In an effort to plug revenue leaks, the Central Goods & Services Tax (CGST) administration has started blocking input tax credit (ITC) for assessees who availed credit against fake invoices, or against invoices without the receipt of goods or services, or both. The move comes at a time when the Revenue Department has increased the collection target for January and February by Rs. 5,000 crore each. It aims to collect Rs. 3.55-lakh crore over the last three months of the current fiscal year. In the first nine months of FY20, the department collected over Rs. 9.08-lakh crore, against Rs. 8.71-lakh crore during the corresponding period last fiscal. Though there was an increase it did not meet the average monthly collection expectation of Rs. 1.10 lakh crore. Now, in effort to boost revenue, the Directorate General of GST Intelligence (DGGI), under the Finance Ministry, has dispatched a letter to all the 26 field formations urging them to make a list of entities that availed fake credit and block ITC for those located in their respective jurisdictions.

The government is looking to get services professionals such as plumbers, electricians and beauticians listed on online platforms onto the Goods and Services Tax Network, in what could be yet another move to bring gig economy workers into the fold of the formal workforce. The Department for Promotion of Industry and Internal Trade ( DPIIT) is considering making it mandatory for online marketplaces such as UrbanClap, HouseJoy and Bro4u to only engage service professionals who have a GST Number or GSTIN, senior government officials in the know of the matter told ET. While the majority of plumbers, electricians, individual fitness trainers that make use of such online platforms will have a turnover of less than Rs 40 lakh annually, exempting them from paying GST, the government’s move to mandate GSTIN is more in line with having a database of such professionals. “Today, these professionals go into people’s houses and there’s absolutely no way for us to identify them,” said a senior government official.

The revenue department has set a target of Rs 1.18 lakh crore of average monthly Goods and Services Tax (GST) collection in the remaining three months of the fiscal (January-March) and has asked the indirect tax department to specially focus on fraudulent input tax credit (ITC) claims as revealed in data analytics review. In the first nine months of the fiscal (April-November), GST collection has averaged just a tad over Rs 1 lakh crore per month. Sources said that about 40,000 companies have been red-flagged for excess or fraudulent ITC availment. “Out of 1.2 crore GST registrants, the focus would be on these identified taxpayers. Field formations have been directed to conclude ITC recuperation without any overreach but in a stipulated time-frame,” an official said. In the previous review meeting in mid-December last year, revenue department had put GST collection target at Rs 1.14 lakh crore per month. It had kept the direct tax target unchanged at Rs 13.35 lakh crore despite the corporate tax relief of Rs 1.45 lakh crore announced in September. In the meanwhile, the directorate general of GST intelligence (DGGI) has asked all the zonal heads of the GST to start blocking input tax credit (ITC) availed by taxpayers on the basis of fake invoices or against invoices without actual supply of goods and services. The letter sent earlier this week has mandated that the exercise be completed by Friday.

Courier companies such as FedEx, DHL and UPS are in a bind over delivering imported goods to customers because of a goods and services tax rule that bars defaulters from issuing e-waybills. The document is mandatory for transport of goods worth over Rs 50,000. On the other hand, the customs department won’t hold such goods in its storage once they’re cleared. The companies, including local ones such as DTDC, Safe Express, Gati and Delhivery, have petitioned the government to seek a way out of the dilemma. The government said it’s examining the issue. GST Rule 138E, which took effect in November, doesn’t allow an entity that hasn’t filed returns for two straight months to generate an e-waybill. While the rule won’t impact direct deliveries to ecommerce customers, business-to-business (B2B) orders from overseas will likely get hit.

GST authorities have zeroed in on about 40,000 companies for claiming excess or wrongful tax rebates, who will now be pursued for recovery of tax dues, said a government official. If the authorities are not able to recover tax dues from the identified companies with the electronic communication such as emails and text messages, they will be visited by officials and further steps will be taken, said the official quoted above, who spoke on condition of anonymity. The government recently stepped up efforts to mobilise revenue collection by launching a crackdown on tax evaders and those who have claimed rebates in excess of the taxes they have paid on raw materials and services procured.

A wave of orders is expected from the National Anti-profiteering Authority (NAA) in the next three months, with the Centre stepping up a goods and services tax (GST) compliance drive. About 40 orders are expected to be issued shortly on complaints against firms in the real estate, consumer goods, and cinema industries, said a person with direct knowledge of the matter, who requested anonymity. The firms facing investigations include some the leading suppliers of ayurvedic products, electronics and television makers, luggage and travel accessories makers, two leading multiplex chains, and hygiene and home products firms, said a second person aware of the matter. This comes amid concern among policy makers that businesses have pocketed part of the Rs. 1 trillion worth of GST rate cuts that was to benefit end users and thus help stimulate demand in the economy. In the past, about 60% of the cases investigated by the Directorate General of Anti-Profiteering (DGAP) have confirmed profiteering behaviour by businesses. The NAA has issued orders on more than 100 cases since it came into force in November 2017.

The Kerala high court has tried to clear the air over the contentious issue of composite supplies under the Goods and Services Tax (GST) which experts say may become guiding principles to decide cases in litigation. If more than one good or service are supplied by a company, these could be considered composite or mixed under the GST system. If these are considered composite, then the GST rate on principal supply applies to the entire supplies, otherwise different rates as applicable to each transaction would be applicable. Explaining the present case, Niraj Bagri, partner at Dhruva Advisors said, Abbott Health Care gives medical equipment to hospitals and labs to be used without consideration. For this Abbott has signd an agreement with these hospitals and labs. These hospitals and labs, in turn, are bound to procure specified quantity of medical products such as reagents, calibrators, disposals etc through distributors of Abbott for consideration till the tenure of agreement.

The revenue department has unearthed as many as 931 fraudulent GST refund cases through data analytics, which has forced it to scrutinise all the past refund claims for inverted duty structure that are already settled, along with the pending ones. In the current year itself, refunds of over Rs 28,000 crore have been filed by over 27,000 taxpayers on account of an inverted duty structure, a senior tax official said. He said a fraud unearthed in Delhi showed that the culprits had a network of over 500 entities — comprising fake billers, intermediary dealers, distributors and bogus manufacturers of slippers — for getting fake ITC credits due to the inverted duty structure on the product. “The bogus manufacturers created in Uttarakhand were making supplies to other fictitious entities and retailers in Gujarat, Maharashtra and Tamil Nadu. The raw materials for the slippers, known as EVA compound, are chargeable to 18% duty whereas chappals are chargeable to a GST of 5%,” he said. Inverted duty structure means the final product attracts a lower GST rate while inputs are taxed at higher rates. This typically leads to an accumulation of input tax credit (ITC) in a taxpayers’ ledger, which is claimed as refunds. However, officials say this refund route has been exploited by unscrupolous elements. The scrutiny would focus on taxpayers who have purchased from ‘fly-by-night operators and shell firms’, the official said. The progress will be tracked by revenue secretary Ajay Bhushan Pandey on a weekly basis.

Banks, airlines, insurance companies, armed forces and telecom service providers are likely to be exempted from mandatory issuing of e-invoices under goods and services tax (GST), said people aware of the matter. "Banks, airlines, telcos and other entities that have direct customer interaction on a large scale may be exempted from filing their e-invoices under GST,” said one of the persons, who did not wish to be identified. Another person said the government would have to specify the exemptions through notification in the rules. Such a move is likely to benefit entities in the sectors that issue a number of invoices to customers directly or have direct debit and credit facilities such as in the case of banks, said experts. Banks and insurance companies are currently allowed consolidated invoices. “These entities would have to undergo heavy compliance costs if the exemption was not allowed,” said Bipin Sapra, partner at EY. From April 1, companies with an aggregate revenue of Rs 100 crore or more have been mandated to issue e-invoices, as the government embarks on digital filing of invoices under goods and services tax (GST) regime amid efforts to curb tax evasion and fraudulent claims of GST credits while increasing tax collection.

The Finance Ministry on Friday extended the due date for amnesty scheme for filing of GSTR-1 by seven days. The scheme was to end on Friday, but it will now be open till January 17. The scheme intends to facilitate filing of all pending FORM GSTR-1 from July 2017 to November 2018 without any late fee. The Ministry said the response to the waiver has been very encouraging and since the announcement on December 18, 54 lakh GSTR-1 were filed till January 9. On an average, only about 25 lakh monthly GSTR-1 get filed. In view of the huge response, which would lead reduction in unmatched credit, it has been decided to extend the last date for the scheme. GSTR-1 is a monthly or quarterly return that should be filed by every registered dealer. It contains details of all outward supplies i.e sales. The return has a total of 13 sections. The due dates for GSTR-1 are based on turnover. Businesses with sales of up to ? 1.5 crore will file quarterly returns.

India Inc is set to face first ever tax audit under the goods and services tax (GST) regime. The GST authorities have begun issuing notices for the tax audit exercise, which involves detailed scrutiny of the accounts and records for FY18. Tax authorities have issued notices seeking audit of accounts and records from July 2017 till March 2018, the first year of GST implementation. India had rolled out GST, subsuming multiple state and central taxes, from July 1, 2017. “The notices are being issued for the first time, and taxpayers are being asked to furnish detailed records of GST forms, income tax papers, input service invoices, electronic cash/credit ledger and business agreements, among others,” a person familiar with the development said. Tax authorities had issued a detailed GST manual earlier in June, making it clear that at least 70% of taxpayers in each commissionerate have to be audited.

To check fraudulent GST refund claims, the government has decided to constitute a panel of centre and state officials for designing a detailed standard operating procedure (SOP). The decision in this regard was taken in the 2nd National GST Conference of the Commissioners of State Tax and Chief Commissioners of Central Tax headed by Revenue Secretary Ajay Bhushan Pandey. “Considering fraudulent integrated goods and services tax (IGST) refund claims, it was explored to link foreign exchange remittances with IGST refund for risky and new exporter. All major cases of fake input tax credit, export/import fraud and fraudulent refunds shall also be compulsorily investigated by investigation wing of the income tax department,” an official statement said. It was also decided to constitute a committee of centre and state officers to examine and implement quick measures in a given time frame to curb fraudulent refund claims including the inverted tax structure refund claims and evasion of GST, it said.

The Revenue Department has brought to the notice of the Directorate General of Foreign Trade (DGCF) instances of ‘mis-availment’ of Integrated Goods & Services Tax (IGST) refunds, based on fake invoices, by some exporters holding ‘star’ status. It has also advised the DGFT, under the Commerce Ministry, to make the exporters’ accreditation system more robust. “A note from the Revenue Department to the DGFT’s office pointed out that since an exporter enjoying star status is allowed many facilities, including reduced Customs inspections, it would make for a strong case for the DGFT to continuously (or annually) seek a compliance and verification reports from other regulators,” a government source said. “It could also oblige exporters to produce statutory records of compliance, including certifications from banks of no NPAs.” Of the 241 cases taken up for scrutiny, the data of 82 star exporters showed that their Income-Tax and GST declarations varied significantly, the source said.

To figure what is wrong with our goods and services tax (GST), we need to go back to the classroom. A 10% value-added tax across the entire economy should yield 10% of the gross value added as revenue. In India, GST collections over April-September 2019 were under 7% of the gross value added in the economy. How did that happen if the average revenue-neutral GST rate is somewhere close to 15%? For one, many goods and services were exempt—energy being a glaring example—at the insistence of states, leaving other items to shoulder an undue share of the tax burden. The Centre, which had been working towards a GST for well over a quarter of a century, yielded much ground in the last lap before launching the indirect tax system in 2017.

States are crying foul over delay in receipt of compensation from the Centre on the goods and services tax (GST) account and are also slashing capital expenditure due to the overall revenue shortfall, but they would have been worse off if the GST weren’t introduced. According to the data gathered by the GST Network and reviewed by FE, states had, between FY14-17, enjoyed an average annual revenue growth of only about 8% from those state-level taxes which later collapsed into GST. Under the compensation mechanism that came into being along with GST in FY18 (July 2017), states are, however, guaranteed an annual revenue growth of 14% till FY22. This has clearly been proven a commitment too onerous for the Centre to meet, especially given the economic slowdown.

Goods and Services Tax (GST) collections in December recorded an increase of 9 per cent on-year to Rs 1,03,184 crore indicating marginal rise in consumption. Since the concept of GST was implemented in 2017, it is the ninth time that the collection crossed one lakh crore mark in a month. In December 2019, almost all but two states and union territories witnessed growth. Overall GST collections from all the states saw an increase of 16 per cent to Rs 80,849 crore in December 2019. Maharashtra got the highest GST collections at Rs 16,530 crore in the month. The state had collected Rs 13,524 crore in the corresponding month of last fiscal.

In a significant relaxation for the ecommerce sector, the government could allow online platforms such as Amazon and Flipkart to upload e-invoice for vendors under the goods and services tax (GST) framework. As part of ongoing trials of e-invoicing, a detailed set of clarifications in the form of frequently asked questions have been issued. “Ecommerce operator can request for e-invoice on behalf of supplier,” the clarification said. The matter has been taken up by the government and could be allowed once the trial period is over, a government official told ET. “Trials are now on...It will require an amendment... The issue has been taken up.” The GST Network has issued a detailed set of FAQs.

States are crying foul over delay in receipt of compensation from the Centre on the goods and services tax (GST) account and are also slashing capital expenditure due to the overall revenue shortfall, but they would have been worse off if the GST weren’t introduced. According to the data gathered by the GST Network and reviewed by FE, states had, between FY14-17, enjoyed an average annual revenue growth of only about 8% from those state-level taxes which later collapsed into GST. Under the compensation mechanism that came into being along with GST in FY18 (July 2017), states are, however, guaranteed an annual revenue growth of 14% till FY22. This has clearly been proven a commitment too onerous for the Centre to meet, especially given the economic slowdown. Overall GST collections, including the cess proceeds that go into the compensation kitty, grew just 4.3% during the April-December period in the current financial year. While the protected monthly revenue for the state in the current fiscal is Rs 55,900 crore, in the first nine months of the year, the average monthly state GST collection fell short by nearly Rs 7,300 crore. Apart from economic slowdown, the series of rate reductions announced by the GST Council in response to the demands from sections of taxpayers too dented GST revenue. These steps brought down the composite GST rate to a level much below the revenue neutral level estimated.

Revenue Secretary Ajay Bhushan Pandey will hold a day-long meeting on January 7 with tax commissioners to discuss ways for streamlining the GST system and plugging leakages due to fraud. Besides, sources said, this meeting with Commissioners of State Tax and Chief Commissioners of Central Tax will also deliberate on enhancing GST compliance by plugging loopholes and discourage tax evaders, that gaming or misusing the system. The meeting assumes significance as the GST Council in its last meeting held on December 18 wanted a detailed study on these issues before taking any call on rate hike on items. Meanwhile, in an encouraging sign, the GST collection for December came in at around Rs 1.03 lakh crore. This was the second month in a row when the GST mop-up was over Rs 1 lakh crore. Sources said this multi-faceted brainstorming meeting is being organised with the purpose of curbing fraud and evasion, checking fake or huge input tax credit claims, seeking bank account details of businesses totally with their filings, misuse of refund and sharing best practices in revenue augmentation.

Goods and services tax (GST) collections in December (concerning November transactions) came in at Rs 1,03,184 crore, closer to the mop-up in the previous month and up 9% over the year-ago month. This has indicated an improvement from the September-October period, when the collections were substantially below the Rs 1-lakh-crore mark and even lower than in the year-ago period. The collections still are below the run rate required for the Centre to fully compensate the states for their ‘revenue shortfall’ and meet its own overall GST budget. The government had said in the light of the April-November GST data that it could face a shortfall of Rs 63,000 crore in the compensation kitty which is created out of assorted cess revenue. It has also set a gross GST collection target of Rs 1.1 lakh crore/month for the December-March period (four months), besides a target of Rs 1.25 lakh crore for one of these months. If this goal is to be achieved, the average monthly collections for January-March period would require to be Rs 1.17 lakh crore, which appears to be a tall order. While the improvement in collections since November is comforting, the fact that GST revenues from domestic transactions grew an impressive 16% in December signal a moderate pick-up in consumption. Sources said recent curbs on utilisation of input tax credit (ITC) have also boosted collections.