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GST Council meet on May 4, simplifying returns on agenda

Finance Minister Arun Jaitley-chaired GST Council will meet on May 4 to discuss a simpler return form and the amendments required in the indirect tax regime rules.

The 27th meeting of the Council, comprising state finance ministers, will meet through video conferencing and will also mull over the proposal of converting GSTN into a government company.

A decision on return simplification could be on the cards with the Sushil Modi-led Group of Ministers putting before the Council the three models of new return form for discussion, an official said.

With Jaitley been advised by doctors to stay in isolation to avoid contracting infection, the meeting has been planned through video conferencing.

The Council had in March discussed on two models of GST returns and suggested that the GoM would work further simplification.

The official said the amendment to the law would also be taken up once the Council clears the new GST return format.

One of the models presented before the Council was that provisional credit should not be granted unless the taxpayers file returns and pay taxes.

The second model stated that provisional credit could be granted to a taxpayer, but returns have to be filed within 3-4 months and taxes have to be paid or else the credit amount would be reversed.

After consulting the stakeholders, the GoM earlier this month worked out a third model for return filing as per which credit could be extended once the invoice uploaded by the supplier is verified by the purchaser on the GSTN portal.

Jaitley had earlier this month asked Finance Secretary Hasmukh Adhia to “examine the possibility” of converting GSTN into a majority government company or a 100 per cent government company. GSTN provides the IT backbone for the new indirect tax regime.

Currently, five private financial institutions — HDFC, HDFC Bank, ICICI Bank, NSE Strategic Investment Co and LIC Housing Finance Ltd — hold 51 per cent stake in GSTN, which was incorporated on March 28, 2013, in the erstwhile UPA regime.

The remaining 49 per cent stake is with the Centre and States.

Sources :  Press Reports

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Prabhu promises exporters to take up GST refund issue

Commerce and Industry Minister Suresh Prabhu on Wednesday assured exporters of
taking up the issue of Goods and Service Tax (GST) refund with the finance ministry and
said he plans to call a ministerial meeting to discuss export related issues.

As exports dipped in March after a gap of four months, Prabhu sought a detailed action plan from exporters of all sectors in an interaction with them here.

“I have asked exporters to give me the details of the pending refund. GST refund is a major issue for exports. I will take it up with the finance ministry,” he said.

Exporters have claimed that over 60% of their refunds are stuck with the government complaining that delay in GST refund has blocked their working capital.

Prabhu also said the government is taking all steps to further boost the country’s exports.
Speaking to members of the Federation of Indian Export Organisations here, the minister asked them to prepare a detailed action plan of all sectors and sub-sectors suggesting ways to promote their exports.

Exporters raised issues related with GST refund, increasing logistics costs and inadequate infrastructure at ports.

The government has sanctioned GST refunds to exporters to the tune of Rs 17,616 crore till March of which Rs 9,604 crore is on account of integrated GST refund and another Rs 5,510 crore on account of refund on input credit by the centre.

“We need a concrete plan to work on that,” Prabhu said and added that he would call a ministerial meeting to discuss issues pertaining to outbound shipments.

India’s exports dipped after a gap of four months in March but finished 2017-18 with a rise of 9.78% to $302.84 billion.

Source : Press Reports

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StartUps Tax benefits for less than Rs. 10 crore funding

Giving a major relief to budding entrepreneurs, the government on Thursday allowed startups to avail tax concession only if total investment including funding from angel investors does not exceed Rs10 crore.

As per a notification by the commerce and industry ministry, an angel investor picking up stakes in a startup should have a minimum net worth of Rs2 crore or should have an average returned income of over Rs25 lakh in the preceding three financial years.

“With the introduction of amendments through this notification, startups are likely to have an easy access to funding which in turn will ensure ease in starting of new businesses, promoting startup ecosystem, encouraging entrepreneurship, leading to more job creation,” the ministry said in a statement.

Several startups have raised concerns to taxation of angel funds under Section 56 of the Income Tax Act, which provides for taxation of funds received by an entity. As many as 18 startups have got notices from tax authorities. This section provides that where a closely held company issues its shares at a price more than its fair market value, the amount received in excess of the fair market value will be charged to tax the company as income from other sources. Startups also enjoy income tax benefit for three out of seven consecutive assessment years.

To avail the concessions, startups would have to approach an eight-member inter-ministerial certification board. “Department of Industrial Policy and Promotion (DIPP) has issued gazette notification…constituting a broad based inter-ministerial board to consider applications of startups for claim of following incentives of the I-T Act 1961,” it added.

A startup set up as a private limited company or limited liability partnership incorporated after 1 April 2016, would be eligible for tax concessions. The ministry said these amendments are introduced to address key demands of start-ups with regard to exemptions under the I-T Act.

Startups have flagged their grievances regarding angel tax provision, which they considered was not friendly to them.

In some positive news for aspiring entrepreneurs, the Government of India is now enabling startups and entrepreneurs to apply for a tax concession when the total investment amount does not exceed Rs 10 crore. This amount includes funding by angel investors as well.

According to a notification issued by the Ministry of Commerce and Industry, the investors should either have an average income of Rs 25 lakh or above, for the preceding three financial years or their networth should be Rs 2 crore to avail of tax benefits for their startups.

The notification stated,

“For the purposes of Section 56 of the Act, there is no restriction on class of investors and eligible startups can receive investment from any person against issue of share capital.”

Opposing Section 56 of the Income Tax Act, a number of startups have raised their concerns on taxation towards angel funds. Around 18 startups had received notices from the IT department previously. To address this concern, the new amendments have been rolled out.

The notification further said, “With the introduction of amendments through this notification, startups are likely to have an easy access to funding which in turn will ensure ease in starting of new businesses, promoting startup ecosystem, encouraging entrepreneurship, leading to more job creation.”

To access these concessions, startups will have to reach out an eight-member inter-ministerial certification board. Apart from that, the turnover of the entity for any financial year since registration should not exceed Rs. 25 crore.

Another notification by the government talked about the definition of startups, which says that an entity shall be considered as a startup up to a period of seven years from the date of registration in India. If the startup is in the biotechnology sector, the period shall extend to ten years.

Source : Press Reports

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Adhia: Single-page GST filing system to be ready in 3-6 months

Union finance secretary Hasmukh Adhia today said the proposed new single page GST return filing system will be in place over the next three to six months that will ease the present problems.

At the April 17 ministerial panel meeting decided to roll out a new simplified model for GST return filing system in single-page, as per which credit could be given on a provisional basis once the supplier uploads the sales invoice. Replying to a query on the leakages being reported in GST-1 and GST-3(b), the top finance ministry official said, “we are checking GST-1 and GST-3b. It is coming to the fore that there is leakage and we will plug it.

“There are leakages but there is no perfect matching until the new system gets in place. Within three to six months a new system will be in place, making the whole process smoother,” he said.

Adhia was in town to address the convocation of the 70th batch of the Indian Revenue Services at the National Academy of Direct Taxes.

The GST Council, headed by finance minister Arun Jaitley and comprising state counterparts, last month discussed on two models of GST returns and suggested that the GoM would discuss further simplification.

One of the models presented before the council was provisional credit should not be granted unless the taxpayers file returns and pay taxes. The second model stated that provisional credit could be granted to a taxpayer, but returns have to be filed within 3-4 months and taxes have to be paid or else the credit amount would be reversed.

The meeting decided that businesses would have to file only one return every month, instead of GSTR-1, 2 and 3 as was conceived earlier. Also there was unanimity that there would be no system based matching and purchaser would have to verify the invoice uploaded by the seller.

The number of returns filed by both small and large taxpayers would be 12 in a year, in place of 36 at present.

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Government to mandate single GST return a month to ease burden

The government inched closer to putting in place a revamped return for goods and services tax (GST) to ease the burden on businesses by mandating only one monthly filing, with the supplier submitting the form and an alert going to the buyer.
Although officers and Infosys chairman Nandan Nilekani, who is advising the government on returns, have not been able to reconcile their differences on how the input tax credit will be given and whether it should be linked to actual tax payment, Bihar deputy CM Sushil Modi, who heads a group of ministers, said the panel was looking at the new return being a blend between the two proposals.

The panel held detailed discussions with stakeholders on Tuesday and another seven days have been given for the feedback before the final draft will be sent to the GST Council, comprising union and state finance ministers, Modi said. After the meeting, Modi said apart from moving to 12 returns annually, instead of 36 currently, the idea was to move away from computer system based matching of returns, which generates large mismatches between claims of suppliers and buyers.

“The supplier will upload the details and the recipient will do the matching,” Modi said, adding that the buyer will be able to see what has been uploaded. He also said that continuous upload of returns by the seller will be allowed and the idea is to ensure that returns are in line with the current business practices.

Although the detailed content of forms was yet to be finalised, Modi said adequate time will be given to GST Network, which provides the IT backbone, as well as businesses for transition. Till then the interim arrangement will continue.

“Returns are the soul of GST and credit is based on that,” Modi said. Returns have been a sore point with businesses, who have cited this as a major burden although the government had earlier dismissed it as a bogey to avoid detailed scrutiny. But under pressure before elections in Gujarat, the government softened its position and scrapped the system and decided to move to a new format.

While e-way bills and reserve charge mechanism were also put on the backburner, the anti-evasion tools are once again in focus. Modi said the panel will deliberate on the details for rolling out the reverse charge mechanism in the first week of May, with the time table and the coverage to be decided.

 Reverse charge is to be paid by registered GST payers on behalf of small suppliers, who are exempted from registration. The registered dealer or the buyer, who has to pay GST under reverse charge, has to undertake self-invoicing for the purchases.
Source : Press Reports
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I-T warns salaried class against filing wrong ITRs, says violators’ employers will be informed

The Income Tax Department today cautioned salaried class taxpayers against using illegal means like under-reporting of income or “inflating” deductions while filing their returns, stating violators will be prosecuted and their employers will be intimated to take action against them.

The Central Processing Centre (CPC) of the department in Bengaluru, that receives and processes the Income Tax Returns (ITRs), has issued an advisory specifying such taxpayers should not “fall prey” to unscrupulous tax advisors or planners who help them in preparing wrong claims to get tax benefits.

Calling it a “cautionary advisory” on reports of tax evasion by under-reporting of income or inflating deductions or exemptions by salaried taxpayers, the department said such attempts “aided and abetted by unscrupulous intermediaries have been noted with concern”.

“Such offences are punishable under various penal and prosecution provisions of the Income Tax Act,” it said.

The advsiory comes in the backdrop of the investigation wing of the department, in January, unearthing a racket of extracting fraudulent tax refunds by employees of bellwether information technology companies based in Bengaluru, in alleged connivance with a tax advisor.

The CBI recently registered a criminal case to probe this nexus.

The tax filing season for salaried class taxpayers has just begun with the Central Board of Direct Taxes (CBDT), that frames policy for the department, recently notifying the new ITRs.

The one-page advisory added that if the department notices any fraudulent claims in their ITRs, such claims “may be punishable under provisions of the IT Act and this may also delay issuance of their refunds.”

“Taxpayers, are, therefore strictly advised not to fall prey to false promises or mis-advice by unscrupulous intermediaries and submit wrong claims in their ITRs, which would be treated as cases of tax evasion.

“In the cases of such wrong claims by the government/PSU employees, reference would be made to the concerned vigilance division for action under conduct rules,” it added.

The advisory added that the department possesses an “extensive risk analysis system” that is aimed at identifying persons who are non-compliant and aim to subvert the trust based-system “envisioned” while processing of ITRs at the CPC, which it said is automated and devoid of any human interface.

“In all such cases of high risk , the department may examine and verify the details submitted by taxpayers in their ITR subsequent to the processing of returns,” it said.

It also asked tax planners and advisors to “confine their advice to taxpayers within the four corners of the IT Act” and warned that the violators will be prosecuted and such instances will also be referred to enforcement agencies like the CBI and the Enforcement Directorate (ED) for criminal prosecution.

The CBI recently registered a criminal case to probe this nexus.

The tax filing season for salaried class taxpayers has just begun with the Central Board of Direct Taxes (CBDT), that frames policy for the department, recently notifying the new ITRs.

The one-page advisory added that if the department notices any fraudulent claims in their ITRs, such claims “may be punishable under provisions of the IT Act and this may also delay issuance of their refunds.”

“Taxpayers, are, therefore strictly advised not to fall prey to false promises or mis-advice by unscrupulous intermediaries and submit wrong claims in their ITRs, which would be treated as cases of tax evasion.

“In the cases of such wrong claims by the government/PSU employees, reference would be made to the concerned vigilance division for action under conduct rules,” it added.

The advisory added that the department possesses an “extensive risk analysis system” that is aimed at identifying persons who are non-compliant and aim to subvert the trust based-system “envisioned” while processing of ITRs at the CPC, which it said is automated and devoid of any human interface.

“In all such cases of high risk , the department may examine and verify the details submitted by taxpayers in their ITR subsequent to the processing of returns,” it said.

It also asked tax planners and advisors to “confine their advice to taxpayers within the four corners of the IT Act” and warned that the violators will be prosecuted and such instances will also be referred to enforcement agencies like the CBI and the Enforcement Directorate (ED) for criminal prosecution.

Sources : Press Reports

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Simplified GST Returns Proposal on the way

A ministerial panel, chaired by Sushil Modi, on Tuesday worked out a new simplified model for GST return filing as per which credit could be given on a provisional basis once the supplier uploads the sales invoice. As it looks to finalise a single-page return form for businesses under GST, the panel on Tuesday met about 40 industry representatives and 15 tax experts to discuss simplification of return filing process.Briefing reporters after the meeting of the Group of Ministers (GoM), Modi said a “fusion” model of return filing after incorporating stakeholder suggestion has been worked out, which will be placed before the GST Council for approval.“Till the simplified return filing process is finalised, GSTR-3B will continue,” Bihar Deputy Chief Minister Modi said.

The GST Council, headed by Finance Minister Arun Jaitley and comprising state counterparts, last month discussed on two models of GST returns and suggested that the GoM would discuss further simplification.One of the models presented before the council was provisional credit should not be granted unless the taxpayers file returns and pay taxes.The second model stated that provisional credit could be granted to a taxpayer, but returns have to be filed within 3-4 months and taxes have to be paid or else the credit amount would be reversed.After consulting the stakeholders, the GoM on Tuesday worked out a third model for return filing as per which credit could be extended once the invoice uploaded by the supplier is verified by the purchaser on the GSTN  portal. Explaining the contours of the “fusion” model, an official said the Central Board of Indirect Taxes and Customs (CBIC) is now working on mechanism to deal with instances of non-payment of taxes even after availing credit.

The official said the model, being drafted by the tax officers, would be to send notices to taxpayer in case he fails to pay the due taxes seeking explanation, following which the credit could be reversed.Modi said there was unanimity in the GoM that businesses would have to file only one return every month, instead of GSTR-1, 2 and 3 as was conceived earlier.Also there was unanimity that there would be no system-based matching and purchaser would have to verify the invoice uploaded by the seller.Modi said the model for simplified return filing that is being worked out would safeguard the interest of revenue to the exchequer, and avoid inconvenience to the taxpayers.

A new simplified form is in the works for filing goods and services tax (GST) returns and could be taken up for consideration at the next meeting of the GST Council.

“A new form incorporating best features of a ‘fusion’ of two models that have been under
discussions will be prepared. This will also take into account all suggestions that have
come from the stakeholders,” said Sushil Modi, Bihar deputy chief minister and chairman of the group of ministers tasked by the GST Council to look at the IT issues.
Addressing media after two day meetings to finalise the reverse charge mechanism and
returns simplification, Modi said the issues ware discussed with industry stakeholders and
a draft would be prepared to be taken to the Council for its consideration. The GST
Council is the apex decision-making body for issues related to the goods and services tax
that rolled out on July 1 last year. The new regime still faces some teething troubles. Modi said the best features of both the models – allowing for provisional credit and linking provisional credit to tax payments – were discussed at the meeting.

“Returns are the soul of GST as tax payments are based on returns,” he said, adding that the industry would get time for adoption of new forms. The GoM was set up following an outcry that GST return forms were cumbersome.

The problem was compounded by glitches in IT interface leading to continuous deferral of deadlines. Modi said the current form GSTR3B would be used till the new form is adopted. On reverse charge mechanism, he said the GoM also discussed various issues, including whether it should be brought back, Modi said some more states, including Madhya Pradesh, Tripura , Jharkhand, Bihar, Haryana and Uttarakhand, are looking to introduce intra-state eWay Bill from April 20 So far 1.22 crore eWay bills have been generated. State authorities have to also file verification reports. “So far 543 verification reports have been uploaded,” he said, adding that tax payers have filed 20 detention reports. Detention reports can be filed if a vehicle is detained for more than 30 minutes.

Source : Press Reports

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