an intensive audit of their accounts equally serves the purpose.

Besides, it is claimed that in sectors like automobiles, steel or services, there is no scope for evasion since components and final products, or contracts and purchases, match perfectly. It is only in the sectors that sell products piecemeal, like soaps or toothpastes, that universal matching should be made mandatory; for all others, an intelligence-based checking, along with comprehensive auditing, should be far more effective than universal invoice matching. The alleged large-scale falsification of invoices has been dismissed as “absurdly illogical” and “only good English”.

Fake invoices

The arguments are as vicious as they are absurd. If universal invoice matching was impractical in the first place, why was the system designed upon this very premise? The argument that big players are all virtuous and small players are all evaders is dangerous to say the least — it is an inevitable step towards lobbying and patronage distribution, unfettered discretion, harassment and extortion — in fact, it is an insane prescription to institutionalise corruption and perpetuate very aberrations the GST regime was designed to thwart. There is also complete ignorance of the huge frauds and evasion resulting from fake invoices, which tax officials are struggling hard to curb.

In fact, the Minister of State for Finance has himself stated in Parliament that frauds amounting to ₹45,683 crore were unearthed since the launch of the GST. The CBIC Member (Investigation) had admitted that between April 2018 and February 2019, evasion of ₹20,000 crore was detected, of which ₹10,000 crore were recovered. A thriving ecosystem of fake companies using fake invoices has grown luxuriantly for claiming ITC; no sooner are the refunds claimed that these companies disappear into the thin air.

Only last week, ₹470 crore of evasion and fake invoices of ₹3,500 crore were uncovered by the tax authorities. There is something much more serious than “good English” at stake here, and the focus should be on addressing these serious structural deficiencies.

Source: The-Hindu-Business-Line

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  • Manage your GST and E-WayBill Software anytime anywhere using multiple devices

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