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Companies get notices for seeking input tax credit on GST paid by their vendors

Companies get notices for seeking input tax credit on GST paid by their vendors

Many companies are reportedly under the scanner of the tax department with authorities beginning to quiz input tax credit claimed by firms in lieu of Goods and Services Tax (GST) paid by their vendors.

Tax sleuths have issued notices to companies in several states, including Gujarat, Telangana, Andhra Pradesh, and Haryana, confirming apprehensions that inspection will intensify in the new financial year as the government looks to plug the leaks, says an Economic Times report.

It may be noted that the GST rule allows a reversal of input tax credit claimed by a company if its vendor has not paid the tax for which credit is being claimed. At present, there is no procedure to determine if vendors have paid GST. The return-filing status of a registered person can only be viewed on the GST Network Portal, but payment of tax cannot be determined. Buyers can only validate whether vendors have included the invoice in their GST filings, the report mentioned.

A company may have actually passed on the tax to a vendor for which it wants to claim credit, it may not be possible to determine if the vendor has deposited the GST. “In such a situation, requiring the buyers to forgo their input credits when they have already paid the GST to vendors and exercised due diligence to the extent possible does not seem like a fair proposition,” Pratik Jain, national leader indirect tax at PwC, told ET.

Given the stakes involved, the issue may result in litigation, he mentioned, adding that the government should review the law and modify if they consider deem it appropriate, and there should be some clarity provided to the taxpayers as to how the government expects them to confirm that vendors have indeed paid tax.

The financial daily quoted M S Mani, a partner at Deloitte India, as saying, “Adequate safeguards to check misuse of the facility such as a time limit to complete the pending compliance/reconciliation can also be prescribed to protect revenue.”

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Source: Times Now News.
Non-filers of GST returns for 2 months to be barred from generating e-way bills from June 21

Non-filers of GST returns for 2 months to be barred from generating e-way bills from June 21

Non-filers of GST returns for two straight months will be barred from generating e-way bills for transporting goods effective June 21, the finance ministry said.

Businesses under GST composition scheme, however, will be barred from generating e-way bill if they fail to file tax returns for two consecutive filing periods, which is six months.

The Central Board of Indirect Taxes and Customs (CBIC) has notified June 21, 2019, as the day from which any “consignor, consignee, transporter, e-commerce operator or courier agency” would be barred from generating electronic way or e-way bill for failure to file tax returns for the stipulated time period as mentioned in the GST rules.

As per rules, a composition scheme taxpayer who has not furnished the returns for two consecutive tax periods and a regular taxpayer who has not filed returns for a consecutive period of two months would be restricted from generating e-way bill.

In the Goods and Services Tax (GST) regime, businesses have to file monthly tax returns by the 20th day of the subsequent month. However, businesses opting for composition scheme have to file quarterly returns by the 18th day of the subsequent month following the end of a quarter.

The Goods and Services Tax Network (GSTN) has put in place the IT system so that businesses which have not filed tax returns for the stipulated period would be barred from generating e-way bills.

The move, officials believe, would help check GST evasion. During April-December, there were 3,626 cases of GST evasion/violations, involving Rs 15,278 crore.

Touted as an anti-evasion measure, e-way bill system was rolled out on April 1, 2018, for moving goods worth over Rs 50,000 from one state to another. The same for intra or within the state movement was rolled out in a phased manner from April 15.

Transporters of goods worth over Rs 50,000 would be required to present e-way bill during transit to a GST inspector if asked.

With almost two years into GST implementation, the government is now focussing on anti-evasion measures to shore up revenue and increase compliance.

AMRG & Associates Partner Rajat Mohan said with this supplier, transporters and e-commerce operators would be forced not to sell or transport goods to non-filers

“E-commerce, logistics, FMCG companies, and businesses working on the franchise model, would have to immediately develop and implement an automated workflow whereby defaulting business partners are moved out from the supply chain on a real-time basis,” Mohan said.

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Source: Economic Times.
Finance Ministry starts notifying provisions of GST acts & amends policies

Finance Ministry starts notifying provisions of GST acts & amends policies

With two days left for roll out of GST, the Finance Ministry has started notifying various provisions of law relating to interest calculation, input tax credit and valuation.

Provisions in the Central GST Act (CGST), Integrated GST (IGST) Act and Union Territory GST Act and rules under them are being notified.

These include those relating to tax invoice, credit and debit notes, accounts and records, returns, payment of tax, refund, assessment and audit, advance ruling.

Also appeals and revisions, transitional provisions, anti-Profiteering and e-way rules have been notified which shall come into effect from 1 July.

As per the notification, interest at 18 percent is to be paid for delayed payment of tax, 24 percent in case of excess claim of input credit or undue/excess reduction in output liability.

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With regard to IGST, provision prescribing refund of 50 percent of IGST on supplies to defence run CSD canteen has been notified. Also notified is those provisions relating to supplies of goods in respect of which no refund of unutilised input tax credit shall be allowed.

The Ministry has also notified the composition levy and has barred manufacturers of ice cream, pan masala and tobacco from paying tax under the scheme.

Under the composition scheme where the sales of businesses does not exceed Rs 75 lakh, manufacturers will have to pay 1 percent of turnover as GST, traders 2.5 percent and 0.5 percent of turnover in state in case of other suppliers.

Besides, the Ministry has also notified 12 amendments to the CGST Rules.

Among other things, the amendments provide for cancellation of registration of a business for violation of anti-profiteering rules.

The Goods and Services Tax (GST) will be rolled out from 1 July and in the run up to the new indirect tax regime various provisions are being notified by the finance ministry.

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Source: TOI
Five basic things about GST everyone should know

Five basic things about GST everyone should know

The government is preparing for a July-1 launch for GST, which will change the concept of levy of indirect taxes. With a little more than two months to go, it is important businesses understand this levy and start identifying whether and how it applies to them.

If you are a business, it is nearly certain you deposit some tax other than income tax. It could be in the form of service tax, excise duty, VAT or some version of custom duty. These taxes are called indirect taxes. Nearly all of these taxes will now be replaced with GST.

But the implementation of GST is not merely a change in tax. GST is an overhaul in the way in which indirect taxes will ‘levy’. Currently, excise duty is levied on manufacture, VAT is levied each time goods change hands and value is added to the product. CST (Central Sales Tax) is charged when goods move between states. This way a finished product can have excise duty, VAT, CST added to its cost before reaching its final consumer. All of these have a different ‘point’ of tax levy. These different taxes will now give way to GST.

When is GST levied?

The most important thing about GST then is its point of levy. Under GST, point of tax levy is ‘supply’. What constitutes a supply has been defined in the GST Act. Supply means sale of goods and services. A supply of goods and services can take place even without an actual sale. Supply will also include, transfer, exchange, and barter, rental, lease and also a supply made to an agent or to a branch. So if you are a business, engaged in any of the above, GST will replace all taxes paid by you on purchases, and mandate you to levy GST on your supply. In this context the government may notify some services & goods, which will not be considered a supply and hence will not attract GST. So the first step would be to identify if your business has made a supply.

Types of GST

Once it has been established that your business has made a supply, the next step is to find out whether it is an intra-state or an inter-state supply. If the origin state is different from the destination State, it is considered an inter-state supply. This is the reason why GST is also called a destination-based tax. Those who make inter-state supplies have to mandatorily register for GST. Most supplies are likely to be taxed at the rate of the destination state. Supplies made outside India would not attract any GST, however GST registration may still be required for these supplies. Intra-state sales will attract Central and State levy, called SGST and CGST. And inter-state sales will attract IGST, which is likely to be a sum total of CGST and SGST. IGST will also be levied on imports.

Who should prepare for GST?

If you are an existing registrant under VAT or service tax or excise duty, you should roll over your registration to GST. Those with turnover less than Rs 20 lakh (Rs 10 lakh for North East states) do not have to mandatorily register for GST. This limit, though, is not to be considered if the business is involved in making inter-state transactions. GST registration is mandatory for them.

If you have a website from where supply of goods or services takes place, GST registration will be mandatory for you. GST also applies to an ‘input service distributor’. Input service distributor means a head office that receives billing for services received at branches and later on it sends apportions to branches. Such ISDs also have to mandatorily register for GST.

GST applicability for various businesses

As a trader, you may be already registered under VAT, so you must register for GST. GST will allow you to set off tax paid at earlier stages for payment of GST on supplies you make. Manufactures also stand to benefit by registering, as they can now adjust tax paid on inputs against GST on outputs. So far as service providers are concerned, many of the existing rules will flow to GST. However, GST on services would now be levied by both State and centre. Taxes would flow to the place of consumption and will be received by the consuming state. Service providers will be able to claim set-off of tax paid on input goods, which was earlier restricted to only input services. Some services, such as doctors, para-medical services, and education services earlier exempt from service tax are likely to be exempt under GST as well.

Should you voluntarily opt for GST registration?

Many small businesses that are below the turnover threshold and do not make inter-state supplies have the option to register voluntarily. If your buyers are GST compliant it helps you are too. This way, your buyer will be able to take credit of taxes you pay for your inputs. The GST act has laid down that if registered buyers make purchases from unregistered sellers, they will have to do full GST compliance towards tax payment and return filing on behalf of the unregistered seller. With every buyer and seller on board, GST will create a sort of a club of its own with benefits, but at the same time come with the cost of being compliant as well adapting technology as means to do business. Both bets worth the investment.

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GST guidelines: Smaller taxpayers can also face troubles, say specialists

GST guidelines: Smaller taxpayers can also face troubles, say specialists

gst experts

Keeping pace with the July 1 roll-out for the goods and services tax (GST), the government on Wednesday unveiled three more draft rules related to account and records, advance ruling, and appeals & revision, respectively. Experts said that while taxpayers would maintain all account and records electronically, certain requirements in the rules could be cumbersome, especially for smaller taxpayers. The new draft rules for accounting and record-keeping require maintenance of trail of each deleted or edited entry in electronic records. While this is supported by major enterprise resource planning (ERP) software, complying with this may be a major challenge for desktop software, which allow removal of entries or details, Preeti Khurana, chief editor of Cleartax, said. She added this may pose compliance challenge for small businesses which may be using a readily-available, basic accounting software.

“This log of deleted or edited entries could pose a serious challenge when it comes to explaining deleted or edited entries to tax officers,” Rakesh Nangia, managing partner, Nangia & Co, said. He also said that while manufacturers are understandably required to keep a record of quantitative details of raw materials or services used in the manufacture including details waste and byproducts, the same set of accounting rules will now apply to the service provider.

 Separately, according to advance ruling rules, a taxpayer applying for advance ruling will need to shell out Rs 5,000 as fees while the same for appeal against advance ruling will be Rs 10,000. This fee is fourfold when compared with the corresponding charge under the current service tax rules. “The fee for appeal against advance ruling for service tax was Rs 2,500, however the same fee has been increased to Rs 10,000 under appeal for advance ruling in GST,” Khurana said.

While all the applications for advance ruling can be made electronically, the rules suggest that petitioner will have to submit multiple copies of the same in hard copy as well. “An appeal to the Appellate Authority or Appellate tribunal can be filed either through electronic mode or in physical mode, but hard copies of the same are compulsory to be submitted. I hope in the final rules, the entire process of application filing would be made electronic,” Nangia said.


GST Assessment and Audit Rules 2017

GST Assessment and Audit Rules 2017


1. Provisional Assessment

(1) Every registered person requesting for payment of tax on a provisional basis in accordance with the provisions of sub-section (1) of section 60 shall furnish an application in FORM GST ASMT-01, along with the documents in support of his request, electronically through the Common Portal, either directly or through a Facilitation Centre notified by the Commissioner.

(2) The proper officer may, on receipt of the application under sub-rule (1), issue a notice in FORM GST ASMT-02 requiring the registered person to appear in person or furnish additional information or documents in support of his request and the applicant shall file a reply to the notice in FORM GST ASMT – 03.

(3) The proper officer shall issue an order in FORM GST ASMT-04, either rejecting the application, stating the grounds for such rejection or allowing payment of tax on provisional basis indicating the value or the rate or both on the basis of which the provisional assessment is to be made and the amount for which the bond is to be executed and security to be furnished not exceeding twenty five per cent. of the amount covered under the bond.

(4) The registered person shall execute a bond in accordance with the provisions of subsection (2) of section 60 in FORM GST ASMT-05 along with a security in the form of a bank guarantee for an amount as determined under sub rule (3):

Provided that a bond furnished to the proper officer under the Central/State Goods and Services Tax Act or Integrated Goods and Services Tax Act shall be deemed to be a bond furnished under the provisions of this Act and the rules made thereunder. Explanation.- For the purposes of this rule, the term “amount” shall include the amount of integrated tax, central tax, State tax or Union territory tax and cess payable in respect of such transaction.

(5) The proper officer shall issue a notice in FORM GST ASMT-06, calling for information and records required for finalization of assessment under sub-section (3) of section 60 and shall issue a final assessment order, specifying the amount payable by the registered person or the amount refundable, if any, in FORM GST ASMT-07.

(6) The applicant may file an application in FORM GST ASMT- 08 for release of security furnished under sub-rule (4) after issue of order under sub-rule (5).

(7) The proper officer shall release the security furnished under sub-rule (4), after ensuring that the applicant has paid the amount specified in sub-rule (5) and issue an order in FORM GST ASMT–09 within a period of seven working days from the date of receipt of the 2 application under sub-rule (6).

2. Scrutiny of returns

(1) Where any return furnished by a registered person is selected for scrutiny, the proper officer shall scrutinize the same in accordance with the provisions of section 61 with reference to the information available with him, and in case of any discrepancy, he shall issue a notice to the said person in FORM GST ASMT-10, informing him of such discrepancy and seeking his explanation thereto within such time, not exceeding fifteen days from the date of service of the notice, as may be specified in the notice and also quantifying the amount of tax, interest and any other amount payable in relation to such discrepancy.

(2) The registered person may accept the discrepancy mentioned in the notice issued under sub-rule (1), and pay the tax, interest and any other amount arising from such discrepancy and inform the same or furnish an explanation for the discrepancy in FORM GST ASMT-11 to the proper officer.

(3) Where the explanation furnished by the taxable person or the information submitted under sub-rule (2) is found to be acceptable, the proper officer shall inform the registered person accordingly in FORM GST ASMT-12.

3. Assessment in certain cases.

(1) The order of assessment made under sub-section (1) of section 62 shall be issued in FORM GST ASMT-13.

(2) The proper officer shall issue a notice to an unregistered taxable person in accordance with the provisions of section 63 in FORM GST ASMT-14 containing the grounds on which the assessment is proposed to be made on best judgment basis and after allowing a time of fifteen days to such person to furnish his reply, if any, pass an order in FORM GST ASMT- 15.

(3) The order of summary assessment under sub-section (1) of section 64 shall be issued in FORM GST ASMT-16.

(4) The person referred to in sub-section (2) of section 64 may file an application for withdrawal of the summary assessment order in FORM GST ASMT–17.

(5) The order of withdrawal or, as the case may be, rejection of the application under subsection (2) of section 64 shall be issued in FORM GST ASMT-18.

4. Audit

(1) The period of audit to be conducted under sub-section (1) of section 65 shall be a financial year or multiples thereof.

(2) Where it is decided to undertake the audit of a registered person in accordance with the provisions of section 65, the proper officer shall issue a notice in FORM GST ADT-01 3 within the time specified in sub-section (3) of the said section.

(3) The proper officer authorized to conduct audit of the records and books of account of the registered person shall, with the assistance of the team of officers and officials accompanying him, verify the documents on the basis of which the books of account are maintained and the returns and statements furnished under the Act and the rules made there under, the correctness of the turnover, exemptions and deductions claimed, the rate of tax applied in respect of supply of goods or services or both, the input tax credit availed and utilized, refund claimed, and other relevant issues and record the observations in his audit notes.

(4) The proper officer may inform the registered person of the discrepancies, if any, noticed as observations of the audit and the said person may file his reply and the proper officer shall finalise the findings of the audit after due consideration of the reply furnished.

(5) On conclusion of the audit, the proper officer shall inform the findings of audit to the registered person in accordance with the provisions of sub-section (6) of section 65 in FORM GST ADT-02.

5. Special Audit

(1) Where special audit is required to be conducted under section 66, the officer referred to in the said section shall issue a direction in FORM GST ADT-03 to the registered person to get his records audited by the chartered accountant or cost accountant specified in the said direction. (2) On conclusion of special audit, the registered person shall be informed of the findings of special audit in FORM GST ADT-04.