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GST Audit is not an avoidable Compliance, Chartered Accountant ensures checks and balances: ICAI President

GST Audit is not an avoidable Compliance, Chartered Accountant ensures checks and balances: ICAI President

GST Audit is not an avoidable compliance. GST Audit by a Chartered Accountant ensures maker checker concept thereby detecting inconsistencies, lapses, errors and ambiguities, if any, in complying with the provisions of GST law, said the ICAI President CA. Nihar N. Jambusaria.

The ICAI President said that, he met key Government functionaries to discuss matters related to contribution of accounting profession and its increasing role in economy. Our meeting with Smt. Nirmala Sitharaman, Hon’ble Union Finance and Corporate Affairs Minister was held to discuss our representation regarding the removal of requirement of audit and certification of reconciliation statement by a Chartered Accountant under CGST Act. We, besides other points, apprised that GST Audit is not an avoidable compliance. GST Audit by a Chartered Accountant ensures maker checker concept thereby detecting inconsistencies, lapses, errors and ambiguities, if any, in complying with the provisions of GST law.

The ICAI also submitted that Audit should not be seen as a cost to the taxpayer, rather it is an investment for him, the benefits of which are reaped over a period of time. The taxpayer is able to take corrective actions for irregularities/lapses detected during the audit thereby saving avoidable costs in terms of interest and penalties.

Further, audit also helps the taxpayers in saving on litigation expenses as errors are noticed and addressed in time. In this meeting, CA. Rajendra Kumar P., Chairman, GST and Indirect Taxes Committee also joined us. In this direction, CA. Babu Abraham Kallivayalil, Chairman, Professional Development Committee also met Finance Minister and Members in Parliament CA. Thomas Chazhikadan, CA. Suresh Prabhu, CA. Narain Dass Gupta.

He also added that, These meetings provided us the opportunity to discuss our professional matters with the dignitaries and reinstate our position as a partner in nation building. Two virtual meetings with the Secretary MCA and Jt. Secretary MCA were also held to apprise them about the networking guidelines and the proposed amendments in Industrial Training framework.

Source: TaxScan.


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GST collections hit record high of Rs 1.24 lakh crore in March

GST collections hit record high of Rs 1.24 lakh crore in March

GST collections rose 27% to hit a record high of nearly Rs 1.24 lakh crore in March, helping to narrow the deficit for the full financial year to around 7%.

The mop-up — based on sales in February 2021, for which returns were filed in March — was boosted by imports with revenue from imported goods jumping 70%, while those from domestic transactions, including services imports, were 17% higher than the corresponding period in 2020.

The impact of the coronavirus pandemic was first seen in February 2020 when the lockdown in Wuhan resulted in a disruption of shipments coming from China, where the deadly virus was first spotted.

“GST revenues crossed above Rs 1 lakh crore mark at a stretch for the last six months and a steep increasing trend over this period are clear indicators of rapid economic recovery post pandemic. Closer monitoring against fake billing, deep data analytics using data from multiple sources including GST, income-tax and customs IT systems and effective tax administration have also contributed to the steady increase in tax revenue over last few months,” the finance ministry said in a statement.

Although the base effect will come into play in the coming months, there has been a sustained recovery with collections rising 14% during the March quarter compared to 8% during October-December 2020. During the first half of 2020-21, GST collections had declined following the lockdown.

“It (collection growth) clearly shows a sustained economic recovery and also is a result of GST audit closures and the government tightening compliance and anti-evasion measures,” said Pratik Jain, who leads the indirect tax practice at consulting firm PwC.

What is providing even more comfort to experts is the growth in collections across all the states. “In addition to the trend of higher overall GST collections over the past six months, all major states have shown a significant increase compared to the previous year. Further the increase in collections on imports accompanied by the increase in domestic transactions would indicate that the overall production/consumption cycle is back to normal,” said MS Mani, senior director at Deloitte India.

Source: Times-Of-India. 

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GSTN issues Advisory on Annual Return Form GSTR-9

GSTN issues Advisory on Annual Return Form GSTR-9

The Goods and Service Tax Networks (GSTN) issued the Advisory on Annual Return Form GSTR-9.

The GSTN advised the taxpayers to ensure that values are reported upto two decimal places in the GSTR-9 offline utility. The error “Error! Invalid Summary payload” after uploading the JSON created from the Offline Utility of GSTR-9 is reported due to reporting values upto three decimal places instead of two decimals.

GSTR-9 is an annual return to be filed by all registered taxpayers under GST which is optional for those whose annual turnover is upto 2 crores. The return consists of details such as inward/outward supplies, taxes paid, refund claimed, demand raised and ITC availed by the taxpayer.

It is noteworthy that the due date for filing GSTR-9 (GST Annual Return) and GSTR-9C (GST Audit) for Financial Year 2019-20 is 28th February 2021.

Source: TaxScan. 

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GST e-invoicing for businesses with Rs 500-cr turnover from Oct 1

GST e-invoicing for businesses with Rs 500-cr turnover from Oct 1

The government will notify a new GST e-invoice scheme under which businesses with turnover of Rs 500 crore and above will generate all invoices on a centralised government portal starting October 1, an official said on Thursday. Earlier, the turnover threshold for businesses was set at Rs 100 crore.

CBIC Principal Commissioner (GST) Yogendra Garg said the existing Goods and Services Tax (GST) return filing system would be improved further by incorporating the features proposed in the new system.

“Yesterday, the GST Implementation Committee has recommended that we will go ahead with October 1 deadline (for e-invoice)… To begin with we will not do it for Rs 100 crore and above, as we had notified. We will soon come out with a notification to make it Rs 500 crore from October 1 and as they stabilise, we will bring a date for Rs 100 crore turnover people,” Garg said at an Assocham event here.

The new turnover threshold would be notified by next week, he added.

The e-invoice was aimed at curbing GST evasion through issue of fake invoices. Besides, it would make the returns filing process simpler for businesses as invoice data would already be captured by a centralised portal.

In November last year, the government had said that from April 1 electronic invoice (e-invoice) would be mandatory for businesses with turnover of Rs 100 crore. Later in March 2020, the GST Council extended the implementation date to October 1.

The Council also exempted insurance, banking, financial instituions, NBFCs and passenger transport service from issuing e-invoice.

It had also decided to introduce the new GST returns filing system in phases between October 2020 and January 2021.

Garg said in the last 3 years of GST, there has not been a single month which saw returns being filed by all the businesses registered under GST.

About 70-80 per cent of GST registered businesses file returns within the due date.

“2019-20 has been a year of consolidation of compliance requirement…. We took a call that instead of introducing the new return system which we had promised, we will carry out improvement in the existing return system and take it closer to what we had promised in the new return system to make the certainty of credit,” he said.

Garg said the GST administration is working on a proposal to make a system available to businesses about how much input tax credit (ITC) is available with a taxpayer.

“The endeavour is to make life simpler for taxpayer. The vision for 4th year of GST is compliance burden gets reduced and e-invoice would help in this,” he said.

With regard to GST audits, Garg said central tax officers have been training state officers on the audit experience, some of the states had some good strategies which we are working on.

“To the extent possible these arre not going to be physical audits, these are more going to be desk audits,” he added.

Source: Economic-Times.

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Just one out of 4 assessees has submitted GST audit conciliation report so far for FY18

Just one out of 4 assessees has submitted GST audit conciliation report so far for FY18

Three out of four Goods & Services Tax (GST) assessees have yet to submit audit conciliation statement for fiscal year 2017-18 (FY 18). The due date for submitting it is January 31.

It is mandatory to file an annual return. There are three annual return forms, GSTR 9, GSTR 9A and GSTR 9C. Every GST assessee (those who submitted all the monthly return forms of GSTR 3B and GSTR 1) has to file an annual return in GSTR 9.

Among these assessees, every registered taxable person whose turnover during a financial year exceeds ₹2 crore, will also be required to get his accounts audited by a chartered accountant or a cost accountant and then submit a reconciliation statement in GSTR 9C along with GSTR 9. The assessees under the composition scheme (businesses with turnover up to ₹1.5 crore) will be required to file the GSTR 9A form.

According to data made available with the GSTN as on January 27, the IT backbone of indirect tax system, out of the 67.64 lakhs eligible to GSTR 9, little over 31 lakh, or nearly 46 per cent of assessees, have filed.

For GSTR 9A, the number of eligible assessees is around 19 lakh, but around only 7.38 lakh assessees, or 39 per cent, have filed the returns so far.

However, the bigger problem is with big assessees who have to submit an audit report. Out of 12.42 lakhs eligible assessees, only around 3 lakh have filed, which is around 24 per cent.

Assessees and experts on one side and tax officials on the other have their own set of arguments to explain the current impasse.

One of the common grouse from assessees is network problem. It was alleged that the GSTN portal was not responsive last week (during January 20-22) and hence the number of filings was abysmally low. The tool was showing “Error Occurred” or “Processed but pending” as the status and was not generating the report. Also, the 9C utility was not accepting copy paste, so taxpayers had to manually punch in the data, resulting in delay in uploading

According to tax consultants, dealers are trying to upload the financials without checking the file size and that resulted in delays. The utility has prescribed 5 MB as the size limit. Where annual return in Form GSTR 9 is filed, the GSTR 9C utility should get auto populated with the details available in GSTR 9.

However, there were instances where taxpayers were unable to download the JSON file of GSTR 9C with auto populated data.

However, GSTN officials said that there is general tendency to wait for the last date in the anticipation that it will be extended and that is why the pace of filing return has been slow so far. Some officials said that there are also connectivity issues at the assessees’ end which is also creating problems.

“Many of the audit reports have internal firewalls, which is causing problems,” one of the official said while emphasising the fact that GSTN is very responsive and ready to help and support. In fact, it has provided all the help at the specially created twitter handle @askGSTtech.

Harpreet Singh, Partner, said that technical glitches in uploading the GST annual reports such as slow system responsiveness, 9C utility not accepting copy-paste option, non-population of GSTR 9 fields in downloaded JSON file of GSTR 9 were some of the issues that could have resulted in the low compliance number during last week.

“Given the multiple delays, ideally the annual filings should have been appropriately staggered during the last few months, surprisingly, that does not appear to be the case,” he said.

Source: The Hindu-Business-Line.

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Govt to reopen FY17-18 GST accounts for fresh audit to check tax evasion, fake refund claims

Govt to reopen FY17-18 GST accounts for fresh audit to check tax evasion, fake refund claims

In a major enforcement drive, the government has ordered a fresh audit of FY17-18 GST accounts to check tax evasion, fake refund claims and credits. The government has started issuing Goods and Services Tax (GST) audit notices to taxpayers for financial year 2017-18, nearly three years since the launch of the indirect tax regime.

As per the tax notice issued by the taxman, the agency has invoked section 65 of the Central Goods and Services Tax (CGST) Act for an audit of accounts and records from July-March of 2017-18 or from the date of the last audit to FY18, CNBC-TV18 reported. The taxpayers have been asked to come with detailed records of related documents, with an immediate appearance in person with the taxman, as per the report.

As per the notices, the list of documents include GST forms, income tax papers, input service invoices, electronic cash/credit ledger, business agreements of sales and purchase, and other related documents.

The fresh audit will happen across the country during January and February 2020. Following this, the taxman will submit a report to the centre, including the list of tax evaders and fake refund claimants.

Earlier on Tuesday, a national level GST Conference was held in Delhi, where the Centre and States had joined hands to take necessary action to streamline the Goods and Services Tax system and plug revenue leakage. These measures include curbing fraudulent refund claims, linking foreign exchange remittances with IGST refund, investigation of fraudulent ITC cases by the IT department, a single bank account for foreign remittance receipt, and refund disbursement, among others.

Source: Business-Today

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Further extension the only solution for GST annual return & GST audit 

Further extension the only solution for GST annual return & GST audit 

The GST annual return & GST audit report for the first year, which is 2017-18, had to be submitted before December 31, 2018, but saw three extensions – March 31, 2019, June 30, 2019 and finally August 31, 2019. However looking at the recent statistics released by the authorities it is observed that only 15 % of annual returns and less than 1 % of the audit reports have been furnished.

Further tax officials have warned of severe consequences and heavy penalty if same are not filed in time. In the next 10 days it is expected that pending 99 % of the audit reports have to be furnished and balance 85 % of Annual Returns have to be furnished. The last dates normally see an increase in numbers, but is it really feasible to achieve such a drastic number?

One must accept the fact that the said delays are not due to lethargy or non-compliance of the tax payers. There are various clarifications, interpretations and technical issues involved. The clarificatory circulars were issued on 04.06.2019 and 03.07.2019. The said circulars cannot be interpreted in such a short span. The tax payer needs some time to revisit the various stands taken by them before the circulars were issued and its impact on them. Further there are interpretational issues in light of various Writ Petitions and Advance Rulings which need to be considered by the tax payers. Technically the tax payers are facing issues of uploading the documents, json files, versions changing from time to time, digital signatures not being recognized, error reports not being generated. There has to be a proper technical cell to assist the taxpayers to resolve their technical issues.

Even the CAG in its recent report has categorically stated that “One significant area where the full potential of GST (Goods and Services tax) has not been achieved is the roll out of the simplified tax compliance regime.” CAG also said there were deficiencies in the GST system, indicating a “serious lack of coordination between the executive and the developers.”

The authorities must appreciate the fact that GST annual returns 9, 9A and 9C for 2017-18 were available online in March, 2019 and offline in April, 2019. The very fact that the status of return filings is low should indicate that the trade and industry is facing genuine problems and hardships in the matter. Most of the trade and consultants have been burning the midnight oil and spending weekends in the office to ensure compliance. Hence, adequate time needs to be given for compiling the details to ensure qualitative filing of information. Submission of improper reports, wrong reconciliations, wrong data etc will render the entire exercise of submission of annual return and GST audit report futile. It will not give the desired results and will also not be helpful to the authorities. There will be unnecessary litigation as due to paucity of time the reports may be qualified and submission of wrong data will lead to unrequired tax liabilities. It may also lead to penal consequences on the trade and consultants for submission of incorrect data.

Besides the above there are various factors which have the taxpayers and professionals on toes for ensuring the said compliance. The due date for filing of income tax returns is also August 31, which clashes with the due date for submission of GST audit reports. The taxpayers are also tied up with uploading 2 monthly returns in GSTR 1 & GSTR 3B for the month of August. The trade is also in the process of reconciliation of ITC claimed with GSTR 2A and following up with vendors for the differences for year ended March 2019. Many taxpayers are also in the phase of upgrading their systems to bring it in line with the new return forms to be introduced from October 2019. Last but not the least there have been floods in various parts of India in the months of July and August 2019. This has led to large scale destruction of documents and records.

Various professional associations have already represented before the authorities to extend the due dates for the same. The present government has always listened and reacted to the issues and problems of the trade immediately. Considering the numerous problems and issues faced by the trade and professionals, it is the need of the hour to postpone the due date for filing Annual Returns and GST Audit Reports for the fiscal year ended March 2018 to November 30, 2019 and for year ended March 2019 to March 31, 2020. Further as most of the taxpayers have already discharged their GST liabilities for year ended March 2018 and 2019, postponing the due dates for annual return & GST audit will not impact the revenue of the government.

Source: Economic Times

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Only about 15% of taxpayers have filed GST Returns, low numbers worry CBIC chief

Only about 15% of taxpayers have filed GST Returns, low numbers worry CBIC chief

With the last date to file GST Annual Return and GST Audit report fast approaching, a complex filing process and numerous data requirement has meant very few taxpayers have been able to comply with the filing process

In a letter to all Principal Chief Commissioners and Chief Commissioners of Central Tax, CBIC Chairman Pranab K Das writes that data available till August 3 shows that only 14,85,863 GSTR-9 has been filed, while all non-composition taxpayers are supposed to file annual returns. This number of taxpayers needed to file GST annual return stands at over one crore. Similarly, the status of filing GSTR-9A stands at 4,33,148 and GSTR-9C at 11,334. About 12 lakh registered taxpayers are required to get their accounts audited and filed under GSTR-9C.

The last date to file GSTR 9, GSTR-9A and GSTR-9C is August 31, 2019, but the dismal figures has prompted Das to get the tax Commissioners to help out with the process and expedite the return filing process.

“Considering the last date is approaching fast, there is a need to reach out to the taxpayers to ask and help them to file the annual returns/reconciliation statement before the due date. Wherever required, they should be guided through the various steps of the return filing process. Towards this end, I request you to organize outreach initiatives in your ones to help the taxpayers file their returns in time. Such outreach programme may be organized at the Commissionerate level as well as Division level. The overarching objective of the exercise is to ensure that the best help and assistance is available to taxpayers in filing their annual returns/reconciliation statement well before the due date,” says the letter from Das.

According to KPMG India, Partner, Harpreet Singh, most dealers are busy in undertaking multiple reconciliations for their pan India operations and sorting the differences. “Also, re-visiting all tax positions and agreeing on them with GST auditors to reduce qualifications is taking time” said Singh.

According to Chartered Accountant, Pritam Mahure, the low numbers of GST Compliances are attributable due to the complex and numerous data requirements for preparing GST Annual Return as well as GST Audit. “Few details, such as eight-digit product codes (HSN) are requested, although legally only four-digit HSN is required. Similarly, HSN-wise purchase summary is another requirement which was not required at the time of monthly GST return, but is now required to be furnished. Given this, GST Council should immediately look into these valid concerns of the GST payers and make the GST Annual Return and Audit process, Good and Simple, in-reality,” says Mahure.

Das in his letter adds that any systemic/policy issue faced by the taxpayer in filing the retur/reconciliation statement should be brought to the attention in the Board urgently.

“Though the numbers look poor at the moment, like any other statutory deadline the compliance would increase significantly with passage of each day towards the deadline” adds Singh.

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Source: Economic-Times.
Soon, GST taxpayers will get ‘risk scores’

Soon, GST taxpayers will get ‘risk scores’

The goods and service tax (GST) authorities will soon draw up a list of taxpayers with ‘risk scores’ that will decide the level of audit scrutiny they face.

An extensive plan is being worked out even though annual return filings has been postponed by two months to August 31. Audits of these returns for 2017-18 was to commence from July.

The directorate general of audits has communicated a plan to field, setting the ball rolling for the exercise that will be first after the rollout of the new tax regime.

A list of taxpayers along with risk scores will be provided to field formations in dividing them in three categories as per their turnover. These would be assigned risk flags for the field’s convenience. Parameters and categorization shall be tweaked for some audit commissioner to ensure adequate representations of risky taxpayers in each category.

About 70 percent of taxpayers have to be audited in each category on the basis of risk parameters in the order of sequence, while 10 percent will be selected randomly. Remaining 20 percent to be selected by the commissioner, considering local risk parameters, if sufficient taxpayers have not filed the annual return, audit commissioner should continue conducting legacy audit under excise and service tax up to 31 August 2019, in case taxpayers are available for such audit.

Tax experts say business need be prepared for these audits.

“Businesses should be very careful in the submission of the GST audit data and ensure that it is reconciled before submission as this data will also be used for live audits in future in addition to being used to determine the taxpayers who would be subjected to the audit “ M S Mani, Partner, Deloitte India.

They also batted for leniency.

“Since this will be the first onsite GST audit which will be conducted by the department it will be good if they are lenient on the tax positions adopted by businesses on issues which were not very clear at the onset of GST implementation,” said Anita Rastogi, partner, PwC.

This is important because there is a difference between nonpayment of tax due to interpretational issues and intentional tax avoidance, she added.

Source: Economic-Times.

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Companies to take GST audit exam; Experts want no penal action

Companies to take GST audit exam; Experts want no penal action

India Inc. is gearing up to face the first test of their goods and services tax filings, with the authorities looking to initiate audits by picking up returns for risk-based assessment from July.

“There is a direction that the audits should begin in July,” a government official said.

The audit is significant because this is the first time that GST returns and the accounts of companies will be scrutinized for compliance levels and the positions they had taken — whether they had interpreted tax provisions correctly and paid tax — after GST was introduced in July 2017. However, tax experts have called for the authorities to adopt a moderate approach during the reviews.

Companies are required to file two returns by December 31, following the financial year ended March, although, for FY18, the deadline was extended to June 30, 2019.

The returns are the GSTR9 or the annual return, and GSTR9C or the annual reconciliation statement of GST returns with financial statements, certified by a chartered accountant.

The GSTR9C is the GST audit report and is akin to the tax audit report. This will become the basis for all GST audits conducted in the future.

“This will also be a test of how the GST audit certificates issued in the GSTR9C format are utilized by the authorities and their significance in the whole audit process,” said Bipin Sapra, a partner at EY.

Experts batted for a lenient view this time.

“Businesses need to be prepared as this will be the first departmental audit,” said Anita Rastogi, indirect tax partner at PwC. “Also, considering that it will pertain to the first year of GST, it is recommended that the authorities should be mindful of the fact that there were many interpretational and portal issues and therefore a lenient view should be considered.”

Sapra of EY supported this view. “Initial process ought to be more liberal and the auditors should look to educate taxpayers if there is a compliance gap and avoid stringent penal actions,” he said.

The first year’s deadline for returns had been extended because the formats of both returns were very elaborate and were released late too close to the last date. The government issued a clarification on Tuesday making it clear that the returns need to be filed before June 30.

According to an official statement, taxpayers who reported a mismatch between auto-populated data and the entries in their books of accounts or returns should report the data as per their books of accounts or returns filed.

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Source: Economic Times.