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GST e-invoices spell end to sales under-reporting

GST e-invoices spell end to sales under-reporting

The practice among small businesses of issuing ‘kacha bills’ or informal sales invoices to under-report turnover is likely to become a thing of the past with the government quietly extending the scope of e-invoicing to ever more businesses.

The requirement of e-invoicing —live reporting of business-to-business transactions to a government portal—which is being applied to ever more small businesses is set to make it harder to keep their final retail sales under wraps as the wholesale purchases have already been reported to the authorities.

The effect is two-fold, said experts. One, it makes it easier for small firms to claim credit for taxes already paid on the wholesale purchases and, two, exposes them to questioning by the authorities if final sales are not reported. As per current plan, from 1 April, businesses with sales of more than ₹50 crore will have to generate e-invoices on their business-to-business transactions, down from the current threshold of ₹100 crore. The government’s idea is to make this obligation applicable to all business-to-business deals later this year. The move shows that the government’s idea of formalizing the economy through goods and services tax (GST), which initially faced a backlash from traders and small firms, is now reaching its final stage.

To be sure, GST has already helped in checking tax evasion and large businesses are compliant with the technology-driven tax system. It is segments of the market where retail margins are high that are prone to tax evasion, as high retail margins make it perversely attractive to forgo credit for taxes already paid on procurement and under-report retail sales. Pharmaceuticals and construction materials, excluding cement and steel, are among high-margin businesses, an industry expert said seeking anonymity.

E-invoicing keeps authorities informed about who purchased goods from a distributor or stockist. If the buyer does not report his eventual retail sales, authorities can ask him to show the inventory. Once fully rolled out, e-invoicing is set to give a strong push to the formalization of the economy and give a big boost to tax compliance not only in GST, but also for income tax as under-reporting sales by small firms becomes harder. Experts said this would be a big feat compared to even what has been achieved by some of the western economies.

“The extension of e-invoicing across all business transactions over a period of time would make the GST one of the most advanced information technology-enabled indirect tax system among countries of comparable size and diversity,” said M.S. Mani, partner, Deloitte India.

According to Niraj Hutheesing, founder and managing director of Cygnet Infotech, a tech firm that helps clients digitize businesses, the primary challenge among micro, small and medium enterprises for implementing mandatory e-invoicing is their readiness to manage data. Since e-invoicing is being done in a phased manner, it is comparatively easier for small businesses to replicate the way solutions are implemented by large businesses. Large corporations are helping vendors and suppliers with software systems that will enable them to comply with e-invoicing requirements, and even small accounting software providers are modifying their software to include e-invoicing as a solution, said Hutheesing.

Source: Live-Mint. 

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GST collection to be record Rs 1.20 lakh crore in January: SBI report

GST collection to be record Rs 1.20 lakh crore in January: SBI report

After clocking record collections in December, the Goods and Service Tax (GST) revenue is expected to cross Rs 1.20 lakh crore in January 2021, indicating that government’s ongoing efforts are bearing fruit.

GST collections will be in the range of Rs 1.21-1.23 lakh crore and may still have an upside, says Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India.

Monthly GST collections have been showing higher year-on-year numbers since September 2020, indicating revival in the economy. It touched a record high of Rs 1.15 lakh crore, which was the highest ever collections since the implementation of the countrywide tax in July 2017. The previously record high of Rs 1,13,866 crore was reported in the month of April 2019.

“The Government’s ongoing efforts are bearing fruit in the form of GST collections. After clocking record collections in December 2020 month (Rs 1.15 lakh crore), our internal simulation model indicates that January 2021 GST collections will be in the range of Rs 1.21-1.23 lakh crore and may still have an upside. The positive trend which started from September 2020 has sustained and gained momentum,” according to SBI research report ‘Ecowrap’.

Considering the highest ever January numbers, if 50 per cent of the Integrated GST (IGST) collection is disbursed to states by March 21, then state GST shortfall can narrow down to only a minimal Rs 11,000 crore after taking into account the full compensation cess, the report noted.

If the central government keeps 60 per cent of the IGST revenue, then the states could be staring at a shortfall of around Rs 67,000 crore, it added.
The SGST (state GST) collection for states was 12 per cent lower at Rs 1.87 lakh crore in April-December 2020, as compared to the same period previous year, while the allocated IGST was 13 per cent lower at Rs 1.26 lakh crore.

Meanwhile the cess collection stood at Rs 60,312 crore, which was 17 per cent lower than last year. The combined amount of SGST, allocated IGST and cess stands at Rs 3.73 lakh crore, which was 13 per cent lower than last year’s collection in the same period and it was equal to 58 per cent of the states’ budgeted SGST which stood at Rs 6.49 lakh crore.

As per the report, the government has already borrowed Rs 11.46 lakh crore (as on January 22, 2021) this fiscal and the remaining gross borrowing of Rs 1.6 lakh crore is expected as per the calendar, thereby taking the total gross borrowing to Rs 13.03 lakh crore, lower than Rs 13.10 lakh crore earlier.

Meanwhile, the government surplus cash balances have increased significantly recently. The number has increased to Rs 3.34 lakh crore as on January 28, 2021 compared to Rs 1.08 lakh crore in September 2020, which indicates that the government is collecting huge amount of tax revenues which it is not able to spend.

“This in turn means that the government will have to borrow less next year than our earlier anticipated gross borrowing of Rs 11.5 lakh crore. Thus, the market perception of upward pressure on bond yield due to increased borrowing next fiscal or even this fiscal is not correct,” it said.

The SBI report suggested that the surplus cash balances can well be used to finance a sizeable portion of fiscal deficit in FY22 to keep interest rate increase in check and fasten the pace of recovery further.

As per the report, the other option is to also use a portion of cash balances to spend and pay back all outstanding dues of FY21, like outstanding SME payments from government departments, pending GST bills which in itself will usher in a big fiscal push in FY22. “Clearly, we could be in for a goldilocks period. The question is can we go for the jugular?” it said.

Source: businesstoday

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GST portal experiences technical glitch raises worries of taxpayers

GST portal experiences technical glitch raises worries of taxpayers

The Goods and Services Tax (GST) portal experienced technical failure on Thursday, leaving taxpayers worried amid fast approaching due dates for return filing.

The technical failure of the portal, which is maintained by Infosys, caused #gstnfailed to trend on Twitter.

The official Twitter handle of the GST Network (GSTN) responded on the micro-blogging site saying: “Dear Taxpayers, we have received complaints regarding difficulty in accessing the portal. We are working to resolve the same and will keep you updated.”

Hours later, in another tweet, it said: “Dear Taxpayers, we have again received complaints of denial of access to the portal and are working to resolve it. Inconvenience caused is regretted. Team Infosys-GSTN.”

The Infosys-GSTN team has finally confirmed in a tweet that the problem faced by the users has been resolved.

“Dear taxpayers, we observed some activity in cyber space by unscrupulous elements because of which some taxpayers may have experienced difficulties/delays in accessing GST Portal which otherwise is working fine. We have resolved the problem and blocked these activities. Kindly retry to access the portal. Inconvenience caused is regretted. Infosys-GSTN team,” it wrote on Twitter.

The Centre has extended the due date for furnishing annual GST or goods and services tax returns for the financial year 2019-20 by two more months. The new deadline is 28 February, 2021, instead of 31 December, 2020.
GST is an indirect tax that replaced a welter of indirect taxes in India such as the excise duty, services tax, and VAT. The GST Act was approved in Parliament on 29 March, 2017, and became law on 1, 2017.

Form GSTR 9 is used by the registered taxpayers to file a GST return every year.

Source: Live-Mint

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Aadhaar authentication now open for new GST registrations

Aadhaar authentication now open for new GST registrations

New businesses can now opt for a quick authentication of their credentials using Aadhaar, the 12-digit biometric identification number, and secure Goods and Services Tax (GST) registration without physical verification of their premises.

Aadhaar authentication facility, which was cleared by federal tax body, the GST Council in March, has now been rolled out from Friday, said a statement from the finance ministry. The option for Aadhaar authentication was kept in abeyance temporarily on account of the pandemic.

“Aadhaar authentication for new registration would substantially enhance ease of doing businesses for genuine businesses,” said the ministry statement. A person opting for Aadhaar authentication for new GST registration would get it within just three working days, if no notice is issued and would not need to wait for physical verification.

However, in the case of those opting not to use Aadhaar, GST registration would be given only after physical verification of the business premise, which could take upto 21 days and in case a notice is issued, even more time.

The government has also introduced a system of deemed registration. If the concerned official has not taken any action within the specified time—that is, three days when Aadhaar is used and 21 days when Aadhaar is not used—then registration is deemed to have been granted. “If the registration application has neither been accepted, nor a notice for rejection has been issued, after the specified period, the application shall be deemed to be approved,” said the statement. There are over 12.2 million registered GST businesses currently. (ends)

Source: Live-Mint.

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GST mop-up hit by Covid, ‘act of God’: Centre

GST mop-up hit by Covid, ‘act of God’: Centre

Amid the chorus for GST compensation from states, the Centre has conveyed that there is a need to factor in the “abnormal situation” due to the coronavirus pandemic, which it described as an “act of God”, indicating that there was no insurance for 14% growth in GST collections during these times.

Three years ago, while introducing GST, the Centre had promised to compensate states for “revenue loss”, if collection growth was under 14% in a year. “Compensation is a larger issue. The Centre is not going back on its promise, but should it not enforce the force majeure clause since this is an event triggered by things beyond anyone’s control? It is an ‘act of God’,” an official told TOI.

Data presented at the GST Council meeting on Friday showed that GST collections had shot up to over Rs 62,000 crore in May — almost twice the level seen in April — but 38% lower than a year ago. A large part of the sequential jump was attributed to payments for April spilling over into May given the extended deadline. In any case, the actual numbers will only be known after a few months as the Centre is not enforcing the payment and filing deadline.

While collections during April and May have been around 45% of monthly average (of a shade over Rs 1 lakh crore), is it fair for the states to demand 114%?” said a source. “Haven’t their VAT, excise and property tax collections suffered,” added another source.

The Centre has, however, agreed to look into the issue of compensating states after finance minister Nirmala Sitharaman suggested in March that the Council could look at the option of market borrowings. On Friday, her party colleague and Bihar deputy chief minister Sushil Kumar Modi is learnt to have pointed this out.

A state finance secretary told TOI that “invoking the force majeure clause” was not provided for in the statutes, although the Centre has made it clear that the GST Council needs to arrange for the compensation. “Technically, they (Centre) are right. They are in no position to pay, given that there was a shortfall last year too,” the official said.

A state finance minister conceded that it may not be possible for the Centre to compensate if a state fails to achieve 14% annual growth in GST collections. “Pre-lockdown too, there was a massive gap because 14% growth was assured. The gap will rise given the economic situation,” the minister said.

In fact, during the GST Council meeting in Goa too, the issue had been flagged since the average GDP growth had slowed down from the earlier highs. “To achieve 14% GST growth, with GDP growth of 6% is tougher than at 8-9%,” a state revenue secretary added.

Source: Economic-Times

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Government gives leeway to MSMEs from penalties, interest for GST non-compliance

Government gives leeway to MSMEs from penalties, interest for GST non-compliance

The government on Friday announced some leeway for small and medium companies in the Goods and Services Tax (GST) framework during the GST council meeting. The relief came in the form of reduced penalties and intrest for small and medium companies.

The government has announced relief by the way of waiver or reduced late fee and interest for delayed filings and payment of taxes by the dealers who have a turnover of less than Rs 5 crore. Tax experts say that many companies were unable to comply with the regulations and slapping them with interest and penalties was a double whammy for them.

The government also allowed tax credit on the corporate social responsibility, which many say would go a long way at a time when many companies are looking to spend more on Covid related relief work.

“Allowing input tax credit for goods and services used in CSR expenditure, GST paid on additional health insurance premiums due to COVID-19, masks, hand sanitizers etc. to be used in offices, was one relaxation/ clarification that the businesses were looking forward to. Guess, one would now need to wait for the next meeting, to get clarity on this critical business expenditure,” said Harpreet Singh, Partner – Indirect Tax, KPMG in India.

Industry trackers say that the government is trying to do a balancing act as it needs more revenue through GST but also doesn’t want to create hurdles for companies in terms of compliance. The government is worried that it would face a major shortfall in revenue collections due to Covid pandemic at a time when even companies are facing major issues with their revenues and cash flows.

“The Government is faced with a tough balancing act. On one hand, it needs robust GST collections to help meet its regular plus the extraordinary nature of expenses during the pandemic. On the other hand, businesses are looking for reliefs from the Government to help them tide the major disruptions, loss of revenue and uncertainties. The announcements made in today’s GST council meeting are a reflection of the tight balancing act that the government has on hand,” said Saloni Roy, Senior Director.

All the announcements are set to benefit the smaller organisations more than the larger ones, say experts.

Abhishek Jain, Tax Partner, said, “While there was not much for larger businesses, the late fee waivers and additional moratorium for smaller businesses is quite a welcome move. With the current financial flu, smaller businesses were aggressively seeking stimulus and some of their requests have been well considered by the council.

Source: Economic-Times.

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CBIC extends the validity of E-Way Bill till June 30, 2020

CBIC extends the validity of E-Way Bill till June 30, 2020

The Central Board of Indirect Taxes and Customs (CBIC) on Tuesday extended the validity of Electronic Way (E-way) (E-way) bills till June 30, 2020, for all those e-way bills which were generated on or before March 24, 2020, and had expired between the period from March 20, 2020, to April 15, 2020.

In the notification, in the first paragraph, in clause (ii), for the proviso, the “Provided that where an e-way bill has been generated under rule 138 of the Central Goods and Services Tax Rules, 2017 on or before the 24th day of March, 2020 and whose validity has expired on or after the 20th March, 2020, the validity period of such e-way bill shall be deemed to have been extended till the 30th day of June, 2020.” proviso shall be substituted.

This notification has come as a major relief to transporters and truckers.
Earlier, the government had extended till May 31st the validity of e-way bills, required for inter-state movement of goods worth over Rs. 50,000.
In the E-way bill system businesses and transporters have to produce before a Goods and Services Tax (GST) inspector e-way bill for moving goods worth over Rs 50,000 from one state to another.

Currently, e-way bills have a validity of 1 day for every 100 km. For over-dimensional cargo (ODC), like trucks, the validity is 1 day for every 20 km. The government had announced a country-wide 21-day lockdown beginning March 25 to contain the spread of coronavirus.

This notification shall come into force with effect from the 31st day of May, 2020.

Read More: https://www.taxscan.in/preview/?previews=1Q_wQz05O71N_Th8-yB5PiODfLy-mURpm

Source: TaxScan.

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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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Transfer of under Construction Project do not attract GST: AAR

Transfer of under Construction Project do not attract GST: AAR

The Authority of Advance Ruling (AAR), Uttrakhand ruled that the transfer of under-construction projects under the ‘Business Transfer Project’ is exempted under Goods Service Tax (GST).

The applicants, M/s Rajeev Bansal and Sudershan Mittal are engaged in the business of constructing and selling residential and commercial complexes. The applicant firm came into existence, particularly for the project.

On perusal of the sale deed, the applicant has sold the under-construction building, with its all assets and transfers the rights of the same to the buyer including the approved map from the competent authority. The buyer has purchased the under-construction building to carry on the same kind of business as the purchaser themselves engaged in constructing residential/commercial complexes and selling.

The applicant sought for an advance ruling on the issue whether business transfer agreement as a going concern which consists of transferring under construction building project is covered under S. No. 12 of the Notification No. 12/2017 Central Tax (Rate) and is thus exempt from the applicability of Goods and Service Tax (GST) or not?

The Authority of Advance Ruling (AAR) consisting of the members Vipin Chandra and Amit Gupta, while relying on the definition of ‘business’ under Section 2(17) of the Act noted, “From the definition of the “business” we find that the acquisition of goods/ services for commencement of business is covered under the said definition. We observe that a transfer of a business as a going concern is the sale of a business including assets.

In terms of financial transaction ‘growing concern’ has the meaning that at the point in time to which the description applies, the business is live or operating and has all parts and features necessary to keep it in operation. Thus ‘Transfer of a going concern’ in a simple way can be described as the transfer of a running business which is capable of being carried on by the purchaser as an independent business.”

“The transfer of under-construction projects under ‘Business Transfer Project’ are exempted under Goods Service Tax (GST),” the authority said.

Source: TaxScan

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GSTN CEO Prakash Kumar says portal is ready to handle 3 bn transactions a month of 8 mn tax payers

GSTN CEO Prakash Kumar says portal is ready to handle 3 bn transactions a month of 8 mn tax payers

GSTN is starting a trial run of the network with 3000 tax payer from today onwards. During this period it will carried out dipstick study.

Prakash-kumar-GSTN

The much awaited technology driven Good & Services Taxes (GST) which is likely to be rolled-out on July 1, 2017 will generate nearly three billion invoices every months. “GSTN is equipped to handle 2.6 billion transactions every month from an estimated 8 million GST tax payers,” said GSTN CEO, Prakash Kumar to Moneycontrol, adding that the network can scale up to 5.2 billion transactions a month and up to 13 million tax payers, without any change.GSTN is starting a trial run of the network with 3000 tax payer from today onwards. During this period GSTN will carried out dipstick study through identified 3,000 tax payers who have migrated and enrolled into the new system, who will test the system by uploading invoice data, filing returns, and paying taxes,” said the report.GSTN portal was launched last year on November 8. So far over 71 percent of 81 lakh assesses which is about 58.5 lakh taxpayers have already come on board. GSTN portal is responsible for three things – registration, return filing, and creation of challans for making payments through banks.

Initially a commercial taxpayer will register with GSTN, he will create challan and choose bank to make the payment. Like IRCTC or any other portal, taxpayer will go to bank website to make the payment and he will be brought back to GSTN portal, with a confirmation from the bank.

So far government has added credit card and debit card as mode of payment but only few states like Rajasthan have allowed this. Going forward, government is likely to add allow RTGS and NEFT payments from any bank.

GSTN CEO told Moneycontrol that all the data will be shared with the RBI and accounting authority for reconciliation. “They will come to the portal, create the challan, go to the bank, and make the payment. The banks will compile that and send it to the RBI. RBI will also get data from us. These two, the RBI’s and our data, will go to the accounting authority for reconciliation,” said Kumar.

Government plans to use high-end cybsersecurity tools and solution to make data secure and safe. In addition, data analytics solutions would also be used to make sense of huge amount of data which will be created every month after GST roll-out.

Source : moneycontrol