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Single rate, fewer exemptions in GST key to boosting India’s tax-to-GDP ratio

Single rate, fewer exemptions in GST key to boosting India’s tax-to-GDP ratio

India may be eyeing further reforms to lift the tax-to-GDP ratio after putting in place the goods and services tax (GST), one of the country’s biggest policy changes ever.

The tax-GDP ratio is expected to cross 12% in FY19, a new high in over a decade, but lower than emerging market peers. This means expanding a tax base that’s been eroded by large exemptions and carveouts. A simpler, non-adversarial tax regime can help in this regard.

“From all accounts, there is likely to be increasing pressure on government expenditure from 2019 onwards as competitive politics will compel enhanced spending on various social and agrarian sector areas,” said Sudhir Kapadia, national tax leader, EY India. “This would mean renewed efforts of broadening the tax base and enhancing revenues.”

One Nation, One Tax
GST created a seamless national market and ensured that consumers pay the same tax for goods and services. The GST Council has been making changes since the July 2017 rollout but deeper surgery may be needed.

An ideal GST means a single rate with negligible exemptions. In India, things are different because of political circumstance. Petroleum products, real estate, and liquor remain out of its purview and there are a plethora of rates. Kerala has been allowed to impose a 1% cess following the 2018 floods. The turnover threshold for goods was raised recently to Rs 40 lakh, but for services, it remains at Rs 20 lakh.

A GST 2.0 would mean moving closer to a single rate structure with fewer exemptions, bringing all sectors within its ambit and a simpler law. Any government will find it politically difficult to tax a Mercedes and salt at the same rate and it may also need to exempt a few items such as the latter altogether. But steps to reduce such divergence would be welcome. “This will require broadening of the tax base by getting petroleum and real estate in its fold, further simplification of tax rates, many legislative interventions and avoiding quick-fix solutions such as selectively restricting the input credit for a particular sector or accommodating state-specific changes, which dilutes the concept of ‘one nation one tax’,” said Pratik Jain, national indirect taxes leader, PwC.

A robust dispute-resolution mechanism and administration will help.

“Inclusion of petroleum products and the entire real estate value chain in GST should figure prominently in the agenda of the new government,” said MS Mani, partner, Deloitte, Haskins & Sells.

Use of the database to generate leads on tax evaders and rewarding honest taxpayers using the GST Compliance Rating tool will also generate more confidence among businesses, Mani said.
Direct taxes
Direct taxes, which saw a decadal high tax-GDP ratio of about 6% in the previous fiscal, need drastic simplification with minimal exemptions for individuals and businesses That would go well with the ambitious plan of the Central Board of Direct Taxes (CBDT) for jurisdiction-free assessment. A task force has been set up to draft a new tax code but a drastic reduction in rates may not be on cards.

“The main agenda for the new government is likely to be a renewed focus on streamlining processes and removing draconian provisions which have inadvertently crept into both the GST and direct tax laws,” said Kapadia of EY, adding that more likely than big-bang reforms would be the easing of processes and ensuring better compliance.

Raising Tax-To-GDP Ratio
The tax-to-GDP ratio for India has inched up slightly in recent years but remains well below the world average. The goods and services tax (GST) and demonetisation have helped but more measures may be needed to reduce evasion.

XaTTaX: Cloud and On-Premises Based GST Filing Software For India

Source: Economic Times
Ahead of festive season, GST collections cross Rs 1 lakh crore in October

Ahead of festive season, GST collections cross Rs 1 lakh crore in October

Ahead of the festive season, the Goods and Service Tax collections have crossed Rs 1 lakh crore mark in October.

Finance Minister Arun Jaitley said, “GST collections for October 2018 have crossed Rs 1 lakh crore. The success of GST is lower rates, lesser evasion, higher compliance, only one tax and negligible interference by taxation authorities.”

The revenue from GST was Rs 94,442 crore in September. The collections stood at Rs 94,016 crore in May, Rs 95,610 crore in June, Rs 96,483 crore in July and Rs 93,960 crore in August.

GST mop-up had crossed the Rs 1 lakh crore mark for the first time in April and since then it has remained above the Rs 90,000 crore level.

The Finance Ministry had targeted monthly GST collections to be Rs 1 lakh crore for this fiscal.

The Goods and Services Tax was rolled out on July 1 last year, in an effort to subsume multiple indirect taxes with a single comprehensive tax.

XaTTaX – World Class Automated eSolution for Return filing and e-Waybill

Source: Business Today
SC upholds Compensation to States Cess under GST constitutionally valid

SC upholds Compensation to States Cess under GST constitutionally valid

The Supreme Court Wednesday upheld the constitutional validity of Goods and Services Tax (GST) Compensation to States, Act saying it was not beyond the legislative competence of the Parliament.

The top court said the Compensation to States Act, enacted by the Parliament in 2017, is not a “colourable legislation”.

A bench of Justices A K Sikri and Ashok Bhushan said the Act does not violate the Constitution (One hundred and first amendment) Act, 2016 nor is against the objective of Constitution (One Hundred and First Amendment) Act, 2016.

It held that the levy of ‘Compensation to States’ Cess is an increment to goods and services tax which is permissible under the law.

The bench while dealing with constitutional validity of the (Compensation to States) Act said that the expression ‘cess’ means a tax levied for some special purpose, which may be levied as an increment to an existing tax.

“The Scheme of Compensation to States Act, 2017 as noticed indicate that the cess is with respect to goods and services tax. There are more than one reason to uphold the legislative competence of Parliament to enact the Compensation to States Act, 2017,” it said.

The bench said that Article 248 read with Articles 246 and 246A clearly indicate that the residuary power of legislation is with the Parliament.

It said that in the present case, no contention has been raised that the subject matter of legislation was within the competence of State Legislature, and that the Parliament had no competence to legislate.

The bench said that after Constitution (One Hundred and First Amendment) Act, 2016, as per Article 270, Parliament can levy cess for a specific purpose under a law made by it.

It said that when Constitution provision empowers the Parliament to provide for Compensation to the States for loss of revenue by law, the expression “law” used therein is of wide import which includes levy of any cess for the above purpose.

“We, thus, do not find any merit in the submission of the counsel for the petitioner that Parliament has no legislative competence to enact the Compensation to States Act, 2017,” it said.

Dealing with second question, whether the Act transgresses the Constitution, the bench said that the Preamble of Compensation to States Act, 2017 expressly mentions the Act to provide for compensation to the States for the loss of revenue arising on account of implementation of GST in pursuance of the provisions of the Constitution (One Hundred and First Amendment) Act, 2016.

“Thus, the Compensation to States Act, 2017 has been enacted under the express Constitution (One Hundred and First Amendment) Act, 2016. We, thus, also do not find any force in the submission of the counsel for the petitioner that Compensation to States Act, 2017 transgresses the Constitution (One Hundred and First Amendment) Act, 2016,” it said.

The court said it does not agree with the submission that Compensation to States Act, 2017 is a “colourable legislation”.

“We having held that Parliament has full legislative competence to enact the Act and the Act having been enacted to implement the Constitution (One Hundred and First Amendment) Act and the object being clearly to fulfil the Constitution (One Hundred and First Amendment) Act’s objective, we reject the submission of the petitioner that Compensation to States Act, 2017 is a colourable legislation”, it said.

With regard to the question, whether levy of Compensation to States Cess and GST on the same taxing event is permissible in law, the bench said that GST imposed under the 2017 Acts and levy of cess on intra-State supply of goods and services or both as provided the CGST Act and supply of goods and services or both as part of IGST Act are two separate imposts in law and are not prohibited by any law so as to declare it invalid.

“We, thus, do not find any substance in the submission that levy of Compensation to States Cess on same taxable event is not permissible,” it said.

The bench also refused to set off payments made towards clean energy cess payment of Compensations to States Cess.

The apex court verdict came on an appeal filed by Centre against the Delhi High Court order passed in a case of Mohit Mineral Pvt Ltd which has challenged the validity of the Goods and Services Tax (Compensation to States) Act, 2017 and the Goods and Services Tax Compensation Cess Rules, 2017.

The Delhi High Court in its interim order provided that additional levy on the stocks of coal on which petitioner Mohit Minerals Ltd had already paid Clean Energy Cess in terms of Finance Act, 2010, shall not be required to make any further payment.

It had said however that on stocks of coal on which no Clean Energy Cess under the Finance Act, 2010 was paid any payment in terms of the Act would be subject to the result of the petition before it.

GST Ready Invoicing Software – Generate GST Compliant Invoice

Sources: Economic Times
GST: Delhi raises e-way bill threshold

GST: Delhi raises e-way bill threshold

After West Bengal and Tamil Nadu, Delhi has become the third state to double the threshold for e-way bill for intra-state movement of goods to Rs 1 lakh of the cargo value.E-way bill software Experts said the move poses a threat to the seamless implementation of a unified, pan-India GST.

States are legally allowed to amend these rules and also give item-wise exemptions from e-way bill requirements, subject to ceilings. However, tax practitioners said the move could create confusion among taxpayers and make compliance more complex for businesses having consumer bases in multiple states.

FMCG companies, white-goods manufacturers, and auto companies will bear the brunt if more states follow suit and digress from the e-way bill norms approved by the GST Council. The tacit understanding at the council is that such digressions are best to be avoided. Sources said Tamil Nadu and West Bengal have notified state-specific exemptions.

The E-way bill mechanism mandates that supplier or recipient of good worth over Rs 50,000 inform the GST Network about details of the movement of such merchandise. The system would allow the government to detect under-reporting of sales in business-to-consumer transactions and is estimated to shore up monthly GST revenue by as much as Rs 10,000 crore.

E-way bill rules came into effect on April 1 for inter-state movement of merchandise.

XaTTaX: Your automated Eway bill compliance is just a click away!


Source: Financial Express
How E-way bill fared in the first 15 days

How E-way bill fared in the first 15 days

It has been more than two weeks that the e-way bill e-way billwas made compulsory for inter-state movement of goods. Given that the capacity of the e-way bill portal was beefed up to handle around 75 lakh inter-state e-way bills on a daily basis, not much trouble was faced on April 1, barring a down-time of two hours which disrupted businesses for a while.

Having said that, overall the implementation was a success, with Karnataka also rolling out its intra-state e-way bill system at the same time, becoming the first state to do so. In these last two weeks, over 1.22 crore e-way bills have been generated from the e-way bill portal, and 543 verification reports have been uploaded by tax officials, as per the government records.

This roughly puts the average number of e-way bills generated per day at a little over 7 lakh – which goes on to show that the government indeed was well prepared this time to handle the load, in fact up to nine or ten times of actuals.

What is also commendable, is that the phase wise implementation of the e-way bill is also progressing as per plan. On Sunday, April 15, e-way bills were made compulsory for movement of goods within and across five states – Gujarat, Uttar Pradesh, Andhra Pradesh, Telengana and Kerala.

XaTTaX: Your automated EWay bill compliance is just a click away!

As per the government records, nine states have generated 82% of the total e-way bills so far – with Gujarat being the major state in terms of intra-state e-way bill generation, followed by Karnataka and Maharashtra. The most recent phase of the e-way bill rollout was on Friday, April 20 which saw intra-state e-way bills go live in six more states, which are Bihar, Haryana, Jharkhand, Madhya Pradesh, Tripura and Uttarakhand. Going by the way, the roll-out has gone so far, the Council’s dream of a nation-wide implementation by June 1, does seem quite feasible.

At this point in time, it can be safely assumed, that with each passing day, the e-way bill is bound to iron out the wrinkles of tax evasion across state borders. For instance, in Madhya Pradesh, about 80 teams have been assigned by the commercial tax department to conduct mobile checking of vehicles, and within the first half of April, already 100 vehicles have been detained, for violating the e-way bill norms.

Quite a few number of trucks in other places have been stopped, after they were found transporting goods either with faulty bills or without registration. Given the alertness of the government, one can expect more such initiatives to ensure that businesses and transporters stay compliant.

While the government is doing their due-diligence, it has become extremely critical for businesses to adopt a solution which assists in generating and managing e-Way Bills, and at the same time facilitates recording and maintenance of accurate invoices.

The software should also mitigate repetitive tasks and allow the flexibility of generating JSON for a single invoice or, a single JSON for multiple invoices along with ease of handling any exceptions. Together with technology, and the initiatives of the government, we are sure to smoothen trade and industry processes, thus making life simpler for both businesses and transporters.

Ease Your GST Filing & Invoice with XaTTaX GST Software

Source: ET
GoM to meet stakeholders today to discuss GST return filing process

GoM to meet stakeholders today to discuss GST return filing process

A Group of Ministers (GoM) headed by Bihar Finance Minister Sushil Kumar Modi Sushil Modi : GSTwill be meeting different stakeholders today to devise a simple, single-stage return filing process, to reduce compliance burden and ease procedures for businesses under GST.

Non-Executive Chairman of Infosys Nandan Nilekani, officials from Central Board of Indirect Taxes and Customs (CBIC), along with GST Network (GSTN) Ajay Bhushan Pandey will also be present at the meeting.

The GoM was set up by the GST Council to make the GST return filing process smooth and less complex, especially for the small taxpayers. Despite a couple of consultations with IT experts over the last four months, meetings have remained inconclusive.

In the last meeting in March, the GST Council discussed two alternate models for simplification of return filing. However, there was no definitive view regarding the same. Tax officials have been deliberating whether provisional input tax credit should be provided to businesses and if it should be linked with payment of tax under GST.

“Tax bureaucracy of states and the Centre felt that simplification should not provide room for evasion…the Council was of the view that there should be single return every month, it should be simple, not prone to evasion and (look at) how to simplify it further. So no decision was taken today. The existing system will continue for another three months (till June 30),” Finance Minister Arun Jaitley had said during the last Council meeting.

Currently, tax assessees file only two sets of forms — GSTR3B (summary form) and GSTR1 (outward supply or goods sold).

GSTR3B is a summary form, which a business is supposed to file before the 20th of the following month. However, a taxpayer does not have to provide invoice level information in the form.

The erstwhile plan of return filing through three key forms—GSTR1 (outward supply), GSTR2 (inward supply) and GSTR3 (the final netted out return)—has been temporarily suspended owing to the complexities in the process.

XaTTaX: Cloud and On-Premises Based Return Filing Software 

Source :  MoneyControl
New income tax return forms notified for FY 2018-19; salary breakup, GST ID to be furnished

New income tax return forms notified for FY 2018-19; salary breakup, GST ID to be furnished

The Central Board of Direct Taxes (CBDT) notified the new Income Tax Return forms for the FY 2018-19 on Thursday. The new ITR form seeks a detailed salary break up from salaried class assessees and GST number and turnover from businessmen.income tax return Though there is no change in the manner of filing the ITRs as compared to the last year 2017-18, some fields have been rationalized in the latest form. All seven ITRs can be filed electronically except for some category of taxpayers. The new ITRs have been uploaded on the official website of the department– The last date for filing the Income Tax Return is July 31, 2018.

What are the new additions for salary holders?

The most basic ITR-1 or Sahaj this time seeks salaried taxpayers’ salary break up for clarity of deductions. Details such as allowances that are not exempt, the value of perquisites, profit in lieu of salary and deductions claimed under section 16 should be mentioned in separate fields. These are available in Form 16 issued by the employer. The ITR- 1 can be filed by an individual having an income of up to Rs 50 lakh and who is receiving income from salary, one house property or other interest income. Last financial year (2017-18), 30 million taxpayers filled this form, the tax department said in a statement.

Taxpayers can complete filing transitional credit form by April 30: FinMin

For businessmen and Hindu Undivided family

The Income Tax Return -2 has also been rationalised” for individuals and  Hindu Undivided Families (HUFs) having income under any head other than business or profession. Now, the individuals and HUFs having income under the head business or profession shall file either ITR-3 or ITR-4 in presumptive income cases. Businesses with a turnover of less than Rs 2 crore can do away with the requirement of maintaining books of accounts and instead pay a tax on the basis of a certain percentage of their turnover.

Also read: Centre sets up IT Grievance Redressal Committee to deal technical glitches on GST portal

For NRIs

The new form provides a relief for NRIs as they can now provide details of their foreign bank accounts to claim credit or refunds. However, they will have to use ITR-2  instead of ITR-1.

Other additions

The CBDT (Central Board of Direct Taxes) said that individual taxpayers of 80 years or more at any time during the previous year or an individual or HUF whose income does not exceed Rs 5 lakh and who has not claimed any refund, can file Income Tax Return in the paper form, using the ITR-1 or ITR-4.

XaTTaX: Your automated E-Way bill compliance is just a click away!

Souce:  Indian Express


GST collection for January comes in at Rs 86,318 crore

GST collection for January comes in at Rs 86,318 crore

GST collection Jan 2018

The Centre today said that the total revenue collection under GST for the month of January, till February 25, stood at Rs 86,318 crore. Rs 86,703 crore was collected in December 2017.

“1.03 crore taxpayers have been registered under GST so far till 25th Feb, 2018. So far,17.65 lakh dealers got registered as Composition Dealers,” according to Ministry of Finace.

According to the Finance Ministry, out of 17.65 lakh dealers, 1.23 lakh Composition Dealers have opted-out of Composition Scheme and have thus become regular taxpayers. “Till 25th Feb,2018 there are 16.42 lakh Composition Dealers which are reqd to file returns every Quarter & 87.03 lakh taxpayers to file monthly returns”.

So far 57.78 lakh GSTR 3B returns have been filed for the month of January, 2018 till 25th February. This is 69 percent of total taxpayers which are required to file monthly returns, the ministry added.

“It was expected that Febuary 18 numbers (for month of January) would be better than this as GST was settling in and impact of opening credit was assumed to have been largely factored in previous months. With roll out of E-way bills getting deferred to April 18 and a contuining shortfall in number of monthly returns getting submitted, we may see administrative tightening and more rigourous anti evasion measures in next few months,” said Pratik Jain, Partner & Leader, Indirect Tax – PwC India .

Of the Rs. 86,318 crores collected under GST for January, Rs.14,233 crores have been collected as CGST, Rs.19,961 crores has been collected as SGST, Rs.43,794 crores collected as IGST & Rs. 8,331 crores collected as Compensation Cess.

Also read: GST Council to further trim list of items in 28% tax slab: FM Arun Jaitley

“The GST collections for January are almost the same as that for December i.e. around 86,000 crores. The average GST revenue collections seem to have settled around Rs 86,000 crore. About 30% taxpayers registered with GST are still not filing their returns and the Centre must endeavour to make them file the returns, which may further enhance the overall GST revenue collections,” said Abhishek Jain, Tax Partner, EY India.

Collections under the GST, implemented from July 1 last year, were over Rs 95,000 crore for the first month, while in August the figure just over Rs 91,000 crore. In September, it was over Rs 92,150 crore, October (Rs 83,000 crore), November (Rs 80,808 crore) and December (Rs 86,703 crore).

Source : Economic Times
26th GST council meet on March 1: GSTR simplification, invoice matching likely to be in focus

26th GST council meet on March 1: GSTR simplification, invoice matching likely to be in focus

26th GST council meet

Invoice matching via simultaneous upload of invoices by sellers and buyers along with a broader focus on returns simplification will be the key focus area of discussion in the 26th meeting of the GST Council that is scheduled to be held on March 1 via videoconferencing.

As the deadline for suspension of GSTR-2 and GSTR-3 returns till March inches closer, the Council is aiming for returns simplification by converging towards one form. Filing of the monthly summary GSTR-3B return will be retained for now, two people close to the development said. The government proposes to bring back invoice matching, broadly facilitated by simultaneous upload of invoices by seller and purchaser, which will allow recipients to claim input tax credit immediately after the upload of invoice by the sellers instead of waiting for filing of returns.

The officials are also working on a turnover-based filing system, with big businesses beyond a certain threshold filing returns by 20th of a month and SMEs filing returns earlier than that to avoid clogging of the technological network of the indirect tax regime.

Officials from GST Council and Goods and Services Tax Network (GSTN) along with Infosys chairman Nandan Nilekani have been making presentations to stakeholders and approaching industry chambers for their inputs regarding the changes. GSTN chairman Ajay Pandey, who heads the panel on GST returns simplification, met representatives from the industry last week for their inputs.

“The new system proposes availment of input tax credit simply by uploading of invoices by the seller and the subsequent confirmation by recipient. Based on acceptance by the recipient, the input tax credit would get sealed, enabling increase in working capital with businesses. The move, if successful, will help the government to reduce the cost of compliance,” one of the persons cited above said.

In the last meeting of the GST Council on January 18, Nilekani had suggested a system of filing the summary GSTR-3B returns along with uploading of suppliers invoices (as was initially proposed via GSTR-1 return).

As per the presentation, ‘system matching’ provides for simultaneous upload of sales/purchase data wherein the buyer would be able to avail input tax credit on filing of purchase details at invoice level, a system which was followed in the earlier VAT regime before the July 1 rollout of GST. The new system proposes to have filing of one return and matching of returns by taxpayers, wherein they have to match only data under the mismatch category. The presentation stated that the buyer won’t be dependent on supplier to upload, but will be dependent on supplier for correction in the system matching option for GST returns.

Finance minister Arun Jaitley had said last month that the Council will finalise the return filing process in the next meeting. “Today it was discussed but not finally approved but it’s moving in that direction,” he had said.

When the GST was rolled out from July 1, taxpayers were mandated to file a simplified sales return 3B and also final sales returns (GSTR-1), purchase return (GSTR- 2) and finally two were required to be auto populated to generate GSTR-3. As technical glitches arose and the industry complained of hardship in filing GSTR-2, the Council in November decided to keep filing of GSTR-2 and 3 in abeyance till March. All businesses now file GSTR-3B every month. Businesses below Rs1.5-crore turnover have to file GSTR-1 every quarter, while those over Rs1.5 crore have to file returns on the 10th day of the next month.

Source: Indian Express
GST refund delays brought on working capital constraints which hit exports in October

GST refund delays brought on working capital constraints which hit exports in October

GST Refund

The implementation and refund delays under Goods and Services Tax (GST) caused working capital constraints for firms, which in turn might have hurt their exports in October 2017, said a study by RBI staff. But various initiatives by the government since then appear to have significantly alleviated exporters’ concerns which got reflected in the exports growth pick up in November and December 2017, it said.

A 10% increase in the Working Capital/Sales ratio led to a 1.8% decrease in the exports growth according to the RBI staff study. Sectors with high working capital to sales ratio took the biggest hit in exports growth between March and October. For example- Petroleum and Gems and Jewellery have the highest working capital/sales requirement and they were hit the most during October. Meat, Dairy and Poultry on the other hand have low working capital requirement and saw one of the smallest decrease in exports growth.

GST implementation was marred by infrastructure snags and implementation delays, which led to changing the date of filing tax returns for July multiple times. As per the implementation of the tax regime, exporters were supposed to get 90% of the input tax (GST on supply of services or goods to a taxable person) refund within seven days of filing their returns. However, there had been significant delays in receiving the input tax credit which could have adversely affected the working capital of firms.

Also read: Filing GSTR-1 return using XaTTaX GST Software

The impact of the implementation issues is more evident and severe for the exporters, the study said. Prior to GST, exporters were upfront exempted from paying any duties. But under GST, they are required to first pay the tax and later claim refunds. This constrained their working capital, at least once after the regime switch, since exporters would have had to adjust to the new tax regime. Under GST, they can avail 90% of the input tax refund within 7 days, but only after the goods are exported out of India.

Post dismal performance of exports in October, November 2017 , exports jumped by 30.55% This is one of the highest growth rates observed in the exports in the last two years.The staudy attributed this to fast-tracking of GST refunds and exports sops and lower base of export growth in November 2016.

XaTTaX: Cloud and On-Premises Based GST Filing Software For India


Source :  The Economic Times