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Taxpayers can use ITC to discharge GST dues for March

Taxpayers can use ITC to discharge GST dues for March

The Finance Ministry on Saturday said GST taxpayers can utilise the Input Tax Credit available in their credit ledger to discharge their GST dues for the month of March.

“Taxpayers are free to utilise the Input Tax Credit available in their credit ledger, as permissible in law, to discharge their GST dues for the month of March, 2021 – the last month of this financial year,” the Central Board of Indirect Taxes and Customs (CBIC) said in a statement.

Goods and Services Tax (GST) collections crossed the Rs 1 lakh crore mark for the fifth month in a row in February. The mop up in February was Rs 1.13 lakh crore.

Source: Economic-Times

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February 2021 GST collection at Rs 1.13 lakh crore: Finance ministry

February 2021 GST collection at Rs 1.13 lakh crore: Finance ministry

The GST collection in February this year stood at Rs 1.13 lakh crore, according to the data released by finance ministry on Monday.

This is the fifth straight month of the GST collection exceeding the Rs 1 lakh crore-mark. The current mop-up is an increase of 7 per cent over the February collection last year.

This is a clear indication of the economic recovery and the impact of various measures taken by tax administration to improve compliance, the finance ministry

“In line with the trend of recovery in the GST revenues over past five months, the revenues for the month of February 2021 are 7 per cent higher than the GST revenues in the same month last year,” the ministry said in a statement.

“During the month, revenues from import of goods were 15 per cent higher and the revenues from the domestic transaction (including import of services) are 5 per cent higher than the revenues from these sources during the same month last year,” the statement added.

In January 2021, the GST collections had surged to all-time high of about Rs 1.20 lakh crore as economic activities picked up after the withdrawal of stringent lockdown restrictions.

Mop-up from the Goods and Services Tax (GST), which is levied when a consumable item is sold or a service such as travel booking rendered, in January was 8 per cent higher than such receipts in the same month of 2020.

In a statement, the finance ministry had said that the January 2021 collections were the highest ever since the implementation of the nationwide tax in July 2017.

The previous best was in December 2020 when Rs 1,15,174 crore was collected.

Source: Times-Of-India. 

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CBIC reminds due dates for filing monthly GSTR-5 Return, GSTR-3B and GSTR-5A

CBIC reminds due dates for filing monthly GSTR-5 Return, GSTR-3B and GSTR-5A

The Central Board of Indirect Taxes and Customs (CBIC) notified January 20, 2021, as a due date for filing monthly GSTR-5 Return, GSTR-3B, and GSTR-5A.

The Ministry of Finance announced for the non-resident GST payers that the due date for filing monthly GSTR-5 Return for the month of December 2020 is January 20, 2021, failing which will attract a late fee and interest.

The Government announced for OIDAR service suppliers that the due date for filing monthly GSTR-5A return for the month of December 2020 is January 20, 2021, failing which will attract a late fee and interest.

Taxpayers with an annual turnover of over Rs.5 Crores during Financial Year 2019-20 to file their monthly GSTR-3B for December 2020 on or before 20 January 2021 failing to attract a late fee and interest.

Source: TaxScan.

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FinMin releases weekly installment of Rs 6,000 cr to states to meet GST compensation shortfall

FinMin releases weekly installment of Rs 6,000 cr to states to meet GST compensation shortfall

The Finance Ministry on Monday released the 12th instalment of Rs 6,000 crore to states to meet the GST compensation shortfall, taking the total amount released so far under this window to Rs 72,000 crore.

The Centre had set up a special borrowing window in October 2020 to meet the estimated shortfall of Rs 1.10 lakh crore in revenue arising on account of implementation of Goods and Services Tax (GST).

The ministry in a statement said it has released the 12th weekly instalment of Rs 6,000 crore to the states to meet the GST compensation shortfall.

Out of this, an amount of Rs 5,516.60 crore has been released to 23 states and Rs 483.40 crore has been released to the 3 Union Territories (UT) with Legislative Assembly (Delhi, Jammu & Kashmir & Puducherry), who are members of the GST Council.

The amount has been borrowed this week at an interest rate of 4.43 per cent.

“Till now, 65 per cent of the total estimated GST compensation shortfall has been released to the States & UT with Legislative Assembly. Out of this, an amount of Rs 65,582.96 crore has been released to the States and an amount of Rs 6,417.04 crore has been released to the 3 UTs with Legislative Assembly,” the ministry said.

Thus, the total amount released so far in 12 instalments is Rs 72,000 crore at an average interest rate of 4.70 per cent.

The remaining five states — Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim — do not have a gap in revenue on account of GST implementation, the statement said.

In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the Centre has also granted additional borrowing permission equivalent to 0.50 per cent of Gross States Domestic Product (GSDP) to the states to help them in mobilising additional financial resources.

Permission for borrowing the entire additional amount of Rs 1,06,830 lakh crore (0.50 per cent of GSDP) has been granted to 28 states under this provision, the statement said.

Source: Financial-Express.

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Centre transfers Rs 42,000 crore to states after 7th weekly GST compensation tranche

Centre transfers Rs 42,000 crore to states after 7th weekly GST compensation tranche

The central government released the seventh weekly installment of Rs 6,000 crore under the first option of the goods and services tax (GST) compensation on Monday, taking the total amount provided to the states to Rs 42,000 crore.

From the latest tranche, 23 states would get Rs 5,517 crore and the three Union Territories of Delhi, Jammu and Kashmir and Puducherry will receive Rs 483 crore, a finance ministry statement said.

The five states of Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in revenue on account of GST implementation, it added.

In October, after an arduous back-and-forth between the Centre and states on the issue, the government started releasing GST compensation tranches to the states through a special borrowing window.

The latest borrowing was done at a rate of 5.13%, taking the average interest rate at which borrowings were made under the window to 4.77%, the ministry said.

Karnataka received the highest amount under this window so far at Rs 5,668 crore, being among the early adopters of the option given by the Centre. This was followed by Rs 5,472 crore to Maharashtra and Gujarat’s Rs 4,213 crore.

Earlier in December, Jharkhand became the last state to select option one for GST compensation provided by the Centre of Rs 1.1 lakh crore. The state received Rs 184 crore in today’s tranche.

Source: Economic-Times

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Centre to release second tranche of Rs 6,000 crore to states as part of GST compensation

Centre to release second tranche of Rs 6,000 crore to states as part of GST compensation

The Centre will release the second tranche of Rs 6,000 crore to 16 states and 3 union territories on Monday, taking the total amount released to states to meet the compensation shortfall under goods and services tax (GST) under the special window to Rs 12,000 crore.

The second tranche was raised at a weighted average yield of 4.42 per cent, the finance ministry said in a statement.

“This amount will be passed on to the States/UTs at the same interest rate, which is lower than the cost of borrowings for the States and UTs, thus benefitting them,” the ministry said.

Till date 21 states and three union territories have opted for the special window under Option one where loans raised by the the government of India are released on a back-to-back basis to states or union territories, in lieu of GST compensation cess releases.

The loans have been released to Andhra Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Meghalaya, Odisha, Tamil Nadu, Tripura, Uttar Pradesh, Uttarakhand, UT of Delhi, UT of Jammu and Kashmir and UT of Puducherry.

The government had given two borrowing options to states to meet the compensation shortfall for 2020-21, of which Rs 1.1 lakh crore option was chosen by 21 states and two union territories.

Under this option, the Centre agreed to borrow and provide to states while the principal and interest will be serviced from the compensation cess collected. The special borrowing window coordinated by the finance ministry allows for back to back borrowing by the Centre and further transfer to states.

Some opposition-led states and union territories, including West Bengal, Rajasthan, Kerala, Chhattisgarh and Puducherry had rejected both the borrowing options provided by the Centre – Rs 97,000 crore and Rs 2.35 lakh crore.

They are also yet to decide whether to take the increased borrowing option of Rs 1.1 lakh crore, enhanced from Rs 97,000 crore earlier, basis a 7 per cent growth projection in revenues versus 10 per cent growth projection estimated by the finance ministry.

Finance minister Nirmala Sitharaman had written to these states last month, asking them to rethink their decision and come on board with the other states that will get faster access to funds.

Finance secretary Ajay Bhushan Pandey told ET in an interview that the government was open to discussion with states and will try to bring them on board.

“On revenue loss and other aspects, one can have discussions. I’m sure other states will also review their positions. We will try to convince them,” Pandey said.

Source: Economic-Times.

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GST reduced tax rates, doubled taxpayer base to 1.24 cr: Finance Ministry

GST reduced tax rates, doubled taxpayer base to 1.24 cr: Finance Ministry

The Finance Ministry on Monday said GST has reduced the rate at which people have to pay tax, helped increase compliance and doubled taxpayer base to 1.24 crore.

In a series of tweets, on the first death anniversary of former Finance Minister Arun Jaitley, the ministry said before goods and services tax ( GST), the combination of value-added tax (VAT), excise, sales tax and their cascading effect resulted in high standard rate of tax up to 31 per cent.

“It is now widely acknowledged that GST is both consumer and taxpayer-friendly. While the high tax rates of the pre- GST era acted as a disincentive to paying tax, the lower rates under GST helped to increase tax compliance,” the ministry said.

The number of assessees covered by the GST at the time of its inception were about 65 lakh. Now the assessee base exceeds 1.24 crore.

GST, which subsumed about 17 local levies, was rolled out on July 1, 2017. Jaitley held the finance portfolio in the first term of the Modi government since 2014.

“As we remember Arun Jaitley today, let us acknowledge the key role he played in the implementation of GST, which will go down in history as one of the most fundamental landmark reforms in Indian taxation,” the Ministry tweeted.

The multiple markets across India, with each state charging a different rate of tax, led to huge inefficiencies and costs of compliance.

“ GST has reduced the rate at which people have to pay tax. The revenue neutral rate as per the RNR (Revenue Neutral Rate) Committee was 15.3 per cent. Compared to this, the weighted GST rate at present, according to the RBI, is only 11.6 per cent,” the ministry said.

Businesses with an annual turnover of up to Rs 40 lakh are GST exempt. Initially, this limit was Rs 20 lakh. Additionally, those with a turnover up to Rs 1.5 crore can opt for the Composition Scheme and pay only 1 per cent tax.

“Once GST was implemented, the tax rate on a large number of items was brought down. As of now, the 28 per cent rate is almost solely restricted to sin and luxury items. Out of a total of about 230 items in the 28 per cent slab, about 200 items have been shifted to lower slabs,” the ministry said.

Also, the housing sector has been placed in the 5 per cent slab, while GST on affordable housing has been reduced to 1 per cent.

“All processes in GST have been fully automated. Till now 50 crore returns have been filed online and 131 crore e-way bill generated,” the Ministry added.

Source: Economic-Times.

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Centre unable to pay GST dues to States: Union Finance Secretary

Centre unable to pay GST dues to States: Union Finance Secretary

Finance Secretary Ajay Bhushan Pandey told the Parliamentary Standing Committee on Finance, headed by BJP MP Jayant Sinha, at a meeting on Tuesday that the government is in no position to pay the GST share of States as per the current revenue sharing formula, sources said.

According to at least two members who attended the meeting, Mr. Pandey’s comments were in response to a question on the revenue shortfall due to the pandemic. The members then questioned him on how the government could renege on the commitment to the States. At this, “he [Mr. Pandey] pointed out that the GST Act has provisions to rework the formula for paying compensation to the State governments if the revenue collection drops below a certain threshold,” one of the members said on condition of anonymity.

The Finance Ministry on Monday said the Centre had released the final instalment of ₹13,806 crore of GST compensation for the financial year 2019-20.

The GST Council was scheduled to meet in July to try and work out the formula to rework the compensation to the States. However, the meeting has not been convened so far.

The opposition members meanwhile were up in arms, as the committee which was meeting for the first time since the nationwide lockdown instead of discussing the State of Indian economy, took up the topic “Financing the innovation ecosystem and India’s growth companies”.

Congress MPs Manish Tewari, Ambika Soni, Gaurav Gogoi and NCP MP Praful Patel, according to sources, vociferously, demanded that the Committee discuss the current state of economy which has suffered a huge set back because of the pandemic. Mr. Tewari in a letter to Chairperson, Mr. Sinha, had earlier pointed out that the people will consider the Committee to be “delusional” to discuss the chosen topic in a hour of crisis.

According to sources, Mr. Tewari pointed out that even the Budget passed by Parliament on March 23 may no longer be relevant since it was based on certain assumptions about the revenue collections. There is no clarity so far from the government on overall revenue shortfall, he pointed out. Congress MP Gaurav Gogoi said the panel must also scrutinise the efficacy of the government’s rescue package.

It is learnt that Mr. Sinha, the Committee Chairperson, said most of the questions posed by the members were political in nature and cannot be answered by Finance Ministry officials. These can only be replied to by Finance Minister Nirmala Sitharaman and can be taken up when Parliament meets during debates on the subject. in either houses of Parliament.

To this Mr. Praful Patel said if the Standing Committee on Finance cannot discuss even the basic question of the state of economy, then it is better to disband the panel, sources added.

Sources: The-Hindu

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Finance Ministry not considering calamity cess on GST

Finance Ministry not considering calamity cess on GST

The Finance Ministry is not considering imposition of calamity cess on the GST as businesses are grappling with low sales and declining demand, sources said. Reports had earlier said that the central government is considering a calamity cess on the Goods and Services Tax, similar to flood cess imposed by Kerala in June last year.

Ministry sources said that in the present economic scenario during the COVID-19 pandemic, any purported proposal of introducing a calamity cess would be nothing less than an adversity itself.

This would prove to be counter-productive, as sales are already at low volume and the industry is facing a deep crisis for want of demand and likely labour challenges, a source said.

“Any such measure would further dampen the consumers’ sentiment and could weaken markets’ strength, especially when the government is endeavouring its best to boost the consumption,” the source said.

Also internationally, no country has tried such imprudent fiddling with their existing tax regimes during COVID time. None of the countries, developed or developing, have increased taxes to counter economic impact of the pandemic, the source added.

Congress leader Kapil Sibal had earlier in the day tweeted: “Even the RBI admits growth this year will be in negative territory. Don’t even think of a “calamity cess” on the GST. That will be another “calamity”, he said.

Source: Economic-Times.

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GST rate cut to boost demand may be counterproductive, say finance ministry officials

GST rate cut to boost demand may be counterproductive, say finance ministry officials

The government may not accept the industry’s demand to substantially reduce Goods and Services Taxes (GST) for six months to boost demand as the exemption would block input-tax credit that would have an adverse impact on businesses and may not result into any significant gain to the consumer, two finance ministry officials said.

The GST exemption will make output tax as zero and thus the input-tax credit would be blocked, which will be added to the cost making the product costlier, the officials with direct knowledge of the matter said requesting anonymity.

“This will not only be injurious to the industry but also to the consumer at large and this is certainly not going to revive the demand,” one of the officials said.

The GST is an integrated levy of indirect taxes and a main source of revenue for both the Centre and the states. It is about one-third of the total tax receipts. Over 70% of the GST revenue accrues to the states through their own share and the devolution. Therefore, it is impossible for states to manage their finances without the GST revenue, a second official said.

Several industry associations have said demand generation would be a major challenge before the government after the lockdown is lifted and a substantial reduction in GST rates could be a solution. Niranjan Hiranandani, president, Associated Chambers of Commerce and Industry of India (Assocham) is one of its proponents who had proposed to cut GST rates on almost all products by 50% for six months to boost demand and had asked the government to include it in the part of its economic stimulus package with estimated cost of about Rs 3 lakh crore. HT reported it on April 17.

Responding to the finance ministry officials’ comments, Hiranandani said on Tuesday, “In theory, yes – lost input tax credit (ITC) on exemption from GST is an issue of concern, but that is not what the industry’s suggestion.”

“It has to be viewed from the perspective of incentivizing consumers by inducing them to make a purchase leading to the consumption which is the need of an hour. The argument is that a cut in GST for a short term, say next 6 months, will reduce the amount paid for the good or service, so the consumer will buy more (spend more) and thereby, revitalize the economy. It is a simple issue of reducing (not exempting) GST, so that consumers go ahead and buy – in the present, during the period of reduced GST rather than keep waiting for some other day to do so,” he said.

The logic is that demand generation needs reduction in GST,” he said adding “The aspect of ITC can be dealt with, so long as the suggestion is taken in the proper perspective.”

Experts, however, advised the government to adopt a cautious approach while tempering with GST rates. “There does not appear to be any empirical evidence that any country has exempted GST/VAT [value-added tax] across the board in order to drive up the pandemic-impacted economies. There could be specific sectors/areas where there may be a need to rationalise the GST rates for a temporary period to assist the sector. This needs be done very cautiously ensuring that revenue losses are minimised, leakages are avoided and the reductions do not lead to emergence of inverted duty structure situations,” said MS Mani, partner at Deloitte India.

Abhishek Jain, tax partner at consultancy firm EY said a GST exemption would entail breaking of credit chain, higher input tax costs for businesses and complexities on compliances with credit transitions during taxable and exempt tax periods. “A specified percentage GST rate reduction could be explored vis-à-vis a NIL rate/exemption by the government specifically for the severely impacted sectors. In a scenario, where the said rate reduction entails accumulation of credits, the government should ensure full refund of the credits so accumulated with faster processing of such refunds,” he said.

According to Pratik Jain, partner and leader-Indirect Tax at  India, providing GST exemption leads to complications in terms of blockage of ITC, coupled with rigors of anti profiteering provisions, besides imports become cheaper. “However, there is perhaps a need to make an exception for certain industry sectors such as airlines, hospitality etc. In addition, the government should consider providing working capital cushion to industry by deferring the payment of GST collected by few months to industry at large, without payment of any interest,” he said.

Source: Hindustan Times

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