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Do RWAs need to pay GST on society fee?

Do RWAs need to pay GST on society fee?

Even after more than two years of its implementation, there are ambiguities that crop up regarding the implementation of the goods and services tax (GST). For instance, there was little clarity on the applicability of GST on maintenance paid by home owners to residents’ welfare associations (RWAs) for the upkeep of societies. The government recently clarified on this particular aspect.

In a notification dated 22 July 2019, the ministry of finance said that if RWA members contribute less than ₹7,500 a month each, the said RWA is exempt from paying GST, irrespective of the annual turnover.

Note that the rule is not new but was amended to increase the limit. “It is only the clarification that has come recently. The limit was earlier ₹5,000, which was increased to ₹7,500 in January 2018,” said Pratik Jain, partner and leader, Indirect Tax, PwC India. However, RWAs are required to pay GST on monthly subscriptions if the subscription is more than ₹7,500 per member and the annual turnover of the RWA—by way of supplying of services and goods—is ₹20 lakh or more. Also, this GST will be charged on the entire amount of maintenance and not just on the amount exceeding ₹7,500.

The RWA does not need to pay GST if the annual turnover is ₹20 lakh or above, but the members are paying less than ₹7,500 as maintenance charge per month each.

For instance, if a housing society has 100 apartments and the monthly maintenance charges are around ₹4,000 each unit, there will be no need to account for GST, as the monthly contribution is below ₹7,500, even though the annual turnover of the RWA is ₹48 lakh, which is over ₹20 lakh a year. Similarly, if the monthly contribution in a high-end housing society with 10 apartments is ₹15,000 per unit, the annual collection will be ₹18 lakh, which is less than ₹20 lakh a year, the contributions of its members will not attract GST.

GST rules also allow RWAs that have to collect GST on monthly contributions to claim input tax credit (ITC). ITC helps an entity to reduce the GST amount it has paid on goods or services from the amount of GST it has to deposit to the government.

“There were representations made to the government in this regard, and hence, they have clarified. Obviously it is a relief for the residents, particularly those who reside in smaller apartment buildings and complexes. Of course, if you look at the luxury segment, the maintenance amounts might be much higher than ₹7,500. At least it provides relief to a large section of society,” said Jain.

The government’s notification also states that by coming under the ambit of GST, RWAs could in fact lower their tax burden by availing the benefits of ITC, which they would have paid to their suppliers for expenses on goods such as buying generators, water pumps, lawn furniture, taps, pipes, or other hardware as well as for services such as repairs and maintenance.

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Source: Live-Mint
Central GST: Fake invoices racket busted

Central GST: Fake invoices racket busted

Central GST Delhi North Commissionerate has busted a racket of issuance of fake invoices without actual supply of goods and services.

Two individuals – Asrar Akhtar and Vikas Singh —have been arrested in this matter and remanded to judicial custody for 14 days by the Chief Metropolitan Magistrate (CMM), New Delhi at Patiala House Courts, an official release said.

The accused and their associates were found to be operating 19 fake firms created to facilitate fraudulent Input Tax Credit (ITC), thus defrauding the Exchequer.

Prima facie fraudulent ITC of about ₹25 crore has been detected to have been passed on using invoices involving an amount of ₹137 crore.

The modus operandi of these individuals and their associates Sabban Ahmed and Arif, inter alia, involved issuance of fake invoices of firms registered across Delhi NCR from a premise in Azadpur, Delhi.

Voluminous incriminating documents such as fake invoices, diaries, letter-heads, rubber stamps of fake firms, cheque books, transporter’s consignment notes and electronic devices have been recovered. Investigations are underway to identify other individuals and firms involved in this racket, the release added.

Asrar Akhtar and Vikas Singh were arrested on August 1 and have been remanded to judicial custody for 14 days.

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Source: The-Hindu-Business-Line
Two New Functionalities available in GST Portal

Two New Functionalities available in GST Portal

The Goods and Services Tax ( GST ) portal has enabled two new facilities for filing Form GST ITC-04 in the official portal to furnish the details of the goods/ capital goods sent to the job worker and received back or supplied from the premises of the job worker. The existing form had been amended vide Notification No. 39/ 2018 – Central Tax, dated 4.09.2018.

Form GST ITC-04 is a quarterly form. It must be furnished on or before 25th day of the month succeeding the quarter.

Job work means processing or working on raw materials or semi-finished goods supplied by the principal manufacturer to the job worker. This is to complete a part or whole of the process which results in the manufacture or finishing of an article or any other essential operation. The principal manufacturer will be allowed to take credit of tax paid on purchase of goods send on job work subject to certain conditions.

Further, the portal has updated the facility to file application for the cancellation of registration and filing clarifications by GSTPs

With this, normal/Composition/ SEZ Developer/ SEZ Unit/ Casual Taxable Person/ ISD/ NRTP users can now select a GST Practitioner for Filing of Application for Cancellation of Registration.

Also, UN Body/Embassy/ONP users can now select a GST Practitioner for filing clarifications on issues raised by a tax official on their registration application.

The GSTP can save draft of the application. The taxpayer/ users and GSTP would be able to work on the drafts of the application, saved by either of them.

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Source: Taxscan
Assocham seeks inclusion of petroleum products in GST

Assocham seeks inclusion of petroleum products in GST

Industry body Assocham on July 25 sought inclusion of petroleum products in GST and subsuming of some local and state taxes like stamp duty.

“The two-year period for keeping petroleum products outside GST is almost over. Also, these products being outside GST lead to increase in cost for businesses. Therefore, these products should be brought under GST,” stated a memorandum by the chamber to the GST Council.

Besides, it said, subsuming mandi tax, stamp duty, road tax and vehicle tax in GST would help streamline businesses and facilitate seamless credit of Input Tax Credit (ITC), which will reduce cascading impact of taxes.

The chamber also suggested to the GST Council that sale of scrips issued for different duty drawbacks and market promotion should not be subjected to levy of Goods and Services Tax (GST).

Other suggestions include cross-utilisation of CGST and IGST credits, flexibility on GST to restaurants and real estate sectors and streamlining and clarity in the levy of such tax on international transactions.

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Source: Money-Control
GST officers arrest one person for creating fake firms, issuing bogus invoices 

GST officers arrest one person for creating fake firms, issuing bogus invoices 

GST officers have arrested one person for creating about 90 fake firms for the purpose of issuing bogus invoices without supply of goods thereon, the finance ministry said on Friday. The officers of Directorate General of GST Intelligence (DGGI), Headquarters, arrested one Anupam Singla, a resident of Sirsa, Haryana, on July 18 after searches conducted at his Delhi residence/offices threw up 110 debit/credit cards belonging to different persons, it said.

During the search operation, GST officers also found blank signed cheque books/ blank cheque books pertaining to 173 different bank accounts, blank bilty books belonging to various transporters, identity proofs of different persons, mobile SIM cards and other incriminating documents.

“The firms opened by Singla issued invoices worth Rs 7,672 crore, including the circularly traded value, with a GST component of Rs 660 crore.

“The said firms have passed on fraudulent ITC to some of the well established traders and cotton yarn spinners who have availed of the same to discharge their GST liability with an ulterior motive to defraud the government exchequer,” the ministry said.

During the investigations conducted so far into the fake billing racket in the cotton industry, the DGGI Headquarters has recovered an amount of Rs 32.60 crore towards GST evasion, it added. JD ANU ANU

Source: Economic Times.

Two traders arrested for Rs 50 crore IGST refund fraud 

Two traders arrested for Rs 50 crore IGST refund fraud 

The Belapur Central GST Commissionerate arrested two traders for allegedly floating over 50 shell companies to fraudulently to avail IGST refunds after GST council recently issued guidelines to curb refund related frauds, people in the know told ET.

Sources said Ajay Gopinath Mishra and Ramesh Chandra Bhatt availed IGST refund by showing export of textile goods over Rs 350 crore and collected IGST refund of over Rs 50 crore between January and May. The said amount was refunded by the customs to these exporters at the port of export.

“The IGST was paid using input tax credit (ITC) which has been found to be fraudulent,” said one of the officials.

An official explained that non-existent suppliers issued invoices for passing of the ITC utilised for payment of IGST on exported goods and IGST refund is claimed. These companies were created by using the PAN and Aadhar Cards of various un-suspecting persons through whom GST refunds were being claimed.

“In this case too, the Belapur Commissionerate officials unearthed a syndicate of more than 50 companies such as H.A. Creation, A.S. Fashion, Ritiesh Creations, R.D. Creation, Bamane Enterprises were floated to fraudulently avail benefits of IGST refunds,” revealed the official. “No one has actually paid the IGST on which ITC was availed by the exporter.”

During investigation, a source said, the bank accounts declared to the department at the time of obtaining GST registration certificate were allegedly different from the bank account declared to the Customs authorities for the purpose of IGST refund. The probe also revealed that while most of the suppliers and CHAs are located at Delhi, the premises of dummy exporters are registered in Mumbai.

Furthermore, documents such as purchase documents, export documents, cheque books, signed blank cheques, ATM debit cards and PIN of about 50 proprietorship firms were recovered from the office premises of the mastermind.

“Both the persons in their statement have admitted that they were the custodian of the bank documents of all the proprietorship firms,” the official further added.

“The investigations has revealed that fictitious suppliers issued invoices for passing of the ITC which was utilized for payment of IGST on exported goods and claiming IGST refund of the same. This fact was further corroborated by the findings that none of the suppliers down the line have generated mandatory E-way Bills for the purported supplies made to the exporters. Thus entire ITC availed by the exporters was found fraudulent,” said Shrawan Kumar, Commissioner, CGST.

Earlier in June the Central Board of Indirect Taxes and Customs (CBIC) asked director-general (systems) to identify a list of “risky exporters” and share it with customs and GST officers. Thereafter CBIC issued a circular dated June 17, 2019 providing a time bound mechanism to verify the IGST payments for goods exported out before sanctioning IGST refund in suspicious and risky cases.

“The new mechanism would ensure that such frauds are curbed while facilitating genuine exporters,” added Kumar.

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Source: Economic-Times.
Breather for exporters as Centre to pay ITC refund for State GST

Breather for exporters as Centre to pay ITC refund for State GST

In a major relief to exporters, the Centre will now pay the input tax credit (ITC) refunds of state taxes, thereby reducing transaction time and costs, and manual interface in claim processing.

As per industry, there is a huge difference in the amount claimed, state goods and services tax (SGST) sanction amount received from central tax authority and the amount actually disbursed.

“The central government has been authorised to pay the amount of refund towards state taxes to the taxpayers,” according to the 2019-20 budget. At present, the taxpayers file refund claims with the central tax officer, who clears half the claims, and the rest are cleared by the state tax authorities, leading to higher time taken in claim processing and refund sanctioning.

Exporters also say that ITC refund is partly electronic and partly manual. The exporter files refund application at the portal, takes a printout along with acknowledgement and carries it to GST authorities in hard copy along with required documents, which too vary from authorities to authorities. The physical interface adds to the transaction time and cost.

“The states and Centre did their own respective approval of ITC refund but now only one will approve both. This is a relief for exporters as it would reduce transaction time and costs,” said Ajay Sahai, director general at Federation of Indian Export Organisations.

The breather comes as exporters grapple with tight credit norms amid slowing global trade growth. Total disbursement of export credit was Rs 7.38 lakh crore in December 2018, a decline of 20% on year.

Share of PSU banks in total disbursement of export credit declined from 65% in FY16 to 45% in FY18.

Exporters have said the number of refund applications filed on the portal are higher than those received in the state tax office.

“The ability for Centre to give the refund for both the CGST and SGST will ease the problems being faced currently specially by the exporters and remove the delay in getting the entire cash post the sanction of refunds,” said Bipin Sapra, partner at EY

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Source: Economic-Times
Businesses to declare mismatch in GST returns form, outward supplies in annual returns: Finance Ministry

Businesses to declare mismatch in GST returns form, outward supplies in annual returns: Finance Ministry

The Finance Ministry Wednesday said any mismatch in GST monthly sales return and outward supply details will have to be reported in the annual return form and due taxes should be paid.

In a clarification on annual returns and reconciliation statement, the ministry said it has received queries from businesses asking whether the primary source of data for the filing of the annual return and the reconciliation statement should be GSTR-1, GSTR-3B or books of accounts.

While form GSTR-1 is an account of details of outward supplies, GSTR-3B is where the summaries of all transactions are declared and payments are made.

The ministry said information in form GSTR-1, GSTR-3B and books of accounts should be synchronous and the values should match across different forms and the books of accounts.

If the same does not match, there can be broadly two scenarios, either tax was not paid to the government or tax was paid in excess.

“In the first case, the same shall be declared in the annual return and tax should be paid, and in the latter, all information may be declared in the annual return and refund (if eligible) may be applied through Form GST RFD-01A,” the ministry said.

Further, no input tax credit can be reversed or availed through the annual return. If taxpayers find themselves liable for reversing any ITC, they may do the same through Form GST DRC-03 separately, it added.

It also said if a taxpayer has not paid, short paid or has erroneously obtained/ been granted a refund or has wrongly availed or utilized ITC then before the service of a notice by any tax authority, the taxpayer may pay the amount of tax with interest. In such cases, no penalty will be levied on such taxpayer.

“Therefore, in cases where some information has not been furnished in the statement of outward supplies in Form GSTR-1 or in the regular returns in Form GSTR-3B, such taxpayers may pay the tax with interest through Form GST DRC-03 at any time. In fact, the annual return provides an additional opportunity for such taxpayers to declare the summary of supply against which payment of tax is made,” it added.

GSTR-9 is the annual return form for normal taxpayers, GSTR-9A is for composition taxpayers, while GSTR-9C is a reconciliation statement. The last date for filing an annual return in August-end.

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Source: Economic-Times
No Input Tax Credit for GST paid on expenses incurred on promotional schemes, rules AAR

No Input Tax Credit for GST paid on expenses incurred on promotional schemes, rules AAR

Input Tax Credit (ITC) will not be available on the Goods and Services Tax (GST) paid on expenses incurred towards promotional schemes, an order by the Maharashtra Authority for Advance Ruling (AAR) has said.

Although AAR rulings are applicable for the applicant and the jurisdictional tax officer in a particular matter, the same can be used a persuasive tool in similar matters. Accordingly, tax experts feel that the ruling can be important for automobile or FMCG companies which give gifts as a part of promotional schemes or as brand reminders.

Pharmaceutical company Sanofi India had approached AAR for rulings regarding two issues — whether input tax credit is available on the GST paid on expenses incurred towards promotional schemes of Shubh Labh Loyalty Program and whether input tax credit is available for the GST paid on expenses incurred towards promotional schemes given as brand reminders?

The company launched ‘Shubh Labh Trade Loyalty Program’ under which the distributors/wholesalers get reward points on the basis of goods sold by them. These points later enable them for rewards such as free trip to Singapore, wrist watch etc. Also, the company incurs various marketing and distribution expenses for distributing pens, notepads, key-chains etc. as promotional items/brand reminders to its distributors with its name embossed on such items.

Nature of ‘gift’
During the hearing, the applicant discussed the concept of ‘gift’ in light of the facts of the case and various judicial precedents under various other Statutes wherein it contended that as gift is a gratuity and act of generosity, the distribution of items by Sanofi for promoting the brand cannot be said to be an act of gratuity or generosity wherein the items are given to increase the sales of the company and advance of business. As regards the Shubh Labh Loyalty Program, the applicant submitted that the programme is not a gift but is given under contractual scheme (wherein the distributors are required to accept the terms & conditions on the Website).

However, in its response, the tax authority mentioned that the expenses under discussion incurred by the appellant are in the nature of ‘gift’ as “there is no commercial consideration and therefore input tax credit (‘ITC’) in respect of such expenses is restricted by virtue of GST law.”

The AAR held that since the items are not given by the applicant under any contractual obligation as no contract/agreement has been signed by customers in writing accepting the scheme floated by the applicant. Considering that the items are voluntarily, given on certain conditions achieved by its customers and without consideration in money, these are in the nature of ‘gift’. This means no ITC will be available.

According to Harpreet Singh, Partner at KPMG, in this case it has been held that items were not given by the applicant under any contractual obligation as no contract/agreement was signed by customers in writing accepting the scheme floated by the applicant. Accordingly, they partake the character of a gift. Therefore, “as a corollary, can one say that where scheme of giving promotional items is well documented and is as per a contractual arrangement, the same would be acceptable to authorities as a business expense not requiring any credit reversal,” he said.

Source: The-Hindu-Business-Line

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Government issues warning against fake GST invoices

Government issues warning against fake GST invoices

The government Monday warned businesses against generating fake invoices to evade GST, saying tax officers will take strict action in such cases.

Speaking on the second anniversary of the implementation of the goods and services tax (GST), Minister of State for Finance Anurag Thakur said the menace of the fake invoice needs to be checked to ensure that honest taxpayers do not suffer and the government does not lose revenues.

“The government will take strict action against those involved in generating fake invoices. The menace of fake invoices needs to be checked as the actions of few unscrupulous traders make the majority of honest taxpayers uncompetitive and cause loss to government revenue. The government is “serious about curbing this menace”, he said.

He also urged GST officers to be sensitive to the concerns of honest taxpayers saying their interaction with trader moulds public opinion about GST.

“Therefore, I urge all GST authorities to remember at all times that as public servants, they serve the trade by being sensitive to their concerns and resolving their genuine difficulties in accordance with the law. It is only through this partnership that we can achieve the goal of ‘one nation, one market, one tax’,” he added.

Hoping that trade and industry will urge their constituents to shun bad practices and comply with the law, Thakur said the policy of the government would be: “imandaar trader se bair nahi, fake invoices walon ki khair nahi” (no honest trader will be troubled but those generating fake invoices will not be spared).

Finance Minister Nirmala Sitharaman in a written reply in the Lok Sabha on Monday said GST officers have booked 535 cases of fake invoices involving a total fraudulent claim of ₹2,565 crore of input tax credit (ITC) and arrested 40 persons so far in the current financial year.

In 2018-19, 1,620 cases of fake invoices were registered involving fraudulent ITC claim of ₹11,251 crore under the GST. As many as 154 persons were arrested.

The GST Council, chaired by Union finance minister and comprising state counterparts, last month decided to launch a pilot project under which businesses above a specified threshold will have to generate e-invoice for B2B (business-to-business) sales from January 1.

As per the plan of e-invoice being worked out by the tax officers, entities with a turnover of more than ₹50 crore will be required to generate electronic invoices on a government portal for B2B sales.

GST, which subsumed 17 local taxes, was rolled out on July 1, 2017. It currently has four slabs — 5, 12, 18 and 28 percent. On top of the 28 percent slab, a cess is levied on automobiles, luxury, demerit and sin goods

Penning a Facebook post on the second anniversary of the GST rollout, former finance minister Arun Jaitley Monday said the 12 and 18 percent tax slabs in the goods and services tax (GST) could be merged going forward as revenues increase, thereby effectively making it a two-tier tax.

Jaitley, who in May wrote to Prime Minister Narendra Modi expressing his unwillingness to be a Minister in the Modi 2.0 government due to health reasons, said as many as 20 states are already showing more than a 14 percent increase in their revenues and do not require the Centre to compensate them for revenue loss arising out of GST implementation.

Monthly GST collection data released by the finance ministry showed that revenue mop-up in June 2019 fell to ₹99,939 crore, down from over ₹1 lakh crore in the previous month. The collection was ₹95,610 crore in June 2018.

Thakur exuded confidence that the government will meet the Budget target of GST revenue mop-up.

“Even if there is any shortfall in a particular month’s collection, we will achieve the budget target at the end of the fiscal. I can assure you that in the coming months, you will see an increase in GST collections,” Thakur said.

Speaking about improving compliance, Revenue Secretary Ajay Bhushan Pandey said the information technology system will ensure that the honest taxpayers are completely given a fair treatment.

“But at the same time, if somebody is not complying, the situation will be such that there will be more motivation for compliance. That is the kind of system that is being worked out,” Pandey said.

Earlier in the day, Sitharaman tweeted, “Today, we mark the second anniversary of the #GST. We are committed to greater simplification of the process. Thanking the @GST_Council, all state governments, union territories, trade and industries for their continued support.”

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Source: Live-Mint.