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News Indirect Tax-GST

  • Sep 23, 2019
  • e-Way bills curb tax evasion, but glitches remain

    There are numerous concerns on the functioning of the GST regime, launched two years ago. But the e-Way bills system is displaying good traction. While there are a few glitches, users mostly agree that e-Way bills have brought down under-reporting and increased transparency. The system was rolled out for inter-State consignments in April 2018, and for intra-State consignments two months later, in a phased manner. e-Way bills generation for the period April-June 2019 was almost 40 per cent higher at about 15.65 crore, compared to 11.19 crore in the same period last year. For transport companies, the system has saved considerable time, removing check-posts and facilitating the shift from a ‘departmental policing model’ to a ‘self-declaration model’. It has also helped in curbing tax evasion.

  • Sep 21, 2019
  • GST relief for hotels, outdoor catering; hefty hike in rate for caffeinated drinks

    Hotel and tourism industries got significant tax reliefs on Friday, as the GST Council that met here reduced the taxes on hotel rooms to the 0-18% range depending on their tariffs and cut the rate for outdoor catering to 5% without an option to claim input tax credit. Besides, the Council increased the tax rate for caffeinated drinks to 28% from 18%; as these beverages, touted to be harmful to health, are now in the highest tax bracket, they will now also be subjected to a 12% cess. The Council did away with the requirement of filing annual returns for taxpayers up to Rs 2 crore turnover, as part of the moves to reduce compliance burden. However, it also introduced some new slabs for items like semi-precious stones, complicating the GST structure even further.

  • Sep 21, 2019
  • In-principle decision to link Aadhaar with GST registration

    The GST Council on Friday took an in principle decision to link Aadhaar with registration of taxpayers under GST and also examine the possibility of making the 12-digit unique identification number mandatory for claiming refunds. The council also decided to a withdraw a circular issued in June which prescribed that the additional discount given by a company to a dealer in certain cases will be liable for Goods and Services Tax (GST). As per an official release, the council also took an in principle decision to prescribe reasonable restrictions on passing of credit by risky taxpayers in order to tackle the menace of fake invoices and fraudulent refunds.

  • Sep 20, 2019
  • Centre’s stand: Extension of GST aid to states not viable

    Tax officials of the Central government are said to have told state government counterparts that any extension in the period for which Centre is liable to pay compensation to states is unviable. Their meeting took place a day prior to the 37th GST Council meet here on Friday. A number of states have represented to the 15th Finance Commission that the Centre should pay them compensation for three years more to ensure that their GST revenue continues to grow 14% year-on-year, as guaranteed in the Constitution. The Constitutional provision for compensation is only till 2022 while states want it extended till 2025. Though the decision to extend the period is beyond the remit of the Finance Commission, states are hoping that it can impact the GST Council. However, one official said any such decision would require a Constitutional amendment which made it unlikely. Further, he said the guaranteed GST revenue growth was already ambitious and for a comfortable period.

  • Sep 20, 2019
  • GST Council meet: No big rate cuts likely, timelines for new returns to be reviewed

    The 37th GST Council meeting to be held at Goa on Friday is unlikely to approve any tax cuts that could have substantial revenue implications. The Council would consider the analysis conducted by the fitment committee on implications of rate cuts on automobiles, biscuits and cement, among other items. According to the fitment committee analysis, GST rate cut on automobile would lead to Rs 30,000-crore revenue loss annually along with an additional impact on cess collection by about Rs 24,000 crore. Similarly, cement and biscuits have large revenue implication and the committee’s report is likely to submit that rate reduction alone might not spur sales. However, sources said the Council might consider cutting rates on outdoor catering which currently attracts 18% tax.

  • Sep 18, 2019
  • Companies drag government to court over GST on long-term land lease pacts

    Some companies have dragged the government and the indirect tax department to court over goods and services tax (GST) levied on these deals in what could jeopardise longterm land lease deals. As per the current regulations, 18% GST is levied on any long term lease transactions, and industry trackers said the GST paid becomes pure cost as it cannot be used as input tax credit in case the recipient wishes to construct any commercial building there. The companies filed a writ petition in the Rajasthan High Court demanding that either GST be removed from such transactions or they be allowed to claim credit. As of now, GST is levied on 99-year land lease and that becomes a cost as it cannot be set off if a hotel or any other commercial property is built on it. Most of such land is government-owned and leased to build hotels or ports.

  • Sep 16, 2019
  • States wary of any move to reduce GST rates

    The Goods and Services Tax (GST) Council meeting on Friday is likely to be a stormy affair, with some states opposing the Centre’s proposal to cut tax on automobiles, citing revenue shortfalls and previous instances of businesses failing to pass on tax cuts to consumers. The opposition from states, which are members of the federal indirect tax body, may make it tougher for the Union government to quickly respond to industry demands for tax cuts on automobiles to help reverse the worst sales slump in more than two decades. Union finance minister Nirmala Sitharaman said earlier this month that a proposal for a tax cut on automobiles would be taken up by the GST Council.

  • Sep 14, 2019
  • GST shortfall: Compensation to states may continue till FY 25

    The state governments’ GST revenue shortfall may continue to be compensated till FY25, that is, for three more years after FY22, the final year prescribed under the law. However, for the post-FY22 period, the ‘shortfall’ would be estimated taking into account the fact that GST revenue buoyancy has been lower than expected. This means the annual growth rate to be assured for states will be lower than the current 14%, for the post-FY22 period. This view seems to have emerged in the 15th Finance Commission which analysed the pros and cons of the compensation mechanism, including the “moral hazard” of guaranteeing certain revenue growth for states.

  • Sep 14, 2019
  • States may support GST relief on hotel tariffs

    India’s apex decision body for goods and services tax (GST) could consider relief for the hotel sector, a proposal that is likely to be backed by states that remain divided over a reduction in the rate on automobiles and biscuits. The GST Council will also discuss two notes circulated by the Fifteenth Finance Commission— one on rate rationalisation and the other on revenue projection for both the Centre and the states for five years. Finance Commission chairman NK Singh will also meet state finance ministers amid demands from the states for extending the GST compensation period, ending in 2022, by another three years to 2025. If the suggestion is accepted by the commission and subsequently by the government, it could mean extension of the compensation cess for three more years.

  • Sep 13, 2019
  • Rs 470 crore fake invoice racket busted

    The investigative agencies of the revenue department have busted a fake invoice racket involving input tax credit (ITC) worth at least Rs 470 crore (Rs 3,500 crore in invoice value) in a day-long operation spanning 336 locations across 15 states, the government said in a statement. The joint operation was carried out by the Directorate General of GST Intelligence and Directorate General of Revenue Intelligence against exporters. “The joint operation of the two premier intelligence agencies of the Central Board of Indirect Taxes and Customs (CBIC) was a first of its kind in the history of the CBIC which involved about 1,200 officers from both the agencies,” it said. It said the intelligence for the operation was developed in close coordination by both the agencies on the basis of data analytics, which revealed that some exporters were exporting goods on payment of tax (IGST).

  • Sep 13, 2019
  • Due date to file FY19 GST returns may be extended beyond 31 Dec

    Businesses are likely to receive more time to file their annual returns for goods and services tax (GST) and audit reports for fiscal year 2018-19, the first full year of the indirect tax reform. Federal indirect tax body, GST Council, is expected to extend the due date for FY19 from the current 31 December, said a person privy to discussions in the Council. The step is being considered as companies are currently busy meeting the deadline for FY18, the first year of roll out of GST, the person said requesting anonymity.

  • Sep 11, 2019
  • Finance panel to meet GST Council at Goa conclave

    The GST Council will interact with the Finance Commission during its September 20 meeting at Goa. This interaction assumes significance as the Finance Commission is expected to submit its report by November 30. It will suggest the formulae for the distribution of taxes between the Centre and States for a five-year period starting April 1, 2020. Recommendations of the Commission are binding on the government.

  • Sep 10, 2019
  • At Sept 20 Goa meet, GST Council to look into inverted duty structure issue

    The Goods & Services (GST) Council is expected to resolve issues related with inverted duty structure for various sectors in its 37th meeting scheduled to take place in Goa on September 20. The inverted duty structure, where there is higher duty on input(s) and lower duty on output, has caused two problems. First is the refund in the GST regime, and second such a structure encourages imports hurting the domestic industry.

  • Sep 09, 2019
  • Hobson’s choice: GST cut for auto industry to cost Rs 30,000 crore to govt

    Amid heightened expectations that the Good and Services Tax (GST) Council will cut the tax rates for a host of categories of automobiles as it meets in Goa on September 20, what concerns revenue authorities at the central and state level is the potential revenue loss. If the industry demand is for an across-the-board rate cut from the highest GST slab of 28% to 18% is to be met, the government’s GST revenue could take a hit of at least Rs 30,000 crore, according to the internal estimates of the tax department. This takes into account gains from the push to sales volumes once taxes are cut. A report by Kotak Institutional Equities had earlier estimated that a 10% GST cut on automobiles across the board could cost the government Rs 45,000 crore in a year.

  • Sep 07, 2019
  • GST rate cut relief likely for compact cars, parts makers

    The clamour for lowering the goods and services tax rate for the auto industry, following the massive slowdown in the sector, may prompt the GST Council to announce a rate cut for automobile components and sub-four metre cars when it meets on 20 September. However, the tax break will be a short-term stimulus to boost demand, and the GST rate cut may be announced only for a limited period. The current rates may be restored after about six months, two officials familiar with the discussions between the central and state governments said, requesting anonymity. This is because raising tax rates once it is reduced is a politically difficult call, the officials added.

  • Sep 07, 2019
  • Auto players should also take up GST rate cut demand with state FMs: MoS Finance

    Minister of state for financeNSE 4.28 % Anurag Thakur said the automotive industry should reach out to state chief ministers and bring them on board for a reduction in goods and services tax (GST) rates on vehicles to boost sales in the local market, which is in the midst of a prolonged slowdown. Thakur, who was speaking at the 59th annual convention of the Automotive Component Manufacturers’ Association (ACMA) on Friday, said any proposal to reduce GST rates on vehicles has to be approved by the fitment committee and consequently by the GST Council. “We are open to taking it to the (GST) Council but most decisions there are taken unanimously. The industry should reach out to state chief ministers who are part of the council,” he said.

  • Sep 06, 2019
  • Bad luck for lotteries as business plunges 80% on GST woes

    The lottery business in the country has gone down from approximately Rs. 60,000 crore to Rs. 12,000 crore due to inaccurate levying of GST, according to industry players. One of the main issues is the differential tax treatment on State government-run and State government-authorised lotteries. Currently, 12 per cent GST is being charged on lotteries run by State governments (a lottery that is not allowed to be sold in any State other than the organising State), while the lottery tickets authorised by State governments (a lottery which is authorised to be sold in States other than the organising State also) attract 28 per cent levy.

  • Sep 05, 2019
  • GST shortfall may turn into next worry for the Centre

    The sluggish growth in goods and services tax (GST) revenue receipts, unless reversed quickly, could poke a Rs. 40,000 crore hole in central government finances by the end of this fiscal, analysts warned on Wednesday, even as a private survey showed India’s services sector growth lost steam in August from a month ago. An analysis of GST revenue trend Credit Suisse shared on Wednesday said growth in collections in the first five months of the fiscal has been 6.4%, well below the 10% estimated for the year. If this pace is maintained for the full year, the shortfall could be Rs. 40,000 crore, all of which may be borne by the central government, considering that states have been guaranteed 14% annual revenue growth under GST laws, the analysis said.

  • Sep 03, 2019
  • GST collection slips below Rs 1 lakh crore mark to Rs 98,202 crore in August

    In another indicator of economic slowdown, GST collection in the month of August dropped below Rs 1 lakh crore mark to Rs 98,202 crore. The tax collection was at Rs 1.02 lakh crore in July this year. The August mop-up was, however, 4.5 per cent higher than the Rs 93,960 crore collected in the same month last year. This is the second time during this year that the revenue collection from the GST has slipped below the Rs 1 lakh crore mark. First, it happened in June when the collection was Rs 99,939 crore. Central GST collections stood at Rs 17,733 crore, State GST Rs 24,239 crore, and Integrated GST Rs 48,958 crore (including Rs 24,818 crore collected on imports) during August this year.

  • Sep 02, 2019
  • Curb on fake invoices may add Rs 50,000 crore to GST kitty

    The indirect tax department has developed a risk-based index to identify entities likely to indulge in generating ‘fake invoices’ to evade tax and is strengthening the legal and administrative framework to curb the menace. These steps could potentially lead to additional goods and services tax (GST) collection of Rs 50,000 crore a year, according to the department’s internal estimate. The fake invoices usually don’t have any corresponding supply of goods/services, nor do they involve payment of GST. These are used by the entities concerned to claim undeserved input tax credit (ITC) and use them to meet the GST liability on their outward supplies.