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GSTN enables Reconciliation Tool for matching GSTR-2B with Purchase Register

GSTN enables Reconciliation Tool for matching GSTR-2B with Purchase Register

The Goods and Services Tax Network ( GSTN ) has enabled the Reconciliation Tool for matching GSTR-2B (Auto-Drafted ITC Statement) with Purchase Register.

The GSTN has issued detailed advisory on using Matching Offline Tool
Matching Offline Tool v1.0

The Matching Offline Tool can be used to:
• View GSTR-2B (Auto-drafted Input tax credit (ITC) statement)
• Match GSTR-2B with Purchase register

To install the tool, please download, extract the zip file and run the Download

Your downloaded (Matching_Offline_Tool) zip file contains:
• GSTR2B_Matching_Tool_v1.0.exe (Application)
• Purchase Register Excel Template
• Readme
• User Manual
• Change History

Important!
• Before you extract and run the downloaded file, ensure that the file is not corrupted. How do I know that my file is not corrupt? Click here to know more.
• Go through the Readme document before you begin installation.
• Double-click on GSTR2B_Matching_Tool_v1.0.exe to install the offline tool.

What’s new v1.0(Released on 13/09/2020)
• Downloading the auto-drafted input tax credit (ITC) statement – GSTR-2B from the dashboard at GST Portal and opening the same in the Offline Tool for viewing.
• Importing the purchase register in the Offline Tool for matching with GSTR-2B downloaded from the GST Portal. Taxpayers will have to use Excel/csv template provided with the tool to prepare their purchase register and import the same in this Offline Tool.
• Comparing the auto-drafted ITC statement – GSTR-2B, downloaded from the portal and the purchase register using the ‘Matching’ tab provided in the tool to identify documents which are fully matched, partially matched or not matched.
System Requirement

To use the tool efficiently, ensure that you have the following installed on your system:

• Operating system Windows 7 or above. The tool does not work on Linux and Mac.
• Browser: You need one of these browsers installed on your system:
• Internet Explorer 10+
• Google Chrome 7+
• Firefox 45+
• Microsoft Excel 2007 & above
• Alternatively, for any below versions, the tool will open in a default browser.
• Before installation of Offline tool, ensure that you have 200 MB of free disk space in your local machine

Source: TaxScan.

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GSTN enables functionality to help GST payers on ITC eligibility

GSTN enables functionality to help GST payers on ITC eligibility

GST Network has enabled a functionality to help GST payers know their input tax credit (ITC) eligibility in their Annual Return, making it more convenient to file GSTR-9.

So far, the GST system used to compute eligible ITC based on suppliers’ sales return GSTR-1, but the break-up at the invoice level was not provided.

Taxpayers used to raise a query on the computation of ITC.

In a statement, Goods and Services Tax Network (GSTN), which handles the technology backbone of GST, said that to bring the entire computation to taxpayers by way of showing each invoice filed by the suppliers and showing eligibility against each, this functionality has been developed.

“GSTN has rolled out an important functionality today which will help GST taxpayers know their exact eligibility of ITC flowing in their Annual Return and thereby filing the annual return, i.e. GSTR-9 more conveniently,” GSTN said in the statement.

For this functionality, a new tab ‘Download Table-8A details’ has been introduced on the GSTR-9 dashboard of the GST portal from Financial Year 2018-19 onwards, it added.

Source: Live-Mint.

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GSTR 1 and 3B to be linked to determine input tax credit and liability

GSTR 1 and 3B to be linked to determine input tax credit and liability

In an effort to plug goods and services tax (GST) evasion and frauds and ease compliance, the existing GST return filing system is being enhanced to have an in-built invoice matching system to determine input tax credit and liability. The returns will be auto-populated to minimize errors, ease reconciliation and simplify compliance.

The group of ministers (GoM) on Information Technology (IT) led by Bihar deputy chief minister Sushil Kumar Modi took stock of the preparedness and the timelines in a meeting held on Friday.

The load handling capacity of GST Network (GSTN) has also been enhanced to 300,000 taxpayers at one point of time as against 150,000 taxpayers earlier to avoid glitches during peak hours.

A dedicated team of 60 tech persons has been set up to expeditiously deliver functional changes to the GST System under ‘Returns Enhancement and Advancement Project’ (REAP), which started in April.

Being developed as an alternative to the earlier proposed simplified return system that was put in abeyance in March, the new approach revolves around advancing and enhancing the existing return filing system to ensure ease of taxpayers. It is divided in five teams and various components are being developed.

“The new features in the existing return system will not only bring ease to taxpayers by way of auto-population of returns, but will also fix the drawback in the current system with respect to invoicing matching and determination of input tax credit and liability. The functionality will be ready by September and will be rolled out after approval from the GST Council,” Modi told Business Standard.

Taxpayers with a turnover of less that Rs 5 crore will also be allowed to file summary returns (GSTR 3B) on a quarterly basis, likely from November. Around 70 per cent taxpayers are likely to get covered under the quarterly return filing system.

In the current system, taxpayers are required to file GSTR-1 for outward supplies and GSTR-3B, which is summary return for sales and input tax credit and GSTR 2A, which is a purchase-related tax return. GSTR 2A is automatically generated for each business by the GST portal. When a seller files his GSTR-1, the information is captured in GSTR 2A.

But GSTR 1 and 3B are not linked, hence different values can be filed. The two returns will now be linked to get a system generated liability and a functionality is being developed for auto-populating valued from GSTR 1 and 3B.

Also, return form GSTR 2B will be introduced for availing input tax credit, which will plug leakages and frauds. In the current system, the input tax credit claimed on self-declaration basis, resulting in a mismatch many a times. Under the new system, GSTR 2B will be generated on the basis of GSTR 1 filed between two due dates by counter-party suppliers, for availing credit in GSTR 3B in a month. “GSTR 2A will suggest exact credit to be claimed to taxpayers in GSTR 3B,” said Modi.

The earlier proposed new return system requiring fewer details, was earlier expected to be introduced from October last year, but was postponed to April 1, 2020, but was eventually put on hold in March in view of lack of IT preparedness.

“Infosys chairman Nandan Nilekani was of the view in March that instead of giving a new instrument, we can enhance the capability of the existing system. It will not cause pain to the taxpayers in terms of adaptability,” said Modi.

Source: Business-Standard.

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Govt dumps new GST return system; to continue with modified version of existing one

Govt dumps new GST return system; to continue with modified version of existing one

The government plans to improve existing GST return filing system instead of rolling out a new model. The new system was supposed to be launched on 1 October this year. Yogendra Garg, Principal Commissioner, GST Policy at CBIC, while speaking at a webinar hosted by Assocham, said that the move is aimed at making compliance much easier.

The GST Network, the IT support of the GST regime, is working on modifying and improving the current returns and will soon announce an advanced version of the existing system.

They are going to introduce a new form GSTR 2B, which like the GSTR 2A will have details of purchases of the company or business with added information on input tax credits. The existing GSTR 1 form, which captures sales-related information, will be more detailed. The Form GSTR 3B, which gives the tax computation, will be auto-populated.

New features likely to be added in the new improved version of the existing return system include matching tool for comparison of GSTR 2A with purchase register, communication channel between buyer and seller, and an improved comparison table of tax liability and input tax credit (ITC) after incorporating ITC on IGST paid on imports.

The GSTN is also looking to reduce error on part of taxpayers by improving the process of linking GSTR1 with GSTR3B and GSTR2A data with GSTR3B for flow of ITC.

Meanwhile, Garg also said that the e-invoicing, a form of electronically-authenticated invoices, will be implemented from 1 October only for businesses with turnover of Rs 500 crore or more. Earlier, it was planned to implement e-invoicing for businesses with turnover of Rs 100 crore or more in a year.

Source: Business-Today.

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Govt blocks fraudulent GST refund claims worth Rs 1,875 crore

Govt blocks fraudulent GST refund claims worth Rs 1,875 crore

The government has blocked fraudulent Goods and Services Tax (GST) refund claims worth Rs 1,875 crore involving 1,377 exporters after their addresses could not be traced, a Union finance ministry official said.

“This number of risky exporters, also, includes seven exporters accredited as star exporters,” the official said requesting anonymity.

The government rates export houses on the basis of their performance and accord them one to five stars.

The Central Board of Indirect Taxes and Customs (CBIC) has instructed its officials to verify the correct refund of input tax credit (ITC) by such risky exporters on the basis of pre-defined risk parameters, he added.

According to the official, while CBIC is focusing on quick disbursal of pending refunds to exporters, it also uses data analytics to identify “risky” exporter entities that take input tax credit fraudulently and monetise it by paying Integrated Goods and Services Tax (IGST) and claiming a refund on that.

Imports of goods and services are treated as inter-state supplies and attract IGST.

“The verification exercise is aimed at preventing unscrupulous exporters from defrauding the state exchequer and bringing a bad name to the exporting community at large,” he said.

CBIC has, however, assured all genuine exporters that they would continue to get their refunds in a timely manner in a fully automated environment, he said.

The official said a total of 7,516 exporters figure in the risky exporters’ list to date. “IGST refund worth Rs 1,363 crore is suspended in respect of 2,830 risky exporters. Adverse reports have been received in respect of 2,197 risky exporters,” he added.

Source: Hindustan-Times.

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Large companies fear losing out on GST credit if vendors, suppliers go bankrupt due to Covid crisis

Large companies fear losing out on GST credit if vendors, suppliers go bankrupt due to Covid crisis

With many small and medium enterprises staring at bankruptcy or severe business disruption due to the Covid-19 crisis, large companies that buy raw material and products from them now have to deal with a new problem: denial of credits if the vendor defaults on paying goods and services tax.

According to the GST framework, large companies cannot claim credits unless their suppliers and vendors have paid the tax. Section 16 of the GST law says that if a vendor does not pay GST to the government, input tax credit will be denied to the buyer.

Companies with a large supplier base across sectors are now reaching out to their vendors to check if there is a possibility of a default from their side.

“The additional liability cast on businesses for ensuring payment of tax by the supplier has been a rising concern since inception because of the practical difficulties in verifying the same and the financial burden even though the tax is paid to vendors,” said Abhishek Jain, a tax partner at EY. “This obligation has drawn attention in these difficult times owing to apprehensions of defaults by vendors with the currently spread financial flu.”

The nationwide lockdown has broken the back of the SME sector. The coronavirus triggered restrictions that shut businesses abruptly and left smaller companies facing a crushing cash crunch. Major raw material and labour shortages along with a demand pullback from the industry created an existential crisis for many.

Industry experts said many large companies have been putting in place some steps to manage the situation.

“Large businesses are considering indemnity arrangements to safeguard themselves from vendor defaults arising from the extended timelines for GST payments and returns provided to smaller businesses. There is also a need to re-evaluate the vendor selection policies based on previous compliance track records,” said MS Mani, a partner at Deloitte India.

According to people aware of the matter, some companies have asked their vendors and suppliers to give them an indemnity letter.

“The letter is essentially a legal document that asks vendors to pay GST on time and be held responsible if there is a GST default or if any interest or penalty is charged to the company due to a vendor’s delay,” said one person.

Input tax credit can be claimed only after a vendor has paid the tax and uploaded the correct invoice on the GST portal. The invoices are matched with the credit eligibility of the company. Full credit is allowed if there is 90% accuracy or if there is a problem with 10% of the invoices.

A few of the larger companies, especially in the automobile and other manufacturing sectors, are not taking chances, experts said.

“Some of the large companies are holding back on payments to vendors and suppliers for two months as a pressure tactic. This is to make sure that they pay up the GST on time and the company is able to avail of tax credits,” said a tax expert who advises large companies.

Source: Economic-Times


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GST rate cut to boost demand may be counterproductive, say finance ministry officials

GST rate cut to boost demand may be counterproductive, say finance ministry officials

The government may not accept the industry’s demand to substantially reduce Goods and Services Taxes (GST) for six months to boost demand as the exemption would block input-tax credit that would have an adverse impact on businesses and may not result into any significant gain to the consumer, two finance ministry officials said.

The GST exemption will make output tax as zero and thus the input-tax credit would be blocked, which will be added to the cost making the product costlier, the officials with direct knowledge of the matter said requesting anonymity.

“This will not only be injurious to the industry but also to the consumer at large and this is certainly not going to revive the demand,” one of the officials said.

The GST is an integrated levy of indirect taxes and a main source of revenue for both the Centre and the states. It is about one-third of the total tax receipts. Over 70% of the GST revenue accrues to the states through their own share and the devolution. Therefore, it is impossible for states to manage their finances without the GST revenue, a second official said.

Several industry associations have said demand generation would be a major challenge before the government after the lockdown is lifted and a substantial reduction in GST rates could be a solution. Niranjan Hiranandani, president, Associated Chambers of Commerce and Industry of India (Assocham) is one of its proponents who had proposed to cut GST rates on almost all products by 50% for six months to boost demand and had asked the government to include it in the part of its economic stimulus package with estimated cost of about Rs 3 lakh crore. HT reported it on April 17.

Responding to the finance ministry officials’ comments, Hiranandani said on Tuesday, “In theory, yes – lost input tax credit (ITC) on exemption from GST is an issue of concern, but that is not what the industry’s suggestion.”

“It has to be viewed from the perspective of incentivizing consumers by inducing them to make a purchase leading to the consumption which is the need of an hour. The argument is that a cut in GST for a short term, say next 6 months, will reduce the amount paid for the good or service, so the consumer will buy more (spend more) and thereby, revitalize the economy. It is a simple issue of reducing (not exempting) GST, so that consumers go ahead and buy – in the present, during the period of reduced GST rather than keep waiting for some other day to do so,” he said.

The logic is that demand generation needs reduction in GST,” he said adding “The aspect of ITC can be dealt with, so long as the suggestion is taken in the proper perspective.”

Experts, however, advised the government to adopt a cautious approach while tempering with GST rates. “There does not appear to be any empirical evidence that any country has exempted GST/VAT [value-added tax] across the board in order to drive up the pandemic-impacted economies. There could be specific sectors/areas where there may be a need to rationalise the GST rates for a temporary period to assist the sector. This needs be done very cautiously ensuring that revenue losses are minimised, leakages are avoided and the reductions do not lead to emergence of inverted duty structure situations,” said MS Mani, partner at Deloitte India.

Abhishek Jain, tax partner at consultancy firm EY said a GST exemption would entail breaking of credit chain, higher input tax costs for businesses and complexities on compliances with credit transitions during taxable and exempt tax periods. “A specified percentage GST rate reduction could be explored vis-à-vis a NIL rate/exemption by the government specifically for the severely impacted sectors. In a scenario, where the said rate reduction entails accumulation of credits, the government should ensure full refund of the credits so accumulated with faster processing of such refunds,” he said.

According to Pratik Jain, partner and leader-Indirect Tax at  India, providing GST exemption leads to complications in terms of blockage of ITC, coupled with rigors of anti profiteering provisions, besides imports become cheaper. “However, there is perhaps a need to make an exception for certain industry sectors such as airlines, hospitality etc. In addition, the government should consider providing working capital cushion to industry by deferring the payment of GST collected by few months to industry at large, without payment of any interest,” he said.

Source: Hindustan Times

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CBIC enables Form PMT-09 for Shifting Wrongly Paid Input Tax Credit

CBIC enables Form PMT-09 for Shifting Wrongly Paid Input Tax Credit

The Central Board of Indirect Taxes and Customs ( CBIC ) has enabled the Form PMT-09 for shifting the wrongly paid the Input Tax Credit ( ITC ).

The CBIC has recently introduced Form PMT-09 (i.e. a challan) for shifting wrongly paid Input Tax Credit. This enables a registered taxpayer to transfer any amount of tax, interest, penalty, etc. that is available in the electronic cash ledger, to the appropriate tax or cess head under IGST, CGST and SGST in the electronic cash ledger.

Hence, if a taxpayer has wrongly paid CGST instead of SGST, he can now rectify the same using Form PMT-09 by reallocating the amount from the CGST head to the SGST head.

All taxpayers registered under GST are eligible to shift any balances available in the electronic cash ledger using Form GST PMT-09. The option is available after the taxpayer logs in, under the electronic cash ledger tab. Thus, a taxpayer can now easily rectify wrongly paid taxes or other amounts.

Source: TaxScan

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Govt not cutting GST on PPEs, masks, to save local cos from cheap imports

Govt not cutting GST on PPEs, masks, to save local cos from cheap imports

The government is holding back on any GST rate reduction for items like PPE, ventilators, test kits, and sanitisers, as this could end up encouraging ‘sub-standard imports’ from China.

Government sources clarified on this after Congress leader Rahul Gandhi raised the issue on Twitter, arguing that it was wrong to levy GST on such items from people who were dealing with poverty and disease.

On the contrary, sources said, GST exemption would make prices fall leading to hardships and distortion for domestic manufacturers without much cost-benefit to the consumers. They said such a step would ensure imports get an advantage on domestic supplies, especially in PPE where the hardship on account of GST exemption would be “severe” for domestic units as basic customs duty on the item is nil up to September 30, 2020.

“The recent experience shows that sub-standard quality goods are exported by China to India and the world. Therefore, incentivising imports by the reduction of GST, at the cost of domestic units, may not be a desirable option,” a government source said.

Sources also explained that distorting the rate structure at the cost of domestic supplier may not be desirable in a situation where government is the biggest buyer of these goods and is supplying these goods for free. “The GST on said items is mostly borne by the Governments. Domestic units are making serious efforts to ramp up their capacities. In certain cases, like masks and sanitisers, the items are being procured by individuals too. Putting domestic manufacturers at disadvantage viz a viz imports may not be desirable,” the sources said.

It was further explained that GST exemption leads to a blocked input tax credit (ITC) thus increasing the cost of manufacturing for domestic manufacturers. “Even if GST on PPE is reduced to nil, the total cost would remain unchanged. While GST exemption to PPE would make output GST as zero, the ITC (GST suffered on inputs) would get blocked and would get added to the cost. Therefore, while the consumer does not gain from GST exemption, the compliance burden would increase for the manufacturer,” sources said. They added that imports would not suffer any such block ITC and thus, imports get an advantage. Sources said GST exemption on sanitary pads had led to a similar situation for domestic manufacturers of the product.

The government had exempted basic customs duty and health cess on such items, except sanitisers till September 30 given the immediate need for such items from abroad. “But GST exemption on such items is in a different footing and has significant cons without much gains to the consumer,” sources added.

Source: Economic-Times

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CBIC processes 12923 GST Refund applications involving claims worth Rs 5575 Cr amid Lockdown

CBIC processes 12923 GST Refund applications involving claims worth Rs 5575 Cr amid Lockdown

CBIC said that it is fully committed to helping the GST taxpayers in the present COVID-19 situation. Since 30th March 2020, CBIC has processed 12923 refund applications involving claims worth Rs. 5575 Cr. While in the last week itself, CBIC has processed 7873 claims worth.. 3854 Cr. CBIC said that a trade and business-friendly measure taken by CBIC .de its Circular No. 133 da.d 31.03.2020. help GST returns filers to facilitate early ITC refunds and to ensure that the wrong ITC claims are not processed in the absence of relevant information, is misconstrued in certain sections of social media and other media as troubling the taxpayers in COVID -19 like situation.

CBIC said that this measure was taken into effect with GST Council’s approval in its 39th Meeting held on 14.03.2020. mitigate delays in I’M refunds faced by the taxpayers besides ensuring that wrong ITC claims are not processed. It had been brought to the notice of GSTC by various stakeholders including the taxpayers. It was noticed that lot of time is spent in the verification of whether the credit was availed on services and Capital Goods in certain categories for the refund claims.

CBIC said that in order. address the difficulty faced by trade in providing this data at the time of processing of claim leading to delays and an increase in compliance cost, it was decided in the GST Council. make declaration of classification codes a part of the application itself. The GST Council in the same meeting has also decided. allow bunching of periods across financial years. facilitate claim of refund by exporters. This would apply to applications filed after 31.03.2020. It may also be noted that the due date of all such applications which were due during 20th March 2020 and 29th June 2020 has been extended to 30.06.2020.

CBIC explained that the Circular No. 133 (da.d 31.03.2020) is with regard to the requirement to give HSN/SAC code along Rith the refund application. The GST Law doesn’t allow refund of credit availed on service,s and/or Capital Goods in certain categories. For example, Capital Goods ITC refund is not permissible for re.. of ITC on account of exports and other zero-rated supplies. Further, ITC availed on services and capital goods are not allowed to be refunded in the Inverted Structure Refimd category.

Source: Taxscan

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