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Updates
2018-07-22T10:31:23
The Council approved quarterly filing of return for the small taxpayers having turnover below Rs. 5 Cr as an optional facility. Quarterly return shall be similar to main return with monthly payment facility but for two kinds of registered persons – small traders making only B2C supply or making B2B + B2C supply. Taxpayers would have facility to create his profile based on nature of supplies made and received. The fields of information which a taxpayer would be shown and would be required to fill in the return would depend on his profile. NIL return filers (no purchase and no sale) shall be given facility to file return Quarterly basis.  
2018-07-13T10:36:26
13/07/2018 WEST BENGAL EXEMPT E WAY BILL FOR JOB WORKERS In West Bengal, e-waybill for an intra-state movement of goods is exempted where such goods are being sent to a job worker for job work or are being sent from one job-worker to another job-worker or are being returned to the principal after such job work, and where such transportation is not for final delivery of the finished goods.
2018-07-05T11:52:22
GST trouble: Assessees told to explain mismatch of ITC claimed in GSTR-3B, GSTR-2A Taxmen cite mismatch of ITC claimed in GSTR-3B and GSTR-2A, give 10 days to explain. The tax department’s move of using GSTR-2 was expected among assessees and tax practitioners. A large number of assessees under the GST have received notices from the tax department asking them to explain the mismatch of input tax credit (ITC) claimed in the self-declared summary return GSTR-3B and the auto-generated, but currently suspended, GSTR-2A. The notices have granted a period of 10 days to explain discrepancy, failing which proceeding would be initiated against the taxpayers. Although the department has intensified its enforcement effort in the last month which is reflected in the spurt of notices received by taxpayers, it is the first time they have used a return form, which is not being used by taxpayers since it was suspended in November last year. GSTR-2A is generated by the system on the basis on information received from GSTR-3B and GSTR-1 (sales details). When the sellers of assessees file GSTR-1 in any particular month, its details are captured by GSTR-2A thus providing the details of purchases of the assessee concerned. Since ITC claimed in GSTR-3B should ideally match ITC available on all the purchases made by an asseessee, a mismatch can be detected by comparing the details in these two forms. However, experts say that a mismatch doesn’t necessarily implicate a taxpayer and several other factors could be responsible for the same. “Numerous reasons could be attributed to these discrepancies which include, contradicting circulars over a period of time, frequent changes in law, suspension of GSTR-2, technical incompetence at GSTN. Policymakers need to assure that tax officers pursue such notices in a non-coercive manner and appreciate the practical difficulties faced by taxpayers in filing of tax returns, ” Rajat Mohan, partner, AMRG & Associates, said. In the past month, taxpayers have received notices for non-filing of GSTR-3B, and mismatch in details between GSTR-3B and GSTR-1. The latest batch of notices suggest that tax department is using all possible tools at its disposal to detect evasion, a tax official said. The tax department’s move of using GSTR-2 was expected among assessees and tax practitioners as reported by FE earlier. These assessees had also started using GSTR-2 and GSTR-2A to ensure that the ITC claimed in GSTR-3B was being reconciled. GSTR-2 helps them provide evidence of tax contents in the goods and services they consumed, and thereby validate the credits claimed. The GSTR-2 form provides a business details on the status of suppliers’ tax filing and gives the entity greater control over choosing a vendor. This also allows a firm to ensure that its suppliers are paying taxes on time so that it can claim ITC without any hurdle. Taxpayers are now mandated to file only the outward-supply return GSTR-1 and a simple summary interim return GSTR-3B, with which they pay tax and claim input tax credits. Filing of comprehensive returns with attendant invoice-matching facility was suspended following complaints. Taxpayers had complained of huge compliance burden and also the GST Network’s inability to handle the traffic. The widespread use of GSTR-2 is despite the GST Network not providing the facility of filing
2018-07-05T11:54:06
26th GST Council Meet held on 10th March 2018 Key Decisions Taken in the 26th GST Council Meet: 1. GST Return Simplification: Current GST Return filing system to continue for next 3 months 2. On the E-Way Bill Front : -Inter-state implementation of E-way bill to be implemented from 1st April 2018 -Intra-state implementation of EWB to kick-off from 15th April 2018 in a phased manner. States to be divided into 4 lots to execute this phased rollout 3. Reverse Charge Mechanism (in case of supplies made by unregistered persons to registered persons) delayed till 1st July 2018 4. TDS & TCS applicability postponed until 30th June 2018 5. Tax exemption for Exporters extended by 6 months till 1st October 2018 & the Council has advised the GSTN to expedite the export refund claims 6. No GST rate changes were announced Read 26th GST Council meet page to know more about what was expected of this meet 25th GST Council Meet held on 18th Jan 2018 Key Decisions Taken in the 25th GST Council Meet: 1. Late fee reduction: • For GSTR-1, GSTR-5, GSTR-5A and GSTR-6 the late fees is reduced to Rs. 50 per day • In case of Nil return filed for GSTR-1, GSTR-5, GSTR-5A late fee is reduced to Rs. 20 per day 2. Cancellation of registration by voluntary registrants can be applied before the expiry of 1 year from the date of registration 3.Cancellation of registration (REG – 29) by migrated taxpayers extended till 31st March 2018. 4. On successful implementation of e-Way bills, the E-way bill portal to be shifted to ewaybillgst.gov.in 5. Certain modification to e-way bill rules to be notified soon. 6. Recommendations made by Handicraft committee has been accepted by the council: The rates are to be worked out later. 7. GST Rates for 29 Goods and 53 Services have been reduced. These rates will come into effect from 25th January 2018. GST Rate Changes for Goods: Nil Rated Goods: 1. Vibhuti 2. Parts and accessories for the manufacture of hearing aids. 3. De-oiled rice bran Rates reduced from 28% to 18% 1. Old and used motor vehicles [medium and large cars and SUVs] with a condition that No ITC is availed 2. Public transport Buses that run on Biofuel Rates reduced from 28% to 12% For Old and used motor vehicles [other than medium and large cars and SUVs] with a condition that No ITC is availed Rates reduced from 18% to 12% 1. Sugar boiled Confectionery 2. Drinking water packed in 20 litres bottles 3. Biodiesel 4. Drip irrigation system including laterals, sprinklers 5. Mechanical Sprayer 6. Certain listed Bio-pesticides (12 in nos) 7. Fertilizer grade Phosphoric acid 8. Bamboo wood building joinery Rate reduced from 18% to 5% 1. LPG supplied to Household Domestic Consumers 2. Raw materials and Consumables needed for Launch vehicles, Satellites and Payloads (Both CGST and IGST Rates) 3. Tamarind Kernel Powder 4. Mehendi paste in cones Rates reduced from 12% to 5% 1. Articles of straw, of esparto or of other plaiting materials 2. Velvet fabric [with a condition that no refund is claimed on ITC] Rates reduced from 3% to 0.25% Diamonds and precious stones GST Rate increased from 12% to 18% Cigarette filter rods Rate increased from 0% to 5% Rice bran (other than de-oiled rice bran) Compensation cess is reduced to 0% for following motor vehicles : 1. Old and used motor vehicles [medium and large cars and SUVs]with a condition that No ITC is availed 2. Old and used motor vehicles [other than medium and large cars and SUVs] with a condition that No ITC is availed 3. Vehicle that is cleared as an ambulance (having all accessories necessary in ambulance) 4. 10-13 seater Buses and ambulances subject to specified conditions GST Rate Changes for Services: GST newly applicable on following: • GST Rate at 5% on small housekeeping service providers, notified under section 9 (5) of GST Act, who provide housekeeping service through ECO, without availing ITC • GST Rate at 28% on actionable claim in the form of chance to win in betting and gambling including horse racing Rate reduced from 28% to 18% Services by way of admission to theme parks, water parks, joy rides, merry-go-rounds, go-karting and ballet Rate reduced from 18% to 12% 1. Transportation of petroleum crude and petroleum products with ITC Credit. 2. Metro and monorail projects (construction, erection, commissioning or installation of original works) 3. Works Contract Services by Sub-contractor to the Main contractor under the following scenario: Where the main contractor provides WCS to Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity at the rate of 12% Note: Similarly, GST Rate for Sub-contract services to the main contractor shall attract 5% where the Main contractor is providing services to Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity at the rate of 5% 4. Common Effluent Treatment Plants services for treatment of effluents 5. Mining or exploration services of petroleum crude and natural gas and for drilling services in respect of the said goods Rate reduced from 18% to 5% 1. Tailoring Services 2. Transportation of petroleum crude and petroleum products without ITC Credit. 3. Job-work services for manufacture of leather goods(Chapter 42) and footwear (Chapter 64) Following Services are exempted : • Providing information under RTI Act, 2005 from GST. • Legal services provided to Government, Local Authority, Governmental Authority and Government Entity. • Transportation of goods from India to a place outside India by air or sea until 30th September 2018: • Life Insurance to personnel of Coast Guard (under the Group Insurance Scheme of the Central Government) by the Naval Insurance Group Fund, retrospectively w.e.f. 1.7.2017 • Dollar-denominated services provided by financial intermediaries located in IFSC SEZ, which have been deemed to be outside India under the various regulations by RBI, IRDAI, SEBI or any financial regulatory authority, to a person outside India • Pure services provided to Government entity by a Panchayat/ Municipality. Composite supply involving predominantly supply of services (i.e. up to 25% of the supply of goods) is also exempted. • Lease of land: 1. By government or local authority to governmental authority or government entity 2. Supply as a part of specified composite supply of construction of flats, etc • Admission to, or conduct of examination provided to all educational institutions including any service of conducting entrance examinations on collection of entrance fees • Reinsurance services in respect of following insurance schemes : 1. General insurance business provided under schemes such as Pradhan Mantri Suraksha Bima Yojna and others listed in Notification 12/2017-CGST Rate 2. Life insurance business provided under schemes such as Pradhan Mantri Jan Dhan Yojana and others listed in Notification 12/2017-CGST Rate • Services by way of fumigation in a warehouse of agricultural produce • Services of admission to planetarium where consideration charged is below Rs.500 • Subscription of online educational journals/periodicals by educational institutions who provide degree recognized by any law • Renting of transport vehicles to a person providing services of transportation to an educational institution (students, faculty, and staff) providing education upto higher secondary or equivalent. • Services provided by and to Fédération Internationale de Football Association (FIFA) and its subsidiaries directly or indirectly related to any of the events under FIFA U-20 World Cup in case the said event is hosted by India. Changes in Exemption limits in the following cases: • The exemption limit of Rs 5, 000 per month per member in respect of services provided by Resident Welfare Association (unincorporated or nonprofit entity) to its members against their individual contribution is enhanced to Rs 7500/-. • The exemption limit of the amount of cover of Rs. 50, 000 enhanced to Rs. 2 lakhs in respect of services of life insurance business provided under life microinsurance product approved by IRDAI • The exemption limit of Rs.250 for services with respect to all the theatrical performances like Music, Dance, Drama, Orchestra, Folk or Classical Arts and all other such activities in any Indian language in theatre increased 500 per person Others Recommendations to Note: • To allow ITC of input services in the same line of business at the GST rate of 5% in case of tour operator service • To extend the period of Viability Gap Funding (VGF) with respect to the construction of RCS Airports from 1 to 3 years from the date of commencement of RCS Udan Airport. • Proposal to not to include the Value of deposits, loans or advances on which interest or discount is earned in the Value of exempt supply under sub-section (2) of section 17 (Not applicable to Banking company, Financial Institutions, NBFC extending deposits, loans or advances) • To defer the liability to pay GST in case of TDR against consideration in the form of construction service and on construction service against consideration in the form of TDR to the time when the possession or right in the property is transferred to the landowner by entering into a conveyance deed or similar instrument (eg. allotment letter). No deferment in point of taxation in respect of cash component. • Changes in Valuation of Lottery, Betting and gambling Services: 1. To insert a provision that the value of lottery shall be 100/112 or 100/128 of the price of lottery ticket earlier notified. 2. To insert a provision that the Value of supply of Betting & Gambling shall be 100 % of the face value of the bet or the amount paid into the totalizator. • Recommendations made regarding Reverse Charge Mechanism 1. To include Renting of Immovable property by government or local authority to a registered person under reverse Charge while renting of immovable property by government or local authority to unregistered person shall continue under forward charge 2. To define insurance agent in the reverse charge notification to have the same meaning as assigned to it in clause (10) of section 2 of the Insurance Act, 1938, so that corporate agents get excluded from reverse charge Clarifications GST Rate Clarifications are given for the following goods: 1. GST at 18% to be charged only on the net quantity of “Poly Butylene Feed Stock & Liquefied Petroleum Gas” retained for the manufacture of “Poly Isobutylene or Propylene or di-butyl para cresol” subject to specified conditions. 2. With Respect to Rail coach industry: • GST at 5% on Chapter 86 Goods (with condition that no Refund of unutilized ITC) • GST to attract at applicable rates for the rest of the Goods supplies to Indian Railways 3. With Respect to Coal Rejects falling under HSN Code 2701: • GST at 5%
2018-07-05T11:53:10
A difficult reform across different levels of the federal system is rarely easy, but perhaps the least difficult in this moment before the next election. As we approach the first anniversary of the goods and services tax (GST) reform, it is a good time to take stock of the problems in the system. Introducing GST in India was no small feat, but it has become increasingly clear that the system is too complicated and has led to a lot of confusion for taxpayers. India has five different GST rates—0, 5%, 12%, 18%, and 28%. According to the World Bank India Development Update 2018, of the 115 countries with GST regime, 40 countries use a single rate and 28 countries use two rates. India keeps rather poor company with Italy, Ghana, Pakistan, and Luxemburg—countries with four or more rates. India does worse still, because in addition to these five tax rates, there are some exceptions. Some goods are categorized as luxury and sin goods, deserving a special cess in addition to the GST rate. There are some special goods taxed at low rates like gold (3%) and precious gemstones (0.25%). One might think five different rates is not so bad, once there is a clear code of classifications, and people get enough time to get used to the new system. After all, the government did a remarkable job of producing a detailed list of classifications in the Harmonised System of Nomenclature (HSN)—an eight-digit code for goods classification—which tries to provide and stipulate a code for every conceivable product category. One year into the GST regime, the HSN code-book for GST classification contains 18, 306 entries in 438 pages. Even after doing such a detailed job, there is confusion. What happens when a good or service could fit in two different categories, taxed at two different rates? For instance, should Pepsi’s Nimbooz be classified lemonade (taxed at 28%) or as pulp juice (taxed at 12%)? Most firms provide a canteen, but most firms also have the food prepared outside the premises, often by a third party. Should they be taxed at 5% or 18%, because canteen service is taxed at 5%, while outdoor catering is taxed at 18%. A few months ago, members of the industry reached out to the finance ministry and the GST council to clarify the matter. The opposite problem also exists, where variations of a good are taxed under different rates. Last year there was a sweets dispute. Plain barfis were taxed at 5%, but barfis with dry fruits could be taxed at 12%, and chocolate barfis at 28%. The GST council had to clarify that chocolate barfis would be taxed at 5% as barfis and not as chocolate. If one goes to the GST council website, there are a few hundred notifications, more than one for each day in existence. And that is just the Central government notifications. Each state has its own set of notifications. There is a constant process of raising disputes and questions, and the government trying to clarify classifications and solve problems. Then there are the legal challenges in courts. And this is only about the current stock of goods and services. It does not account for new products and services that will enter the market in the future. Some blame the government for not doing a good enough job of detailing and specifying various classifications. Actually, it has done a remarkable job, but that is hardly the point. The problem is that it is an impossible task. No matter how detailed the classification code-book, there will be disputes and confusion, because we live in a world with interesting, complicated and customized goods and services with many dimensions and serving many needs. The finance ministry and the GST council are asking the wrong question. The point is not how best to classify each good, but to realize the impossibility of successfully classifying each good. Therefore it is best to do away with the need to classify each good. A single GST for all goods and services needs no classification system. Every individual and firm simply pays the same rate, and the government and the legal system can use valuable time and resources resolving other problems. As the world around us grows in complexity, there is a tendency for governments to think we need more detailed rules and systems to regulate the dynamic nature of our economy and society. Counter-intuitively, the greater the complexity, the more we need simple rules to guide us through the maze of choices. The title is borrowed from the book by Richard Epstein, one of the best-known legal theorists in the world. His idea is that the simplicity of the rule will better help individuals and firms deal with many choices and the changing condition of the world around us. A complex tax system, on the other hand, adds burden to the human ability to navigate the numerous choices in a dynamic world. The greater the number of goods and services in the economy, the better it is to have fewer classifications and rates. In fact, a single rate does the job quite well. If the government can simplify the GST rates to a single rate and do away with the need for classification, it would reduce uncertainty, resources spent on resolving disputes, and compliance costs. However, the GST council needs to agree to a single rate. In a unique moment in India, 21 states, with almost 70% of the population, are currently governed by the Bharatiya Janata Party (BJP). A difficult reform across different levels of the federal system is rarely easy, but perhaps the least difficult in this moment before the next election. If anyone can accomplish this, it is Prime Minister Narendra Modi.
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