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Taxpayer with turnover over Rs 2 cr need GST audit certificate, will be arduous job for auditors

Taxpayer with turnover over Rs 2 cr need GST audit certificate, will be arduous job for auditors

The Government on Thursday notified the GSTR-9C form for annual GST audit under which every taxpayer above GST - GSTR9C auditRs 2 crore turnover in a financial year would need to fill up a reconciliation statement and also obtain a certification of audit.

Under GST, annual return is to be furnished in GSTR-9 (recently notified on September 4, 2018). In addition, as per Section 35 of CGST Act, 2017, every tax payer whose turnover exceeds Rs 2 crore during a financial year, is required to submit audited annual accounts and a reconciliation statement in GSTR-9C.

The Government on Thursday through the notification No. 49/ 2018 – Central tax dated September 13, 2018 has notified the format for GSTR-9C.

GSTR-9C – Design

A look at GSTR-9C makes it clear that it is essentially a reconciliation statement for reconciling turnover, input tax credits and tax payments reported in GST returns (annual return) vis-a-vis annual books of accounts.

GSTR-9C is broadly segregated into the following:

  1. Gross turnover (including taxable and non-taxable turnovers)
  2. Taxable turnover
  3. Tax liability and payments (rate-wise)
  4. Input tax credit availed

The reconciliation is to be accompanied with certification from the auditor (can be statutory auditor as well). Further, there is a separate table for auditor’s recommendation on additional liability to be discharged on account of non-reconciliation of turnover and input tax credit. The auditor may also recommend on erroneous refunds, outstanding demands etc.

There is a separate table for disclosing additional amount payable on account of the un-reconciled amount as per Sr. No. 1, 2, 3 and 4. Taxpayers should note that it appears that the said amount is to be paid in cash (and not credit).

“While the final Audit format appears less labyrinthine, undertaking five different reconciliations, providing recommendations on the additional liability and certifying whether correct books of accounts have been maintained is still going to be an arduous task for the GST Auditor,” says Harpreet Singh, Partner, Indirect taxes, KPMG.

Some points for consideration

The format prescribes indicative sub-heads under which the expenses are generally booked in the financials (like freight, purchases, imports, employee cost, repair & maintenance, capital goods etc.). Tax payer may add/ delete the sub-head as per relevancy and against these sub-heads, the amount of input tax credit as reported in financials is to be reconciled with annual return. However, this is a new requirement and could be challenging for most taxpayers.

Fortunately, the Government has prescribed 2 different certifications as part of GST Audit Format – one where reconciliation statement is drawn and audited by statutory audit and the other wherein it is drawn and audited by a person other than the statutory auditor.

“With the Audit format being released and 31st December 2018 deadline, it would be prudent on part of the dealers to quickly appoint their GST Auditor and initiate the pre-audit process by collating information and documents required for the purpose of Audit,” adds Singh

It would, however, be interesting to see if the auditors would be comfortable with the prescribed language for certifications and if any changes in the language would be allowed while certifying the reconciliation statement. At the moment, Part B provides the format of the certification.

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Sources: Economic Times
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

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
Six lakh new traders registered in Maharashtra state as taxpayers under GST

Six lakh new traders registered in Maharashtra state as taxpayers under GST

OVER 6 lakh new traders have registered themselves as taxpayers under the Goods and Services Tax (GST)OVER Six lakh new traders have registered themselves as taxpayers under the Goods and Services Tax (GST) in Maharashtra so far. in Maharashtra so far. These traders were earlier out of the tax net under the Value Added Tax (VAT) and excise duty system.

The GST, a comprehensive indirect tax system, was rolled out on July 1, 2017, and was expected to bring many new industries into the tax fold.

Data from the state GST department shows that most of the new traders registered under the new tax system are ‘works contractors’. They are traders who offer a combination of goods and services such as textile workers (dying, embroidery) and the printing press. In the one year since goods and service tax came into force, 32,302 such contractors have registered themselves as taxpayers. This is over 5 percent of the total number of new registrants which currently stands at 6.15 lakh.

“The works contractors are traders who supply both goods and services…,” said an official from the state GST department. He said the textile industry and the sugar industry in Maharashtra were the two big industries to have been brought into the GST net.

Apart from these, agency services are also new entries. In the state, over 26,000 agency services have registered as taxpayers. This means insurance agents, real estate agents, and employment agencies, among others, have come into the tax net, too. Over 15,000 business services have also registered, bringing into the fold services such as Information Technology, finance, shipping industries.

While construction activities are also a combination of goods and services, the industry has been identified as a separate entity and as pure service under the GST, said the official. Around 12,000 construction services have registered under Goods & Service Tax.

The new dealers registered on the GST portal are over and above the 7.4 lakh VAT registered dealers who made a swift switch to GST as soon as the new tax system came into force. Among other new entrants in the tax net are maintenance services, operator services, management services and consultancy services. The GST department is currently analysing the returns filed and the patterns noticed among these new entrants.

Source: Indian Express
GST scores high on ease of doing business

GST scores high on ease of doing business

The goods and services tax (GST) has ensured formalisation of the economy and improved mop-up, delivering seamless convergence under the one-nation, one tax theme, said industry champions, unanimously calling it an enabler of ease of doing business. With uniformity of rates and elimination of multiple other indirect taxes, GST has cut out the cascading of levies, widened the tax net and added to revenues. Introduction of the e-way bill has improved the system by reducing transport and logistics costs, said industry leaders.

GST is a “massive and transformational reform,” which is bringing long-term gains to the Indian economy, said Rakesh Bharti Mittal, Confederation of Indian Industry (CII) president and vice-president, Bharti Enterprises. “GST represents a model of cooperation, consensus and convergence and is an exceptional and unique achievement.”

Explaining that GST did not just mean a difference in the tax rate but changes in the entire ecosystem of the IT setup, supply chain, procurements, billing patterns and exports, EY partner Bipin Sapra said GST now doesn’t appear to be the difficult mountain to climb that it had earlier. Compliance has eased, refunds have started to come in for exporters, antiprofiteering is being introduced with caution and the e-way bill mechanism has rolled out smoothly.

Industry Vote :  GST

“GST is a key enabler to bring simplification in the indirect tax system and is expected to end all the complexities the industry has been dealing with,” said YK Modi, executive chairman, Great Eastern Energy Corp.

The exports sector, too, has given its approval to GST — despite its refund challenges — as it has reduced the cost of manufacturing and logistics through complete rebate of input taxes on all goods and services. In a CII survey of 300 respondents, 83% said implementation of GST was in the right direction, while 65% were satisfied with its overall implementation.


At a time when Malaysia has abandoned GST, the industry is confident of India’s regime settling in seamlessly, but wants lesser rate slabs and inclusion of all sectors in the tax’s ambit. Currently, there is a multi-tier rate structure, with five broad categories of 0, 5%, 12%, 18% and 28%. However, rough diamonds and precious stones are subject to 0.25% GST while a 3% tax is levied on gold and silver. Demerit and luxury goods, which fall in the 28% tax slab, are subject to an additional cess of 1-15%.

Rashesh Shah, chief executive, Edelweiss Group, urged the government to make GST a simple and transparent system with reasonable rates and a minimum number of slabs. “GST’s ambit must also be extended to (currently) excluded items, such as petroleum products and real estate,” said Shah, who is also Ficci president.

Source :  The Economic Times
GST has positive impact on overall biz: CFOs survey

GST has positive impact on overall biz: CFOs survey

A significant majority of the CFOs surveyed by global professional services firm Deloitte have given a thumbs-up to the Goods and Service Tax (GST), stating that implementation of this indirect tax GST has positive impact on overall biz: CFOs surveyreform has had a positive impact on overall business. This appreciation of GST’s value proposition comes on the eve of India completing one year of GST implementation.

Over 250 CFOs with revenues spanning from less than Rs 250 crore to more than Rs 10,000 crore, responded to the Deloitte India CFO Survey 2018. The respondents included listed and unlisted companies from both the private sector and PSUs, Indian companies and MNCs headquartered in India as well as overseas.


Seventy-seven per cent of the CFOs believe that GST has had a positive impact on overall business. Additionally, GST has had a positive impact on the revenue (71 per cent) and supply chain (70 per cent), and 58 per cent CFOs felt it had led to an improvement in ease of doing business. On the other hand, industry has witnessed a negative impact (as responded by 66 per cent CFOs) on working capital post-GST implementation.


In terms of the external environment, the survey reveals that regulatory and policy changes such as IndAS, demonetisation or GST, are the biggest concerns for CFOs. Technology disruption is also an important concern, as revealed in the survey. Companies have seen numerous technological disruptions and will continue to encounter the same in coming years.

As much as 89 per cent of the CFOs highlighted GST as a top challenge and saw it as a key regulatory change faced by the company. Rightly so, given that GST had brought about changes not just in technology, systems and reporting, but has also necessitated a relook into the existing business models impacting each and every aspect of business.

The other top challenge seen by CFOs is that IndAS aligned with International Financial Reporting Standards has been introduced, dealing mainly with revenue recognition. The new revenue standard brings in a comprehensive and robust framework (five-step model) for recognition, measurement and disclosure of revenue. This standard would change the manner in which companies recognise and report revenues.

Interestingly, the survey highlights that changes in the regulatory environment has added to the cost of compliance. As much as 49 per cent of the CFOs surveyed witnessed a challenge in terms of increased cost of meeting the regulatory requirements, the survey showed.


India’s short and medium-term economic outlook remains optimistic. While two-thirds of the respondents are positive about economic prospects in the near term, the percentage jumps to 94 per cent over the next 2-3 years.

Positivity among investors about the economic outlook over the medium term is reflected in the risk appetite of Indian businesses. 57 per cent of CFOs are now willing to take greater business risks, as the next couple of years are expected to be a period for consolidating gains from recent reforms, according to the Survey.

Source: The Hindu Business Line
GST Council working towards reducing tax rates: MoS Finance

GST Council working towards reducing tax rates: MoS Finance

The GST Council is working towards rationalising Goods and Service Tax (GST) rates,GST Council: sp shukla Minister of State for Finance Shiv Pratap Shukla said on Thursday.

A big announcement from the government regarding GST is imminent, he said at an event.

Currently, the GST has four rates of 5 per cent, 12 per cent, 18 per cent and 28 per cent.

The all powerful GST Council had, in its meeting in January, decided to slash the GST rate on 54 services and 29 items.

In its November 2017 meeting, the council had removed 178 items from the highest 28 per cent category while cutting tax on all restaurants outside starred-hotels to 5 per cent.

He further said the government is working to promote the growth of SME as it is an important sector to the economy including in output, employment and exports.

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Source: Business Today
GST likely to get centralised AAR for uniform rulings

GST likely to get centralised AAR for uniform rulings

India is looking at creating a centralised Authority for Advance Rulings (AAR) for the goods and services tax (GST) after divergent rulings on identical issues fuelled confusion over applicability and the rate of tax. A recent case in point being the divergent rulings by Karnataka and Maharashtra AARs on the issue of solar projects.

“We are looking at an issuebased central authority with officials from states and the Centre,” a top government official told ET. “If more than one appeal is filed on the same issue in different jurisdictions it can be taken up by this body.”

The AAR is a quasi-judicial body that allows assessees to get guidance on their potential tax liabilities relating to any transaction beforehand. The rulings by the AAR are case-specific, but they have a persuasive impact on tax assessment in cases of other firms under similar circumstances.

This is the key reason behind the government contemplating such a move. “AAR decisions are specific to the case, but they do have some precedence value,” the official said. The previous indirect tax regime had a centralised body ensuring consistency in orders.

Government Wary of Variations 

Maharashtra AAR ruled in a recent case that solar project contracts are “works contracts”, taxable at 18% as a deemed supply of service, instead of a “composite supply” that would have attracted 5%.

Karnataka AAR, on the other hand, reaffirmed in a case that engineering and procurement contracts are composite contracts and taxable at a concessional rate of 5%.

GST: Government Wary of Variations - AAR

The government is wary of such variation in rulings that could sow further confusion.

The structure of the proposed centralised authority will be decided once a decision is taken to set it up, the official said.

It may require a change in the GST laws and all the states would need to come on board.

Experts said the initial experience of the AAR mechanism in the case of GST has not been very encouraging for businesses and backed a centralised body for consistency. “On aspects like taxability of solar power plants, liquidated damages, exemption on sale by dutyfree shops at airports, etc, the authorities have taken a view which is not in line with the industry practice, globally accepted principles or government’s own intention while framing the laws,” said Pratik Jain, indirect taxes leader, PwC. “Further, there is likelihood of different states taking a divergent view on the same issue.”

Jain said there is an immediate need to have a centralised mechanism, either by changing the structure itself and bringing it at par with earlier central taxes or by building a control system under the GST Council’s aegis to ensure consistency and quality.

“Given that each AAR can potentially decide differently on an issue, it makes sense to create a central AAR which will take up issues where more than one AAR has been approached on a similar issue,” said Bipin Sapra, partner, EY.

“In such a scenario, a mechanism needs to be created where all AARs should be listed on the GST portal and in case of similar applications, the state AAR should refer it to the central AAR.”

India implemented GST on July 1 last year as to turn the country into a common market and erase interstate barriers.

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Source :  The Economic Times
Government Clarifies: No GST On Free Services Provided By Banks

Government Clarifies: No GST On Free Services Provided By Banks

Due to its complex nature, there is a lot of confusion about how Goods and Services Tax (GST) applies to the financial sector. Very few have had clarity on how personal finances are impacted by the new tax regime.

Finally, the government has issued detailed FAQs. No GST  In banking ServicesThe detailed clarifications on banking, insurance, and capital markets seek to address some pertinent issues relating to the industry such as levy of tax on free services as well as provide clarity to individuals. Below are a few of the clarifications:

GST on exit load of mutual funds
Exit load in the form of a fee (whether or not as a fixed percentage of the investment) is liable to GST. Even if the exit load is in the form of units in the fund, it may be concluded that the consideration received in money was later converted to NAV units.

The loan of one bank being taken over by another bank?
GST will be chargeable on any transaction processing fees levied for such takeover of loans, but not on the interest component (as interest is exempted).

Additional interest charged in case of default in the installment payment 
As per Section 15(2) of CGST Act, 2017, the value of supply includes, inter alia, interest for delayed payment of any consideration for any supply. Additional Interest charged for default in the payment of installment in respect of any supply, which is subject to GST, will be includible in the value of such supply and therefore would be liable to GST.

Charges for late payment of dues on credit card outstanding 
Goods and Services Tax applies to these charges. The exemption from levy of GST on interest specifically excludes interest charged on outstanding credit card balances as per serial no. 27 of the table of notification No. 12/2017-Central Tax (Rate) dated 28th June, 2017, as amended.

Banking services
According to the FAQs, automated tellers machines or ATMs will not constitute place of business and will not trigger GST registration, the government said. In case services are provided by multiple branches to a customer, the branch where the account is opened will pay GST and other branches will be deemed to provide services to the main branch. In case of import of gold, integrated GST will apply once, on import, and not again when it is appropriated by banks.

Insurance policies issued to Non-Resident Indians are liable to GST where payment is made from non-resident accounts in Indian rupees, according to the FAQs.

According to the FAQs, securitisation, future contracts, derivatives and forward contracts in commodities, unless entailing actual delivery of commodities, will however not be liable to this tax.

Source: ET


No change in the GST law and taxation relating to farmers since July 2017

No change in the GST law and taxation relating to farmers since July 2017

Ministry of Finance has stated that there has been no change in the GST law and taxation relating to farmers since July 2017, when GST was implemented. Support services to agriculture, forestry, fishing or animal husbandry are exempt from GST.

Such exempted support services include renting or leasing of vacant land with or without a structure incidental to its use. Thus, renting or leasing of land by farmers for agriculture, forestry, fishing or animal husbandry on batai (share cropping) or otherwise is also exempt from GST.No change in the GST law and taxation relating to farmers since July 2017

Centre clears double taxation under GST kept in bonded warehouses

Centre clears double taxation under GST kept in bonded warehouses

The indirect tax department has settled the issue of double taxation under the (GST) on GST kept in bonded warehousesimported goods kept in bonded warehouses and later cleared from there, which is a common trade practice in the country.

An earlier circular raised an issue of imposition of the Integrated GST (IGST) twice on such transactions. If a company imports goods and keeps these in a Customs-bonded warehouse, it has to pay IGST. And, again, when the goods are cleared for final sale.

Aditya Mody of Devashish Polymers said, “Hopefully, this should now benefit many players who were facing hardship due to this provision.”

Abhishek Rastogi, counsel for the petitioner and partner in Khaitan & Co, said the circular showed the government was actively taking steps to remove almost all issues raised before high courts through writ petitions.

Sources in the company said it was now likely to withdraw the petition from the high court, with the issue having been settled. However, the circular is effective from April 1 this year, raising doubts over tax issues prior to that date.

The sale of goods while being deposited in a Customs-bonded warehouse is a common trade practice, whereby the importer files an Into Bond Bill of Entry, and stores the goods in a Customs-bonded warehouse, the Board said. The goods are then supplied to another person who then files an Ex-Bond Bill of Entry for clearing the said goods from the Customs-bonded warehouse for home consumption.

According to provisions in the GST laws, IGST would be levied and collected in accordance with the provisions of the Customs Tariff Act, the Board added.

Thus, in the case of supply of warehoused goods, the point of the levy would be the point at which the duty is collected under Section 12 of the Customs Act, 1962, which is at the time of clearance of such goods.

The circular is effective from April 1 this year, raising doubts over the tax issues prior to that date.

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Source: Business Standard