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Companies not passing benefits of GST cut rates to customers, govt plans to hike penalty

Companies not passing benefits of GST cut rates to customers, govt plans to hike penalty

Have the prices of regular use commodities come down after the government and the GST council slashed the tax for hundreds of items? GST cut ratesThe answer, according to the government, is a definitive no.

The government has substantive feedback that a large number of companies and businesses are not passing on the benefit to the consumers and are pocketing the extra tax charge as profit.

In an effort to curb profiteering, the finance ministry is considering an amendment in the GST law to penalize companies and businesses which have not been passing the rate cuts announced by the GST council to the consumers.

Presently, the penalty for such violations is Rs 10,000 or the amount of tax evaded, whichever is higher.

But, the violators may continue to benefit as the government is planning to bring the amendment next year.

The GST council, during the last meeting, discussed the rationale behind bringing the amendment. The amendment proposes the formation of a multi-ministry panel including officials from finance and law.

Sources said that the government has found that companies have not been passing the benefit of the tax cut or the input tax credit to the consumers, thus defeating the very purpose of tax cuts and other provisions.

Since GST was launched on July 1 last year, the GST council has slashed the levy on 384 goods and 68 services. The last phase of cuts included nearly 100 products and services on July 21.

GST Rate Inforgraphics
                              Data: GST council

Finance minister Arun Jaitley, in a blog on July 27, had mentioned that the net revenue loss which government has suffered on account of the reduction of tax on goods and services since the launch is approximately Rs 70,000 crore.

The government feels that since the Centre and states have taken a revenue hit, the benefits should go to the consumers instead of being picketed as profits.

Right now, most of the profiteering is going unchecked. It has been found that companies and businesses have some excuse to defend its failure to pass on the benefits of the tax cuts to the consumers. Some companies claimed that they can’t pass on the benefit as manufacturing cost has gone up.

Some companies have not passed on the full benefit and have given consumers partial relief in prices.

There are also allegations that post rate cut, some companies have lowered prices selectively.

There are different tactics being employed by companies to reap profits. Some companies have slashed prices on less popular large packs of a product but there is no reduction on the smaller packs. Others, manufacturing multiple brands of same products have reduced prices on some and not on others products.

A senior revenue department official said, “These are malpractices and they have to be stopped. For that, there is a need to create deterrents.”

Some companies have started blaming the price hike to the rising prices of fuels and rupee-dollar instability.

The government is worried as the refusal of the companies to pass on the benefits of the rate cut is leading to an inflationary trend.

Currently, the retail inflation is below 5 per cent; still, inflationary expectations are high because of higher fuel prices and declining rupee.

“Steps need to be taken to see inflation should not go up due to reasons which can be controlled domestically,” the official said.

The GST council had created the National Anti-profiteering Authority (NAA) to ensure that customers are charged the correct tax and assesses under GST do not indulge in rampant profiteering.

The authority is 4 tiered including NAA — the Directorate General of Anti-profiteering in the Central Board of Indirect Taxes and Custom (CBIC), a Standing Committee and Screening Committees in every state.

By this August, 32 screening committees have been set up, 29 in states and 3 in Union Territories (Delhi, Puduchery, and Chandigarh).

Based on complaints, the committees have passed an order in some cases and are now hearing over 130 cases. But the action is too little in comparison to violations taking place, sources in the government said.

Source :  India Today
28th GST Council meet on Saturday: Return simplification, law tweaks, setting up of tribunal on table

28th GST Council meet on Saturday: Return simplification, law tweaks, setting up of tribunal on table

The proposed amendments to the goods and services tax (GST)-related laws, simplification of GST returns, the creation of GST appellate tribunal and the revenue position of states will be among the key items slated for discussion in the upcoming 28th GST Council meeting on Saturday. 28th GST Council meet on SaturdayRate cuts and clarification for 40 handicraft items, 32 services and 35 goods including the exemption to marble/stone idols, sanitary napkins, sal leaves will also be discussed, alongside reports of six committees and ministerial panels on issues such as the imposition on cess on sugar and levies on the lottery, officials said.

A rate cut has been recommended from 28 per cent to 18 per cent for lithium-ion batteries, which are used to charge electric vehicles; for water coolers, ice cream machinery along with reduction from 28 per cent to 12 per cent for fuel cell vehicles; for bamboo flooring from 18 per cent to 12 per cent and handloom dari from 12 per cent to 5 per cent, they said.

Though items such as natural gas and aviation turbine fuel (ATF) have not been listed in the meeting agenda, a senior government official said that if time permits, the Council may discuss those items but a decision is unlikely given the revenue implications for states. “There are many listed items for the meeting, so only if time permits, natural gas/ATF could be discussed. The inclusion of natural gas is not contentious, but ATF may be a tricky item given that it contributes majorly to revenues of Delhi and Mumbai,” the official said.

The official further said that since most airlines fuel their planes in Delhi or Mumbai, the inclusion of ATF along with allowing input tax credit will result in less revenue for these two regions. “Smaller states do not earn significantly from ATF, whereas for places like Delhi and Mumbai, it is a major contributor. Allowing credit would result in the revenue stream from ATF getting split among all states instead of the current concentration in these two places. Mumbai may even recover from alternate revenue sources but for Delhi, it could mean a significant loss of revenue,” he said.

Finance Minister Piyush Goyal will chair the meeting of the Goods and Services Tax Council, his first time since taking charge of this portfolio. Officials said that it was considered that Union Minister Arun Jaitley may attend the meeting as a special invitee through video conferencing but it has been decided against since GST Council rules do not specify such exception and it may leave scope for the Council’s decisions getting challenged in courts later.

Apart from the rate considerations, the Council will also discuss reports of six committees and ministerial panels which include those on the lottery, Integrated GST (IGST), on creating an ecosystem for seamless road transport connectivity, digital payments, an imposition of sugar cess and reverse charge mechanism.

Given the high amount of unutilized IGST, the panel for it has recommended a change in cross utilization pattern to allow taxpayers to first use IGST credit for payment of CGST/SGST before using CGST/SGST credit. Unsettled IGST stands at about Rs 1.16 lakh crore, with two provisional settlements of Rs 35,000 crore in February and Rs 50,000 crore in June this year.

The panel on seamless connectivity has suggested doing away with check posts for pollution control certificate, payment of road tax along with the mandated recording of every instance of inspection along with recommending linking the VAHAN database with e-way bill system. The GoM on digital payments has suggested keeping the incentives on hold for now, while the panel on sugar cess has proposed a 1 per cent agricultural cess on certain commodities.

Finer details of the proposed returns simplification is also likely to be discussed. The new model proposes uploading of invoices by the supplier before 10th of next month that shall be subsequently posted in the viewing facility of the buyer by 12th of next month, who will then lock those invoices. The new returns filing model proposes single monthly return for all taxpayers except composition dealers, TDS/TCS and staggered return filing dates based on the turnover of the registered person.

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Source: Indian Express
FinMin Introduce Annual GST Return Forms in Next Council Meet

FinMin Introduce Annual GST Return Forms in Next Council Meet

The finance ministry is drafting an annual return form for the filing of the Goods and Services Tax that will be brought upon in the upcoming GST Council meet.

This will help the revenue department collect additional FinMin Introduce Annual GST Return Forms in Next Council Meetdata from taxpayers. Sources in the finance ministry informed the form has to be filed additionally along with the existing monthly GSTR-3B.

This comes after finance ministry complained of not enough information being shared by taxpayers in the monthly GSTR forms. The new annual form will seek all business details to help the government maintain the invoice-wise database.

The return form will help the government with invoice matching thus aiding in cross-checking returns to avoid tax evasion. The form will also be useful in checking any wrong claims of credit and refunds.

According to media reports, the council is also likely to take up the possible inclusion of natural gas in the indirect tax regime during its next meeting.

Recommended: How to change or update e-mail, phone number in GST system

“Petroleum is a considerably larger source for revenues not only for [the] Centre but states also and on [the] natural gas front, there is some consensus for bringing it into GST ambit and therefore, it could be the first petroleum product that could come within the GSTN,” Dheeraj Rastogi, Joint Secretary, GST Council, said while addressing a PHD Chambers of Commerce and Industry event.

“[We are] going to propose the inclusion of natural gas within the GST purview on an experimental basis in the forthcoming GST Council meeting,” Rastogi added, saying that this could be soon followed by the inclusion of aviation turbine fuel (ATF).

He, however, did not specify the tax bracket for natural gas if it was included in GST.

Currently, petroleum crude, motor spirit (petrol), high-speed diesel, natural gas, and ATF have been kept out of GST. However, several officials, including Petroleum Minister Dharmendra Pradhan and Indian Oil Corporation chairman Sanjiv Singh, had repeatedly said that petroleum products and natural gas should be brought under the unified indirect tax regime.

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Source: ET
27th GST Council Meet: Filing Process Gets Simpler, File Only One Return In A Month.

27th GST Council Meet: Filing Process Gets Simpler, File Only One Return In A Month.

27th GST Council Meet Outcome: Five Things To Know

gst council meeting
1. Monthly Return: GST Taxpayers excluding a few exceptions like composition dealer shall file one monthly return. Return filing dates shall be staggered based on the turnover of the registered person to manage load on the IT system. Composition dealers and dealers having nil transaction shall have facility to file quarterly return.

2. Unidirectional Flow of invoices: There shall be unidirectional flow of invoices uploaded on GST Network by the seller on anytime basis during the month which would be the valid document to avail input tax credit by the buyer. Buyer would also be able to continuously see the uploaded invoices during the month.

3. Simple Return design and easy IT interface: The B2B dealers will have to fill invoice-wise details of the outward supply made by them, based on which the system will automatically calculate his tax liability. The input tax credit will be calculated automatically by the system based on invoices uploaded by his sellers. Taxpayer shall be also given user friendly IT interface and offline IT tool to upload the invoices.

4: Proposal of concession on digital transactions: Keeping in view the need to move towards a less cash economy, the Council has discussed in detail the proposal of a concession of 2% in GST rate (where the GST rate is 3% or more, 1% each from applicable CGST and SGST rates) on B2C supplies, for which payment is made through cheque or digital mode, subject to a ceiling of Rs. 100 per transaction, so as to incentivise promotion of digital payment.

The council has recommended for setting up of a Group of Ministers from State Governments to look into the proposal and make recommendations, before the next Council meeting, keeping in mind the views expressed in GST Council.

5. Cess on Sugar above 5% GST rate: The council deliberated over the imposition of cess on sugar over and above 5% GST and also over the reduction in GST rate on ethanol. Keeping in view the record production of sugar in the current sugar season, and consequent depressed sugar prices and build-up of sugarcane arrears, the Council discussed the issue of imposition of sugar cess and reduction in GST rate on ethanol in great detail. The council has recommended for setting up of a Group of Ministers from State Governments to look into the proposal and make recommendations, within two weeks, keeping in mind the views expressed in GST Council in this regard.

GST Council Meet: FM and the council focus on GST Returns and Cess on Sugar

GST Council Meet: FM and the council focus on GST Returns and Cess on Sugar

Finance Minister Arun Jaitley-led GST Council will meet today to discuss a simpler return form and the GST Council : GSTN Arun Jaitleyamendments required in the indirect tax regime rules.

The 27th meeting of the Council, which is likely to have finance ministers of all states, will meet through video conferencing and also mull over the proposal of converting GSTN into a government company.

A decision on return simplification could be on the cards with the Sushil Modi-led Group of Ministers putting before the Council the three models of new return form for discussion, an official said.

With Jaitley been advised by doctors to stay in isolation to avoid contracting infection, the meeting has been planned through video conferencing. The Council had in March discussed on two models of GST returns and suggested that the GoM would work further simplification.

The official said the amendment to the law would also be taken up once the Council clears the new GST return format. One of the models presented before the Council was that provisional credit should not be granted unless the taxpayers file returns and pay taxes.

The second model stated that provisional credit could be granted to a taxpayer, but returns have to be filed within 3-4 months and taxes have to be paid or else the credit amount would be reversed.

After consulting the stakeholders, the GoM earlier this month worked out a third model for return filing as per which credit could be extended once the invoice uploaded by the supplier is verified by the purchaser on the GSTN portal.

Jaitley had earlier this month asked Finance Secretary Hasmukh Adhia to “examine the possibility” of converting GSTN into a majority government company or a 100 per cent government company. GSTN provides the IT backbone for the new indirect tax regime.

Currently, five private financial institutions — HDFC, HDFC Bank, ICICI Bank, NSE Strategic Investment Co and LIC Housing Finance Ltd — hold 51 per cent stake in GSTN, which was incorporated on March 28, 2013, in the erstwhile UPA regime.

The remaining 49 per cent stake is with the Centre and States.

Source :  The Times of India

GST revenues surpass Rs.1 trillion in April

GST revenues surpass Rs.1 trillion in April

GST revenues

The Centre on Tuesday stated that the revenue collected towards Goods and Services Tax (GST) for the month of April 2018, surpassed the Rs.1lakh crore mark.

As per the Ministry of Finance, the total gross GST revenues collected in the month of April stood at Rs.1,03,458 crore, consisting of Central GST (CGST) worth Rs.18,652 crore, State GST (SGST) of Rs.25,704 crore, Integrated GST (IGST) of Rs. 50,548 crore (including 21,246 crores collected on imports) and cess of Rs.8554 crore (including Rs.702 crore collected on imports).

Furthermore, the ministry noted that a total of 60.47 lakh GSTR 3B returns were filed for the month of March, as on April 30, as against 87.12 lakh, who are eligible to file returns for March, thus accounting for 69.5 percent of the eligible proportion.

Meanwhile, out of 19.31 lakh composition dealers, the ministry said 11.47 lakh filed their quarterly return (GSTR 4) (59.40 percent) and paid a total tax of Rs.579 crores, which is included in the aforementioned figure of total GST collected.

“The buoyancy in the tax revenue of April reflects the upswing in the economy and better compliance. However, it is usually noticed that in the last month of the financial year, people also try to pay arrears of some of the previous months. Therefore, this month?s revenue cannot be taken as a trend for the future”, the ministry clarified.

The department further noted that the Central and State Governments earned a total revenue of Rs. 32,493 crore for CGST and Rs. 40,257 crore for the SGST respectively, after settlement in the month of April.

Last week, the Finance Ministry said Rs.7.19 lakh crore was mobilized from the GST during the period of August 2017 to March 2018. This includes Rs. 1.19 lakh crore of CGST, Rs. 1.72 lakh crore of SGST, Rs. 3.66 lakh crore of IGST, including Rs. 1.73 lakh crore on exports, and Rs. 62,021 crore of cess, including Rs. 5702 crore on imports.

GST Council meet on May 4, simplifying returns on agenda

GST Council meet on May 4, simplifying returns on agenda

Finance Minister Arun Jaitley-chaired GST Councilarun-jaitley-gst-council will meet on 4 May to discuss a simpler return form and the amendments required in the indirect tax regime rules.

The 27th meeting of the Council, comprising state finance ministers, will meet through video conferencing and will also mull over the proposal of converting GSTN into a government company. A decision on return simplification could be on the cards with the Sushil Modi-led Group of Ministers putting before the Council the three models of new return form for discussion, an official said.

With Jaitley been advised by doctors to stay in isolation to avoid contracting infection, the meeting has been planned through video conferencing.

The GST Council had in March discussed on two models of GST returns and suggested that the GoM would work further simplification. The official said the amendment to the law would also be taken up once the Council clears the new GST return format.

One of the models presented before the Council was that provisional credit should not be granted unless the taxpayers file returns and pay taxes. The second model stated that provisional credit could be granted to a taxpayer, but returns have to be filed within 3-4 months and taxes have to be paid or else the credit amount would be reversed. After consulting the stakeholders, the GoM earlier this month worked out a third model for return filing as per which credit could be extended once the invoice uploaded by the supplier is verified by the purchaser on the GSTN portal.

Jaitley had earlier this month asked Finance Secretary Hasmukh Adhia to “examine the possibility” of converting GSTN into a majority government company or a 100% government company. GSTN provides the IT backbone for the new indirect tax regime. Currently, five private financial institutions—HDFC, HDFC Bank, ICICI Bank, NSE Strategic Investment Co and LIC Housing Finance Ltd—hold 51% stake in GSTN, which was incorporated on 28 March 2013, in the erstwhile UPA regime. The remaining 49% stake is with the Centre and States.

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GSTN to be owned by govt? FinMin looking at issues related to proposal

GSTN to be owned by govt? FinMin looking at issues related to proposal

The Finance Ministry is examining various issues, including the overhaul ofGSTN procurement procedures and the salary structure of employees as part of the proposal to convert GST Network (GSTN) into a government company.

These two issues, along with other transitional and operational nuances, would be placed before the Union Cabinet for consideration once the GST Council clears the proposal of turning GSTN into a majority or fully-owned government entity, a source told PTI.

Finance Minister Arun Jaitley had earlier this month asked Finance Secretary Hasmukh Adhia to “examine the possibility” of converting GSTN into a majority government company or a 100 per cent government company. GSTN provides the IT backbone for the new indirect tax regime.

Currently, five private financial institutions — HDFC, HDFC Bank, ICICI Bank, NSE Strategic Investment Co and LIC Housing Finance Ltd — hold 51 per cent stake in GSTN, which was incorporated on March 28, 2013, in the erstwhile UPA regime.

The remaining 49 per cent stake is with the centre and states.

The current structure of GSTN where financial institutions hold the majority 51 per cent stake gives the entity flexibility in quick procurement through tendering process.

However, turning it into a government entity would mean that procurement — that currently occurs on a real-time basis — will have to be in sync with those of PSUs and state-owned companies, a source said.

Another aspect that would come into play could be salary structure. Currently, the employee remuneration is at par with those in the private sector, but transforming GSTN to a government entity would change that, the person privy to the development added.

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These issues are currently being discussed by the officials within the Finance Ministry, the source said, adding the ministry is hopeful of a seamless transition given that the goods and services tax (GST) collections have stabilised over the last 9 months and businesses are familiar with the systems.

The government stake in GSTN was initially kept at 49 per cent and incorporated as a private company to “allow adequate flexibility and freedom” to “ensure timely implementation of the IT infrastructure” prior to the GST roll out.

GST, which subsumed over a dozen local taxes, was rolled out on July 1, 2017. Over one crore businesses are registered on the GSTN portal.

GSTN is a Section 8 company under the new Companies Act and hence is a not-for-profit entity.

The source said that there are no hindrances from the private shareholders in selling their stake to the government because GSTN does not give dividend.

The Finance Ministry is in favour of making GSTN a wholly-owned company with 100 per cent shareholding, but a final call would be taken by the GST Council, headed by Jaitley and comprising state counterparts, in its next meeting.

After GST Council’s clearance, the proposal would go to the Union Cabinet.

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Source: PTI
FinMin clarifies on return filing by businesses opting for composition scheme

FinMin clarifies on return filing by businesses opting for composition scheme

The finance ministry (FinMin) today said traders who have opted for composition scheme need not file certain details in return form since the reverse charge mechanism is not yet functional.

The GST Council, headed by FinMin Arun Jaitley and comprising state counterparts, has kept the reverse charge mechanism in abeyance till June.

The ministry, in a statement, said doubts are being raised about the manner of filing the quarterly return by composition dealers in Form GSTR-4.

Press: Return Filing GSTR4
“Since auto-population of the details of the inward supplies, including supplies on which tax is to be paid on reverse charge is not taking place, taxpayers who have opted to pay tax under the composition levy shall not furnish the data in serial number 4A of Table 4 of Form GSTR-4 for the tax periods January, 2018 to March, 2018 and subsequent tax periods,” it said in a statement.

Businesses with the turnover of up to Rs one crore can opt for composition scheme under the Goods and Services Tax (GST) which was rolled out from July 1, 2017.

The scheme allows taxpayers to pay GST at a fixed rate of turnover and not to go through the tedious GST formalities.Under the reverse charge mechanism, registered dealers are required to make tax payments in case he procures goods from unregistered businesses.

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Source: ET
Government begins move to increase stake in GSTN

Government begins move to increase stake in GSTN

The process of the govt acquiring controlling stake in the GSTN (Goods and Service Tax Network) has been put in motion, government officials familiar with the matter said, asking not to be identified.

According to them, Arun Jaitley- GSTNUnion minister Arun Jaitley has approved the increase of the stake of the central government and the state governments in GST Network to at least 60% from the current 49%, to address fears that the ownership of a company that handles the IT infrastructure and systems related to the Goods and Services Tax (GST), should reside with the state.

Currently, 51% of the ownership of GST Network is with private financial institutions.

The demand that the state take control of GSTN is a long-pending one, and is also prompted by fears that sensitive GST data should not reside in private hands. Several politicians, cutting across party lines, including some from the BJP, have questioned the wisdom of the control of a critical cog in India’s tax process being vested with private entities.

Arun Jaitley, who is back home after his medical treatment, could still undergo surgery in a few weeks, but has started reviewing files, the officials said. They added that he is of the opinion that the government should be the repository of the data provided by companies so that there is no fear of a data breach.

Taxpayers can complete filing transitional credit form by April 30: FinMin

The current shareholding pattern of GSTN is: central government (24.5%), states (24.5%), HDFC (10%), HDFC Bank (10%), ICICI Bank (10 %), NSE Strategic Investment Company (10 %) and LIC Housing Finance Limited (11 %). GST Network has been set up primarily to provide IT infrastructure and services to the Central & State Governments, tax payers, and other stakeholders for the implementation of the unified Goods and Services Tax. The authorized capital of the company is Rs 10 crore and UIDAI chairman Ajay Bhushan Pandey is its chairman.

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Source: Hindustan Times