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GST
GST: CBIC issues Advisory on Implementation of PMT-03 to Re-Credit the ITC sanctioned as Refund

GST: CBIC issues Advisory on Implementation of PMT-03 to Re-Credit the ITC sanctioned as Refund

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The Central Board of Indirect Taxes and Customs (CBIC) has issued the advisory on the implementation of PMT-03 to re-credit the Input Tax Credit (ITC) sanctioned as a refund.

The Board has highlighted the notification No.16/2020-Central Tax dated March 23, 2020, vide which sub-Rule (4A) has been inserted in Rule 86 of the CGST Rules, 2017 and Para 4 of the Circular No 135/05/2020 dated March 31, 2020, wherein the procedure for refund of tax paid on supplies, other than zero-rated supplies were provided.

As per sub-rule 4A of Rule 86 of the CGST Rules, 2017 read with Para 4 of the Circular dated March 31, 2020, a taxpayer is entitled to refund of tax wrongly paid or paid in excess (other than zero-rated supplies), in the same mode by which the tax liability was discharged, i.e., if the tax was paid by partly debiting the credit ledger and partly debiting the cash ledger, the refund shall be sanctioned in the same proportion. The cash part has to be sanctioned and credited to the bank account of the taxpayer by the issuance of RFD-05 and the credit part should be re-credited to the electronic credit ledger of the taxpayer through PMT-03.

“The PMT-03 functionality available at present in the online refund module is only for re-crediting of the rejected amount that has been debited at the time of filing of refunds. In order to enable the operationalization of re-crediting of ITC sanctioned as refund towards tax wrongly paid or paid in excess by debiting the credit ledger, a new enhanced PMT-03 functionality has been developed and deployed in the system,” the CBIC said.

This new functionality is applicable only to the 4 types of refund as provided in the referred circular namely refund of excess payment of tax; refund of tax paid on an intra-State supply which is subsequently held to be inter-State supply and vice versa; refund on account of assessment/provisional assessment/appeal/any other order, and refund on account of “any other” ground or reason.

Source: TaxScan.

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GST ITC
GST technical glitches behind input tax credit frauds: CAG report

GST technical glitches behind input tax credit frauds: CAG report

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The Comptroller and Auditor General (CAG) of India has found that the goods and services tax (GST) system is prone to input tax credit (ITC) frauds due to complexity in the compliance system.

“The originally envisaged system-validated ITC through ‘invoice matching’ had not been implemented. The complexity of return mechanism and technical glitches had resulted in roll-back of key GST returns, rendering the system prone to ITC frauds,” CAG said in its report submitted in Parliament on Wednesday.

The GST returns system is still a work in progress despite more than three years of roll-out, it said. “In the absence of a stable and simplified return mechanism, one of the main objectives of GST rollout — simplified tax compliance system — is yet to be achieved,” the report said.

CAG recommended fixing a definite time frame for rollout simplified returns forms as frequent deferments are resulting in a delay in its stabilisation and continued uncertainty in the GST ecosystem. During October 2018 to March 2020, CAG examined records relating to 4,736 of 23,106 refunds in 33 Central GST (CGST) commissionerates. It noticed non-adherence to extant provisions in processing refunds in 280 claims (6 per cent) involving an amount of Rs 16.16 crore.

“We observed instances of irregular grant of refund due to non-consideration of minimum balance in electronic credit ledger, irregular sanction of refund of input tax credit availed of on capital goods, etc,” the report said.

GST shortfall

The CGST revenue was short of the Budget Estimates and the Revised Estimates during 2018-19 and 2019-20. The shortfall vis-à-vis Budget Estimates was 22 per cent and 10 per cent for the years, respectively. Also, CGST revenue grew 2.97 per cent in FY20 over FY19. CGST revenue as a percentage of GDP, however, declined from 3.08 per cent in FY19 to 2.95 per in FY20.

The share of GST remained constant at 62 per cent of the direct tax collections during the last two years (FY19 and FY20).

To a query over this, the finance ministry said on the recommendations of the GST Council, rate rationalisations have been implemented from time to time by the government and, therefore, the actual indirect tax collections may vary with regard to the target set for a financial year.

It should be noted that in December 2015, the report on the revenue neutral rate and structure of rates for GST recommended the range of 15-15.5 per cent as the revenue neutral rate. However, the effective weighted average GST rate as of July 2019 was 11.6 per cent.

In addition, the GST Council revised the threshold turnover limits upwards for registration of taxpayers and the composition levy scheme, which affected GST collections, the ministry said.

Source: Business-Standard

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GST Input Tax Credit
Taxpayers can use ITC to discharge GST dues for March

Taxpayers can use ITC to discharge GST dues for March

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The Finance Ministry on Saturday said GST taxpayers can utilise the Input Tax Credit available in their credit ledger to discharge their GST dues for the month of March.

“Taxpayers are free to utilise the Input Tax Credit available in their credit ledger, as permissible in law, to discharge their GST dues for the month of March, 2021 – the last month of this financial year,” the Central Board of Indirect Taxes and Customs (CBIC) said in a statement.

Goods and Services Tax (GST) collections crossed the Rs 1 lakh crore mark for the fifth month in a row in February. The mop up in February was Rs 1.13 lakh crore.

Source: Economic-Times

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GST Return
GST: ITC to be availed based on details available in FORM GSTR-2B, clarifies CBIC

GST: ITC to be availed based on details available in FORM GSTR-2B, clarifies CBIC

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The Central Board of Indirect Taxes and Customs (CBIC), via its Twitter, handle clarified that Input Tax Credit ( ITC ) can be availed based on details available in FORM GSTR-2B.

The department was responding to an inquiry from one Mr. Rahul Modi, who asked whether the Goods and Service Tax Network (GSTN), whether ITC needs to be claimed as per 2A or 2B.

“Many clients are filing their GSTR 1 after 12th of the months which gets reflected in 2A but not in 2B which shows difference in ITC with auto populated data,” he added.

The GSTN responded that it was a policy-related issue and has been forwarded to the Government.

“Input tax credit is required to be availed based on details available in FORM GSTR-2B, which is a static ITC statement generated for each month,” the Board tweeted.

Dear Taxpayer,

Input tax credit is required to be availed based on details available in FORM GSTR-2B, which is a static ITC statement generated for each month.
— CBIC (@cbic_india) March 15, 2021

Source: TaxScan.

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GSTN
GSTN now enables the option to download GSTR-2B summary and 2B in detail

GSTN now enables the option to download GSTR-2B summary and 2B in detail

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The Goods and Service Tax Network (GSTN) has enabled the option to download GSTR-2B summary and GSTR-2B in detail on the GST Portal.

The GSTR-2B is a new static month-wise auto-drafted statement for regular taxpayers introduced on the GST portal.

It provides eligible and ineligible Input Tax Credit (ITC) for each month, similar to GSTR-2A but remains constant for a period.

It is available to all the regular taxpayers. Every recipient can generate it on the basis of the GSTR-1, GSTR-5 and GSTR-6 furnished by their suppliers. The statement will clearly show document-wise details of ITC eligibility.

Source: TaxScan.

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gstr-9
GSTN issues Advisory on Annual Return Form GSTR-9

GSTN issues Advisory on Annual Return Form GSTR-9

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The Goods and Service Tax Networks (GSTN) issued the Advisory on Annual Return Form GSTR-9.

The GSTN advised the taxpayers to ensure that values are reported upto two decimal places in the GSTR-9 offline utility. The error “Error! Invalid Summary payload” after uploading the JSON created from the Offline Utility of GSTR-9 is reported due to reporting values upto three decimal places instead of two decimals.

GSTR-9 is an annual return to be filed by all registered taxpayers under GST which is optional for those whose annual turnover is upto 2 crores. The return consists of details such as inward/outward supplies, taxes paid, refund claimed, demand raised and ITC availed by the taxpayer.

It is noteworthy that the due date for filing GSTR-9 (GST Annual Return) and GSTR-9C (GST Audit) for Financial Year 2019-20 is 28th February 2021.

Source: TaxScan.

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compenstion
Over Rs 2.06 trillion GST compensation to states due for April-November

Over Rs 2.06 trillion GST compensation to states due for April-November

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The Centre has released Rs 84,000 crore till date to states under the special borrowing window to meet GST shortfall, while the provisional GST compensation due for April-November 2020 stands at over Rs 2.06 lakh crore, Parliament was informed on Monday.

Minister of State for Finance Anurag Singh Thakur, in a written reply in the Lok Sabha, said GST compensation of Rs 40,000 crore has been released to all states/Union Territories to meet partly the bi-monthly compensation for period April-May 2020 as the GST Compensation Fund was not adequate to meet the full compensation for the period.

The balance GST compensation for the period April-May 2020 and for the full period June-November’20 is pending to all states/UTs due to inadequate amount in the GST Compensation Fund during the current fiscal.

“In order to meet the shortfall in GST Compensation to be paid to States, under the special window, Rs 1.1 lakh crore will be borrowed by Government of India in appropriate tranches.

“The amount so borrowed will be passed on the States as loan on back-to-back basis to help the States to meet the resource gap due to non-release of compensation due to inadequate balance in the Compensation Fund… Central Government has released 14 installments of Rs. 6000 crore each to the States,” Thakur said.

A total of Rs 84,000 crore has been released to the states under the special borrowing window.

The provisional GST compensation due for fiscal 2020-21 (April-November) stands at Rs 2,06,461 crore.

The GST compensation released from July 2017 till date to all states together stands at Rs 3.37 lakh crore.

In response to a separate question on whether the government has received complaints against persons and companies regarding issuance of fake invoices to get benefit of Input Tax Credit (ITC), Thakur said 3,852 fake invoice cases have been booked during July 2017 to December 2020.

The quantum of ITC availed by fake invoicing cumulatively stood at Rs 35,620 crore, while 404 arrests have been made in this regard.

Source: Business-Standard.

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GST
New GST rule is not applicable for MSMEs

New GST rule is not applicable for MSMEs

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Micro, small and medium enterprises (MSMEs) do not require to pay minimum 1% Goods and Services Tax (GST) liabilities in cash as businesses with annual turnover of less than Rs 6 crore are exempted from the new rule, a finance ministry official said.

The Central Board of Indirect Taxes and Customs (CBIC) last week introduced a change in the GST rules that restricted the use of input tax credit (ITC) for discharging GST liability to 99%, the official said requesting anonymity. The move was aimed at curbing the misappropriation of ITC through fake invoicing, he said.

“In order to protect small businesses and genuine taxpayers there are some exemptions to this rule,” he said. The new rule is not applicable in such cases where registered entities have already deposited more than Rs 1 lakh as income-tax in last two years.

It is also not applicable to registered entities who have received a refund of more than Rs 1 lakh in the preceding financial year on account of export, he said adding that government departments and local authorities are also exempted from the rule.

“A legitimate business runs for profit and a minimum value addition is expected from them. It is only where a lot of fake credit is used that no tax payment in cash is made,” he said giving the reason behind implementing the new rule.

This rule will help to control fake invoices fraudsters who avail and pass on ITC by dummy, fake and dormant entities which show high turnovers, but have no financial credibility and flee after issuing fake invoices and misusing ITC, he added.

The new rule is the outcome of a through deliberation by the GST Law Committee to check the menace of fake invoices and misappropriation of ITC, he said. The government in November launched a nationwide drive to nab such fraudsters. “So far, 175 people have been arrested under the ongoing drive and more than 1,800 cases have been booked against over 8,000 fake entities,” he said.

Source: Hindustan-Times

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Simplified GST returns
Businesses with monthly turnover of over Rs 50 lakh to pay at least 1% GST liability in cash

Businesses with monthly turnover of over Rs 50 lakh to pay at least 1% GST liability in cash

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Businesses with monthly turnover of over Rs 50 lakh will have to mandatorily pay at least 1 per cent of their GST liability in cash, the Finance Ministry said as it moved to curb evasion by fake invoicing.

The Central Board of Indirect Taxes and Customs (CBIC) has introduced Rule 86B in Goods and Services Tax (GST) rules which restricts use of input tax credit (ITC) for discharging GST liability to 99 per cent.

“… The registered person shall not use the amount available in electronic credit ledger to discharge his liability towards output tax in excess of 99 per cent of tax liability, in cases where the value of taxable supply … in a month exceeds Rs 50 lakh,” the CBIC said.

While calculating the turnover threshold, sales from GST exempt goods and zero rates supply would not be included.

However, this restriction will not apply where the managing director or any partner have paid more than Rs 1 lakh as income tax or the registered person has received a refund amount of more than Rs 1 lakh in the preceding financial year on account of unutilised input tax credit.

Tax Partner Abhishek Jain said the government has put restrictions on seamless input credit utilisation with introduction of Rule 89B, which blocks utilisation of ITC beyond 99 per cent of the output liability, for businesses having taxable turnover of more than Rs 50 lakh per month.

“With the government providing reasonable exceptions to this rule, the idea remains to prevent misutilisation of credit by businesses taking fake credits,” Jain added.

Further, the CBIC has amended GST rules restricting filing of outward supply details in GSTR-1 for business that have not paid tax for the past periods by filing GSTR 3B.

So far, until now, non-filing of GSTR 3B resulted in blockage of e-way bill but will now result in GSTR 1 blockage as well.

Abhishek Jain, Tax Partner, said, “The government has now restricted filing of outward supply details in GSTR 1 return for businesses who have not paid tax for the past periods by filing GSTR 3B.

“The government’s idea here seems to be to curb input tax credit passing by businesses which have otherwise not paid their GST liability,” Jain added.
AMRG & Associates Senior Partner Rajat Mohan said, “These changes indicate that government is grappling with lower tax collections and high tax evasions, burden of which will again be on honest taxpayers”.

The CBIC has also notified authentication of Aadhaar number or physical verification of business premises for the purposes of obtaining GST registration.

“This amendment has likely been introduced to prevent fraudulent registrations,” Jain added.

Also, the validity of electronic way bill provisions has been amended by the CBIC according to which the e-way bill will be valid for 1 day for every 200 km of travel, as against 100 km earlier.

Source: Times-Of-India.

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GSTN
GSTN enables facility of Communication between supplier and recipient on GST portal

GSTN enables facility of Communication between supplier and recipient on GST portal

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The Goods and Service Tax Network (GSTN) has enabled the new facility of “Communication between Taxpayers” on the GST portal

After the introduction of this facility the supplier and recipient can directly communicate with each other on GST Portal itself. They can also give a reply to communication received on the portal.

The GSTN has given this facility taking care of the requirement that the communication forms a significant part of GST as Input Tax Credit (ITC) in GST which is an important element is invoice based. In case there is some error in the invoice, that has to be immediately rectified so as to enable the buyer to take ITC.

The new facility will make communication easy; bring transparency in the system; help in the matching of invoices and avoid complications of Goods and Service Tax Framework.

This facility helps the taxpayer to raise questions related to Tax Invoices, Debit Note, Credit Note, Missing Document, Amendment of Filed Document, or any other issue. A taxpayer can raise questions both as a buyer or supplier of goods or services.

Source: TaxScan.

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