Over 65 lakh GSTR-3B filed till Jan 20

Source: The Economic Times, Jan 22, 2019

NEW DELHI: Over 65.65 lakh GSTR-3B returns were filed till January 20, for the tax month of December, of which 13.30 lakh GSTR-3B returns were filed on the last day, as per data from Goods and Services Tax Network (GSTN).

“This month’s return filing data till date shows that the GSTN return filing system was working within its expected limits… This was evident by the fact that till January 14, a total of 24.66 lakh GSTR-3B were filed,” an official said Tuesday.

GSTR 3B is a monthly return to be filed under GST in which every taxable person has to summarize the details of outward and inward supplies. On January 15, 2.66 lakh returns were filed, followed by 4.65 lakh on January 16, and 5.93 lakh returns were filed the next day.

In the last three days 8.32 lakh, 6.09 lakh and 13.30 lakh GSTR-3B returns were filed, respectively. “On 21st January, also, till 12 pm more than 2 lakh GSTR-3B were filed for the tax month of December, totalling the GSTR-3B returns filed to 67.70 lakh in this month,” the official added. Some issues about OTPs or onetime passwords being received with some time lag on account of delay by the email service provider or local internet issues, were raised, which were immediately addressed. “In order to ensure that no inconvenience is faced by the taxpayer, the OTPs are sent simultaneously on email as well as on registered mobile number,” the official added.

Central government, states to get tough on GST refund claims

Source: LiveMint.com, Jan 07, 2019

NEW DELHI : Central and state government officials on Tuesday decided to scrutinize goods and services tax (GST) refund claims more diligently, compulsorily investigate all fake claims and step up coordination between income-tax and GST authorities.

The move to tighten enforcement measures comes amid the continued shortfall in GST revenue collections.

The decision to deal with fake tax refund claims by businesses and traders with no leniency was taken at a meeting of central and state officials in the capital.

At the meeting, led by revenue secretary Ajay Bhushan Pandey, it was decided to set up a panel of officers to recommend quick measures to curb “fraudulent refund claims, including the inverted tax structure refund claims and evasion of GST”, said an official statement. The panel will give its advice within a week, which may be implemented across the country by January-end, it added.

With lower-than-expected revenue collection leading to friction between Union and state governments, primarily over delays in compensation payments to states, the authorities have decided to become more strict in their approach to enforce provisions of the law. In the first two years since the indirect system was introduced, the government had taken a lenient view to help businesses make a smooth transition to the new tax regime.

On Tuesday, officials also explored ways of sharing data among the GST Council, Central Board of Indirect Taxes and Customs (CBIC), Central Board of Direct Taxes (CBDT), the revenue department and the various enforcement agencies under the government.

Considering that fraudulent claims for input tax refunds are made on raw material of products allegedly exported, officials explored the possibility of linking GST refund for risky and new exporters with the foreign exchange remittances they receive.

The other proposal was to insist on a single bank account for foreign remittance receipt and GST refund disbursements.Verification of tax credits availed by taxpayers that do not match with what their suppliers have disclosed was also discussed, the statement said.

Government stares at Rs 63,000-crore shortfall in GST payout to states

Source: LiveMint.com, Dec 24, 2019

NEW DELHI: The government is staring at a shortfall of at least Rs 63,000 crore in compensation payout to the states during the current financial year, which could adversely impact the flow of funds.

The calculations were part of a presentation for last week’s GST Council and were based on an assumption of 5% growth in revenue, compared to a 3.7% rise between April and November this year. At a 5% pace of increase, compensation payment for the current year is estimated at Rs 1.6 lakh crore, while compensation cess collections are estimated at around Rs 97,000 crore, sources told TOI.

At least for four straight months cess collections have been declining compared to the previous year. The government levies compensation cess on several sin and luxury goods such as tobacco, soft drinks and large cars, which is to be used compensate states that fail to increase collections by 14% annually. As part of the bargain to implement GST, for five years, the Centre had agreed to compensate them for slower than promised growth, which is often termed as revenue loss.

With the GST Council lowering tax rates and overall economic growth slowing down, collections have been hit, increasing the compensation burden. Last week, West Bengal finance minister Amit Mitra said that states may have to contend without compensation funds from February.

While Opposition-ruled states have threatened to move court if compensation money is denied, the officials concede that there is no other option but to increase GST rates but that is not palatable to the political class. Officials said that an increase in compensation cess will not yield significant revenue to meet the gap.

The presentation suggested that the problem could be more acute over the next couple of years. Even assuming a 5% rise in mop up, the gap between GST cess collections and the projected payout could double to close to Rs 1.3 lakh crore next year and top Rs 2 lakh crore in 2012-22, the government’s estimates has shown.

Even if GST collections rise by 8%, the cess collections are estimated at over Rs 2.1 lakh crore, leaving a gap of around Rs 1.1 lakh crore for states, which will mount to Rs 1.6 lakh crore in 2021-22.

The GST compensation law mandates that the compensation can only be paid out of the compensation cess that flows into a special fund and the Centre cannot dip into its own resources to pay the states. The only remedy is for the Centre to defer the payment, which makes life difficult for states as they have to look for resources elsewhere.

Companies under IBC process may get GST relief

Source: The Economic Times, Dec 23, 2019

NEW DELHI: The government may allow companies undergoing resolution under the Insolvency and Bankruptcy Code (IBC) to pay current levies of goods and services tax (GST) without the mandatory payment of past dues. This will remove a hurdle in the bankruptcy resolution process.

Ministry of Corporate Affairs and Department of Revenue (DoR) officials have begun talks on the matter and a framework is likely to be unveiled soon, two senior government officials told ET. “The issue is under discussion… A procedure will be worked out,” said one of them, adding that the officials are expected to meet this week to finalise the contours.

Tax authorities are treated on a par with operational creditors and eligible to receive payments with others. However, GST framework currently doesn’t allow a firm to file current tax dues if it has past dues. Penal action has been initiated for noncompliance even in cases where the insolvency resolution process has been initiated or GST registration has been cancelled.

This comes in the way of efforts to revive a company under IBC process. Industry organisations have lobbied the government on the issue, asking it to accept current GST dues while giving a moratorium on past ones.

Experts said there’s a need to align GST and IBC. “It is important that the period during which the corporate insolvency resolution process (CIRP) takes place is insulated from the past GST compliances of the company,” said Pratik Jain, indirect taxes leader, PwC.

Industry backs immunity for corporate debtors from penalties or prosecution for noncompliance under the GST regime. “There is a need to recognise the fact that there could be several cases of default in GST filings/payments due to genuine reasons,” said MS Mani, partner, Deloitte India. “Such defaults should be condoned, possibly with a small penalty and the focus should be to avoid business disruptions.”
The Chennai bench of National Company Law Tribunal (NCLT) recently directed revenue authorities to allow corporate debtors to access the GST portal to file taxes after the commencement of insolvency proceedings.

GST compensation to 9 states put at Rs 70,000 Cr

Source: The Economic Times, Dec 20, 2019

Mumbai: The Goods and Services Tax compensation requirement of nine major states could be as much as Rs 70,000 crore in fiscal 2020, ratings firm ICRA has estimated.

This would put significant pressure on the central government’s accounts which are already under stress from the cut in corporate tax rate and other stimulus measures.

Considering lower-than-expected GST collections — ICRA estimates this revenue to fall Rs 3.5 lakh crore short at the central level for this fiscal year compared with the July 2019 budget estimate of Rs 24.6 lakh crore — the total shortfall for all states could touch Rs 2.2 lakh crore in FY20.

Apart from this, the timing of the release of GST grants to state governments pose a key risk to the cash flows of the states, considering the size of the amount in question.

“The nine states that we have studied are likely to require a sizeable Rs 60,000-70,000 crore as grants for GST compensation in FY2020, twice as high as the compensation they received in FY2019. The timing of release of such grants by the GoI (Government of India) to the states would critically affect their cash flows and the pattern of fundraising in the rest of this fiscal,” said ICRA’s group head-corporate sector rating, Jayanta Roy.

This further poses a two-part risk for the states. A shortfall in their revenue implies a revenue expenditure side risk on additional outgo towards welfare schemes, drought and flood relief, and salaries. On the other hand, ICRA estimates that states would increase issuances of state development loans to plug the gap, resulting in higher state fiscal deficits.

The nine states that were covered in this study were Karnataka, Kerala, Gujarat, Maharashtra, Punjab, Haryana, Rajasthan, Tamil Nadu and West Bengal. These have budgeted for an aggregate fiscal deficit of Rs 3 lakh crore in their respective FY20 budget estimates.

These figures amount to around 2.5% of their gross state domestic product (GSDP), according to ICRA, which is below the 14th Finance Commission’s threshold state fiscal deficit at 3% of GSDP.

GST Council votes for a change, shifts lotteries to highest slab

Source: The Economic Times, Dec 18, 2019

NEW DELHI: The Goods and Services Tax (GST) Council on Wednesday departed from its practice of consensus-based decision-making, opting the first time for a vote to settle differences among states over the taxation of lotteries.

The council also deliberated upon a presentation made by a committee of officers set up to study revenue augmentation, but refrained from any generalised rate increase or removal of exemptions. Read the rest of this entry »

Higher GST rate on mobiles, fabrics likely to boost revenue collection

Source: Business Standard, Dec 12, 2019

New Delhi: The goods and services tax (GST) rate on mobile phones and fabric may be hiked by the GST Council next week. This could be part of an exercise to correct the inverted tax structure and boost revenue collection.

The structure of higher tax rates on inputs than on final products is resulting in a huge input tax credit outgo. Other items which have seen an inverted duty structure include fabric bags, shoes, tractors etc.

The GST rate on mobile phones is 12 per cent, whereas that on phone parts and batteries is 18 per cent, triggering an inverted tax structure. That, in turn, leads to unutilised input tax credit and hence issuance of refunds by the government.

In case of phones, a single manufacturer last year claimed a refund of close to Rs 4,100 crore. Pointing out that the issue of inverted tax structure is resulting in huge refunds outgo, a government official said that mobile phones and fabric could see GST rate rectification.

A registered taxpayer can claim refund of unclaimed input tax credit on account of higher tax on input and lower tax on output.

Similarly, fabric has a GST rate of 5 per cent, whereas different types of yarns are taxed at 12 per cent. Initially, the government had not allowed fabric manufacturers to claim input tax credit refunds, but later allowed refunds in the July 2018 meeting.

Read the rest of this entry »