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Over 2 lakh new registrations in Haryana under GST

Over 2 lakh new registrations in Haryana under GST

Haryana Finance Minister Capt Abhimanyu on Tuesday said that over two lakh new registrations have been added under the GST in the state since its roll-out to the existing base of 2.25 lakh payers under the erstwhile VAT.

The Finance Minister said the progress of implementation of GST right from its roll-out in July 2017 was constantly reviewed in the state. Extensive training programmes were conducted for the training of all stakeholders.

“Workshop, seminars, conferences and interactive sessions with the taxpayers are regularly organised. The State has particularly stressed upon the expansion of the tax base,” an official statement quoted Capt Abhimanyu, as saying.

He said that Haryana is contributing handsomely in the GST collections. A total of Rs 36,815 crore was collected from the State under State GST, CGST, IGST and cess for the eight months of GST implementation during 2017-18.

“It is Rs 4,601 crore per month on an average,” he added.

He said that with regard to the state collections under GST, the state collected Rs 10,178 crore including provisional IGST settlement in the financial year 2017-18.

Capt Abhimanyu said that the protected revenue of the state for the year 2017-18 was Rs 13,200 crore. The total shortfall of the state GST revenue after taking into consideration the recoveries of erstwhile Vat and CST was Rs 1,933 crore in the financial year 2017-18.

The state received Rs 1,199 crore from compensation and Rs 667 crore from provisional IGST settlement during this period.

The Finance Minister said that in the financial year 2018-19, the state collected Rs 55,231 crore under state GST, CGST, IGST, and cess contributing Rs 4,602.56 crore per month on an average.

The total collection for Haryana under all the GST Acts is Rs 55,231 crore as against Rs 11,77,370 crore for all the states in the country.

Source: Business-Standard.

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GST collections dip below Rs 1 lakh crore in June

GST collections dip below Rs 1 lakh crore in June

Goods and services tax (GST) collections dipped below the Rs 1 lakh crore mark in June for the first time in the current fiscal in what is seen as an impact of the sluggish demand across several sectors, with tax consultants also blaming evasion for the drop in the mop-up.

The numbers, released on the second anniversary of the indirect tax reform measure, coincided with a government warning to evaders, especially those generating bogus invoices to make fraudulent claims. “The menace of fake invoices needs to be checked as it affects honest taxpayers and causes a loss of revenue to the government. Imaandaar traders se Bair Nahin, fake invoice waalon ki Khair Nahin (we have nothing against honest traders, but there will no peace for those generating fake invoices),” junior finance minister Anurag Thakur said at the GST Day event.

‘Expect increased audit and scrutiny over the next few months’

Using technology, the government has detected thousands of traders, many of whom were using shell companies to generate fake invoices and claim tax credits and refunds. Sales of durables and cars, as well as consumer goods, have taken a beating in recent months, which analysts said is reflecting in tax data.

Although tax collections have dipped in June, Thakur said the government would meet the GST collection target set for the fiscal year. During 2019-20, the government is targeting to collect Rs 6.1 lakh crore through Central GST and a shade over Rs 1 lakh crore via compensation cess on luxury and sin goods such as cars, tobacco, aerated drinks, and coal. The IGST balance has been estimated at Rs 50,000 crore.

During June, Central GST collections were pegged at Rs 18,366 crore, while State GST mop-up was pegged at Rs 25,343 crore, the finance ministry said in a statement.

“More than the amount, it’s important to note that it (growth) is only 4.5% higher than the corresponding period of last year, which should be below the government’s expectations… (it) will be a concern and we should expect some tangible measures in the form of increased audits and scrutiny over the next few months. In addition, the government may explore options as to how consumers can be incentivized to be more vigilant on tax compliance,” said Pratik Jain, partner at PwC India.

EY tax-partner Abhishek Jain said the steps planned by the government in the coming days — such as up-gradation of e-way bills and launch of e-invoicing — will help check evasion even as revenue secretary Ajay Bhushan Pandey promised more reforms in the coming months.


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Source: Times-of-India.
Government identifies 5,106 ‘risky exporters’ who have fraudulently claimed GST refunds

Government identifies 5,106 ‘risky exporters’ who have fraudulently claimed GST refunds

The government on Thursday said it has identified 5,106 “risky exporters” so far who have claimed GST refunds based on bogus invoices, and would manually check their claims before issuing refunds.

The Central Board of Indirect Taxes and Customs (CBIC), in a statement, also assured genuine exporters that their refund claims would be processed in an automated environment and issued in a timely manner.

The CBIC had on Monday issued an instruction to its Customs and GST formations to verify the correct availment of input tax credit (ITC) by few exporters who are perceived as “risky” on the basis of pre-defined risk parameters.

“Only 5,106 risky exporters have been identified so far as against about 1.42 lakh total exporters. Thus the risky exporters are only 3.5 percent of the total exporters…

“Even for these risky exporters, the exports are allowed immediately. However, the refund would be released after verification of ITC within a maximum of 30 days,” the CBIC statement said on Thursday.

The introduction of manual checks in IGST refunds is aimed at preventing unscrupulous exporters from defrauding the exchequer, the CBIC added.

It said that in the last two days — June 17 and 18 — only 1,436 shipping bills filed by total 925 exporters have been interdicted.

“Considering that about 20,000 shipping bills are filed by roughly 9,000 exporters on a daily basis, the intervention is negligible,” the CBIC said.

“The new verification exercise is aimed at preventing unscrupulous exporters from defrauding the exchequer and bringing a bad name to the larger exporting community. CBIC would like to assure all genuine exporters that they would continue to get their IGST refunds in a timely manner in a fully automated environment,” it added.

In the instruction issued on Monday, the CBIC had asked the director-general (systems) to identify “risky exporters” and inform the respective Chief Commissioner of Central Tax about the past IGST refunds granted to such risky exporters (along with details of bank accounts in which such refund has been disbursed).

“Risk Management Centre for Customs (RMCC) shall insert alerts for all such risky exporters and make 100 percent examination mandatory of export consignments relating to those risky exporters. Also, the alert shall be placed to suspend IGST refunds in such cases,” the instruction said.

Exporters can claim IGST refunds on exports in two ways — either on the basis of issuance of a bond/letter of undertaking at the time of exports and claiming a refund of accumulated ITC, or paying IGST in cash at the time of exports and claiming refunds thereafter.

It has come to the notice of taxmen that certain exporters have availed ITC on the basis of ineligible documents or fraudulently and utilized that credit for payment of IGST on goods exported out of India.

“It has also been observed in several cases that there is huge variation between the FOB (freight on board) value declared in the shipping bill and the taxable value declared in GST return apparently to effect higher IGST payout leading to encashment of credit,” the CBIC said.

As per the instruction, the GST officers have been mandated to report to the Chief Commissioner of Central Tax within 30 days specifying whether the amount of IGST paid and claimed/sanctioned as the refund was in accordance with the law or not.

The Chief Commissioner of Central Tax will then share the report with customs port within five working days.

In cases where no malpractices are detected and the ITC availed by the exporter was in accordance with the GST law, the customs officer at the port of export shall proceed to process the IGST refund.

For cases where malpractices are reported on verification and it is found that the exporter has availed ITC fraudulently or on the basis of ineligible documents and utilized the said ITC for payment of IGST claimed as refund, the customs officer will not process the refund claim, the CBIC instruction said.

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Source: The-Hindu-Business-Line.
Govt to verify exporters’ claims before sanctioning IGST refund

Govt to verify exporters’ claims before sanctioning IGST refund

With the government detecting fraudulent refund claims by exporters, the Central Board of Indirect Taxes and Customs (CBIC) has asked customs and GST officers to closely verify the claims before sanctioning them.

The CBIC has also asked Director-General (Systems) to identify a list of “risky exporters” and share it with customs and GST officers, so that an alert can be generated for 100 per cent examination of their export consignments.

Currently, Integrated GST (IGST) refunds are issued to exporters automatically based on shipping bills filed with customs and GST returns filed with central tax authorities.

The refunds are issued within a fortnight of filing of returns without any manual intervention.

Tax experts said the move to verify the refund claims would delay the process of issuing refunds to exporters.

In a letter to field offices, the CBIC said it has observed instances of availment of IGST refund using fraudulent input tax credit (ITC) claims by some exporters.

“Exporters have availed ITC on the basis of ineligible documents or fraudulently and utilised that credit for payment of IGST on goods exported out of India. It has also been observed in several cases that there is huge variation between the FOB (freight on board) value declared in the Shipping Bill and the taxable value declared in GST return apparently to effect higher IGST pay out leading to encashment of credit,” the CBIC said.

“It has been decided to verify the IGST payments through the respective GST field formations,” the CBIC said.

It said the GST policy wing will devise a standard operating procedure (SoP) for GST officers to verify the IGST refund claims.

The GST officers will report to the Chief Commissioner of central tax in 30 days specifying whether the amount of IGST paid and claimed/sanctioned as refund was in accordance with the law or not. The Chief Commissioner of central tax will then share the report with customs port within five working days.

In cases where no malpractices are detected and the ITC availed by the exporter is in accordance with the GST law, the customs officer at the port of export will proceed to process the IGST refund.

The CBIC said DG (systems) shall work out the suitable criteria to identify risky exporters at the national level and forward the list of said risky exporters to the Risk Management Centre for Customs (RMCC) and respective chief commissioners of central

AMRG & Associates Partner Rajat Mohan said, “Increased verification and corroboration from custom officers and central tax officers would push back the digital initiatives of government resulting in genuine hardship for exporters.”


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Source: The-Hindu-Business-Line.
Relief for importers as Gujarat HC stays IGST levy on ocean freight

Relief for importers as Gujarat HC stays IGST levy on ocean freight

Importers can breathe easy as the Gujarat High Court has stayed the levy of Integrated Goods & Service Tax (IGST) on ocean freight. IGST is levied on all Inter-State supplies of goods and/or services. It is also applicable on any supply of goods and/or services in cases of import into and export from the country.

Under the GST, there is specific provision with respect to taxability on the component of ocean freight. The law specifically provides that the importers are required to discharge IGST at the rate of 5 per cent on ocean freight services under the Reverse Charge Mechanism (RCM). Under RCM, it is the duty of importer to pay IGST on behalf of foreign buyer. However, at the same time, customs duty on the CIF value (which includes the component of freight as well) of the goods imported into India is also paid by the importer. As a result, there is double taxation on the component of ocean freight under GST law which is an impediment and has bloated the cost of imports.

Keeping this in mind, a petition was filed with the Gujarat High Court. The petitioner, Mohit Minerals Pvt Ltd challenged vires of IGST related notification. The petition has principally three elements. First, having paid the tax under IGST Act on the entire value of imports (inclusive of the ocean freight), the petitioner cannot be asked to pay tax on the ocean freight all over again under a different notification. Secondly, in case of CIF (Cost, Insurance and Freight) contracts, the service provider and service recipient both are outside the territory of India. No tax on such service can be collected even on reverse charge mechanism. And thirdly, in case of High Sea sales, the burden is cast on the petitioner as an importer whereas, the petitioner is not the recipient of the service at all. It is the petitioner’s seller of goods on high sea basis who has received the services from the exporter/ transporter. The matter is pending.

A similar petition was filed by Ghanshyamlal and Company. The court took notice of order passed in the previous matter and granted stay. Now notice has been issued to the Central Government and both the matter will be heard on June 19.

Commenting on the development, Harpreet Singh, Partner in KPMG, said this is indeed a positive development and should come as relief to importers at large. The issue of double taxation has been at the forefront of recommendations by various industry bodies. “While the present order grants stay on levy of IGST on ocean freight, it would be interesting to track this case as importers would be hoping the final outcome settles the long pending issue of double taxation,” he said.


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Source: The-Hindu -Business-line.
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.
Vendors ask for allowing ITC under GST for supplies made to railways

Vendors ask for allowing ITC under GST for supplies made to railways

The companies engaged in manufacturing wagons and other equipment for railways are pressing for rationalisation of the GST regime by allowing input tax credit on supplies made to Indian Railways.

In a representation to the finance ministry, the equipment manufacturers have argued that in absence of input tax credit (ITC) both vendors and Railways are suffering from avoidable burden of taxes.

It was pointed out that exclusion of railways rolling stock manufacturers from the scope of refund was against the principle of the fiscal neutrality – one of the main objectives of Goods and Services Tax (GST).

The industry has suggested that the IGST rate on locomotives and rolling stock be increased to 18 per cent, which is the pre-GST rate, so that the entire amount of ITC could be availed.

Alternatively, it suggested that the revenue department should remove restrictions on refund of accumulated unutilised ITC with respect to railway locomotives and rolling stock.

As per the industry, railways losing ₹400-500 crore per month and the railway vendors too are losing an equivalent amount on account of not passing the ITC benefits. Therefore, the total loss to the railway ecosystem is more than ₹1,000 crore per month.

Railways vendors also said that the discrimination and anomaly with respect to railways locomotives and rolling stock with respect to GST is contradictory to the policy of eliminating cascading tax effect and is also hurting ‘Make in India’ initiative of the government.


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Source: Live Mint.
GST rule change to aid businesses with better cash flow management

GST rule change to aid businesses with better cash flow management

Reversing its February notification, the central board of indirect taxes and customs (CBIC) has provided relief to businesses in terms of using credit in the goods and services tax (GST) system towards tax payment. This will aid businesses with better cash flow management.

“Input tax credit on account of Integrated tax (IGST) shall first be utilized towards payment of integrated tax, and the amount remaining, if any, may be utilized towards the payment of central tax (CGST) and State tax (SGST) or Union territory tax (UTGST), as the case may be, in any order,” the notification said.

Abhishek Jain, tax partner at EY said that this amendment would bring relief to businesses, who have been worried in the last couple of months on account of the possible increased cash outgo for payment of GST liability.

“With this change, businesses could now structure IGST credit utilisation in an order, which does not entail unwarranted cash payments of GST liability where credits are available,” he added.

From February 1, companies were mandated to utilise available Integrated GST (IGST) credit to set off tax liability in the form of IGST, Central GST, and State GST or UTGST in this very order. As a result, they were unable to use IGST credit to set off SGST liability without extinguishing their CGST liabilities.

With this change, businesses still have to set off IGST liability first. But now, the government has allowed businesses to utilise the remainder of IGST credit to pay off either of CGST or SGST liabilities according to their discretion.

Under the old rules which were in operation in February and March, in most of the cases, IGST credit used to get exhausted in IGST and CGST payments in order. CGST credit used to stay in the system un-utilized, and businesses had to make cash payments for SGST.

Now, under the modified rules, the taxpayer can choose to pay off SGST using IGST credit, even if the latter is not used to set off CGST liability. This will improve the efficiency of credit utilisation in the GST system while helping the concerned company with marginally increased working capital.

However, some businessmen said that the rules effective in February and March were not implemented in reality, since the GST Network (GSTN) system did not allow for the same. But nevertheless, this change makes it better for businesses, they said.


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Source: Business-Standard.
GST Credit Utilisation: Partial Input Tax Credit Relief For Businesses

GST Credit Utilisation: Partial Input Tax Credit Relief For Businesses

In a partial reprieve for companies and their dealers, especially in the consumer durables and auto sectors, the government eased rules on utilisation of input tax credit under the Goods and Services Tax.

The order in which input tax credit could be used to set-off GST liability was changed starting Feb. 1. It was mandated that to set-off GST liability on account of Integrated GST, State GST or Central GST, the input tax credit available on account of IGST must be utilised first. This was affected through the insertion of Section 49A in the central GST law.

This requirement, read with the fact that input CGST cannot be used to discharge SGST liability and vice versa, created cash flow issues for companies.

When GST was implemented, many businesses had an opening CGST credit on their books from the excise and service tax regime, Pratik Jain, a partner at PwC, said. That credit, he said, could only be used to discharge CGST liability since it was a central tax. So, if businesses already had a balance of input CGST to use against output CGST, mandating that input IGST be exhausted by them to CGST liability since it was a central tax. So, if businesses already had a balance of input CGST to use against output CGST, mandating that input IGST be exhausted by them to discharge CGST liability, led to unutilised input CGST and cash flow issues, Jain said.

The issue of unutilised input CGST and SGST was also being faced by businesses who purchased goods from outside their state but sold within their state.

For instance, car dealers. A car dealer in Gujarat buying from a manufacturer in Maharashtra has to pay IGST since it’s an interstate transaction. The dealer, having paid this tax, would have input IGST on his books. The dealer will have some local purchases due to which he’ll also have input CGST and SGST on his books.

The requirement that input IGST be exhausted first against any tax liability meant that some amount of input CGST and SGST remained unutilised.

What’s The Relief?

This requirement, that input IGST be exhausted first, came into being due to concerns raised by several states that the allocation of IGST revenue—which has to be split between the central government and states—is not happening in a timely manner, Waman Parkhi, the partner at KPMG India, said. So the idea was to reduce the available IGST credit so that the settlement between the centre and states becomes easier, he added.

That explains why, despite the amendment, the requirement that input IGST be exhausted first has not changed even now. The relief is in the order of using the balance input IGST once IGST liability has been paid. The balance input IGST can now be used either against CGST or SGST liability, in whichever order a business wants to. To reiterate, earlier this balance input IGST had to be first used to discharge CGST liability.

Jain, however, said this is only a partial relief since input IGST still has to be exhausted first. Businesses had made representations to say that the government should not mandate the order of utilisation of input tax credit i.e. businesses should be allowed to use input tax credit on their books against integrated, central or state GST liability in whatever order they wish to, he said.

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Source: bloomberg Quint