6-digit HSN code mandatory in invoices for biz with over Rs 5crore turnover

Source: Financial Express. Apr 01, 2021

Businesses with turnover of more than Rs 5 crore will have to furnish six-digit HSN or tariff code on the invoices issued for supplies of taxable goods and services from April 1

Businesses with turnover of more than Rs 5 crore will have to furnish six-digit HSN or tariff code on the invoices issued for supplies of taxable goods and services from April 1, the Finance Ministry said on Wednesday. Those with turnover of up to Rs 5 crore in the preceding financial year would be required to mandatorily furnish four-digit HSN code on B2B invoices. Earlier, the requirement was four-digits and two-digits respectively. “With effect from the 1st April, 2021, GST taxpayers will have to furnish HSN (Harmonised System of Nomenclature Code), or Service Accounting Code (SAC) in their invoices, as per the revised requirement, the Ministry said in a statement.

In trade parlance, every product is categorised under an HSN code (Harmonised System of Nomenclature). It helps in systematic classification of goods across the globe. HSN codes for goods at 6 digits are universally common. Therefore, common HSN codes apply to Customs and GST. Accordingly, codes prescribed in the Customs tariff are used for the GST purposes too. The Ministry said manufacturers and importers/exporters have been commonly using HSN Codes. Manufacturers were furnishing these codes even in the pre-GST regime. Importers and exporters have been furnishing these codes in import/export documents. Traders would mostly be using HSN codes furnished in the invoices issued to them by the manufacturer or importer suppliers.

“A large number of GST taxpayers are already furnishing HS codes/SAC at 6/8 digits on voluntary basis on the invoices, e -way bills and GSTR 1 returns,” it added. AMRG & Associates Senior Partner Rajat Mohan said traders, manufacturers and services providers would be required to give more precise HSN code while issuing an invoice to the supplies with effect from April 1. “This will help tax officers with deeper data analytics for every item supplied and help them in arresting tax evasion emanating from fake invoices and irregular tax credit claims,” Mohan added.

GST e-invoicing mandatory for turnover of Rs 50 cr and above from April 1

Source: Business Standard, Mar 08, 2021

New Delhi: E-invoicing under the goods and services tax (GST) regime will become mandatory for entities with a turnover of Rs 50 crore and more from April 1 for business to business transactions, the government said in a notification on Monday. This will be the third phase of e-invoicing roll out, which was rolled out for entities with Rs 500 crore and more turnover from October 1 last year and later extended to entities with Rs 100 crore and above from January 1 this year. The government had earlier planned to extend e-invoicing to all entities from April 1, 2021, but has refrained, taking care of interest of small entities.

The system is aimed at bringing in more transparency in sales reporting, minimising errors and mismatches, automating data entry work, and improving compliance. It will help prevent tax evasion once it is made mandatory for small and medium firms in phases.

Rajat Mohan, partner, AMRG Associates said, “Government had earlier planned to roll out the electronic invoicing system for all business-to-business (B2B) transactions from April 1, whereas government has now zeroed on a threshold of Rs 50 crores. Keeping MSME organisations with turnover of upto Rs 50 crores out of the E-invoicing net would help them thrive and grow without any change in business processes. Under e-invoicing, companies have to generate an invoice registration number (IRN) from a government portal and it has to be shown to the authorities while moving goods. Sectors like transportation, insurance and banking companies, other financial institutions, non-banking financial companies, goods transportation agencies, and passenger transportation services are exempt from e-invoicing. Besides, units in special economic zones too are exempt from this.

GST officers to immediately suspend taxpayer’s registration for ‘significant anomalies’ in sales return

Source: The Economic Times, Feb 14, 2021

NEW DELHI: GST officers will immediately suspend registration of taxpayers whose sales return or GSTR-1 forms show “significant differences or anomalies” from the return filed by their suppliers, a move aimed at curbing tax evasion and safeguarding revenues.

The Central Board of Indirect Taxes and Customs (CBIC) has issued a Standard Operating Procedure (SOP) for suspension of registration of a person on observance of such discrepancies /anomalies which indicate violation of the GST Act.

As per the SOP, the registration of specified taxpayers shall be suspended and system generated intimation for suspension and notice for cancellation of registration in form GST REG-31, containing the reasons of suspension, shall be sent to such taxpayers on their registered e-mail address.

The registration would be suspended in cases where a comparison of the returns furnished by a registered person with the details of outward supplies furnished in form GSTR-1, or the details of inward supplies derived based on the details of outward supplies furnished by his suppliers in their GSTR-1, show ‘significant differences or anomalies’, indicating contravention of the provisions of the GST Act.

“Till the time functionality for FORM REG-31 is made available on portal, such notice/intimation shall be made available to the taxpayer on their dashboard on the common portal in Form GST REG-17.

“The taxpayers will be able to view the notice in the ‘View/Notice and Order’ tab post login,” the SOP said. Goods and Services Tax (GST) officers have already intensified their drive against fake invoicing and this has also contributed to increase in tax collections in the past couple of months.

GST collections have crossed the Rs 1 lakh crore mark for four consecutive months and surged to an all-time high of about Rs 1.20 lakh crore in January.

The SOP further said the taxpayers whose registrations are suspended would be required to furnish reply to the jurisdictional tax officer within 30 days from the receipt of such notice / intimation, explaining the discrepancies / anomalies and the reasons as to why their registration should not be cancelled.

Reply has to be sent to the jurisdictional officer through the common portal within 30 days from the receipt of notice / intimation.

In case the intimation for suspension and notice for cancellation of registration is issued on ground of non-filing of returns, the said person may file all the due returns and submit the response, the SOP added.

GST revenues touch record high of Rs 1.20 lakh crore in January

Source: Financial Express, Jan 31, 2021

GST collections surged to an all-time high of about Rs 1.20 lakh crore in January as economic activities picked up after the withdrawal of stringent lockdown restrictions.

Mop-up from the Goods and Services Tax (GST), which is levied when a consumable item is sold or a service such as travel booking rendered, in January was 8 per cent higher than such receipts in the same month of 2020.

In a statement, the Finance Ministry said the January collections were the highest ever since the implementation of the nationwide tax in July 2017.

The previous best was in December 2020 when Rs 1,15,174 crore was collected.

This is the fourth straight month of over Rs 1 lakh crore tax collections, a sign of strong recovery.

The ministry said the total number of GSTR-3B Returns filed for the month of December up to January 1, 2021, is 90 lakhs.

“The GST revenues during January 2021 are the highest since introduction of GST and has almost touched the Rs 1.2 lakh crore mark, exceeding the last month’s record collection of Rs 1.15 lakh crore.

GST revenues above Rs 1 lakh crore for a stretch of last four months and a steep increasing trend over this period are clear indicators of rapid economic recovery post pandemic, the ministry said.

Closer monitoring against fake-billing, deep data analytics using data from multiple sources including GST, Income-tax and Customs IT systems and effective tax administration have also contributed to the steady increase in tax revenue over last few months, it added.

GST revenue during October-January has grown on an average of 8 per cent, as compared to (-) 24 per cent during the first half (April-September) of the fiscal year.

“The gross GST revenue collected in the month of January 2021 till 6PM on January 31, 2021, is Rs 1,19,847 crore of which CGST is Rs 21,923 crore, SGST is Rs 29,014 crore, IGST is Rs 60,288 crore (including Rs 27,424 crore collected on import of goods) and Cess is Rs 8,622 crore (including Rs 883 crore collected on import of goods),” the ministry said in a statement.

The number could be upped further as more number of GST sales returns get filed.

GST collections, which directly reflect the state of economic activity, had plummeted to a record low of Rs 32,172 crore in April 2020, after the government imposed a nationwide lockdown to curb the spread of coronavirus.

The lockdown, categorised by several agencies as one of the strictest curbs in the world, pummelled the economy as demand dried up and non-essential businesses were shuttered. In the April-June quarter, the economy contracted by the steepest ever 23.9 per cent.

As restrictions were gradually lifted, many parts of the economy were able to spring back into action although output remains well below the pre-pandemic levels.

Commenting on the GST numbers, Deloitte India Senior Director M S Mani said, “The surge in GST collections observed during the past four months is expected to be sustained in the coming months of the current fiscal with more of service sector activities like aviation, hospitality, entertainment etc opening up across states since January”.

The GST revenue in April-January was down about 12 per cent compared to the same period of the previous year.

GST revenues have topped Rs 1 lakh crore in eight out of 12 months of 2019-20 fiscal.

However, in the current fiscal, the revenues have taken a hit due to the COVID-19

pandemic. Revenue in April was Rs 32,172 crore, followed by Rs 62,151 crore in May, Rs 90,917 crore in June, Rs 87,422 crore in July, and Rs 86,449 crore in August. Collections in September were Rs 95,480 crore, Rs 1,05,155 crore in October, Rs 1,04,963 crore in November and Rs 1,15,174 crore in December.

GST fraud of Rs 940 cr busted, 340 bogus firms under lens

Source: The Economic Times, Feb 01, 2021

With the arrest of six persons, including the kingpin, Delhi Police’s Cyber Crime Unit (CyPAD) has busted a Goods and Services Tax (GST) refund scam involving fake business transactions worth Rs 940 crore. According to CyPAD, as many as 340 bogus companies suspected to be involved in fake business transactions are under the scanner.

Police said that in order to generate the GST number, the fraudsters used fake or stolen PAN and Aadhaar cards. They have registered fake firms on GST portal and also procured multiple SIM cards on fake documents.

Subsequently, the details of the bogus firms were sold to business entities or individuals who then used those to show fake sale and purchase transactions through bogus GST returns for evading tax and transfering the tax liability or claiming refunds.

“Once a fake firm has been registered and GST number was allotted, bogus business transactions are conducted with another fake firm and likewise the transaction steps are repeated up to 4 layers for the purpose of avoiding suspicion of GST department because the business transactions of previous two to three levels are checked by the department before sanctioning the GST refunds,” said Anyesh Roy, DCP Cyber Crime.

The accused have also opened bank accounts on the basis of forged IDs including PAN numbers. Using these firms, fake sale and purchase transactions are shown from one another by filing bogus GST returns and claiming difference in GST as refund.

All the six accused persons have worked as data entry operators in VAT and GST department on contract basis and were well conversant with the vulnerabilities of the taxation system and the ways to take advantage of the existing GST slabs to claim fake refund. “During investigation, 340 companies suspected to be involved in fake reimbursement of GST have so far been identified,” the officer added.
A total of 25 bank accounts used for claiming GST returns have been freezed. A total of Rs 48 lakh has been found to be frozen as fraudulently obtained refunds in these bank accounts. More such fraudulently obtained refunds are likely to be identified.

FinMin releases Rs 6K crore to states to meet GST compensation shortfall

Source: Business Standard, Jan 04, 2021

The Finance Ministry on Monday released the tenth instalment of Rs 6,000 crore to the states to meet the GST compensation shortfall, taking the total amount provided so far under this window to Rs 60,000 crore.

The Centre had set up a special borrowing window in October 2020 to meet the estimated shortfall of Rs 1.10 trillion in revenue arising on account of implementation of GST. The Ministry of Finance in a statement said it has released the tenth weekly instalment of Rs 6,000 crore to the states to meet the GST compensation shortfall.

Out of this, Rs 5,516.60 crore has been released to 23 states and Rs 483.40 crore has been given to the three Union Territories (UTs) with Legislative Assembly (Delhi, Jammu & Kashmir and Puducherry), who are members of the GST Council.

GST-registered small biz to file 4 sales returns in a year from January

Source: Financial Express, Dec 07, 2020

Businesses with up to Rs 5 crore turnover will have to file only four GST sales returns, or GSTR-3B, from January instead of 12 at present, according to sources.

The Quarterly filing of Return with Monthly Payment (QRMP) Scheme would impact almost 94 lakh taxpayers, about 92 per cent of the total tax base of the goods and services tax (GST), he added.

With this, from January onwards, small taxpayers would need to file only eight returns (four GSTR-3B and four GSTR-1 returns) in a year, one of the sources said.

The source further said the scheme also brings in the concept of providing input tax credit (ITC) only on the reported invoices, thereby putting a significant curb on the menace of fake invoice frauds.

Sources in the know of the matter said the QRMP scheme has optional feature of invoice filing facility (IFF) to mitigate business-related hardships for the small and medium taxpayers.

Under the facility of IFF, the small taxpayers who opt to be quarterly return filers under the QRMP scheme would be able to upload and file such invoices even in the first and second month of the quarter for which there is a demand from the recipients.

Further, this would engage buyers who earlier used to avoid purchase from the small taxpayers in the want of uploading of invoices in the system on monthly basis, the sources said.

According to the sources, the taxpayers would need not upload and file all the invoices for the month and could upload and file only those invoices that are required to be filed in IFF as per demand of the recipients.

The remaining invoices of the first and second months can be uploaded in the quarterly GSTR-1 return. The IFF would be available up to a cut-off date and credit would flow to the recipient after the cut-off date on filing of the IFF, they added.

The GST Council in its meeting on October 5 said registered person having an aggregate turnover up to Rs 5 crore may be allowed to furnish return on a quarterly basis along with monthly payment of tax, with effect from January 1, 2021.

With the launch of the QRMP scheme on December 5, taxpayers with up to Rs 5 crore turnover have the option to file their GSTR-1 and GSTR-3B returns quarterly beginning January-March period. Taxpayers can make GST payments through challan every month either by self-assessment of monthly liability or 35 per cent of net cash liability of the previous filed GSTR-3B of the quarter. 

Supreme Court upholds levy of GST on lottery, gambling

Source: Financial Express, Dec 04, 2020

The Supreme Court on Thursday upheld the levy of Goods and Service Tax (GST) on sale of lotteries and gambling across the country.

A bench comprising justices Ashok Bhushan, R Subhash Reddy and MR Shah ruled that the Central Goods and Services Tax Act, 2017 and the notifications issued there under bringing lottery and gambling under the GST net are valid. The top court said that “while determining the taxable value of supply the prize money is not to be excluded for the purpose of levy of GST”

“The inclusion of actionable claim in definition “goods” as given in Section 2(52) of CGST Act, 2017 is not contrary to the legal meaning of goods and is neither illegal nor unconstitutional,” it held. According to judges, it is well settled that the courts have very limited role to play with regard to taxing policy of the legislature.

Challenging Section 2(52) of the 2017 Act and notifications levying tax on lottery, Skill Lotto Solutions, a dealer for sale and distribution of lotteries organised by Punjab, contended that the law was violative of the fundamental rights and contrary to the SC judgment (Sunrise Associates Vs government of NCT of Delhi) that held that lotteries were merely actionable claims and cannot be defined as ‘goods’.

It said that the GST Council wrongly viewed lotteries as “goods” while they were only “actionable claims”. Besides, lottery tickets by themselves were only “valueless pieces of paper” and cannot be taxed.

Skill Lotto also alleged that the notifications were arbitrary and discriminatory as the Centre had imposed GST of 12% on sale of lotteries within the same State and 28% if tickets were sold from other States. While dismissing its petition, the Supreme Court granted the liberty to the petitioner to challenge the notifications of February 21 or March 2 by which rate of GST for lottery run by the state and lottery organised by the state have been made the same.

GST collections cross Rs 1 lakh cr mark for second straight month in November; show economic recovery

Source: Financial Express, Dec 01, 2020

The government collected GST revenue of more than Rs 1 lakh crore for the second consecutive month in November 2020. GST collections stood at 1.05 lakh crore in the month, according to the Ministry of Finance. At a time when the government is struggling with revenue collections, October and November have seen decent growth in GST collections, signalling the recovery in the economy. Out of the total collection, the government garnered a CGST of Rs 19,189 crore, SGST of Rs 25,540 crore, IGST of Rs 51,992 crore, and Cess of Rs 8,242crore. The total number of GSTR-3B returns filed for the month of November stood at 82 lakhs. Read the rest of this entry »

GSTN infrastructure upgraded to handle up to 300,000 users concurrently

Source: Business Standard, Nov 08, 2020

New Delhi: GST Network’s infrastructure has been upgraded to handle up to 300,000 logged-in users at a time, GSTN said on Sunday.

Besides, the Goods and Services Tax Network (GSTN) has introduced auto-populated sales return form GSTR-3B in PDF form which will be available from October 2020 tax periods onwards.

The complete PDF with auto-population of input tax credit will be available on the common portal (GSTN) from November 12, 2020, GSTN said in a statement.

GSTN said it has augmented the capacity of the gateway from 150,000 to 300,000 concurrent logged in taxpayers to handle the expected sharp surge in the indirect tax-related activities on the portal after easing of lockdown.

Further, the upgrade has enabled GSTN to handle and scale up to 500,000 concurrently logged-in taxpayers, if necessary, it added.

The number of active taxpayer numbers have effectively doubled since the launch of GST at about 13 million.

As per GSTN data, September 2020 witnessed a sudden jump in filing of GSTR-3B, the monthly return filed by normal taxpayers.

This surge was also due to the backlog in filing of previous months’ returns for which relaxations were provided to taxpayers in view of the Covid-19 outbreak.

The subsequent month also saw increased traffic which was successfully handled by the GST portal, it said.

GSTN said detailed breakup of various tables of GSTR-1 (supply return) and GSTR-3B which have been used to auto-populate GSTR-3B have also been provided in the PDF.

In the first phase, system has started auto-populating details from GSTR-1 to GSTR-3B from July 2020 period onwards for all GSTR-1s filed after August 27, 2020, GSTN added.

“All taxpayers are requested to go through their GSTR-3B (PDF) and provide feedback (if any) on any aspect by raising a ticket on the self-service portal,” GSTN said.

The GST Council, in its 39th meeting on March 14, had recommended adopting and implementing an incremental approach of linking the present system of filing of GSTR-3B and GSTR-1.