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GST returns: New system unlikely before next elections

The roll-out of the new simplified return-filing system for the goods and services tax (GST), which was to kick in from January 2019, may get delayed further and, most probably, beyond the tenure of the current government

The roll-out of the new simplified return-filing system for the goods and services tax (GST), which was to kick in from January 2019, may get delayed further and, most probably, beyond the tenure of the current government. According to sources, even though the Narendra Modi government wants to implement the system before the general election, that may not happen given the time needed to complete the elaborate testing procedures to make the system foolproof.

Officials have been asked not to precipitate a repeat of the glitches faced by the originally conceived triplicate returns system that has never been fully implemented. Since the January deadline for the new system — which will automatically produce monthly returns based on supply data uploaded and inward supplies accepted — is difficult to be met and the announcement of the election is expected by March, the government might have to reconcile with the need to defer it further rather than risk a problematic system close to elections, sources said.

Since the GST returns filing continues to be confined to the summary returns GSTR 3B (with which taxes are paid) and outward supply (GSTR-1), the crucial anti-evasion requirement of invoices matching is not being met. It is assumed this is one of the reasons for the continuing shortfall in GST collections.

“The fear is that even if a handful of people complain of the system’s potential shortcomings, it could be amplified disproportionately on the eve of impending elections,” a government official said on condition of anonymity.

According to the implementation plan, a prototype of the software would be first deployed. This would be followed by release of the beta version of the final software, open for a few taxpayers to use in the real-world environment. However, sources said, the entire cycle could take six to eight months from now.

“We are planning to first release a prototype of the software, which would be connected to a small server. This would then be taken to various industry bodies and tax practitioners for them to use, an essential element to find bugs in the system that can be rectified,” an official said.

He added that it was essential that the new system is exposed to real taxpayers and tax practitioners to make it robust. This is a learning from the (failed) earlier system, which was tested in-house robustly but wasn’t tried by real taxpayers. This had resulted in constant firefighting to resolve glitches after the system went live.

“After the format for the new system was approved by the GST Council, the GST Network has started working on its implementation,” a tax official involved closely with drafting the new system said.

The GST Council in August had approved the format of the new design which promises to be lot less cumbersome for assessees than the original system that required filing three returns every month. In the new system, there will be a facility for sellers to continuously add invoices and for buyers to view them. The system could allow the buyer to lock the invoice after which the seller can’t edit/delete it, making it a confirmed liability of the seller.

VidyaSunil & Associates is into practice of Tax Complaince, Audit, Accounts , Corporate / Business Finance & Outsourced CFO Services.

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IMF Advises India To Consider Simpler GST Rate Structure

The GST is an indirect tax levied on the supply of goods and services in India. It came into effect on July 1, 2017

The International Monetary Fund or IMF today described the Goods and Services Tax (GST) as a “milestone reform” in India’s tax policy, but pushed for a simplified structure, saying the multiple rate structure and other features could give rise to high compliance and administrative costs.

In its annual country report, the International Monetary Fund also said that a dual rate structure with a low standard rate and an additional higher rate on select items can be progressive and preserve revenue neutrality.

The GST is an indirect tax levied on the supply of goods and services in India. It came into effect on July 1, 2017.

The IMF said that GST is a milestone reform in India’s tax policy, taking the important step of unifying and harmonising numerous indirect taxes across all states of the federation and the central government.

“Yet, the GST has a complex structure with a relatively high number of rates (and exemptions), which could be simplified without sacrificing progressivity of the current GST and with potentially significant gains from lower compliance and administrative costs,” it said.

A dual rate structure with a low standard rate and an additional higher rate on select items can be progressive and preserve revenue neutrality, while streamlining exemptions would further contribute to progressivity and reduce compliance and administrative costs, the IMF recommended.

The IMF said that with the consumption basket of the rich taxed at higher rates than that of the poor, the GST as presently designed has an effective tax rate rising with household consumption. A revenue-neutral reduction in the number of rates would raise the effective rates for poorer households while reducing those for richer households. This is the key cost of moving to a simpler system, it argued.

In its report the IMF said the implementation of the GST led to the key step of harmonising indirect tax rates on goods and services that previously differed across different states and the centre, and brought services into the state tax net.

However, India belongs in a small group of five countries having four or more GST rates: four non zero rates of five per cent, 12 per cent, 18 per cent, and 28 per cent; special low rates of three per cent on gems and jewelry and 0.25 per cent on rough diamonds; and a GST “cess” levied on demerit goods. In comparison, among 115 countries with VATs, 49 have a single rate, and 28 have two rates, it noted.

“The multiple rate structure and other features of India’s GST environment could give rise to high compliance and administrative costs,” it said.

The goods and services tax created a unified national market for the first time by lowering internal barriers to trade – effectively establishing a free trade agreement for a market of over 1.3 billion people, said Ranil Salgado, IMF mission chief for India.

The tax is also expected to increase the amount of economic activity taking place in the formal sector of the economy – leading to better quality and more reliable jobs, he added.

“As a result, the goods and services tax should improve productivity and boost medium term potential growth, while also creating room for the government to increase much needed social and infrastructure spending,” Mr Salgado added.

Source :  Press Reports

VidyaSunil & Associates is into practice of Tax Complaince, Audit, Accounts , Corporate / Business Finance & Outsourced CFO Services.

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Govt. likely to take pause on further GST Rate Cuts

The GST regime has been facing many bumps, such as inadequate collections compared to the target set out initially, non-compliance by stakeholders and frequent changes in slabs leading to a revenue shortfall. According to recent reports, the government will take a ‘pause’ in further rate cuts. This has come even when the shortfall each month between the target and actual collection has begun narrowing since the beginning of fiscal 2019.

Since the GST regime was first implemented in July last year, rates on 384 products have been reduced but not a single product has seen any rate hike. Lowering rates obviously reduces overall GST collections, at least in the short term.

Jaitley said the 28% tax slab is being phased out as the bulk of the remaining items in this category are only “luxury items or sin goods.” Other items outside the luxury–sin goods category are cement, air-conditioners, large screen televisions and a handful of others. “Hopefully, with further expansion of revenues, these few items may also witness a change of category,” he said.

Between August 2017 and March this year, the total collections stood at Rs 7,19,078 crore or an average of Rs 89,885 crore. It is obvious that though the shortfall continues, it has been narrowing.

Besides, as Jaitley said, tariff rationalisation depends on the expansion of the revenue base. “In the pre-GST regime, India had a complicated, inefficient, multiple indirect tax system where each assessee could be levied up to 17 different taxes. The GST consolidated them to one tax. Since the passing of GST Constitutional Amendment Bill, there have been twenty-eight meetings of the GST Council which have reviewed the GST tariffs on a continuous basis. Obviously, the tariff rationalisation depends on the expansion of the revenue base. The first one year has witnessed an encouraging trend in this direction.”

Source :  Press Reports

VidyaSunil & Associates is into practice of Tax Complaince, Audit, Accounts , Corporate / Business Finance & Outsourced CFO Services.

Advise for contacting VidyaSunil & Associates;

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Cell No. : +91 9739834819

Govt notifies due date for filing GST returns from July 2018 – March 2019

The government has modified the due date for filing of final GST sales returns by businesses with turnover exceeding ₹1.5 crore to the 11th day of the succeeding month

The government has modified the due date for filing of final Goods and Service Tax (GST) sales returns by businesses with turnover exceeding ₹1.5 crore to the 11th day of the succeeding month.

Currently, such businesses are required to file GSTR-1 or final sales return of a particular month by the 10th day of the succeeding month.

In a notification issued today, the Central Board of Indirect Taxes and Customs (CBIC) has stipulated that details of outward supplies for July 2018 to March 2019 has to be filed by the 11th of the succeeding month.

For businesses with turnover up to ₹1.5 crore, and who are required to file quarterly returns, the GSTR-1 giving details of outward supplies has to be filed by the last date of the subsequent month.

In the notification, the CBIC has said that the due date for filing quarterly return for July-September period is 31 October, while for October-December, 2018, period it is 31 January 2019.

GSTR-1 for the period January-March 2019 will have to be filed by 30 April 2019. The due date for filing summary sales return of GSTR-3B and payment of taxes for every month between July 2018 to March 2019 is the 20th day of the succeeding month.

Source : Press Reports

VidyaSunil & Associates is into practice of Tax Complaince, Audit, Accounts , Corporate / Business Finance & Outsourced CFO Services.

Advise for contacting VidyaSunil & Associates;

Website  :  http://www.vidyasunilassociates.com

E Mail ID : vidyasunilassociates@gmail.com

Cell No. : +91 9739834819

GST gets standing ovation from IMF: ‘Milestone reform’ in India’s tax policy; could be even better

The IMF today described the Goods and Services Tax (GST) as a “milestone reform” in India’s tax policy, but pushed for a simplified structure, saying the multiple rate structure and other features could give rise to high compliance and administrative costs.

In its annual country report, the International Monetary Fund also said that a dual rate structure with a low standard rate and an additional higher rate on select items can be progressive and preserve revenue neutrality.

The GST is an indirect tax levied on the supply of goods and services in India. It came into effect on July 1, 2017.

 

The IMF said that GST is a milestone reform in India’s tax policy, taking the important step of unifying and harmonising numerous indirect taxes across all states of the federation and the central government.

“Yet, the GST has a complex structure with a relatively high number of rates (and exemptions), which could be simplified without sacrificing progressivity of the current GST and with potentially significant gains from lower compliance and administrative costs,” it said.

A dual rate structure with a low standard rate and an additional higher rate on select items can be progressive and preserve revenue neutrality, while streamlining exemptions would further contribute to progressivity and reduce compliance and administrative costs, the IMF recommended.

The IMF said that with the consumption basket of the rich taxed at higher rates than that of the poor, the GST as presently designed has an effective tax rate rising with household consumption. A revenue-neutral reduction in the number of rates would raise the effective rates for poorer households while reducing those for richer households. This is the key cost of moving to a simpler system, it argued.

In its report the IMF said the implementation of the GST led to the key step of harmonising indirect tax rates on goods and services that previously differed across different states and the centre, and brought services into the state tax net.

However, India belongs in a small group of five countries having four or more GST rates: four non zero rates of five per cent, 12 per cent, 18 per cent, and 28 per cent; special low rates of three per cent on gems and jewelry and 0.25 per cent on rough diamonds; and a GST “cess” levied on demerit goods. In comparison, among 115 countries with VATs, 49 have a single rate, and 28 have two rates, it noted.

“The multiple rate structure and other features of India’s GST environment could give rise to high compliance and administrative costs,” it said.

The goods and services tax created a unified national market for the first time by lowering internal barriers to trade – effectively establishing a free trade agreement for a market of over 1.3 billion people, said Ranil Salgado, IMF mission chief for India.

The tax is also expected to increase the amount of economic activity taking place in the formal sector of the economy – leading to better quality and more reliable jobs, he added.

“As a result, the goods and services tax should improve productivity and boost medium term potential growth, while also creating room for the government to increase much needed social and infrastructure spending,” Salgado added.

VidyaSunil & Associates is into practice of Tax Complaince, Audit, Accounts , Corporate / Business Finance & Outsourced CFO Services.

Advise for contacting VidyaSunil & Associates;

Website  :  http://www.vidyasunilassociates.com

E Mail ID : vidyasunilassociates@gmail.com

Cell No. : +91 9739834819

GST Council to consider merging of two GST Rates

The chairman of GST implementation committee Sushil Modi informed on Thursday that the GST Council is deliberating over merging the rates of 12 percent and 18 percent into a single slab of 14-15 percent, based on the stabilization of revenues.

For a country like India, he said, it was not possible to have a single GST rate. “The number of items under the 28 percent category may also be reduced but the states would be able to impose cess or surcharge on sin and luxury goods,” he said.

“It is surprising to see the manufacturing states like Maharashtra, Tamil Nadu, Gujarat and few others were experiencing a lesser shortfall in GST (goods and services tax) revenue collection despite being manufacturing states,” he told.

For Maharashtra, the shortfall was 2 percent, while for Tamil Nadu it was 3 percent, he said.

For consuming states like West Bengal, the shortfall was 10 percent while for Uttar Pradesh it was 8 percent and Bihar at 30 percent, he said on the sidelines of an Institute of Chartered Accountants of India (ICAI) event here.

The manufacturing states were apprehending that they would lose revenue as GST was a consumption-based tax.

“It is due to the huge base of the services sector in the manufacturing states and the shortfall they face now will be wiped out very shortly,” Modi, who is also Bihar’s deputy chief minister, said.

He said the priority of the GST Council for 2018 was to simplify GST returns.

Regarding e-way bill, he said that the council had taken a decision to attach RFID (radio frequency identification) tags on all vehicles travelling between states and also install GPS, which would help in integrating various databases and detect whether anyone was evading tax. He also urged the composite dealers to pay taxes as evasion was taking place.

The GST implementation committee chairman said that revenue collection might fall in the next 3-4 months due to rate cuts on a number of items totaling to Rs 70,000 crore.

The GST Council in its last meeting reduced rates of 450 items, Modi said, adding that all the states were taking compensation for the shortfall in revenue as the Centre had promised to them.

On bringing petroleum products under the GST, he said it would depend on when revenues stabilize.

“If petroleum products are brought under GST, there is no guarantee there will be an impact since they are linked to international prices and no state will like to lose revenue as they can levy the cess on them,” he said. Modi said, “I do not think it will come soon. It may take a long time.”

The GST Council would meet on Saturday to discuss the problems faced by the micro, small and medium enterprises (MSME) sector, he said.

Source :  Press Reports

VidyaSunil & Associates is into practice of Tax Complaince, Audit, Accounts , Corporate / Business Finance & Outsourced CFO Services.

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Cell No. : +91 9739834819

GST Council clears 20 per cent cashback on digital payments, with Rs 100 cap

Revenue shortfall concerns and issues being faced by micro, small and medium enterprises (MSMEs) dominated the 29th meeting of the GST Council. The Council approved a six-member ministerial panel, headed by Minister of State for Finance Shiv Pratap Shukla, to look into the issues of MSMEs.

The Goods and Services Tax (GST) Council on Saturday cleared a pilot project to offer digital incentives, in the form of cashback of 20 per cent of GST paid on business-to-consumer transactions using RuPay and BHIM platforms, subject to a cap of Rs 100 per transaction.

Revenue shortfall concerns and issues being faced by micro, small and medium enterprises (MSMEs) dominated the 29th meeting of the GST Council. The Council approved a six-member ministerial panel, headed by Minister of State for Finance Shiv Pratap Shukla, to look into the issues of MSMEs.

“We have decided to undertake a pilot project. A broad framework has been worked out so that users of RuPay card, BHIM, Aadhaar, UPI, USSD transactions can be given the incentives because these are mostly used by poor people,” said Finance Minister Piyush Goyal, adding that the pilot programme will be implemented in any state on a voluntary basis.

The revenue department and GST Network (GSTN) will coordinate with the National Payments Corporation of India (NPCI) for the development of software to facilitate the refunds in these digital transactions. “The burden will not be put on the dealers. Software will be developed by NPCI to facilitate the cashback. First, it will be rolled out on pilot basis, and then, after seeing the results, will be considered for a nationwide rollout,” said a senior government official.

Uttar Pradesh, Bihar, Maharashtra, Gujarat, Tamil Nadu and Assam have opted to join the digital incentives pilot project, officials said.

Bihar’s Deputy Chief Minister Sushil Kumar Modi said the revenue impact of the cashback/ refund for these digital transactions is expected to be around Rs 980 crore when it gets rolled out nationwide. “Compliance will increase. In the longer run, it will encourage formalisation of the economy,” he said.

West Bengal’s Finance Minister Amit Mitra pressed the need for a relook at incentives in the wake of revenue considerations. “Already Rs 43,000 crore is the estimated shortfall in the first quarter of this fiscal. If we give incentives and reduce revenues, the shortfall will increase. If we give one incentive today, then tomorrow we will have to give 10 other incentives,” he said.

The ministerial panel for MSMEs, which includes Delhi Deputy Chief Minister Manish Sisodia, Bihar Deputy Chief Minister Sushil Modi, Assam Finance Minister Himanta Biswa Sarma, Kerala Finance Minister Thomas Isaac and Punjab Finance Minister Manpreet Singh Badal, will look into recommendations of fitment and law committees on tax rates and policy. States were of the view that since MSMEs were exempted from excise duty with turnover up to Rs 1.5 crore in the pre-GST era, they should continue to get some relief under GST as well.

Rate cuts, however, will not be considered in the near term as of now in the wake of revenue concerns. “During the meeting, Union Finance Minister was also of the view that the Council should now adopt, in the RBI’s parlance, a pause in rate cuts,” said the official.

Delhi’s Finance Minister Manish Sisodia said MSMEs need to be given importance since they are employment generators. “There are big businesses which give more taxes, but then there are small businesses which are large in number, which give employment. Both have to be given importance. The rule shouldn’t be such that we brainstorm for those who give more tax to government… with this, MSMEs will get the required support,” he said.

Punjab’s Finance Minister Manpreet Singh Badal also echoed the same views. “The small and medium industries may not be paying 50 per cent of tax but they give huge amount of employment of 70-80 per cent… Something has to be done. Small and medium industries cannot fade away,” he said, adding that even if the GoM does not finalise its report within six weeks, it will submit interim reports after consultation with the fitment and law committees.

The proposal to incentivise digital payments was considered at the 27th GST Council meeting in May also, but has now been trimmed considerably to soften the impact on revenue. The earlier proposal of 2 per cent concessional rate for digital payments under GST in B2C transactions (for GST rates 3 per cent and above) was estimated to cost the exchequer around Rs 10,000-25,000 crore.

One in every four items has seen a rate cut in the 13 months of GST rollout. Rate cuts on over 350 items, out of total 1,211 items in the five broad categories of zero, 5 per cent, 12 per cent, 18 per cent and 28 per cent, are estimated to result in a revenue loss of about Rs 70,000 crore a year.

Tax experts said the select rollout of digital incentives would help in limiting the revenue impact and also help in creating a trail of GST transactions. “The incentivising of digital payments would help in maintaining a better database by the government and tracking the footprint of various taxpayers. Also, with the committee for addressing MSME issues in place, further simplification of GST compliance and other issues for this sector should soon be in place,” .

In the Budget for 2018-19, GST collections, including compensation cess, have been pegged at Rs 7.44 lakh crore, out of which the Centre aims to collect Central GST (CGST) of Rs 6.04 lakh crore and Integrated GST (IGST) of Rs 50,000 crore. In theory, IGST is supposed to be equally divided between Centre and the states. Adding State GST (SGST) collections, the government is aiming a monthly target of Rs 1-1.12 lakh crore.

So far, the government has collected Rs 3,89,567 crore from GST — Rs 1,03,458 in April (for March), Rs 94,016 crore in May (for April), Rs 95,610 crore in June (for May) and Rs 96,483 crore in July (for June).

The next GST Council meeting is scheduled to be held in Goa on September 28-29.

VidyaSunil & Associates is into practice of Tax Complaince, Audit, Accounts , Corporate / Business Finance & Outsourced CFO Services.


Advise for contacting VidyaSunil & Associates;

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E Mail ID : vidyasunilassociates@gmail.com

Cell No. : +91 9739834819