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Government extends IGST, compensation cess exemption under various export promotion plans

Government extends IGST, compensation cess exemption under various export promotion plans

Giving relief to exporters, the government has extended IGST (Integrated Goods and Service Tax) and compensation cess exemptions for goods procurement under certain export promotion schemes till March 2020.

These exemptions have been extended for exporters buying inputs domestically or importing for export purposes under export oriented unit (EOU) scheme, Export Promotion Capital Goods (EPCG) scheme and advance authorization.

EPCG is an export promotion scheme under which an exporter can import a certain amount of capital goods at zero duty for upgrading technology related to exports.

On the other hand, advance authorization is issued to allow duty-free import of inputs, which is physically incorporated in the export product.

The move was aimed at giving relief to exporters as they do not have to pay IGST at the initial point itself. In the GST regime, they have to pay the indirect tax and then seek a refund, which is a cumbersome process.

In a notification, the Directorate General of Foreign Trade (DGFT) has said that exemption from integrated GST and compensation cess under advance authorisation scheme, EOU, and EPCG scheme of foreign trade policy 2015-20 “is extended up to March 31, 2020”.

During April-February of the current fiscal year, exports grew 8.85 percent to USD 298.47 billion, while imports rose by 9.75 percent to USD 464 billion.

The trade deficit has widened to USD 165.52 billion during the 11 months of the current fiscal from USD 148.55 billion compared to the year-ago period.

XaTTaX: Cloud and On-Premises Based GST Filing Software For India

Source: Economic Times

Telangana State GST collections soar

Telangana State GST collections soar

Telangana continues to register impressive growth in the collection of Goods and Services Tax (GST) in the current year, maintaining more than 20 per cent growth till the end of February. Interestingly, the State collected a whopping Rs 1,040 crore of State GST (SGST) in February when the national level GST collections were Rs 97,246 crore, down from Rs 1.02 lakh crore collected in January.

In GST era, February 2019 has been the best month for the Commercial Taxes Department of Telangana government. The officials collected Rs 1,040 crore of SGST in last month, beating previous best of Rs 1,021 crore collected in April last year. The officials could achieve the targets and collect nearly Rs 3,000 crore of GST including SGST, Central GST (CGST) and Integrated GST (IGST) in February.

“Despite a nation-wide drop in GST collections, we could achieve the growth due to consistent pursual of pending cases of GST arrears. We hope to beat the February collections during March as the financial year comes to an end,” said an official in the Commercial Taxes department, which issued notices to traders who failed to pay their arrears.

The State’s growth in tax collection has been one of the highest in the country. The State collected Rs 904 crore State Goods and Services Tax (SGST) in March 2018, a record of sorts after the implementation of GST from July 2017. The State registered nearly Rs 22,700 crore GST collection between April 2018 and February this year. Except for July when the collections were down by over Rs 250 crore, the State’s GST collection has been consistently above the previous year’s monthly collection.

Meanwhile, the nation-wide GST collections have reduced over the past few months and GST revenues of the Central government stood at Rs 97,246 crore in February against Rs 1.02 crore collected in January this year. In all, the Central GST collections were Rs 17,626 crore, while the State GST collections were Rs 24,192 crore and integrated GST collections were at Rs 46,953 crore in February. Another Rs 8,476 crore was collected as cess under various accounts. During the corresponding period last year, the GST collections were Rs 85,962 crore which is 13.12 percent less than this year. As on February 28, the GST collections were Rs 10.7 lakh crore across the nation. The number is likely to increase by at least Rs 1 lakh crore.

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Source: Telangana Today
GST collections drop to Rs 97,247 crore in February

GST collections drop to Rs 97,247 crore in February

GST collections in February dropped to Rs 97,247 crore in February from Rs 1.02 lakh crore in the previous month, the Finance Ministry said on March 1.

The number of sales return or GSTR-3B filed for the month of January up to February 28, 2019 is 73.48 lakh. “The total gross GST revenue collected in February 2019 is Rs 97,247 crore of which Central GST is Rs 17,626 crore, State GST (SGST) is Rs 24,192 crore, Integrated GST (IGST) is Rs 46,953 crore and Cess is Rs 8,476 crore,” the ministry said in a statement. Goods and Services Tax (GST) collections in the current fiscal till February totalled Rs 10.70 lakh crore.

The government has lowered the GST collection target for current fiscal to Rs 11.47 lakh crore in the Revised Estimates, from Rs 13.71 lakh crore budgeted initially. For the next fiscal 2019-20, the GST collection target has been budgeted at Rs 13.71 lakh crore.

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Source: Money Control.
GST 2.0: Preparing for integration of e-way bills with GST returns

GST 2.0: Preparing for integration of e-way bills with GST returns

As we prepare to enter the next phase of GST compliance, e-way bills are set to take center stage. With the two systems, GST return filings and e-way bills, likely to see integration and confluence, the challenges are important to make sure that businesses comply with them.

GSTN along with GST Council is steadily paving the way for a smooth transition into the GST 2.0 – the newly proposed GST Return filing system to be introduced on the GST portal. While the full-fledged implementation is starting from 1st July 2019, the pilot run is set to begin in April 2019. While the e-way bill site has seen significant developments in terms of the user interface since its inception, the GST authority has noticed that it is a right time to start integrating the same with GST portal.

One of its plan of actions is to disallow taxpayers from using the e-way bill site from generating e-way bills when they default in filing of GST Returns for two periods consecutively. This would apply when either of GSTR-3B or GSTR-4, whichever applicable, is not filed. It has been observed that most of the taxpayers generating e-way bills belong to the class of taxpayers contributing the most to the GST collections.

Further, sufficient time has lapsed in making sufficient e-way bill data available, which can now be analyzed and gaps can be identified. This change will act as an important tool to locate defaulting taxpayers to fix GST revenue collections. The effective date to implement the rule is still under wraps and currently, the validation on the portal is being worked on.

Another plan of action which has just seen a start is the invoice data transfer from the e-way bill portal to the GST portal for the filing of GSTR-1. This move meets a two-fold objective. The most evident one is to make the users feel accommodative of the ease in data-handling and achieving accuracy. The second objective is to allow real-time monitoring of the transactions to keep an eye on the cases of tax evasion.

The facility for importing e-way bill data for preparing GSTR-1 is already up and running on the GST portal login. It allows importing only those invoices against which e-way bills were generated during the tax period. This serves as an alternative mode of data ingestion apart from the existing methods like excel, JSON or API Integration. However, a taxpayer may still have to separately import the details of the invoices that are not subject to e-way bill rules. The integration works on the basis of a proper declaration of GST Identification number (GSTIN) while generating e-way bills.

It is a noble idea to eliminate the need for multiple feeds of the same invoice data by a taxpayer from the ERP or the accountant’s system onto the GST portal and e-way bill portal. It is a critical regulatory checkpoint to ensure the right amount of ITC claims by businesses through automation.

While these actions point towards the long-term goal of using technology to boost tax compliance, these are most likely to continue under the newly proposed GST Return filing system with few tweaks to fit into the system.

The new system proposes an automated intake of sales invoices on a real-time basis, it also allows the buyer to accept or reject these online, and facilitates seamless single return filing (MAIN Return) for the month. Buyers can also keep such invoices on hold for claiming the Input Tax Credit (ITC) in the following month. His actions will be visible to the seller too, thus enabling lesser turnaround time to file GST Returns.

Small taxpayers having less turnover have got multiple options to submit their quarterly returns – SAHAJ or SUGAM or a more elaborate version of the QUARTERLY return. Likewise, the composition dealers have to continue filing GSTR-4 with the frequency to file being changed now to yearly instead of quarterly.

The crucial aim of building the GST system is to allow a free and transparent flow of credit for taxpayers. The new system looks up to accomplish this. Despite the propositions, there will likely be a few hardships. The input claimed on the missing invoices by the recipient can be filed by the seller within next two tax periods from the input claimed by the recipient. However, if the same is not filed by the supplier, the input claimed by the recipient shall be ultimately reversed with interest and penalty.

Though, taxpayers will continue to face the risk due to the default of supplier when an invoice is not uploaded and returns are not filed timely. Recourse to a genuine buyer is still not available. With the eco-system will continue to evolve and compliance will take center stage for those who want to grow their business. These validations point out that the authorities are chalking out a definitive plan for making way to a smooth implementation of GST 2.0, its on ground implementation will be key.

XaTTaX: Cloud and On-Premises Based GST Filing Software For India

Source: Economic Times
Failure to include Place of Supply and State’s Name in GST Invoice for Inter-State Supply would attract Penalty: CBIC

Failure to include Place of Supply and State’s Name in GST Invoice for Inter-State Supply would attract Penalty: CBIC

The Central Board of Indirect Taxes and Customs ( CBIC ) has clarified that in case of failure to satisfy the mandatory requirement of inserting place of supply and the name of the State in the invoices for inter-State supply would attract penalty under the GST law.

A circular issued by the Board last day said that after the introduction of GST, which is a destination-based consumption tax, it is essential to ensure that the tax paid by a registered person accrues to the State in which the consumption of goods or services or both takes place. In case of inter-State supply of goods or services or both, this is ensured by capturing the details of the place of supply along with the name of the State in the tax invoice.

“It is, therefore, instructed that all registered persons making the supply of goods or services or both in the course of inter-State trade or commerce shall specify the place of supply along with the name of the State in the tax invoice. The provisions of sections 10 and 12 of the Integrated Goods and Services Tax Act, 2017 may be referred to in order to determine the place of supply in case of supply of goods and services respectively. Contravention of any of the provisions of the Act or the rules made thereunder attracts penal action under the provisions of sections 122 or 125 of the CGST Act,” the Board said.

To Read the full text of the circular CLICK HERE

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Source: Tax Scan.
Companies stare at cash flow problems on account of GST credits

Companies stare at cash flow problems on account of GST credits

A tweak in the rule on availing goods and services tax (GST) credits may create cash flow problems for some companies starting this month. The change is in the way companies can set off tax paid on raw material against those levied on the goods they sell, which is meant to avoid double counting of taxes.

According to the credit utilisation mechanism announced late last year, companies can set off their tax liabilities by first utilising their integrated GST (IGST) credits before availing of their central GST (CGST) and state GST (SGST) credits. Previously, companies could set off IGST credits against both CGST and SGST.

Tax experts said this has started to result in situations where companies end up paying GST in cash even though they have credits on their books. “This amendment has become a point of worry for most industry players as they may now have to pay SGST liability in cash even in scenarios where prior to this amendment, these could be paid by utilising credits. The reason being the introduction of this new rule of utilisation of IGST credit,” said Abhishek Jain, tax partner at EY India. IGST credits are accumulated by companies that import goods or source them from vendors in other states. Collections under IGST are shared between the central and the state governments. Tax experts said the regulation change could result in litigation.

“The main objective of GST is that there should be no tax cascading, but the underutilized or non-utilised credit would lead to exactly that. The constitutional validity of this tax cascading could be challenged in court,” said Abhishek A Rastogi, a partner at Khaitan & Co.

The only way companies can solve this problem is by altering their supply chain structures. However, this may not be possible for most companies because supply chains cannot be determined merely to save taxes, industry experts said.

With the new regulation requiring utilisation of IGST credits first, industry experts said that many companies with a national presence will have credits accumulated in one state and taxes pending in other states.

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Source: Economic Times
On GST Council table: Tax relief for real estate, duty relaxation for exporters

On GST Council table: Tax relief for real estate, duty relaxation for exporters

The proposal was discussed in 26th GST Council meeting in March last year and since many technical, legal and administrative issues were identified, its implementation was put on hold.

Duty relaxation for exporters and a tax relief package for the real estate sector are likely to be discussed at the next meeting of the GST Council, which is expected to meet once before the model code of conduct kicks in ahead of the Lok Sabha elections.

Targeting the steady erosion of export competitiveness across segments, which is especially telling in labour-intensive sectors such as textiles and garments, the Centre is readying a proposal for a duty drawback like scheme under the Goods and Services Tax (GST) regime that could comprehensively compensate exporters for embedded taxes.

Also, a ministerial panel set- up last month to analyse tax issues faced by the real estate sector under the GST regime is set to make a strong push for lower tax rates for under-construction residential properties and the affordable housing segment.

Currently, under the GST regime, compensation for taxes other than the basic customs duty (BCD) is not given to exporters, which ends up eroding their competitiveness. Officials involved in the exercise confirmed that the duty drawback scheme is being readied after a letter from the Directorate General of Foreign Trade (DGFT) to the Central Board of Indirect Taxes & Customs sought relief on this count.

After this, a proposal has been sent to the GST Policy Wing for a duty drawback like scheme under GST. GST officials are also discussing contours of the proposed e-wallet scheme for exporters, which was put on hold for six months until October last year.

“A scheme to provide more sops for exporters such as some relief on the front of the additional levy is being worked on. It would be more clarificatory in nature aimed at freeing up the working capital of exporters,” said a government official, adding that the existing export incentive scheme Merchandise Export from India Scheme (MEIS) could be tweaked to give some more sops to exporters.

The Commerce Ministry has been pushing for more relief to exporters including the e-wallet scheme but the Finance Ministry has raised some concerns about the possible misuse by some fly-by-night exporters, said another official. An inter-ministerial meeting regarding the e-wallet scheme for exporters has been scheduled for next week.

The e-wallet scheme or electronic e-wallets will be credited with notional or virtual currency by the DGFT. This notional/virtual currency will be used by the exporters to make the GST/IGST payment on goods imported by them so their funds are not blocked.

The proposal was discussed in 26th GST Council meeting in March last year and since many technical, legal and administrative issues were identified, its implementation was put on hold.

“It will monitor the track record of the exporter and provide relief on taxes paid on inputs. Last time, the discussion stalled as there were concerns about the availment of credit and the exporter having an edge over others since his working capital will be free compared to other exporters,” an official said.

Meanwhile, the Group of Ministers (GoM), under Gujarat Deputy Chief Minister Nitin Patel, set up last month to analyse tax rates and challenges being faced by the real estate sector under the GST regime is leaning in favour of lower rates for under-construction residential properties.

The panel has favoured lowering the GST rate on under-construction residential properties to 5 per cent (without input tax credit) from the present rate of 12 per cent with an input tax credit (after abatement of land) and for affordable housing to 3 per cent from the current rate of 8 per cent.

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Source: Indian Express.
GST collections drop to Rs 94,726 cr in December, lowest in three months

GST collections drop to Rs 94,726 cr in December, lowest in three months

The government collected Rs 94,726 crore as goods and services tax (GST) in December, lower than the collection in the previous two months.

With a shortfall in seven of the nine months so far in 2018-19, GST collection in January, February and March has to be on average Rs 1.23 trillion to meet the budgeted target, according to calculations byBusiness Standard. While states are relatively safe due to compensation, the Centre’s fiscal position is in peril.

Against expectations of Rs 6.04 trillion from the Central GST (CGST) in 2018-19, CGST revenue stands at Rs 3.41 trillion in nine months (April-December), or 56 per cent of the annual target.

The Centre needs Rs 87,000 crore in January, February and March at least to recoup this shortfall. This includes tax collected as CGST as well as settlement towards CGST from IGST account. In comparison, the highest inflow as CGST was recorded in July 2018 stood at Rs 58,796 crore.

Admitting that the fiscal year would end with some shortfall, finance ministry officials said the amount would be near Rs 40,000 crore. Cuts in revenue and capital expenditure would be imperative, they said.

Experts said enhanced revenue from other indirect taxes and income tax would not be sufficient to make good the gap, and, as a result, anti-evasion measures would gain prominence.

“CGST collection so far suggests an impending shortfall relative to the budgeted estimate this fiscal year. A provisional settlement of the Integrated GST (IGST), as well as the residual GST compensation cess that remains after disbursal to states, will be key in augmenting the Centre’s cash flows in the coming months,” said Aditi Nayar, principal economist, ICRA.

The slowdown is surprising especially since Diwali fell in November, the month the December collection represents.

“The collections, while admittedly below the targets, seem to indicate the revenue is stabilizing at around Rs 95,000 crore a month, despite the rate reductions in the current fiscal year. A lower revenue than the target could lead to more compliance pressures on businesses and more focus on anti-evasion measures,” said M S Mani, partner, Deloitte India.

Recovering evaded GST would also be important for meeting the annual target, said Pratik Jain, partner, indirect tax, PwC India.

Tax evasion detected in April-November stands at Rs 12,767 crore, of which Rs 7,910 crore has been recovered, according to the data presented by the finance ministry in Parliament.

“We should expect greater enforcement and investigations of cases in the next few months,” said Jain.

The GST Council, in its December 22 meeting, slashed the rates of 23 items, of which six were in the top slab of 28 per cent. This would help in improving compliance, experts said.

December recorded the highest number of monthly returns (GSTR-3B) filed, at 7.24 million, 4 per cent more than 7 million filed in November.

However, this might make further rate cuts difficult, some experts said.

“The slight dip in GST revenue collections as compared to the last two months is a bit discouraging. This may deter the government from rationalising the rate of goods left in the 28 per cent category like cement and auto parts in the short term,” said Abhishek Jain, tax partner, EY India

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Source: Business-Standard


Govt clears Rs 91,149 cr GST refunds to exporters so far; Rs 6,053 cr still pending

Govt clears Rs 91,149 cr GST refunds to exporters so far; Rs 6,053 cr still pending

The finance ministry said Rs 91,149 crore has been issued so far to exporters as GST refunds, which are 93.77 percent of total claims with the tax authorities.

In a statement, the ministry said Rs 6,053 crore worth GST refund is still pending with the government and that is being “expeditiously processed”.

“Total GST refunds to the tune of Rs 91,149 crore have been disposed of by CBIC and state authorities out of the total refund claims of Rs 97,202 crore received so far. Thus, the disposal rate of 93.77 per cent has been achieved,” the ministry said.

 Giving break-up for the refund figures, the ministry said that Rs 48,455 crore of IGST refunds has been disposed of as on November 28, which is 95 per cent of the total such claims.

As much as Rs 2,473 crore worth of IGST refund claims is held up on account of “various deficiencies” which have been communicated to exporters for remedial action.

With regard to refund of input tax credit claims, the ministry said of the total claims of Rs 46,274 crore, the pendency as on December 3 stood at Rs 3,580 crore.

“Provisional/final order has been issued in case of (ITC) refunds amounting to Rs 37,406 crore. In claims amounting to Rs 5,288 crore, deficiency memos have been issued by respective GST authorities,” the statement said.

The ministry said pending GST refund claims amounting to Rs 6,053 crore are being expeditiously processed so as to provide relief to eligible claimants.

“Refund claims without any deficiency are being cleared expeditiously,” it added.

Efforts are being made continuously to clear all the pending refund claims, where ever requisite information is provided and found eligible, it said.

“Co-operation of the exporter community is solicited to ensure that they respond to the deficiency memos and errors communicated by Centre and State GST as well as Customs Authorities and also exercise due diligence while filing GSTR 1 and GSTR 3B returns as well as Shipping Bills,” the statement added.

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Source: Money Control.
GST collection for November drops to Rs 97,637 crore

GST collection for November drops to Rs 97,637 crore

Goods and Services (GST) collection in November dropped to Rs 97,637 crore, lower than Rs 1 lakh crore collected the previous month.
The total number of GSTR 3B returns filed for October up to November 30, 2018, is 69.6 lakh, the finance ministry said in a statement. Compensation released to states for August-September stood at Rs 11,922 crore.

Of the Rs 97,637 crore collected, central GST (CGST) collection is Rs 16,812 crore, state GST (SGST) is Rs 23,070 crore, integrated GST (IGST) is Rs 49,726 crore (including Rs 24,133 crore collected on imports) and cess is Rs 8,031 crore (including Rs 842 crore collected on imports).

The government has settled Rs 18,262 crore to CGST and Rs 15,704 crore to SGST from IGST as a regular settlement.

The total revenue earned by the central government and the state governments after regular settlement in November 2018 is Rs 35,073 crore for CGST and Rs 38,774 crore for SGST, the ministry added.
The GST collections stood at Rs 1.03 lakh crore in April, Rs 94,016 crore in May, Rs 95,610 crore in June, Rs 96,483 crore in July, Rs 93,960 crore in August, Rs 94,442 crore in September and Rs 1,00,710 crore in October.
Commenting on the number, EY Tax Partner Abhishek Jain said, “While the GST collections have shrunk vis-a-vis the earlier month, it is higher than the average monthly collection in the year. This steady increase in average collection brings a gleam of hope for a regular monthly collection of Rs 1 lakh crore being met soon.

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Source: Economic Times.India