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GST portal glitches to dominate agenda of Council meeting on Saturday

March 10, 2020 admin Comments 0 Comment

Glitches on the goods and services tax (GST) portal will dominate the agenda of the Council meeting on Saturday, even as states will vehemently seek resolution of delayed compensation issue. Infosys Chairman Nandan Nilekani has been asked to make a presentation before the Council.

“Hassles on the GST portal even 30 months after roll-out is unacceptable and that has been communicated to both GST Network and Infosys,” said a government official.

States are likely to demand that Infosys should have a point of contact in each state to resolve these glitches, the official said.

Meanwhile, the electronic invoice facility is likely to be deferred by three months from April 1 to July owing to lack of readiness of both GSTN and the taxpayers.

Finance Secretary Ajay Bhushan Pandey took a detailed meeting with Infosys officials on March 7 on the GSTN-related matters, more importantly ahead of the crucial roll-out of new simplified returns from April 1. GSTN’s tech support partner Infosys has been asked to come up with a plan for quick resolution within a fortnight.

System capacity constraints and the inability of GST Network to provide smooth return filing will be taken up at the Council.

With new returns format to be rolled out from April, it was imperative for GSTN and Infosys to work effectively, he added. The department of revenue, in a letter to Infosys on March 5, highlighted that the issues flagged in 2018 were still unresolved and that failures month after month resulted in genuine taxpayers getting frustrated.

“It is requested to go through the pending issues, day-to-day disruptions and the future road map and come up with a plan for quick resolution within 15 days. Infosys has set high international standards and it is expected that the efficiency which your organisation is known for should be visible in GST project also,” the letter said.

It also said even though the GST system has been in operation for the last 30 months, there have been instances of taxpayer complaints on facing issues in filing returns in the last two days of filing of returns.

“It is noticed that MSP (Master Service Provider) Infosys has been repeatedly asked to take timely action and to identify the root cause of issues after each event and taken corrective action. However, problem still persists,” it said.

The ministry said such glitches on the portal led to an unhealthy tax compliance requirement, more so when on account of such disruptions some taxpayers end up becoming liable for payment of late fee, interest.

The ministry is working to shore up GST revenues. In the April-February period this fiscal year, GST collection stood at Rs 11.24 trillion, down from Rs 12.67 trillion in the year-ago period.

No response at peak hours, wrong computation of late fees for annual returns for FY18, and offline tool not available for GSTR9 are among a list of problems flagged in the letter.

Compensation cess issue will be raised by the states, who are likely to ask for full compensation for the fiscal year, irrespective of collections and pitch for extension of compensation period. The Centre, meanwhile, is expected to clearly tell states that they will be compensated only as much as is collected in the cess fund, according to the law.

With only 56 per cent of compensation dues for October and November worth Rs 19.958 crore disbursed last month, states are expected to strongly seek a resolution on the matter.

The Centre is supposed to compensate states on a bi-monthly basis for any losses they incur in the first five years of GST implementation. The loss is estimated if they do not record 14 per cent increase in the subsumed indirect taxes keeping 2014-15 as the base year.

The Centre has released a total of Rs 120,498 crore as GST compensation to the states and Union Territories so far in FY20 out of Rs 87,821 crore collected till February.

Source: Business-Standard.

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What is GSTR 9? Have a Thorough Knowledge about GSTR 9 Online Filing Procedure

October 14, 2019 admin Comments 0 Comment

These days you might have come across different types of returns which are to be filed under the GST regime. Here, we shall discuss the filing process of the GSTR 9 return in detail. GSTR 9 refers to an annual return which should be filed on a yearly basis by those taxpayers who are registered under the GST system. Further, it includes details related to inward and outward supplies received or made during the preceding year under various heads like SGST, CGST, IGST, and HSN codes. In fact, it is a consolidated statement of the entire monthly/quarterly returns such as GSTR 1, GSTR 2A, GSTR 3B, etc., which are filed during the relevant year. Though this return seems to be a bit complicated, it helps in the reconciliation of data, thereby facilitating complete transparency in the disclosures.

Who All are required to File GSTR 9?

All those taxpayers or taxable individuals who are registered under the GST regime are required to file their GSTR 9 return. Anyhow, the below-mentioned individuals need not file this return:

Those taxpayers who opt for composition scheme (they should file GSTR 9A)
Input service distributors
A casual taxable person
Those individuals who pay TDS under section 51 of the CGST Act
Non-resident taxable individuals

Important Note: According to the decision made in the 37^th GST Council meeting held on 20^th September 2019, the GSTR 9 filing for businesses that have a turnover up to Rs.2 crore have been made optional for FY 17-18 and FY 18-19* (*this has been subject to notification).

Due Date, Late Fee, and Penalty for Not Filing GSTR 9 Return

The annual GSTR 9 return form should be provided on or before 31^st December in the concerned financial year bracket. In fact, the due date for filing GSTR 9 has been further prolonged to November 30^th 2019.
If the GSTR 9 return has not been filed within the due date, the late fee is Rs.100
per day, according to both CGST and SGST Act. In other words, the total liability would be Rs.200 per day of default. Further, this would be subject to a maximum of 0.25% of the turnover of the taxpayer in the concerned state or Union Territory. Anyhow, as per the IGST Act, no late fee is required.

The Important Details Which are Required to be filled in the GSTR 9 Form

The GSTR 9 form has been broadly divided into 6 parts and 19 sections. Every part asks for information which is readily available from the previous returns as well as the books of accounts. Generally, the disclosure of annual sales needs to be done in this form, dividing it between the cases which are subjected to taxation and those which are not subjected to taxation. As concerned with the purchase side, the annual value of inward supplies, as well as the corresponding ITC (Input Tax Credit) availed, should be furnished. Further, these procurements should be categorized as inputs, capital goods, and input services. Moreover, the information concerning ITC that should be reversed owing to ineligibility should also be entered.

The Different Types of Annual GST Returns

There are different types of annual returns which come under GST:

GSTR 9 Annual Return Form: A regular taxpayer who files GSTR 1 and GSTR 3B forms need to file the GSTR 9 return
GSTR 9A: All the composition scheme holders under GST are required to file the GSTR 9A return
GSTR 9B: All e-commerce operators are required to file the GSTR 9B return during a financial year
GSTR 9C: Those taxpayers whose annual turnover cross Rs.2 crore need to file the GSTR 9C return during a financial year. Further, these taxpayers need to collect the accounts which are to be audited, along with a copy of the tax reconciliation statement which has been already paid, the audited annual accounts, and the tax payable according to the audited accounts.

To summarize, you would be able to get a gist of the GSTR 9 online filing procedure from the information furnished here.

Input tax credit under GST regime restricted to 20% of claims: CBIC

October 11, 2019 admin Comments 0 Comment

Businesses will have to pursue their vendors on a monthly basis to upload their invoices to enable them to take the entire input tax credit (ITC) after the indirect tax board came out with a notification to restrict these credits to 20 per cent of the claims.

Concerned at dwindling revenues, the Central Board of Indirect Taxes and Customs (CBIC) put this condition on the claims where vendors have not uploaded their invoices within a month.

Experts said it would block cash flow of businesses and increase their compliance burden.

Though theoretically, businesses have to reconcile their ITC within 60 days, this clause was never implemented since the auto-populated form of purchases by suppliers — GSTR2 — has been suspended.

As such, businesses are supposed to reconcile their input tax credit at the time of annual returns. However, the deadline of annual returns even for the first year of the GST rollout — 2017-18 — have been deferred a number of times. This means that there was no restriction on the businesses to claim their input tax credit, provided they have the invoices to support their claims.

Now, businesses have to follow-up with non-compliant vendors on a monthly basis to upload their invoices in the form GSTR 2A.
Harpreet Singh, partner at KPMG, said, “Restriction of mismatched ITC by 20 per cent would necessitate undertaking monthly reconciliation of purchase, credit register with GSTR 2A, and hence may increase the monthly compliance burden.”

He said the move would also restrict credit, which was rightly availed of but did not get reflected in the GSTR 2A form, on account of default by vendors may result in adverse cash flow impact.

The GST collections fell to a 19-month low of Rs 91,916 crore in September, pointing towards deepening economic slowdown. It was the second straight month of revenue collections falling below the Rs 1-trillion mark, compounding the government’s revenue woes amid steep collection target for the fiscal. The target is over Rs 1.1 trillion a month.

In the first six months till September, GST grew by 4.9 per cent year-on-year.

The government in August had extended the date for filing annual GST returns for 2017-18 and 20018-19 by three months to November 30, as taxpayers were facing technical problems in furnishing returns. In fact, the government postponed the deadline a number of times. The original deadline of filing these returns were December 31, 2018.

GSTR-9 is an annual return to be filed yearly by taxpayers registered under the GST. It consists of details regarding the outward and inward supplies made or received under different tax heads.

The form GSTR-9C is filed by those with an annual turnover of above Rs 2 crore. It is a statement of reconciliation between GSTR-9 and the audited annual financial statement, while GSTR-9A is the annual return to be filed those who have opted for the Composition Scheme under GST.

The deadlines were extended after the businesses and experts complained about the complex nature of filing these returns and reconciliation of audited accounts with these returns. For instance, tax and legal consultants had said hundreds of amendments, notifications and circulars have made the GST Act very complex.

Officials of the Tax Bar Association, a body of over 400 members of chartered accountants, company secretaries, cost advocates and tax consultants, had said that the government has made the entire GST procedure and filing of returns very “confusing with hundreds of changes in the rules and taxes”.

Source: Business-Standard.

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‘GST return form too complex to meet filing deadline’

September 4, 2019 admin Comments 0 Comment

Although the government has postponed the deadline for the filing of annual returns under the Goods and Services Tax (GST) for the fourth time, tax analysts say that the problems with the form are so confounding that most filers won’t be able to meet even the new deadline of November 30.

The GST legislation requires the filing of the GST annual returns by specified categories of taxpayers along with a GST audit if the turnover is more than ₹2 crore in a financial year.

As of July 1, 2019, the third year of GST implementation had started and yet, tax filers had not been able to file the returns even for the first year. The government had extended the due date for filing the returns four times, with the latest being the extension from August 31 to November 30.

One of the biggest pain points for tax filers, according to the analysts, is that the annual return form — the GSTR-9 — asks for a lot of information. Such information was not required to be given in the monthly or quarterly return forms — GSTR-1 and GSTR-3B. Tax filers are thus finding it very difficult to provide that information.

“GSTR-9 is nothing but complexity and confusion galore,” said Ritesh Kanodia, partner, Dhruva Advisors.

“The complexity starts with the level of details required, despite the fact that most of these were waived for monthly return filing. For example, the break-up of credit into input, input services and capital goods, or the break-up of reversals type-wise, reporting of ineligible credit, which may not have been captured in the financials.

“The values derived from the system does not always match with the books and a lot of time is wasted in trying to match them, with the only conclusion that it cannot be done,” Mr. Kanodia added.

Apart from the discrepancies between the data in the various GST forms that have to be submitted, another major issue being faced is the complexity of the annual return filing itself, and the fact that it requires information that is often at odds with the GST law itself.

“The manner in which the said information is to be provided is quite complicated,” said Prashanth Agarwal, partner, indirect tax, PwC India. “Although some of the aspects have been clarified by the government on this, still there are open issues which need clarity.

“There is a need to provide HSN classification for services at a six-digit level whereas the GST law allows companies to maintain the same at a four-digit level as well,” Mr. Agarwal added.

“Hence, companies don’t have this six-digit classification available with them. The government should allow companies to report HSN at the four-digit level.”

Onerous requirement
In what is being seen as an extremely onerous requirement, the annual return also requires tax filers to provide details of the transactions on which GST is not payable. Further, in terms of discrepancies, the power lies with the government. Companies cannot claim more input tax credit (ITC) than had already been claimed in the year, but the government can ask for more tax if it feels it is needed.

“The annual return requires the details of all those transactions in respect of which no GST is payable during the relevant period, which make the entire process more complex,” Rahul Dhuparh, deputy general manager, Taxmann said.

“No additional ITC can be claimed in GSTR-9, though additional tax, if found to be payable while reconciling, must be deposited with the government in cash.

“Due to the complex structure of the annual return, taxpayers are afraid to file it as there is no provision in the law to rectify the annual returns,” he added.

“Small taxpayers, who run their business from multiple registrations, but do not maintain separate books of accounts and do not have information split according to GSTIN registrations, are facing a huge challenge in preparing GSTR-9,” said Archit Gupta, founder and CEO, Cleartax.

“Taxpayers with a turnover of less than ₹5 crore must be allowed to report GSTR-9 on an aggregate basis, instead of GSTIN-wise,” said Mr. Gupta.

Source: The-Hindu.

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Last date to file GST annual returns extended till 30 November

August 27, 2019 admin Comments 2 comments

The finance ministry on Monday said the last date for filing annual GST returns has been extended by three months to November 30 as taxpayers were facing technical problems in furnishing returns.

Earlier, GST taxpayers were to file required returns by August 31.

“It is hereby informed that the last date for furnishing of annual return in the Form GSTR-9 / Form GSTR-9A and reconciliation statement in the Form GSTR-9C for the financial year 2017-18 is extended from August 31, 2019 to November 30, 2019,” the Central Board of Indirect Taxes & Customs (CBIC) said in a statement.

GSTR 9 is an annual return to be filed yearly by taxpayers registered under the Goods and Services Tax (GST). It consists of details regarding the outward and inward supplies made or received under different tax heads.

While extending the date, the CBIC said “certain technical problems are being faced” by the taxpayers as a result annual return for the period July 1, 2017 to March 31, 2018 could not be furnished by persons registered under GST.

GSTR-9C is filed by those whose annual turnover exceeds ₹2 crore. It is a statement of reconciliation between GSTR-9 and the audited annual financial statement, while GSTR-9A is the annual return to be filed those who have opted for the Composition Scheme under GST.

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Source: Live-Mint.

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

August 9, 2019 admin Comments 0 Comment

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.

GST Annual Return And Audit: Complexities Galore

December 3, 2018 admin Comments 1 comment

In less than 30 days from now, over 1.15 crore taxpayers will have to file the Goods and Services annual return and audit forms. Made available by the government in September this year, the forms require businesses to not only consolidate information that they have been filing in monthly returns but also reconcile it. Both the forms are fraught with complexities and given that many companies have only now engaged auditors, it would be near impossible to meet the Dec. 31 deadline, experts told BloombergQuint.

GST Annual Return: Surprises

The annual return Form 9 is essentially consolidation of information that taxpayers have been filing via summary return Form 3B and outward supplies Form GSTR 1. It requires consolidation of outward and inward supplies, input tax credit, tax paid, GST demands and refunds.

There are two key areas of concerns in Form 9: requirement of HSN Code for input side and bifurcation of input tax credit or ITC.

The HSN Code Problem:

HSN codes are prescribed by the government to classify goods and services. So far, a buyer while filing Form 3B and GSTR 1 didn’t have to mention the HSN codes of the inputs—i.e. goods bought from a vendor. But the annual return form requires them to do this classification. This is new information altogether that needs to be given and companies’ ERP systems are not geared to give input classifications, Jigar Doshi, an indirect tax partner at SKP Business Consulting, pointed out.

Ritesh Kanodia, a partner at Dhruva Advisors questioned the need for this data.

“The liability for a taxpayer arises only on account of HSN of goods and services he sells and their rate of tax. The HSN of the vendor is not his liability. He merely takes credit for what he has paid for the inputs. He is not going to get into the debate of what is the HSN of the inputs, the rate of tax on them, etc.”

Ritesh Kanodia, Partner, Dhruva Advisors

So there is no need for him to get into the HSN for inputs and many companies won’t even have this data, he said.

ITC Bifurcation Problem:

The annual return requires a three-way split of ITC availed into inputs, input services, and capital goods credits, Doshi said. But in the reporting so far, there was no concept of ITC bifurcation, Kanodia added. He explained the issue by way of an illustration—let’s say, we purchase some machinery. That is a fixed asset. So the credit has been taken as capital goods. If I purchase some inputs, credit has been taken as that and similarly for input services. What has been reported in Form 3B so far is the total figure.

“This data is not appearing anywhere else. Credit is available to me, I can consume that credit. Capital goods—I can understand—because there are certain rules around capital goods. But why do I need this bifurcation for input and input service?”

Ritesh Kanodia, Partner, Dhruva Advisors

That’s another layer of complication which has been added in the annual return form, he said.

GST Audit: Complexities

The complexities in the annual return form pale in comparison to what the audit process entails, both the experts pointed out.

Divided in two parts, the GST Audit Form 9C needs to be filed by a taxpayer who has an aggregate annual turnover exceeding Rs 2 crore. It requires companies to reconcile turnover declared in the financial statement and annual return, tax liability and tax paid, input tax credit availed and reported. Any liability arising out of non-reconciliation also needs to be specified.

This form is trying to dissect the entire financial statement—P&L and balance sheet— and compare the numbers on the outward-inward side and the tax-paid side with the annual return numbers which have been disclosed, Doshi said.

The objective is to assess whether you’ve paid GST on transactions recorded in the books of accounts and, if not, then the explanation for it needs to be provided, Kanodia said. “Similarly, on the credit side, whatever credits you have taken, there is an entry in the books of accounts. That needs to be reconciled with the annual return. So, reconciling rupee to rupee with the books of account is the objective of this exercise,” he added.

And the complexities are many:

Unclear Time Period: The filing threshold is based on gross turnover in a financial year, Kanodia said, but GST came in July. “You have lot of adjustments which happen in any financial accounting—for instance, unbilled revenue. Do I consider the beginning of the financial year or the beginning of July? There are lot of adjustments which need to be seen,” he added.

State-Wise Audit: Doshi explained that GST Identification Number is the basis for the audit. If a taxpayer has branches in five states and each has a separate GSTIN, then five audits need to be done. This would require GSTIN-level bifurcation of audited financial statements which most companies do not maintain, he said.

Reconciliation Issues: GSTR 1, which is filed at the state level, will need to be reconciled with the income and sales ledger at the company P&L level which is not available state-wise and it’s likely that the consolidated figure of different states’ GSTR 1 may not match with the annual P&L, Kanodia explained. This could be due to accrual entries, IND-AS, out-of-scope GST supplies, etc, he added.

“This may entail a line-item level analysis to find out unreconciled line items and ascertain reasons of such mismatch, which is time consuming. Availability of data in the right format is critical to carry out such reconciliations.”

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Source: Bloomberg Quint

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