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CBDT again defers GST, GAAR reporting in I-T audit report till Mar 2021

CBDT again defers GST, GAAR reporting in I-T audit report till Mar 2021

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The Income Tax Department on Monday deferred for the third time the requirement for companies to include in their I-T audit report the details of the Goods and Services Tax (GST) and GAAR.

The reporting requirement of these details in income tax audit form has been kept in abeyance till March 31, 2021 — meaning that all income tax audit reports need not include details on the GST and the General Anti-Avoidance Rules (GAAR) till March 2021.

Business entities having a turnover of more than Rs 1 crore (or Rs 2 crore if they have opted for presumptive taxation) and professionals with gross receipts of more than Rs 50 lakh have to comply with the tax audit requirements.

The due date for its filing is September 30 and if the taxpayer is covered by transfer pricing provisions, the due date is November 30.

The Central Board of Direct Taxes (CBDT) in an order issued on Monday said the board has received representations with regard to difficulty in implementation of reporting requirements under clause 30C (pertaining to GAAR) and clause 44 (pertaining to GST compliance) of the Form No 3CD in view of the global pandemic due to COVID-19 and requested for deferring it’s applicability.

“The matter has been examined and in view of the prevailing situation due to COVID-19 pandemic across the country, it has been decided by the board that the reporting under clause 30C and clause 44 of the tax audit report shall be kept in abeyance till March 31, 2021,” the CBDT said.

In July 2018, the I-T department had changed the tax audit form – 3CD, seeking details under the GST as well as the GAAR, which seeks to prevent companies from routing transactions through other countries to avoid taxes.

The changes were to come into effect from August 20, 2018.

With stakeholders complaining that the change is onerous and a burden on companies, the CBDT had then deferred the implementation of the change in I-T audit form till March 31, 2019. Further in May 2019, the CBDT had deferred its implementation till March 31, 2020, and with April 24 order it has now been deferred till March 31,2021.

Consulting firm AKM Global Tax Partner Amit Maheshwari said, “We don’t have a detailed guidance on certain aspects related to reporting on GAAR.

This certification poses a challenge to auditors as it is very subjective in nature. Though this deferment comes as a relief to the auditors, it is better to do away with this requirement as it is not fair to expect the auditors to comment on such subjective piece of legislation.”

Nangia Andersen LLP Director Sandeep Jhunjhunwala said, “The decision to defer the onerous reporting requirements is a clear indicator that the CBDT is ensuring that there aren’t any slips between the cup and the lip, leading to taxpayers’ anguishes. In the midst of COVID-19 pandemic, tax authorities have been proactively announcing the relaxation in compliance and reporting obligations for businesses.”

Source: Economic-Times

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5,000 companies under scanner over mismatch between I-T and GST filings: Report

5,000 companies under scanner over mismatch between I-T and GST filings: Report

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Around 5,000 companies have come under the scanner of tax authorities due to alleged discrepancies between their Goods and Services Tax (GST) filings and Income Tax (I-T) returns, Business Standard reported.

The Central Board of Direct Taxes (CBDT) has ordered search-and-survey operations against these mid-and-small sized companies, including owners of business houses.

The information, based on GST Network (GSTN) data, has been shared with states so that they can take appropriate action immediately.

The companies allegedly inflated GST claims and under-reported income in their I-T filings, the report added.

Moneycontrol could not independently verify the story.

Around 2,000 cases of mismatches have been found in Mumbai alone, followed by Delhi, Kolkata, Hyderabad and Bengaluru, a source told the newspaper.

Scrutiny notices were sent to some companies for utilising input tax credit to clear the bulk of the GST liabilities, the report added.

The discrepancies were found after comparing other data as well, such as gross total income, turnover ratio and sales returns provided by GSTN and other sources.

The companies claimed GST returns on transactions that were not reflected in their filings, the article quotes a source as saying.

The companies are said to have claimed input tax credit through dummy companies. In their GST filings, they showed transactions between companies that were either unrelated or had no business history.

Source: Money-Control

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GST Refund
GST fraud: 1,200 exporters seeking Rs 350 crore GST refund untraceable

GST fraud: 1,200 exporters seeking Rs 350 crore GST refund untraceable

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Even after two years of implementation of the Goods and Services Tax (GST), the government is struggling to plug leakages in the system. A probe by the GST authorities has revealed that nearly 1,200 exporters, who made GST refund claims of Rs 350 crore, were untraceable, the Times of India reported. 

Citing sources, the daily said that over 800 entities have been prevented from exporting overvalued merchandise of Rs 1,500 crore to claim fake IGST with refunds over the last five months.

GST authorities also suspect the involvement of few custom brokers in these frauds, involving fictitious entities, existing only in virtual space, through identity thefts with fake and morphed documents. The role of 50-odd brokers is under the scanner as they were found to have dealt with exporters who are now untraceable. As part of the licensing conditions, the Central Board of Indirect Taxes and Customs (CBIC) has allowed these brokers to independently verify the KYC of exporters, the publication mentioned.

Initial scrutiny of the Integrated GST claims had revealed that eight star trading houses, which are entitled to several benefits, were also not traceable, prompting the revenue department to keep close tabs on these entities. Tax officials said that the entire exercise has been undertaken through the analysis of data, which is also shared with other government agencies including CBDT.

The publication citing sources said, newer modus operandi are now surfacing. An investigation related to a Delhi-based company revealed fraudulent refund claim of close to Rs 10 crore. The firm was ostensibly exporting readymade garments to a special economic zone. The taxpayer was selected for physical scrutiny and found non-existent at his declared address. It was also found that the owners of the firm were dummy persons.

Using a web of fake invoicing of over Rs 847 crore, the company is accused of creating a fraudulent tax credit of Rs 195 crore. Investigations showed that even the suppliers were untraceable. The documents showing deemed exports to the SEZ were also found to be fake.

Source: Times-now-news

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GST
GST taxpayers alert! CBIC is going to use this unique number from Friday, here’s how it will benefit you

GST taxpayers alert! CBIC is going to use this unique number from Friday, here’s how it will benefit you

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In order to protect GST taxpayers from any harassment at the hands of errant tax officials, the Central Board of Excise and Customs (CBEC), is going to use a unique number in every communication with taxpayers from Friday. Initially, the department will use this unique document identification number (DIN) mostly for investigation related communications such as arrest warrants and search authorizations and it will be later expanded to cover all the communication issued by the officers of the board. All the communication issued on or after November 8 without a computer-generated document identification number will be invalid and deemed to have never been issued, said the CBIC in a letter issued to all the top officers on Tuesday.

The new document identification number to be used by the CBIC is similar to the one used by the CBDT since October 1 this year. GST taxpayers and recipients of summons, search warrants will be able to verify the genuineness of the document by visiting the CBIC’s website.

“The board in exercise of its powers under section 168(1) of the CGST Act, 2017 and Section 37B of the Central Excise Act, 1944 directs that no search authorization, summons, arrest memo, inspection notices and letters issued in the course of any inquiry shall be issued by any officer under the Board to a taxpayer or any other person, on or after the 8th day of November, 2019 without a computer generated Document Identification Number (DIN) being duly quoted prominently in the body of such communication,” said the CBIC in a letter issued on November 5, which was reviewed by the Financial Express Online.

The letter which was issued by the GST Investigation wing under the department of revenue, ministry of finance also made it clear that no communication issued on or after November 8 will be valid without a system-generated DIN number.

“The board also directs that any specified communication which does not bear the electronically generated DIN and is not covered by the exceptions mentioned in para 3 shall be treated as invalid and shall be deemed to have never been issued,” said the CBIC.

What is Document Identification Number (CBIC-DIN) in GST
1. In order to prevent the harassment of genuine taxpayers at the hands of tax officials, the government has decided to create a proper audit trail of all the communications issued by the Central Board of Indirect Taxes and Customs.

2. The 20 digit unique Document Identification Number (DIN or CBIC-DIN) will be computer generated and it will be prominently displayed in the body of the document issued by the officers under the board.

3. Only authorised officers will be entitled to generate CBIC-DIN from the utility developed by the Directorate of Data Management (DDM) hosted on the online portal of the CBIC.

4. Use of CBIC-DIN will be compulsory from November 8, 2019 and no communication without it will be valid.

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Source: Financial Express.
GST
Government to push for lower GST on auto, textile sectors

Government to push for lower GST on auto, textile sectors

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The Central Government would like the Goods and Services Tax (GST) Council, slated to meet later this month, to address the distress in India’s export sector on account of the US withdrawing preferential trade terms and an ongoing global slowdown by tweaking the GST rate on products which figure heavily in India’s export basket.

There is a strong demand, among others, for reducing GST on auto parts and some textile goods, which the Central Government is likely to support. It will also be pitching for a single authority to process GST refunds.

“The whole idea is to reduce the time for refunds. Exporters’ main grudge has been that they are constantly facing a liquidity crisis as refunds do not come on time and impatient suppliers in the global supply chain are unwilling to wait for payments, forcing Indian exporters to borrow at high costs,” said officials.

While some auto parts are currently taxed at 18 percent, others are taxed at 28 percent. The Automobile Component Manufacturers Association has been demanding that all auto parts be uniformly taxed at 18 percent for some time. The auto-components industry accounts for 2.3 percent of India’s Gross Domestic Product (GDP) and employs as many as 1.5 million people directly and indirectly each. There is also a move to reduce GST on some textile product lines which are now taxed at 18 percent to 12 percent, as well as on finishing agents such as dyes etc., used by the textile industry in order to help the sector which earned about $38 billion in 2018.

The centre may also make a case before the Council for the need to bring in at least some petroleum products into the GST ambit.

Officials point out that there are three categories of petroleum products: Industrial fuels such as crude oil used as industrial inputs; transportation fuels like petroleum, diesel, aviation turbine fuel and household fuels like kerosene and LPG. “The entire range of petroleum products is taxed at multiple points in the country… Central excise and state VAT are among these taxes. To top it, there is no input tax credit for the industry,” pointed out Sumit Dutt Majumder, former chairman, Central Board of Direct Taxes. “There can be a case for industrial fuels which are used as inputs being brought under GST,” he added.

Currently, some auto parts are currently taxed at 18 percent and others at 28 percent. The Automobile Component Manufacturers Association has demanded that all auto parts be uniformly taxed at 18 percent for some time. Meanwhile, the textile industry has been seeking a reduction in GST on some textile product lines which are now taxed at 18 percent, as well as on finishing agents such as dyes, etc. which are used by the sector which earned $38 billion in 2018.

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Source: New-Indian-Express.
GST CBDT
I-T dept again defers GST, GAAR reporting in tax audit report till March 2020

I-T dept again defers GST, GAAR reporting in tax audit report till March 2020

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The income tax department May 14 deferred for the second time the requirement for companies to include in their tax audit report the details of Goods and Services Tax (GST) and GAAR.

The reporting requirement of these details in income tax audit form has been kept in abeyance till March 31, 2020 — meaning that all income tax audit reports need not include details on GST and General Anti-Avoidance Rules (GAAR) till March 2020.

Business entities having a turnover of more than Rs 1 crore (or Rs 2 crore if they have opted for presumptive taxation) and professionals with gross receipts of more than Rs 50 lakh have to comply with the tax audit requirements.

The due date for its filing is September 30 and if the taxpayer is covered by transfer pricing provisions, the due date is November 30.

The Central Board of Direct Taxes (CBDT) in an order issued Tuesday, said the Board has received representations that implementation of reporting requirements under clause 30C (pertaining to GAAR) and clause 44 (pertaining to GST compliance) of the Form No 3CD may be deferred further.

“The matter has been examined and it has been decided by the Board that the reporting under clause 30C and clause 44 of the Tax Audit Report shall be kept in abeyance till March 31, 2020,” the CBDT said.

In July 2018, the I-T department had changed the tax audit form – 3CD, seeking details under GST as well as GAAR, which seeks to prevent companies from routing transactions through other countries to avoid taxes. The changes were to come into effect from August 20, 2018.

With stakeholders complaining that the change is onerous and a burden on companies, the CBDT had then deferred the implementation of the change in I-T audit form till March 31, 2019.

With Tuesday’s order, its implementation has been further deferred till March 31, 2020.

Nangia Advisors (Andersen Global) said Managing Partner Rakesh Nangia said: “It is anticipated that there would be a fair and detailed guidance on aspects such as no GAAR certification – an area devoid of precedence and largely characterised by interpretational issues, before the reporting requirement is made operative post March 31, 2020″.

Ashok Maheshwary & Associates LLP Partner Amit Maheshwari said this deferment comes as a relief to the auditors.

“Currently, the requirements are difficult to comply with and the practitioners are not properly prepared. The lack of clarity in these clauses has made it very difficult to comply with,” Maheshwari added.


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Source: Money Control.
Evasion
Tax dept to share ITR data with GSTN to detect tax evasion by business persons

Tax dept to share ITR data with GSTN to detect tax evasion by business persons

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Soon, the income tax department will be sharing the tax return data of business persons with the Goods and Services Tax Network (GSTN) officer. The move is aimed at spotting income anomalies or mismatches between their GST returns and income tax return (ITR).

Clearly, business persons need to ensure that their income tax returns and GST returns correlate. In simple terms, a business person whose income as per ITR is sharply at variance with what is declared in his/her GST returns would come under the lens.

Before GST was introduced, the department could not reconcile the data filed by the business persons in his/her sales tax return/service tax return and ITR. This was because sales tax return was filed at the various state levels and service tax return was filed at the national level. However, post the introduction of GST, such data will now be available at the central level which makes exchange of data between the two authorities easy.

This move will apply for all those assessees who have business income and file the returns specified for those with this income i.e. ITR 3 to ITR -7.

As per the order issued by the Central Board of Direct Taxes (CBDT) dated April 30, 2019, important financial fields such as – status of filing of ITR, turnover, gross total income, turnover ratio, gross total income range, turnover range and any other field which will be decided by the concerned authorities themselves will be shared by the income tax department with the GSTN officers.

Archit Gupta, CEO & founder, Cleartax.com says, “Government’s tax departments can now act in unison and review taxpayers and their submissions via information collected between them separately. Starting last year’s ITRs the government had begun collecting information in ITRs related to GST. With this request-based and automated sharing of data – government can do intensive analysis to pick up cases for further scrutiny. Turnover may not be a one-on-one match between the two direct tax return however several trends and compliance may be analysed in detail.”

As per the order, the exchange of data will be request-based as well as spontaneous and automatic. However, before sharing any information, the income tax authority shall determine that such information is necessary for the GSTN authority to perform its functions, says the order.

chartered Accountant, Naveen Wadhwa, DGM, taxmann.com says, “In earlier years, mismatch in the figures of turnovers furnished by SMEs in Income-tax returns and Sales returns were very common. Signing of an MOU between the I-T Dept. and GSTN will ensure that the taxpayers furnish same set of information in income-tax return and GST return. As more than 38% Income-tax returns filled for the FY 2017-18 include business income, such initiatives to reconcile the turnover of business would help the government to check the tax evasion.”

As per the order, for the exchange of information to take place, a Memorandum of Understanding (MoU) will be signed between Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) and nodal officer, GSTN.


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Source: Economic Times.
GST Expensive jewellers and cars
Expensive cars, jewellery to become cheaper as TCS to be out of GST working

Expensive cars, jewellery to become cheaper as TCS to be out of GST working

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In a relief to buyers of high-value cars and jewellery, the CBIC has said that the TCS amount would be excluded from the value of goods for computing GST liability.

Under the Income Tax Act, tax collection at source (TCS) is levied at 1 per cent on purchase of motor vehicles above Rs 10 lakh, jewellery exceeding Rs 5 lakh and bullion over Rs 2 lakh. TCS is also levied on other purchases at different rates.

The Central Board of Indirect Taxes and Customs (CBIC) in a circular said that the TCS amount would be excluded from the value of goods while computing the Goods and Services Tax (GST) liability.

Earlier in December, the CBIC had said that the TCS amount would also be included while ascertaining the GST liability on goods on which TCS is applicable under the I-T Act.

In view of the representations received from various stakeholders and after consultation with the Central Board of Direct Taxes (CBDT), the CBIC has decided to exclude the TCS amount paid while valuing the goods for the purpose to levy GST.

The CBDT has clarified that TCS is not a tax on goods but an interim levy on the possible “income” arising from the sale of goods by the buyer and to be adjusted against the final income-tax liability.

“For the purpose of determination of value of supply under GST, Tax collected at source (TCS) under the provisions of the Income Tax Act, 1961 would not be includible as it is an interim levy not having the character of tax,” the CBIC said.

EY India Tax Partner Abhishek Jain said: “This clarification comes as quite a relief for businesses specifically the automotive sector. While most industry players already believed that GST should not be levied on the Income tax TCS component, given the otherwise clarification by the Government, they were quite apprehensive of litigation on this aspect”.

AMRG & Associates Partner Rajat Mohan said the erstwhile circular issued by the CBIC unnecessary complicated the mechanism of calculating GST where TCS Income tax was also collected by the supplier.

“Recent corrigendum of CBIC eased the calculation process by breaking the circular referencing which would also result in marginally rationalising the tax payments (GST and income tax both),” Mohan said.


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Source: Business-Standard.
CBDT defers till March 2019 GAAR, GST reporting under the new tax audit form

CBDT defers till March 2019 GAAR, GST reporting under the new tax audit form

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The Central Board of Direct Taxes (CBDT) has put off till March 31, 2019, the proposed GST and CBDT defers till March 2019 GAAR, GST reporting under the new tax audit formGAAR reporting under the amended tax audit form. This dispensation would be available for tax audit reports to be furnished on or after August 20 but before April 1, 2019.

In a circular issued on Friday, the CBDT said representations had been received by the Board that the implementation of the reporting requirement under the proposed Clause 30C (pertaining to General Anti-Avoidance Rules or GAAR) and the proposed Clause 44 (pertaining to Goods and Services Tax compliance) of the tax audit Form No 3CD may be deferred.

“The matter has been examined and it has been decided by the Board that reporting under the proposed Clause 30C and proposed Clause 44 of the Tax Audit Report shall be kept in abeyance till March 31, 2019. Therefore, for Tax Audit Reports to be furnished on or after August 20, 2018 but before April 1, 2019, tax auditors will not be required to furnish details called for under the two clauses,” the CBDT circular said.

Expert take Anupam Jain, Executive Director, Nangia Advisors LLP, said the CBDT move is a welcome step, given the new reporting requirement and lack of any guidance on it.

“Ever since the revised audit format was circulated, there was much restlessness in the industry and auditors alike on the expansive import of the clause introduced on GAAR. It was indicative of loading tax auditors with an onerous responsibility to step into the shoes of a tax officer and determine if any transaction was an impermissible arrangement,” he said.

Further, even though the Act prescribes a threshold of ₹3 crore of tax impact, for a transaction to be categorised as an impermissible transaction, the proposed clause, at the first step wanted disclosure on any ‘impermissible transaction’ and then required quantification, said Jain.

Rahul Garg, Senior Partner, Tax and Regulatory, PwC India, said it would have been burdensome for companies to compile the enhanced requirements for tax audit after the close of the accounting period and statutory audits.

“The decision of the CBDT would save companies from the effort to go back to their closed and audited books to compile additional information for last year,” said Garg.

Sanjay Sanghvi, Partner, Khaitan and Co, said a fair decision has been taken by the CBDT.

“It was practically not possible for a tax auditor to provide those details/ remarks concerning applicability of GAAR,” said Sanghvi.

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Source:  The Hindu
GSTN to rope in private entities for tax payer profiling, fraud analytics

GSTN to rope in private entities for tax payer profiling, fraud analytics

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GST Network has invited bids from private entities for “360-degree” profiling of Fraud Analytics : GSTNtaxpayers for early detection of fraud as it seeks to transform into an end-to-end platform for checking GST evasion, from being just a tax collection portal.

The analytics company to be roped in will have the mandate for designing and developing a Fraud Analytics System. GST Network has however barred Infosys from bidding for the project to avoid conflict of interest.

The system will take about a year to be operational and leverage existing data pertaining to GST registration, return filing and e-way bill, along with the information from other external sources such as Financial Intelligence Unit (FIU), Central Board of Direct Taxes (CBDT), banks and state tax departments.

According to the eligibility criteria, the interested bidder will need to have a turnover of Rs 300 crore and should have posted a profit in the past three financial years. Also, it should have experience in implementing Advanced Analytics, the GSTN said in the Request For Proposal (RFP).

The fraud analytics company would be tasked with establishment of taxpayer’s identity. “Based on information available within GSTN as well as third party information, it is expected to reliably establish the identity/360 degree view of the taxpayer and key members of its management,” said the RFP.

It would also establish taxpayer’s risk profile by analysing information on purchasers and sellers as part of returns data, whether the taxpayer deals with sensitive or evasion prone commodities, history of the owner of the company as well as a rapid change of promoters, among others.

The company, to be appointed for 6 years, would also be required to suggest ways to prevent revenue leakages and forecast revenue growth and other econometric analysis for policy formation.

It can also suggest changes in laws, rules/ procedures based on fraud detection to plug loopholes and identify material/evidences which may be shared with tax authorities for prosecution of fraudulent taxpayers.

To ensure that there is no conflict of interest, the GSTN has barred Infosys from bidding for the fraud analytics project.

Infosys had in 2015 won the Rs 1,380-crore deal for developing and running GSTN’s backend software and hardware. The indirect tax reform, GST subsumed over a dozen local taxes and was rolled out from July 1, 2017.

GSTN has in the bid document mandated that the bidder should develop adequate capability for data storage and calculating the complexity of data.

“In the near future, GSTN is likely to experience an ‘explosion’ in the amount of data in its transactional systems,” the GSTN said.

“The figure of data is likely to have quantum jump when the system such as E-way Bill data, external agency data like CBDT, information from banks, Ministry of CorporateAffairs, Shops and Establishments Department, other Government and non-government agencies etc. which will be integrated with the GST fraud analytics system,” it added.

To ensure full confidentiality of data, GSTN has mandated that the eligible bidder would have to ensure a separate section within their office premises for undertaking the fraud analytics project.

GSTN may also place one or two of its employee there for monitoring. “GSTN may, in case required, provide desktops and laptops for day-to-day operations for carrying out fraud analytics,” said the RFP.

Besides, the people involved in the project would not be allowed to “carry any storage device such as USB sticks etc. to GSTN premises”.

The GST Council, chaired by Finance Minister Arun Jaitley and comprising state counterparts, last week approved converting GSTN into a wholly owned government company. Currently, 51% stake in GSTN is held by private entities and 49% by the Government.

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Source: ET