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GST Eway Bill
e-Way bills curb tax evasion, but glitches remain

e-Way bills curb tax evasion, but glitches remain

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There are numerous concerns on the functioning of the GST regime, launched two years ago. But the e-Way bill’s system is displaying good traction. While there are a few glitches, users mostly agree that e-Way bills have brought down under-reporting and increased transparency.

The system was rolled out for inter-State consignments in April 2018, and for intra-State consignments two months later, in a phased manner. e-Way bills generation for the period April-June 2019 was almost 40 per cent higher at about 15.65 crore, compared to 11.19 crore in the same period last year.

For transport companies, the system has saved considerable time, removing check-posts and facilitating the shift from a ‘departmental policing model’ to a ‘self-declaration model’. It has also helped in curbing tax evasion.

According to chartered accountant Chirag Chauhan, e-Way bills have reduced tax evasion by almost 80 per cent. He also points out that the drop in GST collections of just 2-5 per cent in the first quarter of FY20, against a sales decrease of 15-20 per cent, is proof that tax malpractices have come down.

Under the norms, every consignment worth above ₹50,000 (raised to ₹1 lakh in a few States as a temporary relief) should begin with the generation of an e-Way bill. The bill must be raised before the goods are shipped and should include details of the products, their consignor, recipient and transporter. Though check-posts have been abolished under GST, a consignment can be intercepted at any point for the verification of its e-Way bill. If found without one, or with invoice discrepancies, a penalty of ₹10,000, or tax sought to be evaded, or, in some cases, 200 per cent of the GST amount, can be levied. These provisions are helping in reducing the disparities between the actual value of the sale and that reported in e-Way bills. Every e-Way bill generated has to be matched at the invoice level with the entries uploaded by the manufacturers or traders in their monthly GSTR-1 returns for outward supplies. Also, the GSTR-1 of the manufacturer or trader gets auto- populated in the GSTR-2A of the purchaser, based on which the latter claims the input tax credit (ITC).

Due to such matching of invoices at multiple levels, there’s hardly any scope for the supplier to under-report sales.

Once the e-Way bill portal is linked to the centralised VAHAN portal, which contains vehicles details, generation of fake e-Way bills gets checked. Further, the system helps in increasing the overall GST compliance, as a recent notification bars a supplier or a recipient from generating an e-Way bill if the GST returns are not filed for two consecutive months.

Some challenges do remain. Complaints have been raised that the time limits prescribed for the validity of an e-Way bill are not in consonance with ground realities.

Time limit

“Genuine reasons for delays should be taken into account while fixing the time limits,” Bal Malkit Singh, former President of the All India Motor Transport Congress, told BusinessLine.

On consignment verification issues, he said: “State borders have paved the way for flying squads and, the vehicles are being stopped randomly on the pretext of checking for collateral extortion.” Another issue, he said, is the lack of flexibility in rectifying errors and changing the destination address.

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Source: The-Hindu-Business-Line
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Ahead of GST Council meet, biscuit makers hope for rate cut

Ahead of GST Council meet, biscuit makers hope for rate cut

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Biscuit makers are hoping for a lowered tax rate on widely consumed mass biscuits priced below ₹100 a kilo as an increased instance of GST has put additional burden on manufacturers.

The GST Council is expected to meet on 20 September and could consider tax revisions on various goods. Auto and biscuit manufacturers are hoping for a reduced tax burden amid a slump in consumer demand.

Mayank Shah, category head, Parle Products, and vice president, Biscuit Manufacturers Welfare Association said biscuit manufacturers are hoping for a reduced tax burden on lower-priced biscuits or those priced below ₹100 per kilo from the current 18% to 5%.

“Our request is to continue the distinction between two categories of biscuits ie those below and above ₹100 per kilo because the sub ₹100 per kilo biscuits are targeted at the middle class and lower strata of the society—the consumption is huge there,” Shah told Mint. “We are okay paying 18% GST on biscuits priced above ₹100 per kilo,” Shah added.

Biscuits priced below ₹100 per kilo include largely affordable biscuits such as glucose, and milk and account for 25% of all biscuit sales in India; these are typically priced under ₹10. Earlier in September, the Biscuit Manufacturers Welfare Association, which represents close to 40 biscuit makers, including Parle Products, made fresh petition to the government seeking a reduction on tax slabs.

To be sure, biscuit makers have been seeking a reduction in taxes on biscuits in the mass market segment since 2017, after the government clubbed them in the same tax bracket as premium cookies or those priced above ₹100 per kilo, thus doing away with a varied tax structure under the new GST regime.

This, companies added, has prompted manufacturers to reduce the size of biscuits offered per pack amid growing cost pressures and even take price hikes leading to a slump in demand. Shah added that in the first quarter of the current year premium biscuits or cookies grew between 7% to 8%; while mass biscuits or those priced below ₹100 per kilo declined by 8%, he said citing industry figures.

India’s biscuit market is estimated at over ₹31,200 crore and sees the participation of large companies such as Britannia Industries, Parle Products, ITC, Mondelez India, among others. It is among the largest categories of packaged foods sold in India.

But an increased instance of tax has burdened manufacturers who complain that they have had to resort to price hikes or cut the grammage of biscuits priced under ₹10 to ensure consumer demand is intact. Shah added that last December the company took measures to control costs and has since reduced the number of biscuits sold in its ₹2 to ₹5 packs, including Parle-G —India’s largest selling biscuit.

“We had absorbed the costs for a while, but then last December we started to reduce the quantity offered so that we don’t pass on the prices to consumers,” Shah said. He added that the company had to rule out price increase in ceratin packs as shoppers are “extremely value-conscious, they notice things like this and easily switch to cheaper alternatives.” For Parle, biscuits priced under ₹100 a kilo account for 40% of its sales.

Anmol Industries, which sells namkeen, butter and cream biscuits priced between ₹5 to ₹20, said it has been gradually reducing the size of some of its biscuit packs over the last two years as raw material prices, especially wheat, continue to climb. “Earlier we used to have a 60 gram pack at ₹5, today it has been brought down to 45 grams and if this continues we could soon be selling 40 grams,” said Gobind Ram Choudhary, managing director at the company.

Choudhary who is also part of the India Biscuit Manufacturers Association, an industry body of ten biscuit companies in the North, made representation to the government to reduce the GST on biscuits are priced below ₹150 per kilo to 12% about two months ago. “For us these account for 90% of our sales,” he added.

The move to push to lowered tax rates comes amid a slowdown in consumer demand largely aggravated by a slump in rural consumption where consumers are holding back on purchases of essentials such as household products and staples. This has spooked FMCG companies, which draw over 35% of sales from the hinterland.

In its quarterly update on the FMCG sector for the April-June quarter, research firm Nielsen said that categories such as salty snacks, biscuits, spices, soaps and packaged tea led the slowdown during the quarter. Nielsen also lowered its guidance for the sector for the full year.

XaTTaX: Cloud and On-Premises Based GST Filing Software For India

Source: Live-Mint.
gst council
At Sept 20 Goa meet, GST Council to look into inverted duty structure issue

At Sept 20 Goa meet, GST Council to look into inverted duty structure issue

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The Goods & Services (GST) Council is expected to resolve issues related with inverted duty structure for various sectors in its 37th meeting scheduled to take place in Goa on September 20.

The inverted duty structure, where there is higher duty on input(s) and lower duty on output, has caused two problems. First is the refund in the GST regime, and second such a structure encourages imports hurting the domestic industry. There are at least seven industries including textiles and railway wagon facing difficulties on account of inverted duty structure.

Senior Finance Ministry officials confirmed that efforts are on to resolves the problems especially related with refund and therefore rates related with inverted duty structure are being restructured under GST.

According to MS Mani, Partner with Deloitte India, there is a need to correct inverted duty situations in a few sectors to assist both suppliers of inputs and their buyers from a working capital standpoint. “In a situation where growth has tapered, all elements of cost, especially indirect taxes would be an area of focus,” he said.

Any registered assesee can claim a refund of unutilised input tax credit on account of inverted duty structure at the end of any tax period where the credit has accumulated on account of higher tax on input and lower tax on the output.

Exceptions to this are in four categories — if output supplies are NIL rated or fully exempt supplies except supplies of goods or services or both as notified; if the goods exported from India are subject to export duty; if the supplier claims refund of output tax paid under IGST (integrated Goods & Services Tax); or avails duty drawback or refund of IGST on such supplies.

The issue of refund came up before the Council at least twice — once during the 31st meeting held on December 22, 2018 and the second, during the 35th meeting held on June 21.

In the December meeting it was decided that clarifications will be issued on certain refund related matters like refund of ITC accumulated on account of inverted duty structure, disbursal of refunds within the stipulated time, time allowed for availment of ITC on invoices, refund of accumulated ITC of compensation cess etc.

The Central Board of Indirect Taxes and Custom (CBIC) issued a circular on December 31, 2018. It was clarified that refund of unutilised ITC in case of inverted tax structure is available where ITC remains unutilised even after setting off of available ITC for the payment of output tax liability.

Where there are multiple inputs attracting different rates of tax, the concept of ‘Net ITC’ as mentioned in the formulae prescribed under the CGST rules will be applicable.

This term covers the ITC availed on all inputs in the relevant period, irrespective of their rate of tax. However, industries complain that this circular has not resolved their issues completely.

The minutes of the 35th meeting said West Bengal Finance Minister Amit Mitra had written a letter to Finance Minister Nirmala Sitharaman regarding the inverted duty structure of ‘wagon industry’ and he had requested that it might be sent to the Fitment Committee.

Sithraman assured that it would be sent to the Fitment Committee.

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Source: The-Hindu-Business-Line.
GST Collections
GST trouble: Businesses reporting 20 per cent revenue fall receive notices

GST trouble: Businesses reporting 20 per cent revenue fall receive notices

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GST-registered businesses that have reported decline in annual revenue by 20% or more over the previous year have received a flurry of notices over the last few weeks from the tax department, sources in the know told FE. While notices related to mismatch in declaration between GSTR-3B (summary return) and GSTR-1 (outward supplies detail) were common earlier, the department is now comparing firms’ earning under GST with that of erstwhile service and excise regime.

The notices have asked businesses to produce relevant documents and explain the reasons for decline in sales. The department believes that many such cases could point to possible evasion under the new indirect tax regime. Sources said that the government is sitting on a pile of data that wasn’t available to them before GST. This is further aided by integration of information from Customs and direct tax department. The GST IT system is now throwing up many red flags when tax returns under different tax regimes are compared.

However, the spate of notices are also targeting businesses that have genuine reasons for declining revenue which includes a slowing economy. In one instance, a service provider for multinational companies received a notice but its revenue had slacked due to expiry of certain contracts. In another notice seen by FE, the taxpayer was asked to produce input tax credit documents as it had paid a substantial portion of tax liability through accumulated tax credit.

“While genuine businesses are not worried over these notices, it does raise the cost of doing businesses for them,” Rajat Mohan, partner at AMRG & Associates, said. He explained that replying to notice under GST requires professionals and could cost as much as `1 lakh while earlier, the tax laws had been around for some years and most replies followed a set pattern that didn’t require professional intervention.

Although the GST system generates a lot of data to track evasion, the absence of a full-fledged return system means that there are areas prone to exploitation through fake invoices for claiming additional credit and bringing down tax liability. The Comptroller and Auditor General’s (CAG) report tabled in Parliament recently pointed this out. The new return system is likely to come into force only from next year.

Meanwhile, tax department has estimated that evasion worth as much `1.2 lakh crore may have taken place under GST regime. An official said that while the government had detected evasion worth over `12,000 crore since GST came into force two years ago, rule of thumb suggested that such detection were only 10% of the actual evasion taking place. The GST collection for central government in FY19 fell short of target by over `60,000 crore.

This prompted the government to set relatively modest budget estimate for the current fiscal at `11.89 lakh crore. This translates into an average monthly collection of just below `1 lakh crore. In the first four months of FY 20, the collection have kept pace with the required rate.

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Source: Financial-Express.
gst collection
GST collection grows 5.8% in July to ₹1.02 trillion

GST collection grows 5.8% in July to ₹1.02 trillion

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Central and state governments have collected Rs. 1,02,083 crore from Goods and Services Tax (GST) in July, 5.8% more than what they mopped up in the same month a year ago, an official statement said here.

This is the third time the combined central and state GST receipts crosses ₹1 trillion mark so far this fiscal. The union government is bound to compensate states for any shortfall in their revenue collection below an agreed 14% annual growth every year in the first five years of GST regime. Tax collected in July pertain to the transactions in June. After showing a 10% annual growth in April GST receipts, collections remained rangebound between 6.6 and 5.8% in subsequent months.

The statement said the union government collected ₹17,912 crore, while states collected ₹25,008 crore. Receipts from integrated GST (IGST) on inter-state sales stood at ₹50,612 crore and from GST cess at ₹8,551 crore. On account of the revenue shortfall in FY19 and the growth rate remaining below 14% so far in FY20, the central government’s requirement to compensate states continues and raises questions about states revenue position after the first five years of GST if the current trend continues. Central and states collected and average RS 93,114 crore a month last fiscal against a ₹1 trillion combined monthly target.

The GST shortfall could make the union government more dependent on cesses and surcharges on various taxes to find resources for compensating states for their revenue shortfall.

The Controller General of Accounts (CGA), the government’s internal auditor, said on Wednesday the central government’s gross tax revenue in the June quarter grew at a slow pace of 2.7% to ₹1.86 trillion from the year ago period. (ends)

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Source: Live-Mint.
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GST: CBIC extends due date for filing FORM GST CMP-08

GST: CBIC extends due date for filing FORM GST CMP-08

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The Central Board of Indirect Taxes and Customs ( CBIC ) has notified the extension for filing returns by the composition dealers in Form CMP-08.

According to the Notification, “Provided that the due date for furnishing the statement containing the details of payment of self-assessed tax in said FORM GST CMP-08, for the quarter April, 2019 to June, 2019, or part thereof, shall be the 31st day of July, 2019.”

The composition taxpayers shall furnish a statement, every quarter or, as the case may be, part thereof containing the details of payment of self-assessed tax in FORM GST CMP-08 of the Central Goods and Services Tax Rules, 2017, till the 18th day of the month succeeding such quarter.

“The said persons shall furnish a return for every financial year or, as the case may be, part thereof in FORM GSTR-4 of the Central Goods and Services Tax Rules, 2017, on or before the 30th day of April following the end of such financial year,”.

Under the GST regime rolled out from 1st July 2017, the composition scheme is an alternative method of tax levy under GST designed to simplify compliance and reduce compliance costs for small taxpayers. The main feature of this scheme is that the business or person who has opted to pay tax under this scheme can pay tax at a flat percentage of turnover every quarter, instead of paying tax at a normal rate every month.

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Source: Taxscan.
GST Cell, ni-MSME to conduct 3-day training program on GST

GST Cell, ni-MSME to conduct 3-day training program on GST

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To impart the knowledge about Goods and Service Tax (GST) and procedures for implementation, GST cell in association with ni-msme has proposed to conduct training program on GST to have a better understanding about the new tax regime.

The three days certification program will start from July 29 here, and will end on July 31, 2019.

The objective of the program is to impart the knowledge about Model GST law and to provide valuable insights on impact of GST on Industry/Trade/ Services.

In addition, it will give practical knowledge of the different procedures required under GST Act and Rules such as Registration, tax invoices, Filing of Returns, availing Input Tax Credit, compliance, Refunds and other documentation requirements.

The target participants for the program are Entrepreneurs of Industry and trade, Key managerial personnel, Professionals, Tax consultants, Academicians and students.

On the successful completion of program, the participant will be able to understand the transitional issues relating to migration from Current indirect tax structure to GST regime.

GST is a game changing reform for the Indian economy by creating a common Indian market and reducing the cascading effect of tax on the cost of goods and services. GST has a large ramification on business processes and there is a grave necessity for the industry members, entrepreneurs of Industry/Trade, Managerial personnel, Finance managers and professionals to ensure compliance with the Act, and for benefitting from the seamless pass through of Tax to the final consumer.

Source: Knn-india.

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Importers do not need state-wise registration under GST regime

Importers do not need state-wise registration under GST regime

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Importers with godowns or those which store goods at customs warehouses in different states got relief from the advance authority of ruling (AAR) under the goods and services tax (GST) regime.

The AAR, Maharashtra, in two recent rulings, said that these companies do not need a separate registration in each state and that a registration where their headquarters are located would be enough. These firms can sell products in different states and raise invoices against their head offices, it ruled.

Harpreet Singh, a partner at KPMG, said in one of the cases, the petitioner — Aarel Import Export —noted it has a head office in Mumbai and is exporter and importer of products such as black matpe, toor whole, pet coke, and agarbatti.

The applicant wished to import coke from Indonesia at Paradip port in Odisha. The item would be stored at Customs warehouse at the port. It wished to sell coke to customers in Odisha from the said warehouse but wanted to clear the bill against Mumbai office by paying customs duty, if any, and IGST.

The AAR held that no separate registration is required in Odisha. It also held that the place from where the applicant makes a taxable supply of goods shall be his location — Mumbai office in this case. Since the applicant does not have any godown or place of business in Odisha, it can clear goods on the basis of an invoice issued by the Mumbai headquarters. It also stated that the applicant can mention the GSTIN of Mumbai office in the e-way bill and dispatch place as Paradip Port.

In the other case, petitioner Gandhar Oil Refinery (India) Ltd said it carries out manufacturing activity from its plants located at Silvassa and Taloja in Maharashtra. The company is engaged in the trading activity of non-coking coal and carrying out businesses from many states. Here also, the AAR held that the applicant need not take separate registration in each state where the goods are imported and stored in godowns.


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Source: Business-Standard.
GST
Government rules out bringing oil products under GST for now

Government rules out bringing oil products under GST for now

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The Centre has virtually ruled out including petroleum products within the ambit of GST immediately, turning down repeated demands from the aviation sector and oil companies.

Even the petroleum ministry had taken up cudgels for the sector that has been arguing that the benefit of GST is not accruing to them as companies cannot claim an input tax credit. The credit can only be claimed if the entire chain from inputs to the final product pays GST.

The Centre is, however, of the view that the change in the regime may not pass muster with the states, which want to retain flexibility in taxing a few items that they have control over. Stamp duty on real estate, excise on alcohol and petroleum products are among the handful of items on which states still have control after the introduction of GST.

At the time of the introduction of GST two years ago, the states and the Centre had decided to pool their powers, which now vests with the GST Council. The panel headed by the Union finance minister now decides the rates and the indirect tax regime, leaving only a few items with the state FM.

In any case, the overall levy is not going to reduce significantly as the government will impose cess above the 28% rate on petrol and diesel to ensure that there is no loss to the exchequer.

Besides, sources told TOI, politically too the Centre is not keen on moving to GST for products such as aviation turbine fuel (ATF) or jet fuel, despite the high-decibel lobbying unleashed by airlines.

The government believes that the taxes on ATF, which airlines say is among the highest in the world, is passed on to consumers. To ensure that the transition to GST is tax-neutral, the Centre and the states will have no option but to raise the levy on air tickets. “There will be no change for the flyers,” said a source.

Over the past two years, the government has discussed the possibility of shifting to a GST regime for sectors such as real estate, where under-construction units face the levy but on receipt of the completion certificate, stamp duty is levied. But the Centre and the states have refrained from expanding the ambit, opting for the new tax mechanism to settle down.


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Source: Times-of-India
28th GST Council Meeting
No GST at duty-free shops: HC

No GST at duty-free shops: HC

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Multiple court rulings on payment of goods and services tax (GST) at duty-free shops are making life confusing for those buying perfumes and chocolates from these stores.

A recent Allahabad high court judgment may, however, provide some relief with the court ruling that there shall be no tax levied in case of purchases made at duty free stores at the arrival or departure terminals. The court held that tax will not be levied as the goods never cross customs border and passengers carry the items as their personal belonging.

The ruling is similar to the one by Karnataka high court where in case of Flemingo Duty Free Shop, it was held that sale or purchase by such stores would be a transaction in the course of export or import.

But what complicates matters is a ruling by the MP high court in the case of Vasu Clothing, where it held that the transactions were liable to GST as supply to a duty-free shop by an Indian supplier is not to “a place outside India” and therefore such supplies do not qualify as exports under GST.

Moreover, the Authority for Advance Ruling (AAR) had held that supply of goods to passengers going abroad from duty-free shops at Delhi International Airport is liable to GST. Alcohol, which is the most popular item at duty-free shops, is outside the ambit of GST.

“Applicability of GST on duty-free shops has been a perennial issue under the erstwhile VAT regime with multiple diverse rulings. The situation has not improved even under GST on account of diverse rulings by MP and Karnataka high courts. The new ruling seems to have rightly interpreted the provisions under the GST law as well as baggage rules to arrive at the conclusion which appears to be rational and in line with the legislative intent,” said Harpreet Singh, partner at consulting firm KPMG.

The Allahabad HC order came in response to a PIL filed by Atin Krishna on the grounds that the exchequer is losing revenue. The petitioner has argued that the respondent is liable to pay Central and state GST on the goods sold to international passengers at its departure terminal and is ineligible to get refunds of the accumulated input tax credit.

The respondents countered it saying that the supply of goods till they cross customs border should be considered as an inter-state supply under the integrated GST.

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Source: Times of India.