Finally, some good news: November GST collections up 6%

Source: The Economic Times, Dec 01, 2019

NEW DELHI: India’s goods and services tax collections rose 6% to Rs 1.03 lakh crore in November, reversing two months of decline, with experts attributing the increase to festive shopping and better compliance.

GST collections were Rs 97,637 crore in November last year and Rs 95,380 crore in October this year. The increase in collections was a sign of economic revival, recovery in demand and measures to ease compliance, government officials told ET.

“After two months of negative growth, GST revenues witnessed an impressive recovery… During the month, the GST collection on domestic transactions witnessed a growth of 12%, highest during the year,” the government said in a statement.

Tax revenue growth has been muted in the current financial year because of slowing growth. Net tax revenue climbed 3.4% in April-October from a year ago. Higher collections will provide some fiscal relief to the government. India’s economic growth slowed to a six-year low of 4.5% in July-September, while nominal GDP growth in the quarter hit a decade low of 6.1%, which would impact taxes.

GST collections had fallen 2.7% in September and 5.3% in October from the corresponding months in 2018. “While increase in collections is encouraging, it’s difficult to read too much into the collection for one month, particularly because October was also a month of festivals. We need to see what’s the trend,” said Pratik Jain, a partner at PwC. “The GDP numbers also say that personal consumption expenditure is slightly on the higher side, so from that perspective it was somewhat expected that GST collections would go higher,” said Indranil Pan, chief economist at IDFC First Bank.

“This (increase in collections) might be a festive occurrence – whether the intensity with this will go up, only time will say,” Collections may have got a lift from better compliance measures. “With implementation of anti-evasion measures like investigation on identified discrepancies through analytics and the recently implemented restrictions on availing of unmatched credits, there was a general expectation of collections witnessing an increase,” said Abhishek Jain, a tax partner at EY.

Collections in November comprised of Rs 19,592 crore of central GST, Rs 27,144 crore of state GST, Rs 49,028 crore integrated GST (including Rs 20,948 crore collected on imports) and cess of Rs 7,727 crore. The total number of GSTR 3B returns filed for October up to November 30 was 77.83 lakh.

Govt culls software development, four other biz from 15% corporate tax rate

Source: The Hindu Business Line, Nov 25, 2019

New Delhi: The Finance Ministry on Monday said that computer software, mining and three other business segments will not be eligible for the 15 per cent corporate tax rate.

Now, it is clear that the new 15 per cent corporate regime is only for the new manufacturing businesses.

Also, it has clarified that the losses on account of merger and amalgamation will not be taken into consideration for computing 22 per cent corporate tax for existing businesses. All these were part of new Taxation Laws (Amendment) Bill, which will replace an ordinance promulgated on September 20 to bring in effect a reduction in corporate tax.

Commenting on the Bill, Rakesh Nangia, Chairman, Nangia Andersen Consulting, said that creasing out the interpretational issues arising from the ordinance, the Bill has added necessary provisos and subsections. Foremost is the amendment in 115JAA, legislating that MAT (Minimum Alternate Tax) credit shall not be available where the beneficial rate of tax is claimed. The Bill has put an end to the possible litigation on the applicability of the CBDT circular which was issued to clarify that MAT credit shall not be allowed.

“Further listing down the activities that shall not be deemed as manufacturing activity, eligible to claim the reduced rate of 15 per cent, the Act has restricted the benefit. Clarifying that the surcharge of 10 per cent shall apply to those claiming the beneficial rate under the new sections, the speculations on that front have also been removed,” he said.

Read the rest of this entry »

Govt eases input tax refunds for exporters

Source: The Economic Times, Nov 20, 2019

NEW DELHI: In a major relief for the export sector, the customs authority has directed tax officials not to insist on proof of realisation of exports proceeds for processing of input tax refunds.

Delay in issuance of refunds has been a sore point for exporters since the switchover to goods and services tax (GST) regime in July 2017.

The new directive from the Central Board of Indirect Taxes and Customs (CBIC) follows assurance from finance minister Nirmala Sitharaman to the industry on easing of compliances.

The circular makes it clear that tax authorities will not insist on proof of realisation of export proceeds for processing of refund claims related to export of goods as it has not been envisaged in the law.

CBIC emphasised that exports have been zero rated under the Integrated Goods and Services Act. Hence, as long as goods have actually been exported, even after a period of three months, tax officials should not insist on payment of Integrated tax first and claiming refund at a subsequent date.

There have been reports that exporters were being asked to pay integrated tax in cases where the goods were exported more than three months after the date of the issue of the invoice for export.
Tax experts said the circular has come at an opportune time. “The circular has provided some key relaxations,” said Harpreet Singh, partner at KPMG. Tax authorities will no longer insist on proof of realisation of proceeds, or on payment of tax before refunds are initiated when the export is delayed, he said. Also, there won’t be any adverse action in case the order of debit on claiming refund is not followed, Singh said.

CBDT notifies PAN-Aadhaar interchangeability

Source: The Economic Times, Nov 07, 2019

NEW DELHI: The apex body for direct taxes has amended over 100 forms and returns to provide for interchangeability between permanent account number (PAN) and Aadhaar number.

A notification to this effect was issued by the Central Board of Direct Taxes on Thursday. 20191108-3
The Union Budget presented in July had amended Section 139A of the Income-tax Act, 1961 to provide for interchangeability of PAN and Aadhaar number. However, an amendment to give effect to this change in various forms or returns and statements prescribed was pending.

The CBDT has now issued a notification to amend the Income-tax Rules, 1962 (Rules) to enable quoting of the Aadhar number instead of PAN in various forms and documents as specified under the tax laws.

Digital tax on MNCs: India seeks changes in OECD math

Source: The Economic Times, Nov 06, 2019

NEW DELHI: India has sought changes in the Organisation for Economic Cooperation and Development (OECD) proposal on digital taxation, saying it would deny the country its proper share of taxes from multinationals such as Google, Facebook, Uber and Netflix, which generate substantial revenues locally.

The government has proposed a more balanced principle for the taxation of such companies based on place of revenue generation.

“We want a fair share in revenues that accrue to the company from the country,” said a government official aware of the development. India has submitted its concerns to the body. The OECD had on October 9 released a draft on taxing digital companies for public comment. Discussions on the proposal are to be held on November 21-22. All countries have to agree for the rules to be enforced. Read the rest of this entry »

Rs 75,000-crore minimum alternate tax credit dilemma grips India Inc

Source: Business Standard, Oct 17, 2019

Mumbai: Vast swathes of Corporate India may not be in a hurry to shift to the new corporation tax regime. Ninety-nine companies, which also include some unlisted ones, have more than Rs 100 crore each of minimum alternate tax (MAT) credit on their books, cumulatively adding up to Rs 75,000 crore. Of these, 15 heavyweights such as NTPC, Reliance Industries, Bharti Airtel, Vedanta, and TCS have MAT credit in excess of Rs 1,000 crore each.

“By utilising MAT credit, many companies will be able to bring down their effective tax cost to 17.47 per cent from 25.17 per cent (under the new regime), leading to substantial tax savings of about 8 per cent,” said Saumil Shah, partner, Dhruva Advisors. “Only those companies whose effective tax cost is higher than 25.17 per cent will shift to the new regime.” Read the rest of this entry »

GST refunds denied to MNC back offices

Source: The Economic Times, Oct 09, 2019

New Delhi: A host of back offices of multinational companies in the financial sector face a tax whammy, with Goods and Services Tax authorities denying them refunds of amounts paid on inputs, saying the work done for parent companies can’t be considered as exports and will be counted as a service for the same entity.

GST authorities have rejected refunds on these grounds across states, including Haryana, Maharashtra, Tamil Nadu and Karnataka. The denial of refunds running into hundreds of crores of rupees to these outfits can derail their business model and may impact India’s attractiveness as the world’s back-office hub, especially with the emergence of low-cost sites in the Philippines and East Europe.

“Rejection orders are based on the premise that the services are provided by the local entity to its overseas affiliate company, which is the ‘same entity’ and therefore, the said services do not qualify as exports,” said an industry official privy to the development. Industry has approached the government for expeditious resolution of the issue. Individual companies will approach appellate bodies to seek relief.

Read the rest of this entry »