Call to extend GST compensation

Opposition-led states, including Bengal, Kerala and Chhattisgarh, have demanded that the Centre pays GST compensation beyond June and the issue could dominate the GST Council meeting likely to be held later this month.

The recent Supreme Court judgment that the recommendations of the GST Council are not binding on the Centre and states and that the council as a body holds only persuasive values could result in states imposing taxes to meet the revenue demand.

Finance ministry officials said Rajasthan, Tamil Nadu, Chhattisgarh, Kerala, Bengal and Delhi have demanded an extension of the compensation for another five-year period as the states have not bounced back from the Covid-19 impact on the economy.

Amit Mitra, principal chief adviser to the chief minister and the finance department of the Bengal government, in a letter to Union finance minister Nirmala Sitharaman sought the continuation of the GST to the states for the next 3 to 5 years beyond June.

Mitra said the unforeseen battle against the pandemic has put the fiscal health of the states under huge stress. “On top of that, the massive inflationary pressures have severely aggravated and impaired the economies of states which today are struggling with massive fiscal burdens. The GDP has not yet reached the pre-pandemic level and is not likely to reach a desirable trajectory any time soon,” the letter said.

Speaking to The Telegraph, Mitra later explained that states have not reached the projected revenue generation which formed the basis of the compensation formula. In comparison to assumed 14 per cent revenue growth on the base year of 2015-16, the states have barely crossed 6-7 per cent, he argued.

Mitra said there are “ominous” signs that the Centre may not extend compensation. The Modi government, which usually lags in clearing compensation, has paid the entire dues as on May 31. “When the state and the Centre agreed to the formula, nobody could foresee the pandemic which is into its third year. Covid has put huge fiscal stress on states,” he said.

Seeking an extension of the compensation beyond June, K.N. Balagopal, finance minister of Kerala, told The Telegraph: “The GST law from inception itself is against the interest of federalism. Since the GST regime came into being, the Centre had been arbitrarily imposing its decisions on the states, affecting their revenue and forcing them to impose treasury restrictions.”

He said the recent apex court order has “upheld the freedom of the states in taxation which was important. It would pave the way for states to protect their rights.”

Chhattisgarh GST council member T.S. Singh Deo said several questions like sharing of revenue by the Centre, issues of producing states, continued encroachment of fiscal power of the states by the Centre among others would come under scrutiny.

While the Centre has stated that beyond June, the cess collected till March 2026 would be used to pay back the principal and interest for the borrowed sum, the states are expected to put pressure on compensation extension as revenue collection has been below expectations.

States had accepted to be part of the GST on the assurance that being given full compensation for the first five years of introduction of GST on the assumed revenue growth rate of 14% over the base year of 2015-16. And, any shortfall needs to be compensated by Cess.

States are demanding that the Centre continue to compensate them as the revenue buoyancy has not been as promised and the Covid-19 had a huge impact on revenue collection.

The SGST growth was at an average of 6.7 per cent during FY18-21, which is lower than the 9.8 per cent growth recorded by the taxes subsumed under GST during FY14-17, a report said.

“The share of state GST (SGST) in their own tax revenue (SOTR) during FY18-FY21 stood at 55.4 per cent, compared with 55.2 per cent during FY14-FY17 indicates that the growth in both SGST and non-SGST components of SOTR has been broadly similar. This means the GST implementation did not result in any incremental benefit to the SOTR,” India Ratings and Research said in the report.

Emphasising the need for the extension of the compensation as the tax buoyancy has not been as promised before the implementation of the GST,

SOURCE:https://www.telegraphindia.com/business/call-to-extend-gst-compensation/cid/1869869

Gujarat GST raids: Over Rs 11-crore tax evasion detected at hotels, resorts near Gir National Park

The Gujarat Goods and Services Tax (SGST) department conducted searches on hotels, resorts and booking agents operating in and around Sasan-Gir National Park and found tax evasion to the tune of Rs 11.97 crore.

The teams from the department searched 25 locations, including 17 hotels and resorts and offices of two booking agents in Ahmedabad. The hotels and resorts in Sasan-Gir were found to have recorded lower room tariffs, unaccounted services provided and paid tax under low slabs, said an official statement from the department Saturday.

The officers have asked the erring hotels and resorts to pay Rs 3.04 crore, which included pending tax and penalties. The department has already recovered Rs 2.14 crore, the release said.

SOURCE:https://indianexpress.com/article/cities/ahmedabad/gujarat-gst-raids-rs-11-crore-tax-evasion-hotels-resorts-gir-national-park-7964693/

GST Council unlikely to alter inverted duty structure for textiles; 28% tax on online gaming, casinos under consideration

The Goods and Services Tax (GST) Council is unlikely to change the inverted duty structure for textiles at its next meeting, which is expected to be held in the third week of June, CNBC TV-18 reported on June 3, quoting sources.

The GST Council may also take up the Group of Ministers (GoM) report on online gaming, casinos, and race courses. The GoM, headed by Meghalaya Chief Minister Conrad Sangma, has a consensus on a tax rate of 28 percent on these services.

 The GST Council is also likely to extend the timeline for GoM on the rate rationalisation by six months.

The council may begin discussions to bring Virtual Digital Assets (VDAs) and crypto assets under the GST ambit.

The Supreme Court recently ruled that the recommendations by the GST Council are not binding on states or the Centre and only hold a persuasive value.

The parliament, as well as state legislatures, possess equal and simultaneous powers to legislate on GST and the Council can advise suitably in the event of repugnancy between laws laid down by the two federal units, the court said.

It may be noted that on May 3, the Centre released an amount of Rs 86,912 crore to cover the entire amount of GST compensation due to states until May 31, 2022.

SOURCE:https://www.moneycontrol.com/news/business/crypto-com-gets-regulatory-nod-in-dubai-ftx-launches-in-japan-8638011.html

IDs of many Indore residents used in Rs. 700 crore GST fraud: Police

Indore: The identity documents (IDs) of many Indore residents may have been obtained by three Gujarat residents accused of a Rs. 700 crore Goods and Services Tax (GST) fraud, police officials in Madhya Pradesh have said.
 According to a report published in Hindustan Times, the three suspects have been booked for running an elaborate racket that fraudulently claimed what is known as an input tax credit by registering 500 fake companies using the stolen identity and address documents.
“The cyber cell officials suspected that data of 80% of Indore’s population has been compromised as they used electricity bills of common people for registering these companies,” said a senior police officer on anonymity.
The police have identified the accused as Suleman Kareem, 29, Shamsuddin Ameen Bodhani, 33 and Firoz Khan, 36, all residents of Gujarat, following a detection of the fraud by the Central GST intelligence.
In this case, the suspects created a network of fake companies that generated invoices to show non-existent input taxes to have been paid. The data stolen was meant to register the fake companies, Hindustan Times report further added.
 “In our investigation, we found that people whose electricity bills were used had never registered any firm on the GST portal. The accused used the unique number of the electricity bill to register the fake company. We tracked the digital footprint of the input credit transactions to find the accused,” the MP police officer said.

₹ 700 Crore GST Fraud Unearthed In Madhya Pradesh, 5 Arrested

They generated and passed on Input Tax Credit (ITC) of more than ₹ 700 crore by issuing fake invoices through 500 bogus firms, officials said.

The accused ran the fake GST input tax credit (ITC) racket by creating a network of around 500 bogus firms using forged documents, addresses and fake identities.

They generated and passed on input tax credit of more than ₹ 700 crore by issuing fake invoices through the bogus firms, officials said.

A joint investigation by the Central GST Commissionerate in Indore and the Madhya Pradesh Police’s cyber cell revealed that the accused routed the transactions through digital wallet accounts linked to different mobile numbers.

“The accused were routing the transactions through multiple digital wallet accounts to avoid conventional banking channels,” said Cyber Cell Indore’s unit inspector Rashid Khan.

They were arrested from Surat in Gujarat on May 25. While the key operator and his close associate are being grilled by the CGST Indore Commissionerate officials, the three others are being quizzed by the cyber cell’s cops in Indore.

 Officials have seized mobile phones, SIM cards, documents, seals, and letter pads pertaining to the fake firms from the premises linked to the accused in Surat during the search operation.

All the accused are school dropouts aged between 25-35 years,” Mr Khan said.

SOURCE:https://www.ndtv.com/cities/credit-fraud-massive-gst-fraud-of-rs-700-crore-unearthed-5-arrested-3021030

GST: Small Online Retailers May Soon Be Exempted From Indirect Tax Registration

In a move that could boost the reach of small enterprises through e-commerce, small online sellers may soon be exempted from GST registration and the discussions are on between the central and state governments regarding this, according to a livemint report. Currently, all e-commerce retailers must register for GST irrespective of their turnover.

“Representations have come from the industry and trade to bring parity between online and offline sellers on the issue of GST registration, saying that the current norm comes in the way of small businesses reaching a larger customer base. Discussions are on between the central and state governments. The law committee of the GST Council will examine the matter before a decision is taken,” according to the report which quoted a source as saying.

As of now, all online sellers, irrespective of their turnover, compulsorily need GST registration, whereas those working offline need to register for GST only if they have a total annual sale of more than Rs 40 lakh. The proposal, if approved, will bring online and offline sellers on par as far as GST registration is concerned.

Apart from this, the GST Council, which is likely to meet next month, may consider a proposal to do away with the five per cent slab by moving some goods of mass consumption to three per cent and the remaining to eight per cent categories, according to reports.

The Council may also decide to prune the list of exempt items by moving some of the non-food items to 3 per cent slab.

The government plans to reduce the number of GST slabs from the current four to three. The report said a new median slab of 15 per cent may be introduced in place of 12 per cent and 18 per cent slabs. The 5 per cent rate may be replaced by a new rate which will be 6 per cent or 7 per cent, but the rate tweaking will be done in a manner that not more than four slabs are created at any point of time, according to reports.

Currently, the GST system has four slabs — 5 per cent, 12 per cent, 18 per cent, and 28 per cent. There are 480 items under the 18 per cent slab, from which about 70 per cent of the GST collections come. Apart from this, there is an exempt list of items like unbranded and unpacked food items that do not attract the levy.

The Council was also reported to have sought the views of states for increasing rates on 143 items. The products on which GST rates might be increased include handbags, perfumes/deodorants, chocolates, chewing gums, apparel & clothing accessories of leather, and walnuts, among others.

The highest decision-making body on indirect taxes in India is also likely to consider levying a 28 per cent goods and services tax on cryptocurrencies. The government’s view is to keep cryptocurrencies at par with lotteries, casinos, racecourses, and betting, they said.

SOURCE:https://www.news18.com/news/business/gst-small-online-retailers-may-soon-be-exempted-from-indirect-tax-registration-5281027.html

May GST collection likely at Rs 1.4 lakh crore: Sources

New Delhi: Goods and Services Tax revenues in May are likely at Rs. 1.4 lakh crore. GST revenue in April was at record high of Rs. 1.67 lakh crore. GST revenue in May last year stood at Rs. 1.02 lakh crore. April revenue is higher as it includes quarterly return filings.
 7.14 crore e-way bills worth Rs. 22.72 lakh crore value generated in the month. Average monthly GST revenue in FY23 is expected at Rs 1.4 lakh crore. Average monthly GST revenue in FY22 at Rs 1.23 lakh crore.
 High revenue growth will help the government provide for additional expenses this year on increased fertiliser subsidy, food subsidy, excise duty cuts, etc. There is a risk of exceeding fiscal deficit in FY23 because of less than Rs. 1 lakh crore additional borrowing expected in H2.

Late fee for delayed GST returns filing waived till June 30 under composition scheme

New Delhi: In a relief for small taxpayers, the Central Board of Indirect Taxes and Customs (CBIC) has allowed filing of GST returns for the fiscal 2021-22 till June 30 without any late fee under the composition scheme.
 In a notification issued on Thursday, the CBIC said late fee shall be waived from May 1 to June 30, 2022, for delay in filing GSTR-4 for FY22. GSTR-4 is filed annually by the taxpayers registered under the composition scheme.
 As per provisions in the GST law, Rs 50 per day is levied as late fee for delay in filing GSTR-4. However, where the total amount of tax payable is nil, not more than Rs 500 can be imposed as late fee. For all other cases, the maximum fee that can be charged is Rs 2,000.
Any manufacturer or trader having a turnover of less than Rs 1.5 crore in a financial year can opt for the GST composition scheme, while it is Rs 75 lakh for businesses in north-eastern states.

Tax harmonisation vs fiscal autonomy: A renewed debate in Indian GST

The Supreme Court of India has recently pronounced that recommendations of the Goods and Services Tax (GST) Council are not binding on the Union or State governments. One way this pronouncement has clarified is that both the Union and State governments enjoy fiscal autonomy, as their freedom to set tax rate under GST depending on revenue needs will continue. On the other hand, the pronouncement has created apprehensions among stakeholders that probably harmonized rate structure of GST may be at stake in future. The pronouncement came at a very crucial juncture when the GST Compensation regime will be ending on 30 June 2022 and a Group of Ministers is working on the restructuring of the GST rates. Even after five years of introduction, Indian GST is evolving in many ways and stabilization of the GST system will be delayed if either the Union or State governments decide to discontinue the harmonized rate structure.
It is believed that the scope of deviation from the harmonized GST structure will be limited to the GST rate structure; as other components of the harmonized GST system (e.g., Acts, Rules, Regulations, Processes, Procedures, Tax Administration) will be the same across all tax jurisdictions. In other words, probably neither States nor the Union government may deviate from the harmonized structure of GST, except in setting GST rates. On average two-third of own tax revenue of State governments have been subsumed into GST. Therefore, to keep pace with rising demands for public expenditures, States may feel the urge to increase GST rates to mobilize larger public resources. However, it is to be noted that tax collection also depends on the tax base, tax compliance, tax efforts (or efficiency) etc. apart from tax rates.
Therefore, enlarging the tax base by protecting the consumption base of a State (i.e., aggregate consumption expenditures of a State) would be important. For example, States could rein in base erosion due to tax-shopping (or cross-state purchases) due to the availability of better options/ choices in neighbouring states by facilitating investment in consumer retail infrastructure. Similarly, demands for goods and services may be enlarged by providing economic opportunities to a larger group of people by investing public infrastructure. Improving tax compliance, especially by pursing taxpayers to file both the GST monthly returns – GSTR-1 (invoice-wise details of outward supplies) and GSTR-3B (summary of inward and outward supplies, availability of input tax credits and tax liabilities thereof) could also help the states to improve tax collection. Effective utilization of analytical tools developed by the Business Intelligence and Fraud Analytics (BIFA) unit of the GSTN depends on State-specific compliance in filing both GSTR-1 & GSTR-3B returns. A large section of taxpayers (who are either not filing any tax returns or filing any one of the mandatory tax returns, either GSTR-1 or GSTR-3B) remain outside the purview of tax administrations for the purpose of tax enforcement.
Tax compliance is also a function of tax effort, therefore investing in tax administration infrastructure, especially in data analytics, fraud investigations, monitoring of inbound and outbound flows of goods may help in augmenting revenue mobilization. Therefore, deviating from harmonized GST rate structure may not be required if other factors of tax collection are strengthened. Moreover, changing tax rates destabilize the tax system and enhances the possibility of revenue leakage.
 There are benefits as well as costs associated with harmonized GST rate structure. The benefits are accrued in terms of ease-of-tax administration and ease-of- tax compliance (and associated compliance costs). In the GST regime, adjustments of input tax credits (ITC) are not restricted to intra-state supplies alone, as was the case in the State Value Added Tax (VAT) regime. For effective monitoring of revenue, tax officials need to assess transaction chains which involve multiple layers of inter-state transactions. Therefore, harmonized GST rate structure lessens the tax administration burden in matching the inward and outward invoices.
In absence of robust IT system for backend processing of tax information (administrative data) and without access to information of taxpayers of other States to tax officials across field formations, if there are differences in law, practice or rates, it would be impossible to catch the tax evaders. In other words, without access to cross-state information to all levels of tax officials, any attempt to deviate from harmonized GST rate structure may result in increasing burden on tax administration and increase the possibility of revenue leakages. Similarly, tax payers operating in multiple States, tax compliance costs will increase if harmonized GST structure is not maintained. Building a robust IT infrastructure (for front- and back-end processing of tax information) to handle rate differentiations across tax jurisdictions with automated invoice-matching system may help to accommodate in future any move to deviate from the harmonized GST structure.
 Since a Group of Ministers is working on restructuring of GST rates, it will important to reduce number of GST rates gradually to two to three rates. This will also contain revenue leakages on account of misclassification, improve tax compliance and reduce tax administration burden. Though comprehensive assessment of tax expenditures is yet to be taken up for the GST regime, protecting the tax base by containing tax expenditures on account of tax exemptions, incentives, thresholds, abatements etc. may help to protect the tax base.
 The ongoing GST compensation period will be ending on 30 June 2022 and States will receive arrears of GST compensation corresponding to GST transition period (i.e., 1 July 2017 to 30 June 2022). Probably designing a framework to compensate States for GST revenue shortfall may help to dissuade them to deviate from harmonized structure of GST in post-GST compensation period. It will be imperative for States to keep the harmonized structure of GST intact, as it will reduce revenue leakage on account of trade diversions and misclassifications of goods. There is also apprehension that rate differences among States may lead to Input Tax Credit conflicts.
 If the deviation from the harmonized GST rate structure becomes unavoidable, it will be important to set a common harmonized floor rate with a band which will allow States some flexibility in fixing rates. The Rajya Sabha Select Committee suggested that GST rates will be levied with floor rates and with bands, where a band is defined as “Range of GST rates over the floor rate within which Central Goods and Service Tax (CGST) or State Goods and Services Tax (SGST) may be levied on any specified goods or services or any specified class of goods or services by the Central or a particular State Government as the case may be”. There were also discussions that maximum 1 to 2 per cent deviation from the floor rate should be allowed. This option may be explored as a last option if States are keen to set their own GST rates by deviating from the harmonized GST structure.
 There is always a trade off between harmonization of tax system and fiscal autonomy of States. Given the federal structure of India, it is desirable that tax rates will remain harmonized across States to minimize the compliance burden as well as cost of tax administration. Harmonization of tax rates across States is expected to minimize rate wars across States and rein in revenue leakage due to cross border tax shopping, trade diversions, and misclassification of goods.
 (Dr Sacchidananda Mukherjee is an Associate Professor at the National Institute of Public Finance and Policy (NIPFP). Before joining NIPFP, he was with International Water Management Institute (IWMI), Hyderabad and World Wide Fund for Nature (WWF)-India, New Delhi.)

Types of GST Returns, who should file, and all you need to know

A return is a document containing details of income that a taxpayer is required to file with the tax administrative authorities. This is used by tax authorities to calculate tax liability. Goods and services tax is an indirect tax applicable from July 1st, 2017 across India. GST return is the filing of taxes through GSTR forms according to the slabs and eligibility criteria. A return is a document containing details of income that a taxpayer is required to file with the tax administrative authorities.

To file GST returns or GST filing, GST compliant sales and purchase invoices are required. This is used by tax authorities to calculate tax liability. Under GST, a registered dealer has to file GST returns that include purchases, sales, output GST (On sales), and input tax credit (GST paid on purchases).

WHO HAS TO FILE GST RETURN:

All registered businesses have to file monthly, quarterly, and/or annual GST Returns based on the type of business.

Under the GST returns, the taxpayers running their firms and business across India, whether it is interstate or intrastate, are liable to file GST return as prescribed by the GST council and indirect tax department.

TYPES OF GST RETURNS:

GSTR-1 – The registered taxable supplier should file details of outward supplies of taxable goods and services as affected.

GSTR-2 – The registered taxable recipient should file details of inward supplies of taxable goods and services claiming the input tax credit (Currently Filing facility of GSTR-2 is not available on the portal).

GSTR-3B – The registered taxable person should file the monthly return on the basis of finalization of Summarized details of outward supplies & inward supplies plus the payment of an amount of tax.

GSTR-4 (CMP 08) – Composition supplier should file the quarterly return for depositing payment.

GSTR-5 – Return for the non-resident taxable foreign taxpayer.

GSTR-5A – Return for the OIDAR.

GSTR-6 – Return for input service distributor.

GSTR-7 – Return for authorities carrying out tax deduction at source.

GSTR-8 The E-commerce operator or tax collector should file details of supplies affected and the amount of tax collected.

GSTR-9 – The registered regular taxpayer should file an annual return.

GSTR-9A – The composition traders should file an annual return.

GSTR-9C – Turnover Above 2 crores (Regular Taxpayers) in a Particular FY.

GSTR-10 – The taxable person whose registration has been canceled or surrendered should file the final return.

 GSTR-11 – The person having UIN claiming the refund should file details of inward supplies

SOURCE:

GSTR-3B – The registered taxable person should file the monthly return on the basis of finalization of Summarized details of outward supplies & inward supplies plus the payment of an amount of tax.

GSTR-4 (CMP 08) – Composition supplier should file the quarterly return for depositing payment.

GSTR-5 – Return for the non-resident taxable foreign taxpayer.

GSTR-5A – Return for the OIDAR.

GSTR-6 – Return for input service distributor.

GSTR-7 – Return for authorities carrying out tax deduction at source.

GSTR-8 The E-commerce operator or tax collector should file details of supplies affected and the amount of tax collected.

GSTR-9 – The registered regular taxpayer should file an annual return.

GSTR-9A – The composition traders should file an annual return.

GSTR-9C – Turnover Above 2 crores (Regular Taxpayers) in a Particular FY.

GSTR-10 – The taxable person whose registration has been canceled or surrendered should file the final return.

GSTR-11 – The person having UIN claiming the refund should file details of inward supplies.

SOURCE:https://www.indiatoday.in/information/story/types-of-gst-returns-who-should-file-and-all-you-need-to-know-1953535-2022-05-24