GSTR-2A Archives | XaTTaX GST Blog

Centre sends out lakhs of GST recovery notices to taxpayers pan-India

February 28, 2020 admin Comments 0 Comment

In a bid to shore up GST collections and recover pending dues, the Centre has sent out several lakhs of recovery notices to taxpayers, sources said. These notices are under various sections including violations, claiming of excess credits and delayed payment.

A massive data analytics drive has helped the government calculate these dues which are legally pending to be cleared by the taxpayers, the sources added.

”A high-level revenue augmentation review meeting has been called by Revenue Secretary Ajay Bhushan Pandey today where GST wing has updated on the notices sent out and the recovery so far,” a senior government official said, confirming the development.

According to sources, the Centre’s GST wing has asked field formations to keep a close watch on over 262,000 GST taxpayers pan-India to ensure they file timely returns to maintain steady growth in monthly GST collections.

These taxpayers have been identified after detailed trend analysis through data monitoring, risk profiling and past return filing pattern.

Apart from this, the Centre has also asked field formations to assess taxpayers with a mismatch between declared liability and paid liability. “On this account, the Centre has identified Rs 36,000 crore worth of dues by taxpayers. Notices have been sent out for this to the taxpayers identified by data analytics,” the sources stated.

Taxpayers directed to refund credits

The Centre has also issued notices to taxpayers asking them to refund credits that have been taken on invoices for FY18 and FY19 but were time barred.

“Another set of notices have been sent out under section 36 (4) to the taxpayers identified for claiming more than 10 percent of credit dues in GSTR2A. The Centre estimates Rs 46000 crore of extra credit already availed by taxpayers and fields have been asked to re-assess the taxpayers and ensure a return of the excess claim to the government,” the sources pointed out.

Industry experts point to the need to follow a clear-cut process to streamline the GST system. “While business houses receiving notices on account of data mismatches, delayed returns, etc would feel hassled in responding to these notices while they are grappling with year-end sales and performance pressures, these notices, once again, bring out the need to follow a process-oriented approach on GST matters,” says MS Mani, partner India.

Abhishek Jain, Tax Partner said: “While such investigations should typically help check tax evasion, the said decentralisation has become an area of concern for businesses especially the service industry who were used to centralised management of assessments. While companies are in general fine with providing adequate replies to notices, they have been facing concerns on in-person discussion with the various GST authorities; specifically given the locational inconvenience to those centrally managing GST compliances.”

The government has also tallied dues of Rs 40,000 crore on account of interest to be paid on late payment of GST from July 2017 to September 2019. As per the rule, 18 percent interest is being charged on the amount of GST on account of late payment.

Source: cnbctv18

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ITC-invoices mismatch: Huge sums sought as GST credit denied

February 19, 2020 admin Comments 0 Comment

The Goods and services tax (GST) authorities have blocked input tax credits (ITC) claimed by thousands of businesses to the extent these claims are not corroborated by invoices uploaded by their suppliers, multiple tax practitioners and businesses told FE.

While the government had indeed announced that the credit restrictions would be implemented from January 1, for most of the affected businesses, especially for smaller ones, the move could result in a serious cash crunch, as they can now meet the tax liability for the rest of FY20 only through cash.

Though no estimate is available of how much the blocked ITCs would add up to, given that the credits to thousands of firms have been curtailed and the amount in a large number of cases are in crores, credits worth many thousands of crores appear to have been denied.

Among the firms whose unmatched ITC claims have been blocked in their electronic cash ledger are social media giant Facebook. Godrej Housing, Duroflex are too among who have been hit by the policy. An email sent to Facebook remained unanswered.

An analysis by the GST department showed that as much as 39% or Rs. 2.5 lakh crore of ITC claimed by taxpayers in FY18 remained unmatched with the invoices uploaded by their suppliers. Though the gap had come down to 13% (Rs. 1.7 lakh crore) in FY19, it was still very large and unacceptable to the department.

The government’s stated intent behind the move is to curb credit claims based on fake invoices. The move could improve GST collections significantly for the next two months owing to increased cash payment by taxpayers and aid the government’s efforts to bridge the perceived tax revenue shortfall (against the revised estimate in the Budget). However, experts said that gains to the exchequer could gradually taper off as large number of missing invoices will get reconciled at a later stage. All unmatched invoices cannot be attributable to fraudulent practices, tax experts feel.

In October, the government inserted a a clause in GST rule saying that a taxpayer filing GSTR-3B (monthly summary return) can claim provisional input tax credit only to the extent of 10% of the eligible credit available in GSTR-2A. The eligible credit is only against those invoices which show up in a taxpayer’s GSTR-2A, which is possible only if the said assessee’s suppliers file and upload all relevant sale bills in their GSTR-1 (which contains details outward supplies).

If ITC claimed by a taxpayer in GSTR-3B for a given month is, say, Rs 100 and the invoices uploaded by the suppliers are only worth Rs 80, then ITC of Rs 20 does not show up in GSTR-2A in the form of corroborating invoices. So the total credit available to the taxpayer in the case will be Rs 88 (i.e. Rs 80 plus 10% of Rs 80).

Another expert said that the variance between credit claimed in self-declared monthly GSTR-3B and GSTR-2A return could also arise from various issues including non-availability of qualified manpower to match invoices on a monthly basis, technical glitch in tax filings and the MSME filers filing GSTR-1 on a quarterly basis. Late filing of GSTR-1 also leads to mismatch as suppliers’ invoices don’t show up for matching. The compliance rate for GSTR-1 filing has hovered around 65-70% in recent months.

“Tax credit blockage by tax officers without any notice and hearing is spreading tax terrorism at the grass root level, although it is expected to pump up the revenue collections in February and March. However, this would be mitigated in succeeding months,” Rajat Mohan, senior partner at AMRG & Associates said.

Additionally, the GST administration has also started clamping down on taxpayers which have not filed GSTR-3B for long periods of time by asking the assessees’ bank to freeze their account. Tax practitioners said that several such notices have been received by assessees. One such notice seen by FE has raised a payment demand on the bank branch used by Hyderabad-based assessee. It asked the banks to ‘attach all the current/savings A/c./FDR/TDR and lockers’ of the taxpayer who has failed to file GSTR-3B for 20 months and owes Rs 1 crore in taxes.

Source: Financial-Express.

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

May 30, 2018 admin Comments 0 Comment

A large number of assessees under the GST have received notices from the tax department asking them to explain the mismatch of input tax credit (ITC) claimed in the self-declared summary return GSTR-3B and the auto-generated, but currently suspended, GSTR-2A. The notices have granted a period of 10 days to explain the discrepancy, failing which proceeding would be initiated against the taxpayers. Although the department has intensified its enforcement effort in the last month which is reflected in the spurt of notices received by taxpayers, it is the first time they have used a return form, which is not being used by taxpayers since it was suspended in November last year.

Also Read: What is Input Tax Credit under GST? And how to claim it?

GSTR-2A is generated by the system on the basis of information received from GSTR-3B and GSTR-1 (sales details). When the sellers of assessees file GSTR-1 in any particular month, its details are captured by GSTR-2A thus providing the details of purchases of the assessee concerned. Since ITC claimed in GSTR-3B should ideally match ITC available on all the purchases made by an assessee, a mismatch can be detected by comparing the details in these two forms.

However, experts say that a mismatch doesn’t necessarily implicate a taxpayer and several other factors could be responsible for the same. “Numerous reasons could be attributed to these discrepancies which include, contradicting circulars over a period of time, frequent changes in law, suspension of GSTR-2, technical incompetence at GSTN.

Policymakers need to assure that tax officer pursue such notices in a non-coercive manner and appreciate the practical difficulties faced by taxpayers in the filing of tax returns,” Rajat Mohan, partner, AMRG & Associates, said. In the past month, taxpayers have received notices for non-filing of GSTR-3B, and mismatch in details between GSTR-3B and GSTR-1. The latest batch of notices suggests that tax department is using all possible tools at its disposal to detect evasion, a tax official said.

The tax department’s move of using GSTR-2 was expected among assessees and tax practitioners as reported by FE earlier. These assessees had also started using GSTR-2 and GSTR-2A to ensure that the ITC claimed in GSTR-3B was being reconciled. GSTR-2 helps them provide evidence of tax contents in the goods and services they consumed, and thereby validate the credits claimed.

The GSTR-2 form provides business details on the status of suppliers’ tax filing and gives the entity greater control over choosing a vendor. This also allows a firm to ensure that its suppliers are paying taxes on time so that it can claim ITC without any hurdle.

Taxpayers are now mandated to file only the outward-supply return GSTR-1 and a simple summary interim return GSTR-3B, with which they pay tax and claim input tax credits. Filing of comprehensive returns with the attendant invoice-matching facility was suspended following complaints. Taxpayers had complained of huge compliance burden and also the GST Network’s inability to handle the traffic. The widespread use of GSTR-2 is despite the GST Network not providing the facility of filing it right now.

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Source: Financial Express

Companies get scrutiny notices for mismatch in GST returns

May 7, 2018 admin Comments 0 Comment

GST officers have started sending scrutiny notices to companies whose Pre-GST Notice tax payment did not match the final sales return, after revenue authorities detected underpayment of GST by about 34 per cent, a source said.

Besides, companies whose final sales return GSTR-1 did not match GSTR-2A, which is a purchase return auto-generated by the system from his seller’s return, have also received scrutiny notices.

As per an analysis was done by the revenue department in March, 34 per cent of businesses paid Rs 34,400 crore less tax between July-December while filing an initial summary return (GSTR-3B).

These 34 per cent of the businesses have paid Rs 8.16 lakh crore to the exchequer by filing GSTR-3B, whereas analysis of their GSTR-1 data show that their tax liability should have been Rs 8.50 lakh crore.

In one notice issued by Gujarat GST commissionerate on May 4, taxpayers have been asked to explain the reason for “discrepancies” in return GSTR-3B and GSTR-1 for October-December period by May 14.

“If no explanation is received by the aforesaid date, it will be presumed that you have nothing to say in the matter and proceedings in accordance with law may be initiated against you without making any further reference to you in this regard,” the notice said.

Tax experts said that GST law provides for 30 days time to be given to taxpayers for replying to scrutiny notices, however, in the said case only 10 days time has been granted.

AMRG & Associates Partner Rajat Mohan said: “The government should issue strict guidelines for the officers to be reasonable and rational in disposing of the notice after giving the full opportunity of being heard to the tax payers. In one of such notice tax officer has given 10 days (out of which four days weekly off) against a maximum 30 day period allowed in rules”.

EY Partner Abhishek Jain said that the activity of data analytics at the end of revenue authorities has commenced with various players receiving notices, seeking clarifications on differences between GSTR-1 and GSTR-3B as well as GSTR-2A and GSTR-3B.

While the reconciliation between GSTR-1 and 3B is to essentially verify payment of taxes for all outward supplies made, reconciliation between GSTR-2A and GSTR-3B is to ensure that credits claimed by businesses only pertain to taxes actually paid by the suppliers and there not being any loss to the government exchequer on this account, Jain said.

The government has collected over Rs 7.41 lakh crore as GST in last fiscal. However, there were concerns that due to the absence of anti-evasion measures there might have been leakages in tax revenue.

The GST Council, headed by Finance Minister Arun Jaitley and comprising state counterparts, had in its meeting in March decided to further analyze data gaps between self-declared liability in GSTR-1 and the taxes actually paid while filing GSTR-3B.

The revenue department has analyzed the Goods and Services Tax (GST) returns data filed by over 51.96 lakh businesses during July-December, 2017. The indirect tax reform GST was rolled out from July 1, 2017.

The data analysis showed only 16 per cent of the summary sales returns under GST matched with the final returns till December 2017.

It also showed that there was excess tax payment of Rs 91,072 crore by 49.36 per cent of businesses registered under GST between July-December. While they have paid Rs 6.50 lakh crore as GST, the GSTR-1 filed by them shows that their liability should have been Rs 5.59 lakh crore.