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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
Explore the Salient Features of GSTR-1

Explore the Salient Features of GSTR-1

GSTR-1 refers to a particular kind of return for outward supplies, which should be filed by each registered dealer on a monthly or quarterly basis. It necessarily indicates the entire sales transactions of a business. This return is segregated into 13 sections which are listed below:

  1. The GSTIN of the business you are engaged in (you can also use a provisional Id as GSTIN, if you do not have one)
  2. The exact legal name of the business
  3.  The aggregate turnover achieved in the last financial year
  4. The taxable supplies/sales offered to registered individuals including UIN-holders
  5. Taxable sales/supplies offered to unregistered individuals who stay outside their base state and that exceeding Rs.2.5 Lakhs (which implies inter-state sales to unregistered individuals, which exceeds Rs.2.5 Lakhs)
  6. Export sales which is deemed and zero-rated
  7. Sales offered to unregistered individuals which is not included in the 5th point
  8. The entire sales which is carried out via an e-commerce operator
  9. The inter-state sales made to unregistered individuals up to an amount of Rs.2.5 Lakhs
  10. Exempted, nil-rated, and non-GST supplies – those which are exempted and not included in the above points
  11. Amendments made in taxable supplies/sales to registered businesses in the preceding months
  12. Amendments made in taxable supplies/sales to unregistered businesses in the past months
  13. Information regarding advances adjusted or received during a month, from the clients
  14. The HSN summary for outward supplies
  15. The documents which are issued during a month, which contain information on the invoice serial numbers, debit notes, and credit notes for the month.
Due Date For GSTR1

What is the Due Date for Filing GSTR-1?

The due date for filing GSTR-1 depends on the turnover of the business. Those businesses which have sales up to Rs.1.5 Crore would have to file quarterly returns whereas, other taxpayers that have sales more than Rs.1.5 Crore would have to file monthly returns which will be 11th of every month.

Who All Are Required to File GSTR-1?

Each registered person is needed to file GSTR-1, regardless of whether there are any transactions carried out during a particular month or not.

The list of registered individuals who are exempted from filing the return are given below:

  • Composition Dealers (The composition scheme is an easy scheme under GST for small-time taxpayers, in which they can avoid complicated GST formalities and remit GST for a fixed turnover rate. This scheme is applicable for those taxpayers that have a turnover less than Rs.1.0 Crore (as per a notification of CBIC, the threshold limit has been increased from Rs.1.0 Crore to Rs.1.5 Crore))
  • Input Service Distributors (An Input Service Distributor or ISD refers to a business for which invoices are issued for the services used by its branches. The tax paid is disbursed to these branches on a proportional basis by means of an ISD invoice. Further, though these branches can have dissimilar GSTINs, they need to have the same PAN as the ISD)
  • Those who are suppliers of Online Information and Database Access or Retrieval (OIDAR) services and have to pay tax by themselves according to Section 14 of the IGST Act
  • The taxpayers who are accountable to collect TCS (The TCS or the Tax Collected at Source refers to the tax owed by a seller which he collects from a buyer during the time of sale. There are certain organizations or people that are classified as sellers for TCS such as the State and Central governments, local authorities, statutory corporation or authority, the companies registered under the Companies Act, the partnership firms, etc. Similarly, there are a few buyers that are liable to pay TCS to the sellers like the Central and State governments, public sector companies, sports and social clubs, etc.
  • The taxpayers who are accountable to deduct TDS (The TDS or Tax Deducted at Source is a method to levy tax based upon a particular percentage on the amount, which should be paid by the receiver on services or goods. The tax which is collected thus would be taken as revenue by the government. The government agencies, local authorities, the departments or establishments belonging to the State or Central government, and some categories of people as per the notification of the government are liable in deducting TDS under the GST Law. Further, according to a recent notification, a board, or an authority, or any other body which is set up by the government, or a State Legislature, or Parliament, of which 51% equity is owned by the government are supposed to deduct TDS. Others who are eligible to deduct TDS include, a society which is registered under the Societies Registration Act, 1860 and has been established by a local authority or any State or Central government, and the public sector undertakings.
  • A non-resident taxable person (As per the GST Law, a non-resident taxable person refers to any individual who performs transactions which include the distribution of services or goods, or both, either as an agent or a principal, or in any other capacity, but do not have a residence or permanent place of business in India).

Is it Possible to Revise GSTR-1?

Once a return is filed, it is unable to revise the same. If there are any mistakes made in the filing of the return, it could be corrected in the next monthly or quarterly return. For example, if there is a mistake made in the September GSTR-1, you are able to rectify it in the October GSTR-1.

Consequences of Late Fee and Penalty

There is a late fee imposed if you do not file GSTR-1 on time, which is Rs.200 for each day of delay (Rs.100 each according to CGST and SGST Act. The late fee is charged from the date succeeding the due date.  As per a recent update, for nil returns, the late fee has been reduced to Rs.50 and Rs.20 for each day.

To sum it up, it is essential to know the basics of the GSTR-1 return before filing the same to avoid any mistakes. This blog gives an outline of what GSTR-1 is all about.

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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e-Way bills curb tax evasion, but glitches remain

e-Way bills curb tax evasion, but glitches remain

There are numerous concerns on the functioning of the GST regime, launched two years ago. But the e-Way bill’s system is displaying good traction. While there are a few glitches, users mostly agree that e-Way bills have brought down under-reporting and increased transparency.

The system was rolled out for inter-State consignments in April 2018, and for intra-State consignments two months later, in a phased manner. e-Way bills generation for the period April-June 2019 was almost 40 per cent higher at about 15.65 crore, compared to 11.19 crore in the same period last year.

For transport companies, the system has saved considerable time, removing check-posts and facilitating the shift from a ‘departmental policing model’ to a ‘self-declaration model’. It has also helped in curbing tax evasion.

According to chartered accountant Chirag Chauhan, e-Way bills have reduced tax evasion by almost 80 per cent. He also points out that the drop in GST collections of just 2-5 per cent in the first quarter of FY20, against a sales decrease of 15-20 per cent, is proof that tax malpractices have come down.

Under the norms, every consignment worth above ₹50,000 (raised to ₹1 lakh in a few States as a temporary relief) should begin with the generation of an e-Way bill. The bill must be raised before the goods are shipped and should include details of the products, their consignor, recipient and transporter. Though check-posts have been abolished under GST, a consignment can be intercepted at any point for the verification of its e-Way bill. If found without one, or with invoice discrepancies, a penalty of ₹10,000, or tax sought to be evaded, or, in some cases, 200 per cent of the GST amount, can be levied. These provisions are helping in reducing the disparities between the actual value of the sale and that reported in e-Way bills. Every e-Way bill generated has to be matched at the invoice level with the entries uploaded by the manufacturers or traders in their monthly GSTR-1 returns for outward supplies. Also, the GSTR-1 of the manufacturer or trader gets auto- populated in the GSTR-2A of the purchaser, based on which the latter claims the input tax credit (ITC).

Due to such matching of invoices at multiple levels, there’s hardly any scope for the supplier to under-report sales.

Once the e-Way bill portal is linked to the centralised VAHAN portal, which contains vehicles details, generation of fake e-Way bills gets checked. Further, the system helps in increasing the overall GST compliance, as a recent notification bars a supplier or a recipient from generating an e-Way bill if the GST returns are not filed for two consecutive months.

Some challenges do remain. Complaints have been raised that the time limits prescribed for the validity of an e-Way bill are not in consonance with ground realities.

Time limit

“Genuine reasons for delays should be taken into account while fixing the time limits,” Bal Malkit Singh, former President of the All India Motor Transport Congress, told BusinessLine.

On consignment verification issues, he said: “State borders have paved the way for flying squads and, the vehicles are being stopped randomly on the pretext of checking for collateral extortion.” Another issue, he said, is the lack of flexibility in rectifying errors and changing the destination address.

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Source: The-Hindu-Business-Line
GST: Restrictions on ITC claim if you do not file GSTR 1 on time

GST: Restrictions on ITC claim if you do not file GSTR 1 on time

The GST Council, in its 37th meeting held at Goa, has come up with various proposals to simplify and strengthen the tax filing system and one such decision is aimed at ensuring taxpayers file their GSTR 1 in time.

“In order to nudge taxpayers to timely file their statement of outward supplies, imposition of restrictions on availment of input tax credit by the recipients in cases where details of outward supplies are not furnished by the suppliers in the statement under section 37 of the CGST Act, 2017,” a statement said. This means when taxpayers do not file a GSTR 1, they would not be able to claim input tax credit.

According to Archit Gupta, Founder and CEO – ClearTax, there will be restrictions on ITC claim for those who fail to submit GSTR-1. “ITC will only be allowed to be claimed where outward supplies have been reported by your suppliers. This is an important step to ensure validity of ITC claim in the system and sets the stage for the new simplified return filing mechanism. Those whose suppliers do not submit GSTR-1 will be restricted from availing ITC credit,” says Gupta.

Incidentally the Government on Friday said, the New return system that was to be introduced in October 2019, would now be introduced from April, 2020. This is in order to give ample opportunity to taxpayers as well as the system to adapt and accordingly specifying the due date for furnishing of return in FORM GSTR-3B and details of outward supplies in FORM GSTR-1 for the period October, 2019 – March, 2020.

“With the Government now showing full intention to plug ITC leakages, businesses cannot do without a robust mechanism that will keep suppliers in check and make sure they are complying in a timely manner,” says Gupta.

Other announcements:

The GST Council provided much-needed relief to MSMEs by allowing them waiver to file GSTR 9 and GSTR-9A. Announcing the relaxation in filing of annual returns for MSMEs for FY 2017-18 and FY 2018-19, a statement said waiver of the requirement of filing FORM GSTR-9A for Composition Taxpayers for the said tax periods will be provided.

Additionally, filing of FORM GSTR-9 for those taxpayers who (are required to file the said return but) have aggregate turnover up to Rs. 2 crore made optional for the said tax periods.

Other important decision taken at the Council meeting include setting a Committee of Officers to examine the simplification of Forms for Annual Return and reconciliation statement and extension of last date for filing of appeals against orders of Appellate Authority before the GST Appellate Tribunal as the Appellate Tribunals are yet not functional.

Source: Economic-Times.

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GST Annual filing waived off for taxpayers below Rs 2 cr turnover

GST Annual filing waived off for taxpayers below Rs 2 cr turnover

The GST Council, in its 37th meeting held at Goa provided relief to MSMEs by allowing them waiver to file GSTR 9 and GSTR-9A.

Announcing the relaxation in filing of annual returns for MSMEs for FY 2017-18 and FY 2018-19, a statement said waiver of the requirement of filing FORM GSTR-9A for Composition Taxpayers for the said tax periods will be provided.

Additionally, filing of FORM GSTR-9 for those taxpayers who (are required to file the said return but) have aggregate turnover up to Rs. 2 crore made optional for the said tax periods.

Abhishek Jain, Tax Partner, EY said, “The annual return compliance waiver till Rs 2 crore turnover would be quite an aid from an ease of compliance perspective for small businesses. To recall, an annual return requirement historically under the VAT regime as well was exempt for businesses with a specified threshold and hence this proposal may be aligned to the pre GST regime. Also, smaller businesses were looking for this relief because they had not maintained quite a lot of details which were required to be reported in the annual return; essentially owing to the suspension of GSTR-2.”

A Committee of Officers to be constituted to examine the simplification of Forms for Annual Return and reconciliation statement.

“The Council’s decision to make annual return (GSTR-9 and GSTR-9A) and audit report (GSTR-9C) optional for taxpayers with turnover up to Rs 2 crore, would certainly ease the compliance burden of small taxpayers. Further, assurance on further simplification of annual compliances should result in reduction of compliance costs, as undertaking multiple reconciliations was proving to be complex and time consuming.” said Harpreet Singh, Partner, KPMG India.

There is also an extension of last date for filing of appeals against orders of Appellate Authority before the GST Appellate Tribunal as the Appellate Tribunals are yet not functional.

In order to nudge taxpayers to timely file their statement of outward supplies, imposition of restrictions on availment of input tax credit by the recipients in cases where details of outward supplies are not furnished by the suppliers in the statement under section 37 of the CGST Act, 2017.

In another significant announcement, the new return system which was to be introduced from October 2019, will now be introduced from April, 2020. The statement said this is in order to give ample opportunity to taxpayers as well as the system to adapt and accordingly specifying the due date for furnishing of return in FORM GSTR-3B and details of outward supplies in FORM GSTR-1 for the period October, 2019 – March, 2020.

Source: Economic-Times

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GST compliance regime not yet simple, says CAG

GST compliance regime not yet simple, says CAG

The government has failed to put in place a simplified tax compliance regime and non-intrusive e-tax system remains elusive even after two years of the Goods and Services Tax’s (GST) roll-out, according to official auditor, Comptroller and Auditor General of India (CAG).

“The complexity of return mechanism and the technical glitches resulted in roll back of invoice-matching, rendering the system prone to ITC frauds. Thus, on the whole, the envisaged GST tax compliance system is non-functional,” the CAG has said a report tabled in Parliament on Tuesday.

The new indirect tax regime had kicked in July 2017. The transformation tax structure is aimed at reducing tax cascading, ushering in a common market for goods and services and bringing in a simplified, self-regulating and non-intrusive tax compliance regime.

The CAG said that one significant area where the full potential of GST roll out has not been achieved is the roll out of the simplified tax compliance regime.

While it was expected, the auditor said, that compliance would improve as the system would stabilise, all returns being filed showed a declining trend of filing from April 2018 to December 2018.

According to the report, the filing percentage of GSTR-1 returns (monthly returns on outward supplies) were throughout less in comparison to the corresponding filing of GSTR-3B returns (summary self-assessed return). The introduction of GSTR-3B resulted in filing of returns with ITC claims which could not be verified and it appears to have disincentivised filing of even GSTR-1.

“Since filing of GSTR-1 is mandatory, short-filing is an area of concern and needs to be addressed,” the CAG noted.

GSTR-3B being only a summary return, short-filing of GSTR-1 implied that the tax departments did not have complete invoice level details as filed by the suppliers, which could be used to verify details given in GSTR-3B or to arrive at turnover.

During the audit, the CAG found that system validations were not aligned to the provisions of the GST Act and as a result, there were some crucial gaps in the registration module. Among various gaps, the system failed to validate and debar ineligible taxpayers from availing Composition Levy Scheme.

Source: Economic-Times

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New GST return forms released; compliance process simplified from April 1

New GST return forms released; compliance process simplified from April 1

The goods and services tax (GST) network released the revised return forms which businesses would need to comply with from this year. The new forms would be operated on a pilot basis from April 1, 2019, and would be mandated across the country from July, according to the decisions of the GST Council.

The new and revised return format would obviate the need to furnish returns under the family of GSTR-1, GSTR-2 and GSTR-3, but the annual return GSTR-9 might continue, experts said.

The GST Council had suspended GSTR-2, a purchase return, and GSTR-3, input-output return, because of the complex form structure. On the other hand, GSTR-1, a sale return, and GSTR-3B, summary input-output return, remain. The new forms are uploaded following an exercise to simplify the returns under GST.

The new return formats — named “normal”, “sahaj” and “sugam” — would make the compliance process simpler for the smallest of businesses wherein taxpayers up to a turnover of Rs 5 crore would have an option to file any of the three forms.

For the revenue department, the new format would help in matching the invoices of the seller and the purchaser, and would help the department check evasion to a great extent. But at the same time, it is likely to increase clerical and administrative work for businesses.

The HSN-wise details need to be provided at the invoice level rather than the summary level. In addition, while details at 4-digit HSN codes are required in the current format, the new format would need those details at the 6-digit HSN level.

Under the new format, invoices can be reported on a continuous basis.

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Source: Business-Standard
Not just lower taxes, evasion too a factor in the GST shortfall

Not just lower taxes, evasion too a factor in the GST shortfall

It’s fairly clear by now that goods and services tax (GST) collections are falling way short of the government’s initial expectations. The monthly run rate of collections until November was less than ₹90,000 crore, far lower than the monthly average of ₹1.05 trillion required to meet the annual target.

Graphic: Paras Jain/Mint

One reason, of course, is the downward revision of tax rates on various products. But another, and more worrying cause is widespread tax evasion despite measures such as e-way bills.

Shiv Pratap Shukla, minister of state for finance, provided data in Parliament on Friday that showed the percentage of eligible taxpayers who are not filing returns has risen sharply. A year ago, 84.4 million hadn’t filed returns; this has risen to a whopping 283.1 million.

“Our understanding is that people are still gaming the system and this has to do with input credit,” said an expert in indirect taxation, who did not want to be named.

“Basically these companies are claiming input credit by showing estimates of their sales in the GSTR-1 form, as you just have to give details of your sales in this form and not show the actual invoices based on which the input credit is being availed. Later, they avoid paying GST, as payment of taxes happens when you file the GSTR-3B form. So, in many cases, registrations are made, and initial GST payments are missed. By the time the tax authorities figure it out, many of them have deregistered or shut shop,” he added.

The data presented by Shukla showed that until December, 499 cases of fake invoices, which were used for claiming input tax credit worth ₹3,895 crore, were detected. In contrast, in the July 2017-March 2018 period, only four such cases had been detected, cumulatively worth ₹9.75 crore.

“Many companies, which have not been paying income tax, continue to remain outside the GST net as well. They have simply decided to not get registered,” said another tax expert requesting anonymity. “Frankly, the government doesn’t have the bandwidth to detect all such cases, ” added the tax expert.

The dice seems loaded against the government, which also may not want to be seen as being too tough on small businesses ahead of the general elections.

Leakages are especially high in industries where the market share of unorganized companies is high.

Analysts at JM Financial Institutional Equities recently visited Haryana’s Yamunanagar, a region where 550-600 plywood manufacturing units are located. According to their interactions, while invoicing levels have increased, e-way bill implementation is still not strict at most places and companies are able to get away with under-invoicing, it said in a report on 12 December.

“Reconciliation of GSTR-1 and e-way bills generated by taxpayers need to be implemented at the earliest for e-way bills to be a more effective anti-evasion measure,” says Abhishek Jain, tax partner, EY.

After the implementation of e-way bills in April 2018, revenues were expected to rise. It was expected that lower effective taxes, along with increased compliance, would accelerate formalization, and organized businesses would gain share and tax collections would surge. But it seems the mechanism has failed to yield the desired results so far.

“The government is committed to increase the percentage of compliance by taxpayers under GST,” Shukla told Parliament. “In this regard, an extensive outreach programme has been carried out across the country to create awareness among traders, industry bodies and other stakeholders. Further, effective enforcement measures are being undertaken to check cases of tax evasion and fake invoices.” It’s another matter that the numbers he provided don’t hint at any reduction in evasion.

In fact, the way things stand, shoring up GST revenue collections meaningfully could be a long row to hoe.


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Source: Live Mint

 

GST Council waives Late Fee for Some Returns

GST Council waives Late Fee for Some Returns

The 31st GST Council meeting has waived the late fee for some returns such as FORM GSTR-1, FORM GSTR-3B & FORM GSTR-4 for the periods July 2017 to September 2018.

According to the recommendation of the GST Council, the late fee shall be completely waived for all taxpayers in case FORM GSTR-1, FORM GSTR-3B &FORM GSTR-4 for the months/quarters July 2017 to September 2018, are furnished after 22.12.2018 but on or before 31.03.2019.

The council also recommended that the taxpayers who have not filed the returns for two consecutive tax periods shall be restricted from generating e-way bills. This provision shall be made effective once GSTN/NIC make available the required functionality.

It was further recommended that one more window for completion of the migration process is being allowed. The due date for the taxpayers who did not file the complete FORM GST REG-26 but received only a Provisional ID (PID) till 31.12.2017 for furnishing the requisite details to the jurisdictional nodal officer shall be extended till 31.01.2019. Also, the due date for furnishing FORM GSTR-3B and FORM GSTR-1 for the period July 2017 to February, 2019/quarters July 2017 to December 2018 by such taxpayers shall be extended till 31.03.2019.

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Source: Tax Scan
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