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gst council
GST Council eases compliance burden for businesses

GST Council eases compliance burden for businesses

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The Goods and Services Tax Council on Friday decided to further ease compliance burden of businesses by providing relief on late free and interest payable on late payments.

It reduced late fee and interest for those with tax liabilities and waived off late fee completely for those with no tax liabilities.

Finance minister Nirmala Sitharaman said that GST collections had fallen to about 45%, aggravating the problem of compensation to states, even as states demanded they be funded through market borrowing. The Council will meet again in July to specifically discuss this issue.

“For all those who have no tax liabilities but have not filed their returns between July 2017 and January 2020 there will be zero late fees,” FM Nirmala Sitharaman said.

“For people who have tax liability, maximum late fee for non-filing of GSTR-3B returns for period July 2017 – January 2020 has been capped to Rs 500,” she added.

Companies having no tax liability will not be fined any late fee if they have not filed returns, since July 1, 2017. Those with tax liabilities will now be able to pay a late fee of Rs 500 per month, per return, far lower than Rs 10,000 per month.

During Covid period of February, March and April 2020, interest rate on late return filings by small taxpayers with turnover up to Rs 5 crore, will be reduced to 9% from 18%, if returns of inward supplies are filed till September 30.

The late fee and interest will be waived for the months of May, June and July, if returns are filed by September 30.

“Providing compliance relief, even beyond September if required, to all businesses is essential at the present stage where the primary focus has to be on business revival and working capital management,” said MS Mani, partner at Deloitte India.

Taxpayers can file for restoration of GST registrations that have been cancelled till June 12, 2020, through a one-time extension being offered till September 30.

Compensation Cess
The GST Council will meet again in July to discuss exclusively compensation cess which has to be given to the states. The fund shortfall remains an issue even with the Centre having released Rs 36,400 crore to states as compensation cess for December to February period, while states have asked the GST Council to raise money through market borrowings.

“If there has to be a borrowing, how and who’s going to pay for it… it will be discussed,” Sitharaman said.

The total outgo to states stands at Rs 1.51 lakh crore for FY 2019-20, with installment of March remaining. Between April and November 2019, the government had released Rs 1.15 lakh crore as funds to states. About Rs 12,500 crore more needs to be paid to states for the month of March.

GST Collections
The impact of coronavirus followed by the lockdown has hurt GST collections, with the April and May collections falling well short of targets of Rs 1 lakh crore per month.

“States understood what the collections are, they’re at 45% only,” Sitharaman said.

The Government is faced with a tough balancing act, as on one hand it needs robust GST collections to help meet its regular and extraordinary expenses during the pandemic, while on the other hand, businesses are looking for relief to help them tide the major disruptions, loss of revenue and uncertainties.

“Collections are done by states as well, and every state is fully aware of how much money they’re getting every month. Discussion is happening together, revenues we got are not final,” said revenue secretary Ajay Bhushan Pandey.

A complete picture will emerge after collections for April, May and June are taken into account, he added.

Rate rationalisation
The Council however postponed rationalisation of GST rates for textiles, footwear and fertiliser, even though principally all members agreed that the duty rates need to be corrected as these products faced inverted duty structures.

“The minister for UP wanted to take call on brick-klins and pan masala. This meeting will be taken up in the next GST Council meeting,” Sitharaman said.

Source: Economic-Times.

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GST Compensation
Centre releases Rs 14,103 crore GST compensation to states; more to be released soon

Centre releases Rs 14,103 crore GST compensation to states; more to be released soon

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The central government released the second installment of goods and services tax (GST) compensation to states, of over Rs 14,100 crore, for the October-November period.

Officials aware of the development said that funds were released earlier this week, completing the full tranche of Rs 34,503 crore for the two months. Centre had given me ven Rs 19,950 crore as the first installment in February.

One of the officials said that dues for December and January were also to be released soon, which in turn can be used for fighting the Covid 19 outbreak.

States like Rajasthan, Punjab and West Bengal have asked finance minister Nirmala Sitharaman to ease the fiscal deficit limit under the Fiscal Responsibility and Budget Management (FRBM) Act to 5% from 3% for the ongoing financial year, release pending GST compensation and allow use of interest accruing to the Consolidated Sinking Fund.

States have also asked for full release of revenue deficit grant provided by the 15th Finance Commission, besides a moratorium on loan payments.

In case of GST compensation, the Centre has released a total of Rs 1.2 lakh crore as compensation to states for the fiscal till mid-February.

Source: Economic-Times

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compenstion
Govt set to release Rs 20,000 cr pending GST compensation to states soon

Govt set to release Rs 20,000 cr pending GST compensation to states soon

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The finance ministry is set to release Rs 20,000 crore in pending goods and service tax (GST) compensation to states soon, Business Standard has learnt. This will not be from the compensation cess, but from the Consolidated Fund of India, and comes days after the Centre disbursed Rs 17,287 crore to states as devolution and disaster funds.

The finance ministry and the Prime Minister’s Office are also working on another stimulus package, which is expected to be announced soon. There is no definitive number yet on the quantum of the package, which will again be aimed at the urban and rural poor, micro, small and medium enterprises and the sectors most affected by the coronavirus disease (Covid-19) pandemic and the subsequent 21-day nationwide lockdown.

Officials working on the stimulus package say that a lot of ever-changing factors are still under consideration. These include active cases of Covid-19, hotspots, and the status of the lockdown after April 14.

“The revenue department has been authorised to clear Rs 20,000 crore in GST compensation dues to states,” said a top government official.

“We can only disburse compensation to states from the compensation cess fund. Since it is not available, approval has been given for releasing it from the Consolidated Fund,” said a second official.

Even with the Rs 20,000 crore distributed among states, it will still be a fraction of what they have been demanding in financial support and clearance of pending dues. Central government officials say there is a resource crunch, but more will be given. States have also been allowed to borrow 50 per cent of their total 2020-21 limit in April itself.

Maharashtra had sought a special package worth Rs 25,000 crore from the central government and asked it to release pending dues worth Rs 16,654 crore under various heads by March 31, to fight the economic crisis. Tamil Nadu has sought a special assistance of Rs 4,000 crore and a slew of other financial support measures. West Bengal has sought a package of Rs 25,000 crore and clearance of dues worth Rs 36,000 crore. Additionally, all states have sought relaxation of their borrowing limits.

With only 65 per cent of compensation due for October and November at Rs 19,950 released last month, the total disbursal has been Rs 1.2 trillion as against full-year collection of just Rs 95,000 crore. It is, in fact, Rs 3,000 crore short of the revised estimate of Rs 98,327 crore.

Compensation cess, to be released on a bi-monthly basis, has been pending for about five months. With compensation of over Rs 60,000 crore still pending, some states are even planning to drag the Centre to the Supreme Court.

“Never in the history of India has there been such a callous attitude of the Centre towards the states. There is no option other than the states approaching the Supreme Court,” Kerala Finance Minister Thomas Isaac told Business Standard.

The central government was of the view that it would only release compensation out of collections through levy of cess on luxury and sin items like automobiles, tobacco, and aerated drinks.

In her Budget speech, Finance Minister Nirmala Sitharaman said it was decided to transfer to the GST Compensation Fund balances due out of collection in 2016-17 and 2018-19 in two instalments.

Source: Business-Standard.

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GST collection
GST collection slips below Rs 1 trillion in March after four months

GST collection slips below Rs 1 trillion in March after four months

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Goods and services tax (GST) collection fell below the Rs 1-trillion mark in March after a gap of four months, even as disruptions caused by the coronavirus-induced lockdown will get captured only in the coming months.
The numbers pertain to GST paid in February but collected in March, suggesting that collections might turn grimmer going forward.

The GST mop-up in March stood at Rs 97,597 crore, down 8.4 per cent on a year-on-year basis, the data released by the Ministry of Finance showed on Wednesday. The government had targeted a collection of Rs 1.25 trillion in March. GST collection grew by a meagre 3.7 per cent in the full fiscal year 2019-20.

The dismal collection in March is despite the stringent anti-evasion measures introduced by the government, including the blockage of e-way bill and restricting input tax credit to 10 per cent in the case of failure of invoice uploads by suppliers.

Already hit by an economic slowdown, the country went into a 21-day lockdown from March 24 to prevent the spread of Covid-19. All industries that were struggling have become non-operational, which will reflect in the April GST collection figures.

Kerala Finance Minister Thomas Isaac told Business Standard that the April numbers, which would essentially be transactions in March would only be about 15-20 per cent of the March figures.

Pratik Jain, partner, India, said, “It seems that many businesses may not have been able to pay GST because of liquidity issues being faced after the lockdown. As the second half of March 2020 has been significantly impacted due to the Covid-19 outbreak, collections in April are likely to be substantially lower.”

In a major relief for businesses facing lockdown due to coronavirus, the last date for GST return filing for March, April and May 2020 has been extended to June 30, with no interest, late fee and penalty, for companies with up to Rs 5 crore turnover and subsidised interest of 9 per cent, and no penalty or late fees for bigger companies.

M S Mani, partner, India, said it was necessary for businesses to conserve cash in order to enable resumption of operations once the lockdown ends. Hence, any deferral of the GST payment timelines by a few months would significantly assist them in this process, Mani said.

Central GST collection for FY20 at Rs 4.95 trillion fell Rs 18,188 crore short of revised estimates for the fiscal year. The finance ministry, in Union Budget 2020-21, had lowered the CGST collection target for FY20 to Rs 5.13 trillion from Rs 5.26 trillion estimated in July.

Of the Rs 97,597-crore revenue in March, the central GST collection stood at Rs 19,183 crore, state GST at Rs 25,601 crore and integrated GST at Rs 44,508 crore, which included Rs 18,056 crore collected on imports, the finance ministry said in a statement.

GST collection on domestic transactions witnessed an 8 per cent decline, while GST collection on imports posted a negative growth of (-)23 per cent, indicating the beginning of Covid-related supply and demand disruption.

In order to plug revenue leakages, the Council allowed blocking of input tax credit in the case of fraudulent invoices and blocking of e-way bills in the case of non-filing of returns for three straight months.

The Council in its meeting on March 14 deferred the new simplified returns and e-invoicing till October, which was to be launched from April 1. Meanwhile, in order to improve collections, the government is aiming to correct inverted duty structure. It raised the GST on mobile phones to 18 per cent from 12 per cent, bringing the rate on a par with the inputs.

Lower-than-expected revenues are also putting pressure on the Centre to compensate states for the revenue shortfall. The compensation cess collection stood at Rs 8,306 crore during the month, much smaller than the approximately Rs 14,000-15,000 crore compensation required by states on a monthly basis. States are up in arms with the Centre over a delay in payment of compensation dues and are planning to drag Centre to the Supreme Court.

Source: The-Business-Standard.

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GST compensation
Centre to extend IGST, compensation cess exemptions under export schemes till March 2021

Centre to extend IGST, compensation cess exemptions under export schemes till March 2021

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Offering some relief to exporters struggling to cope with the effects of the lockdown, the Centre has decided to extend the IGST (Integrated Goods and Service Tax) and compensation cess exemptions for goods procurement under two popular export promotion schemes by a year, till March 31, 2021.

The Export Credit Guarantee Corporation of India (ECGC), the government-owned company providing insurance cover to exporters, is also adopting measures to aid exporters such as extending the time limit for returns, extension requests, default notifications and filing claims, apart from reducing fees, a government official told BusinessLine.

“We understand that exporters are not in a position right now to adhere to timelines or pay additional taxes. The Centre is trying to give them as much policy flexibility as possible to ease the pains of the lockdown,” the official said.
Exporters have been hit hard this month with the pandemic disrupting their production, shipments, orders and payments.

Following the Centre’s latest decision, exemptions on payment of IGST and compensation cess for goods procurement under the Export Promotion Capital Goods (EPCG) scheme and Advance Authorisation scheme have been extended by a year to March 31, 2021.

Extended deadline

Also, the ECGC has extended the deadline for all returns, extension requests and default notifications till May 31, 2020, as per a communication from the insurance company to stakeholders. The time for filing claim, reply to claim queries and representations has been extended to June 30, 2020. The specific shipment policy expiring in March 2020 has also been extended to June 30, 2020.

Moreover, the ECGC has reduced by 50 per cent its policy proposal fee for policies due to be renewed or issued between March 1 and June 30, 2020.

Discretion has also been extended to exporters, within RBI guidelines, to extend the due date for payment by buyers for shipments accepted earlier and to decide about the release, re-import or abandonment of shipments that reached their destination but have not been cleared by overseas buyers, said the note.

Source: The-Hindu-Business-Line

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