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National Anti Profiteering Authority (NAA)
Centre extends deadline for completing GST anti-profiteering probe

Centre extends deadline for completing GST anti-profiteering probe

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The government has extended the deadline till March 31, 2021 for completing GST anti-profiteering investigations, which were to be completed by November this year.

Through a notification, the Central Board of Indirect Taxes and Customs (CBIC) extended the deadline for completion of such investigations by authorities, like DGAP, under section 171 of GST Act, till March 31, 2021.

In September, CBIC had extended the deadline till November 30, 2020.

Section 171 of GST Act deals with anti-profiteering measures.

Under the GST law, a National Anti-Profiteering Authority (NAA) and a Standing Committee on anti-profiteering have been set up to examine complaints of not passing on tax rate cut benefits to consumers. GST was rolled out on July 1, 2017.

Directorate General of Anti Profiteering (DGAP) investigates profiteering complaints and submits report to NAA, which passes the final order.

DGAP is mandated to complete the investigation within a period of six months of the receipt of the reference from the Standing Committee, which can be further extended by three months.

The GST rules also specify that NAA shall, within a period of six months from the date of the receipt of the report from DGAP, determine whether a registered person has passed on the benefit of GST rate cut or the benefit of input tax credit to the recipient by way of commensurate reduction in prices.

Abhishek Jain said the government has further extended timeline for anti-profiteering authorities to complete their investigations, and as such any investigation required to be closed by DGAP by November 30, 2020 can now be completed up to March 31, 2021.

“This extension, much like the previous one, seems to be on account of the limitations posed (inability for businesses to provide requisite data) to the revenue authorities on account of the ongoing pandemic, as well as the quantum of pending cases,” he said.

Source: Times-of-India

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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

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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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GST Council to meet on Aug 27 to discuss compensation payout to states

GST Council to meet on Aug 27 to discuss compensation payout to states

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The GST Council is likely to meet on August 27 to discuss the compensation payout to states and the opinion of the Attorney General on the legality of market borrowing to meet revenue shortfall.

Sources said the 41st meeting of the Goods and Services Tax (GST) Council would be a single agenda meeting on states’ compensation to be held via video conferencing.

Besides, a full-fledged meeting of the Council would be held on September 19, agenda for which is to be decided in due course, they added.

The Attorney General- who is the chief legal officer of the government – has opined that the Centre has no statutory obligation to make up for any shortfall in GST revenues of states from its coffers , sources had said.

They had earlier indicated that following the AG’s opinion, states may now have to look at market borrowings to meet the revenue shortfall and the GST Council will take a final call.

The Centre had in March sought views from Attorney General K K Venugopal on the legality of market borrowing by the GST Council to make up for any shortfall in compensation fund – a corpus created from levy of additional tax on luxury and sin goods to compensate states for revenue shortfall arising from their taxes being subsumed into GST.

The AG had also opined that the Council has to decide on meeting the shortfall in the GST compensation fund by providing the sufficient amount to be credited to the fund.

Sources said the options before the Council for meeting the shortfall could be to rationalize GST rates, cover more items under the compensation cess or increase the compensation cess, or recommend higher borrowing by states to be repaid by the future collection into the compensation fund.

Since raising tax or cess rates might not be feasible in the current pandemic situation, the option that remains is each state borrowing from market against the consolidated fund of the state.

Under the GST law, states were guaranteed to be compensated bi-monthly for any loss of revenue in the first five years of the GST implementation from July 1, 2017. The shortfall is calculated assuming a 14 per cent annual growth in GST collections by states over the base year of 2015-16.

Under the GST structure, taxes are levied under 5, 12, 18 and 28 per cent slabs. On top of the highest tax slab, a cess is levied on luxury, sin and demerit goods and the proceeds from the same are used to compensate states for any revenue loss.

The GST Council has to decide how to meet the shortfall in such circumstances and not the central government, sources added.

Any borrowing of the central government is upon the security of the Consolidated Fund of India. Similarly, borrowing by a state government is upon the security of the consolidated fund of the state.

In either case, it would lead to increased general government debt burden and also a higher fiscal deficit.

The payment of GST compensation to states became an issue after revenues from the imposition of cess started dwindling since August 2019 and the Centre had to dive into the excess cess amount collected during 2017-18 and 2018-19.

The Centre had released over ₹1.65 lakh crore in 2019-20 as GST compensation. However, the amount of cess collected during the year 2019-20 was ₹95,444 crore.

The compensation payout amount was ₹69,275 crore in 2018-19 and ₹41,146 crore in 2017-18.

Sourece: Live-Mint.

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gst rates
GST Rates Can Be Reduced Further As Tax Base Increases: Finance Secretary

GST Rates Can Be Reduced Further As Tax Base Increases: Finance Secretary

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GST rates can be reduced further once the tax base increases and everyone pays taxes properly, Finance Secretary Ajay Bhushan Pandey said on Thursday.

“Once the tax base increases and if we are able to enforce our tax laws and everyone pays taxes properly, there will be definitely scope for further reduction of taxes,” he said.

Addressing a session on ”Digitisation in Governance” at CAPAM 2020, he said the ultimate aim should be that to collect minimum taxes at minimum rates.
“The government should collect taxes which are absolutely necessary and to that extent, we need to increase our tax base,” he said.

Mr Pandey said the government is also working on reducing the number of forms under the GST.

He said that there were 495 forms in the pre-GST era with 17 different taxes which were levied by various states.

“After the introduction of GST, the number of forms have reduced to 17-18 and we want to further cut down the number of forms in GST,” he added.

He said that with IT-enabled platforms there is no inspector raj now and GST regime has become faceless.

Elaborating on the new measures for income tax assessment, including the faceless assessment of taxpayers, he said that the government is working on promoting self-compliance.

He added that the government is also working on providing tax profile of each taxpayer.

“We have all the information and if it can be shared in a secure manner, protecting the privacy of the individual, this will also help in securing loans from banks. The entire digital exercise is being undertaken across various government departments. We are making all that information available and providing it to each taxpayer,” Mr Pandey said.

He also said that all the information is getting integrated for the benefit of the citizens, including ease of doing business, ease of living and is enhancing capabilities.

Stressing on the importance of digitisation, Pandey said that India is the only country to have Aadhaar, Aadhaar-enabled payment system, direct benefit transfer scheme and UPI payment scheme. “Use of digitisation in governance has improved our speed, effectiveness, efficiency and capabilities,” he added.

He noted that in the last three months, Aadhaar-enabled transaction have crossed Rs 50,000 crore and UPI transaction has taken over debit card transaction and cash withdrawals.

Referring to the revenue trend, he said all figures are giving an encouraging signal that the economy is coming back on track sooner than what was being anticipated when the lockdown started.

Source: NDTV.

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GST filing deferment no relief for mobile phone makers after recent rate hike

GST filing deferment no relief for mobile phone makers after recent rate hike

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The deferred filing of Goods and Services Tax returns won’t provide much of a breather for mobile phone manufacturers, which face a 6 percentage point rate increase on handsets from April 1 and a further drag on demand, already plunging amid the Covid-19 outbreak.

“Though returns can be filed till June 30, any phone sold after April 1 (including inventory) will be billed at 18% GST (from 12% currently),” said Abhishek Rastogi, a partner at law firm Khaitan & Co.

What the sector needed was an allowance to pay this tax in a deferred way over the next six months, otherwise it is hardly any relief, Rastogi said.

According to market research firm International Data Corporation, even after the 21-day nationwide lockdown ends in mid-April, it will take at least two quarters for demand to revive. Realme and Samsung have already said the increase in GST will be passed on to consumers.

An intelligence firm that tracks the smartphone market has cut this year’s growth estimate to 5.5% from 8% earlier. Realme has estimated that phone prices could go up by 12-15% for reasons including fluctuation in rupee-dollar exchange rates, impact of Covid-19 on the supply chain for components, an increase in memory prices of smartphones, and higher GST.

“At Realme, we are trying to absorb the first three impacts. However, it will not be feasible for us to absorb GST increase impact,” it had said.

The GST Council increased the rate on mobile phones to 18% from 12% on March 14 to correct an inverted duty structure that taxed components at a higher rate than the device.

“While Samsung and Realme have written to us about their decision to pass on the new rates, others have communicated verbally,” Arvinder Khurrana, president of the All India Mobile Retailers Association, told ET. Xiaomi and Vivo said they are yet to take a call on this.

ET had reported that the decision could lead to job losses and nullify efforts to make India a smartphone manufacturing hub.

In the wake of the Covid-19 crisis, finance minister Nirmala Sitharaman said on Tuesday that traders with an annual turnover of less than Rs 5 crore can file GST returns for March, April and May by June 30 without late fees or penalties.

Source: The-Economic-Times

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Textile bizmen relieved after GST Council stays tax hike

Textile bizmen relieved after GST Council stays tax hike

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City businessmen into textiles and garments have heaved a sign of relief after the GST Council, in its meeting held on Saturday, did not hike the rate of 5% GST applicable on some fabrics and garments costing below Rs1,000. Earlier, there were hints from the central government that the 5% slab of GST would be abolished, and the minimum GST on fabrics and garments would be 12%.

Welcoming the decision, Knitwear Club finance secretary Harish Kairpal said, “We are thankful to the GST Council for not going ahead with the proposed hike in the rate of GST on certain fabrics and garments up to Rs1,000. Had the GST been hiked to 12%, it would have destroyed the textile and garment manufacturers, who are already struggling to cope with the current scenario, where there is a huge drop in demand, both locally and internationally. We also request the union government to bring out a package for our industry to face this recession, which is getting worse day by day.”

According to Atul Saggar, general secretary of Apparel Manufacturers Association of Ludhiana, “It’s nothing less than a big relief for us, as had the GST been hiked by 7%, it would have hiked our cost of production significantly, and we would have been forced to hike the rates of our products, and that too at a time where we are already short of orders.”

According to Sukhwinder Singh — another garment manufacturer, and member of the Ludhiana Business Forum, “The currently applicable GST of 5% on certain fabrics and garments costing up to Rs1,000 is already non- refundable, and when the same rate is into force for more than three years now, why did the government want to change it now. The stand taken by GST Council is really appreciable, as the hike of 7% GST would have definitely hit the garment industry hard, and our already low sales would have dropped further had the new rate of 12% GST been imposed on us.”

Source: Times-of-India

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All you need to know from the 39th GST Council meet

All you need to know from the 39th GST Council meet

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The 39th GST Council took an array of decisions, including an increase in the tax rate on mobile phones and specified parts to 18 percent from 12 per cent. GST on handmade, machine-made matchsticks has been rationalised to 12% while GST on MRO (maintenance repair overhaul) services of aircraft has been slashed to 5% from 18%.

The GST rate on mobile phones was increased from 12% to 18% allowing a full claim of input tax credit; Relief given to domestic service providers of maintenance, repair and operations.

Addressing the media after the meeting, Finance Minister Nirmala Sitharaman also said that a better GSTN system should be ensured by Infosys by July 2020.

Here are the major decisions taken

* GST on mobile phones, specified parts increased to 18% from 12%.

*GST on MRO (maintenance repair overhaul) services of aircraft slashed to 5% from 18%

*GST on handmade, machine-made matchsticks rationalised to 12%.

*Delayed GST payment to attract interest on net tax liability from July 1.

Important change on GSTR-1:

The GST Council decided to stagger the GSTR-1 filing for taxpayers with:

*Turnover more than Rs 1.5 cr -to file before 10th of the following month
* Turnover up to Rs 1.5 cr -to file before 13th of the following month
* The GSTR-2A can be generated on 14th of following month
*GSTR-9 and 9C due date pushed to 30th June 2020 for FY 2018-19 from 31 March 2020; Increases the turnover limit from Rs 2 cr to Rs 5 cr for the mandatory annual return filing
*The GST Council defers the proposal on the taxability of economic surplus of brand owners of alcohol for human consumption.

Mr. MS Mani, Partner, reacted to GST Council meet- “ the approach of the GST Council to proceed with changes in returns, e-invoicing etc on an incremental basis would permit businesses to embrace these changes in a calibrated manner. Introduction of multiple changes from 1st April, as was proposed earlier , would have put added pressure on businesses, who have been grappling with multiple business and regulatory headwinds.”

Souce: Economic-Times

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GST rates may rise on mobiles, footwear

GST rates may rise on mobiles, footwear

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Ahead of the Goods and Services Tax (GST) Council meeting on Saturday, the government is pushing for a review of the levy on mobile phones, footwear, fertiliser and man-made fibres to correct a major discrepancy that has crept in where the duty on the finished product is lower than those on inputs.
The “inverted duty structure” is resulting in massive refund claims on tax paid on inputs, although the government does not allow credit for levies on input services and capital goods, making the tax regime inefficient. Estimated annual refund on account of inverted rate structure was estimated at around Rs 20,000 crore.

At least four items — mobile phones, footwear, manmade fabrics and fertiliser — have been identified for a possible change in levies, which may rise in a phased manner. The move is part of a review of the wider duty structure where several items such as utensils and renewable energy equipment were also flagged, although their volume is much lower.

The proposals have been discussed by a committee of officers on augmentation of revenue, which was also on the agenda for the last GST Council meeting. Sources said that there is little justification in retaining a 12% levy on mobile phones when many electronic items such as TV, water heaters and mixers are taxed at a higher rate. Besides, before the launch of GST, the levy was higher.

The issue is a little complex in case of fertilisers as the government will have to increase the subsidy to correct the inverted rate structure to ensure that farmers are not impacted. But officials reckon that a corrected GST rate structure would go a long way in refining the indirect tax system. Against taxes of around 9.75% before GST, the government had put fertilisers in the 12% bracket. But states got the GST Council to reduce the levy to 5%, creating a situation where Rs 6,000 crore have been claimed as input tax credit refund on fertilisers.

For man-made fibres, the textiles ministry has made a strong pitch for correcting the duty structure, arguing that differential rates and slow-refunds of accumulated input tax credit have affected the competitiveness of the industry and hit investment. The ministry has demanded that man-made fibres and yarns need to be brought under a uniform tax slab as it will benefit the spinning and power loom sectors.

Source: Economic-Times

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Parliamentary panel calls for lower GST rates for troubled auto sector

Parliamentary panel calls for lower GST rates for troubled auto sector

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A parliamentary panel suggested lower GST rate for the automobile segment at least till the revival of the sector, and uniform road tax across all states against the backdrop of negative growth in the automobile production since July 2018.

A parliamentary panel had examined the Demands for Grants 2020-21 of Department of Heavy Industry (DHI) and tabled its report in Parliament.

The automobile industry in India is one of the largest and fastest-growing sector and constitutes 27 per cent of industrial gross domestic product (GDP) and 49 per cent of manufacturing GDP. It provides about 37 million direct and indirect jobs and 15 per cent of total GST collection amounting to Rs 1.5 lakh crore.

“But, the committee observes that of late, there is a negative growth in the automobile production since July 2018,” said the report.

The committee noted that some of the factors that contributed to slowdown are non-availability of credit facility to consumers, stringent rules for loan sanction by banks, rise in price due to the upfront payment of third-party insurance for 5 years, introduction of BS-VI vehicles from April 2020; and higher rate of GST on automobiles and components.

Amid slowdown in the sector, the committee, among other things, recommended to either suspend or postpone the upfront payment of insurance for 5 years for the time being and reduction in GST rate to a lower slab “at least till the revival of the auto sector”.

Further, it made a case for introduction of incentive-based scrappage policy for creating purchase demand for new vehicles, reduction in import duty on lithium-ion cell battery which is used for operating the e-vehicles and levy of uniform road tax across all states.

The report said the committee “is pleased to note” that the Delhi-Chandigarh highway has been declared as the first e-vehicle friendly expressway of the country.

It desires that other expressways, including Delhi-Jaipur and Mumbai-Pune expressways, may also be made completely e-vehicle friendly soon with charging infrastructure in place at regular and frequent intervals.

Source: Business-Today.

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GST trouble: Assessees told to explain mismatch of ITC claimed in GSTR-3B, GSTR-2A
CBIC notifies GST Rate of Lottery

CBIC notifies GST Rate of Lottery

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The Central Board of Indirect Tax & Custom (CBIC) has notified the GST Rate of Lottery. 28%  Uniform rate of GST will be applicable to all lotteries.

The amendment will be effective from March 1st 2020.
Through this amendment, there is no distinction for lottery authorized by State Governments and lottery run by State Governments for the purpose of taxability and, hence, the standard rate of 28% shall apply.

The notification was issued in the name of Pramod Kumar, Director of Government of India. Further, the Central Government on the recommendation of the Council of Ministers exercised their power under Section 9(1) and Section 15(5) of the Central Goods and Services Tax (CGST), 2017 seeks to amend the Notification No. 1/2017-Central Tax (Rate) which was issued on June 28, 2017, for the purpose notifying the rate of Goods and Service Rates (GST) on the supply of lottery.

In the Notification No. 1/2020-Central Tax (Rate), the following amendments are done:
1.In the Schedule II of Notification No. 1/2017-Central Tax (Rate): 6% for S. No. 242 was omitted through this notification.
2.In the Schedule IV of Notification No. 1/2017- 14% for S. No. 228 and the related entries, and the following was substituted namely:
Entry No. Chapter Subject
228 Any Chapter Lottery
Therefore, through this amendment in Schedule II S. No. 242 was omitted and in Schedule IV, the government introduce the Goods and Service Tax Rates (GST) rates pertaining to the lottery.
Further, a notification consisted of a note, which pertained to the Principle Notification No. 1/2017-Central Tax (Rate) that was published on the Gazette of India on June 28, 2017, Extra-ordinary, Part II, Section 3(i) vide number G.S.R. 673(E), dated 28th June 2017 and last amendment by Notification No. 27/2019-Central Tax (Rate) dated December 31, 2019, published in the Gazette of India, Extraordinary, Part II, Section 3(i) vide number G.S.R. 961(E) dated December 30, 2019.

Source: TaxScan

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