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Karnataka assembly unanimously passes state GST bill

With less than a month left for the rollout of the GST, the ‘Karnataka Goods
and Services Tax Bill, 2017’ was unanimously passed by the state assembly here today.
Before Karnataka, as many as 24 states and Union Territories had passed the State
Goods and Services Tax (SGST) bill in their respective legislative assemblies.

As per the GST Constitutional amendment, all states have to pass SGST bills by
September 15, 2017, failing which they will lose their taxation powers.

Piloting the bill, Karnataka Chief Minister Siddaramaiah said the state has always been at
the forefront of issues like implementing tax reforms, including VAT.

“Even the World Bank has acknowledged Karnataka as the most progressive states in
implementing tax reforms,” he added.

Countering this, Vishweshwara Hegade Kageri (BJP) said the image of the state took a hit
for not being the first state to pass the SGST bill, especially after being the first state to implement VAT.

“Karnataka should have been first to have agreed to implement GST, especially after the state was first to implement VAT in the country… But this did not happen… This is one of the examples where it hurt the image of Karnataka being a progressive state,” the BJP
leader said.

Kageri also slammed Siddaramaiah for not agreeing to implement GST on earlier occasions despite 50 per cent of the states agreeing to do so.

“Everybody knows the hurdles created by your party (Congress) in parliament to stall the bill, which was your own baby,” he argued.

Taking an indirect dig at BJPruled states, Siddaramaiah said as many as 24 states and one union territory have agreed to implement GST, but initially Gujarat, Madhya Pradesh and Rajasthan were against it.

Siddaramaiah also said since parliament has already passed GST Bill, the state assembly did not have much scope to debate over it because decisionmaking powers are vested with the GST Council.

However, suggestions submitted by members will be presented during GST Council meetings, he added.

The Chief Minister said he did not attend the GST Council meetings because he did not get time and had deputed Agriculture Minister Krishna Byre Gowda.

Source : Economic Times

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

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GSTN Registrations Set to Open Doors for E-Commerce Vendors

Small businesses won’t face the risk of their products being taken off online marketplaces

E-commerce com panies such as Amazon, Flip kart and Swiggy concerne about losing business after th rollout of the goods and services tax (GST) on July 1 shouldn’ have to worry about being for ced to exclude pro ducts sold by unregistered vendors.

The GST Network, which provides the new tax regime’s technological backbone, plans to start registra tion of new taxpayers soon to ensure there is no disruption in online commerce.“Registration for first-time taxpayers will open soon in about a week’s time,“ said a GSTN official.

All vendors on ecommerce platforms have to be registered on the GST Network.That’s because online market platforms have to mandatorily collect tax on any payment they make to a supplier.

The market places have been grappling with the matter as a d substantial number of vendors e fall below the tax threshold and hence aren’t registered with the  tax authorities of either the states or the Centre.

Many of these are small businesses, some even operating from home. Another set of sellers were only offering taxexempt items on these platforms and hence were not required to pay tax or register with the tax department.

Industry representatives who recently met finance ministry officials to lobby them on the issue were told that registration would be opened up soon, an e-commerce executive told ET.

GSTN had only opened enrol ment for existing taxpayers who were migrating to GST from either value-added tax, service tax or central excise duty and not for fresh registrants.Thursday was last day for enrolment in the second round.

The third round will open on June 25. It is expected that registration of the first-time vendors will begin before that. While early registration will be good, the government can consider providing some relief to vendors, experts said.

“Alternatively, the government may want to consider giving a relaxation to vendors to obtain the registration after GST is implemented till say the first GST return is filed.“The first GST returns have to be filed on August 10.

Source : The Economic Times New Delhi, 16th June 2017

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

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SMEs will benefit from composition scheme, says CBEC chief

Central Board of Excise and Customs (CBEC) Chairperson Vanaja Sarna has said that small and medium enterprises engaged in trade, manufacturing and restaurants business will benefit under the new limit of the Composition Scheme for the GST.

“Everybody will get the benefit, those who are already listed in the services or the traders or manufacturers among services… without any change in the rate that is already listed in the section,” Sarna told.

On Sunday, the GST Council decided to allow traders, manufacturers and restaurants with turnover of up to Rs 75 lakh to avail the composition scheme. The bar was earlier set at Rs 50 lakh.

Under the scheme, traders with turnover of up to Rs 75 lakh will be required to pay one per cent tax, while manufacturers will have to pay two per cent and companies engaged in restaurant business five per cent.

“Initially it was up to Rs 50 lakh. The Section 10 of the Act provides it to be increased up to Rs 1 crore. There was a discussion about the difficulties of the small and medium sector and because the central excise assessees were actually exempt below Rs one and a half crore, so it was felt it could be a hardship to them,” Sarna elaborated.

“So the council deliberated a lot on this and finally came to a conclusion that it would be appropriate to make it Rs 75 lakh instead of Rs 50 lakh and that may cover the concern of the small and medium sector.”

However, the business which avail the scheme will not be eligible for input tax credit.

Source: India.com

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Small Traders want penal norms delayed

With 60 per cent of the country’s small traders yet to be computerised, wholesalers and traders are demanding amnesty from penal provisions of GST for atleast nine months.

A large number of small traders are still not educated about GST and there are expected to be teething problem for them in the initial phase.

GST is expected to replace hand-written receipts as traders will need to maintain computerised records and file returns online. For that they will need to upgrade their existing business format and link digital payment with GST among other things.

“We are asking for interim period for general traders for whom so far no interaction has been initiated by the government and they are still unaware of nitty-gritty of GST. Since GST is a new thing for the trading community interim period will be best suited  to bring more people under GST net,” said Praveen Khandelwal, Secretary General, Confederation of All India Traders ( CAIT).

He said that when VAT was introduced there was around three years as transition period. Khandelwal said that during the trial period no penal action should be taken against any trader for procedural lapses.

As per the GST Council decision, traders in the country with revenue above Rs 20 lakh have to register for GST. “Till now GST rules have not been completely been framed. There are many things in pipeline. Trading community across country need to be informed about GST and GST is entirely different kind of taxation system against current tax regime. So it is obvious that during its operations there may be procedure lapse by the trading community,” he said.

“Still 60 per cent of the small businesses in the country  has not adopted computerisation which is a major challenge because GST is technology based taxation system,” he added.

Source: The Asian Age

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

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ANGEL INVESTMENT

ANGEL INVESTMENT:

Angel Investment means investment in equity shares of startup companies by investors. Such investors who invest in the equity shares of startup companies are called Angel Investors. Angel investors are essentially the well-heeled individuals/firms/companies who used to form a group of investors for investment in startup companies or small entrepreneurs.

PROVISION OF ANGEL TAX

The provision of Angel Investment Tax was introduced in the Union Budget of 2012. Under existing rules, funds raised by an unlisted company through equity issuance are covered under this tax to the extent the amount raised is in excess of the fair market value. Such extra inflow was taxable as “income from other sources” under Section 56(2) of the Income-Tax Act, 1961 (IT Act) and charged the corporate tax rate, resulting in an effective tax of over 30%.

Section 56 of the IT Act, 1961 confers on tax authorities the power to levy excess consideration, more than the fair value, against issue of shares. Section 56 (2) (viib) of the Income Tax Act states:

“Any consideration received by a company (startup) from a resident, against issue of shares, exceeds the fair market value of such shares; such excess consideration is taxable in the hands of the startup, as an income.”

Therefore, under Indian tax law, if an Indian company receives share subscription amount from an Indian resident which exceeds the fair value of shares, then the excess amount is taxed as income of such Indian company.

EXEMPTION OF ANGEL TAX

The Government of India had, now as an initiative to promote start ups, scrapped the so-called ‘Angel Investment Tax’ on investors providing funding to startups.

The Central Board of Direct Taxes vide Notification1 dated June 14, 2016 (CBDT Notification) had made the required changes in Section 56(2)(viib) of the Income- Tax Act, 1961 exempting startups raising funds from angel investors.

It may be noted here that for the purpose of this CBDT Notification, “startup” shall mean a company in which the public are not substantially interested and which fulfills the conditions specified in the Notification2 of the Government of India, Ministry of Commerce and Industry, Department of Industrial Policy and Promotion (“DIPP”), number G.S.R. 180(E), dated the 17th February, 2016, published in the Gazette of India, Extraordinary, part II, section 3, sub-section (i), dated the 18th February, 2016.

As per Notification of DIPP dated February 17, 2016 an entity is considered as a ‘startup’-

  1. Up to five years from the date of its incorporation/ registration;
  2. If its turnover for any of the financial years has not exceeded Rupees 25 crore; and
  3. It is working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property;

Provided that any such entity formed by splitting up or reconstruction of a business already in existence shall not be considered a ‘startup’. It is to be noted that under the said Notification of DIPP, clarity has been given as to what will qualify as innovation, development, deployment or commercialization.

Accordingly, a firm/company would be considered a start-up if it is incorporated or registered in India not prior to five years, with an annual turnover not exceeding INR 25 Crore in any preceding financial year and at the same time, it should be working towards development, deployment or commercialization of new products, processes or services driven by technology or intellectual property. Further, Startups would need to get a certificate from the Inter-ministerial Board of Certification to get the status of startup.

Therefore, investment in every startup is not eligible for the exemption and only such startups which fulfill the conditions specified by the DIPP, as mentioned herein above, are eligible for exemption from Angel Investment Tax. Further, the said exemption will not apply to retrospective investments.

CONCLUSION

The exemption of Angel Investment Tax for specified startups is a step forwards in implementation of Startup India programme initiated by the Government of India. Due to high tax rate on Angel Investment in India the investors usually hesitate in making investment in such startup companies.

This affects the economic growth rate of the country as well. Now the eligible startup companies need not have to pay Angel Tax even if it exceeds the fair value of shares. This will benefit the resident angel investors as well which are not registered as venture capital funds with Securities and Exchange Board of India.

Although removal of Angel Tax will not benefit all the startups because of the stipulation attached in the Notification of DIPP i.e. only those start ups which have a certificate from the Inter-ministerial Board, fulfill criteria like not being more than 5 years old, turnover not exceeding INR 25 Crore, working towards innovation & commercialization of new products or services and driven by technology or intellectual property, will have the benefit and accordingly, such exemption would be welcomed by the investors as well as by the startup companies which needs such investment.

This will promote the investment in India and definitely provide a huge relief to angel investors and eligible startup companies.

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

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Taxpayers have to file only one return under GST: Revenue Secy

Taxpayers have to file only one return under GST: Revenue Secy

The fear that three returns in a month and one annual return under the proposed Goods and Services Tax (GST) would make the whole process very cumbersome and compliance-heavy is unfounded and exaggerated, said Revenue Secretary Hasmukh Adhia in an interaction with media here today.

Explaining how filing returns would not be as cumbersome as it is made out to be, Adhia said that when a supplier uploads details of the sales invoices generated in the GST system, and files GST Return-I, the details from the suppliers GSTR-I automatically gets updated in the GST Return II (GSTR-II) of the purchaser. All the recipient needs to do is amend or modify and file the GSTR-II by 15th of every month.

By 17th of the month both the supplier and the recipient would have to reconcile the invoice details and file the third return (GSTR-III) by 20th of the month.

“So what looks like three returns in a month is effectively just one return, and the other two are taken care of with little efforts of the assessee” .

Under the GST, all registered taxable entities have to file three monthly returns and one annual return (see Table). The first return is for all the sales made by the taxpayer,  the second one is for the purchases and the third monthly return is a composite return of all sales and purchases. So, in a year a total 37 returns have to be filed by assessees.

Tax experts and businesses have expressed their concern that three returns in a month would mean a huge compliance burden on taxpayers especially for small traders and SMEs.

 Return Form What to file? By Whom?  By When?
 GSTR-1  Details of outward supplies of taxable goods and/or services effected  Registered Taxable Supplier  10th of the next month
 GSTR-2  Details of inward supplies of taxable goods and/or services effected claiming input tax credit  Registered Taxable Recipient  15th of the next month
 GSTR-3  Monthly return on the basis of finalization of details of outward supplies and inward supplies along with the payment of amount of tax Registered Taxable Person  20th of the next month
 GSTR-9  Annual Return  Registered Taxable Person  31st December of next financial year

Source : Business Today

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

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GST Monthly Returns

GST, which is set to roll out from July 1, is expected to see eight million taxpayers come under the new tax regime, with more than 2 billion invoices expected to be filed every month. India’s biggest tax reform in history is also set to make its small to medium
businesses more transparent.

On July 1, as India rolls out its landmark national sales tax, businesses that make less
than 100 million rupees which the government refers to as micro, small and medium
enterprises will all have to digitise

The GST filings are expected to be one of the most significant data points for flowbased
lending, given the authenticity and complete information of an SME’s financial health. Flow based lending entails lending based on cash flows of a company as opposed to collateral or asset based lending. “GST data will become the largest repository of verifiable cash flows and transactions of business.

While small and medium businesses are expected to face teething trouble in complying with the Goods and Services Tax regime, the new tax system will also open an opportunity for them to access credit as GST filings are set to become a significant
data source for flowbased lending.

Small businesses are the backbone of Indian economics. They drive the velocity of
country’s economics, industrial growth, and catalyst for job creation. However, a large
number of businesses in the country are unorganized and irregular in filing returns and
paying taxes.

This could be due to knowledge gap, situational issue or perception among businessman
that they are small in size, operations and earnings, and it is okay to miss the deadline.
As a result, they end up getting a notice from the tax department demanding tax payment, interest, late fee and penalties for noncompliance.

Especially in case of VAT dealers, the severity of consequence in terms of monetary impact is lesser to extent of additional cash outflow to the extent of default.

GST, a comprehensive indirect tax system is all set to subsume a host of existing indirect
taxes and with its implementation, compliance will become a key factor for the success and credibility of a business. GST works on a selfmonitoring mechanism, which is matching the concept of invoice between supplier and recipient of goods and services.

Only after matching of invoices and payment of tax by the supplier, the input tax credit will be available to the recipient.

Thus, a customer will always want to do business with vendors who are compliant. This results in a change of relationship between supplier and recipient from ‘customercumemotional relationship to compliance relationship’.

Hence under GST, noncompliance will not only affect your cash outflow in paying fines, interest, and penalties but also affect the continuity your business and compliance rating.

There will now be four different rates for indirect taxes on goods and services: five, 12, 18 and 28 percent. Except, of course, there are actually five rates, since some things won’t get taxed at all, so zero percent should also be in that list. An additional surcharge will apply to some high tax products and the rate of that surcharge could be anywhere from three percent (on personal jets) to 12 percent (on sodas), 17 percent, 21 percent, 61 percent, 72 percent, 142 percent, 160 per cent, 204 percent or 290 percent (on pipe tobacco). For a reform meant to introduce a single, simple and low tax rate to India, this bewildering maze is a little farcical.

Monthly Statutory Returns under GST 

Based on the category of registered person such as monthly return is to be filed by Regular, Foreign Non Residents, ISD and Casual Tax Payers whereas Compounding/Composite tax payers has to file quarterly returns:

In the table below, we have provided details of all the returns which are required to be filed under the GST Law.

Return Form What to file? By Whom? By When?
GSTR-1 Details of outward supplies of taxable goods and/or services effected Registered Taxable Supplier 10th of the next month
GSTR-2 Details of inward supplies of taxable goods and/or services effected claiming input tax credit. Registered Taxable Recipient 15th of the next month
GSTR-3 Monthly return on the basis of finalization of details of outward supplies and inward supplies along with the payment of amount of tax. Registered Taxable Person 20th of the next month
GSTR-4 Quarterly return for compounding taxable person. Composition Supplier 18th of the month succeeding quarter
GSTR-5 Return for Non-Resident foreign taxable person Non-Resident Taxable Person 20th of the next month
GSTR-6 Return for Input Service Distributor Input Service Distributor 13th of the next month
GSTR-7 Return for authorities deducting tax at source. Tax Deductor 10th of the next month
GSTR-8 Details of supplies effected through e-commerce operator and the amount of tax collected E-commerce Operator/Tax Collector 10th of the next month
GSTR-9 Annual Return Registered Taxable Person 31st December of next financial year
GSTR-10 Final Return Taxable person whose registration has been surrendered or cancelled. Within three months of the date of cancellation or date of cancellation order, whichever is later.
GSTR-11 Details of inward supplies to be furnished by a person having UIN Person having UIN and claiming refund 28th of the month following the month for which statement is filed

GST Monthly Returns

10th of Subsequent Month Form – GSTR1

In Form GSTR1, you need to declare the details of all the outward supplies of goods and/or services effected during the month. Invoice wise details of outward supplies made to registered dealer and aggregate taxable value of supplies made to consumer are required to be declared. In case, taxable value of supply made to consumer is more than Rs 2.5 lakh and if it is interstate supply, you need to declare invoicewise details.

11th of Subsequent Month Form – GSTR2A
On 11th, the visibility of inward supplies is made available to the recipient in the autopopulated GSTR2A.

This is generated based on the outward supplies declared by your supplier in Form GSTR1. The period from 11th to 15th will allow for any corrections (additions,
modifications and deletion) in Form GSTR2A.

This is the most critical phase of filing of your return, as any omission or correction not reconciled as per the statement in Form GSTR 2A with your inward supplies register, will impact your Input Tax credit eligibility. To save time, quicker and accurate reconciliation, technology will play a key role in your compliance.

15th of Subsequent Month Form – GSTR 2
After reconciling, any additional claim or correction as per Form GSTR 2A needs to be incorporated and submitted in Form GSTR 2 by
15th of subsequent month. Based on the claim reported in Form GSTR2, ITC will be credited to your Ecredit ledger on provisional basis and post matching of invoice, it will be finalized.

16th of Subsequent Month Form – GSTR1A
The corrections (addition, modification and deletion) reported by you in Form GSTR2
will be made available to your supplier in Form GSTR1A.
The supplier has to accept or reject the adjustments made by the customer by verifying with suppliers outward supply register.

20th of Subsequent Month Form – GSTR3
On 20th, based on the Form GSTR1 and Form GSTR2, an autopopulated return GSTR3 will be available for submission along with the payment.

Final Acceptance of Input tax credit in Form GST MIS1 After the due date of filing the monthly return in Form GSTR3, the inward supplies will be matched with the outward supplies furnished by the supplier, and then the final acceptance of input tax credit will be communicated in Form GST MIS1.

The following details will be considered in the matching of invoices:
GSTIN of the supplier
GSTIN of the recipient
Invoice/or debit note number
Invoice/or debit note date
Taxable value and
Tax amount

The claim of input tax credit will be considered as matched, if the amount of input tax credit claimed is equal to or less than the output tax paid on such tax invoice or debit note by the corresponding supplier.

Also, the mismatch input tax credit on account of excess claims or duplication claims will be communicated to recipient in Form GST

MIS 1 and to supplier in Form GST MIS 2.
Discrepancies not ratified will be added as output tax liability along with interest. However, there will be some breathing space since the law provides a window of two months to ratify the discrepancies before reversing the ITC claim on provision basis.

A Way Forward

Activity. The return cycle under GST will put an end to the existing practice. Today, most of the small business prepare their returns in a day by summarizing their purchase and sales transactions. This will no longer be relevant since GST Return cycle is spread across the month.

Secondly, the businesses need to move from offline data recording to online data recording to file the return. Today, most of the small businesses port the data from their books to offline tools and file their return. This will prove to be a costly affair since, under GST inward supplies and outward supplies will be autopopulated by GSTN and need to be reconciled with books.

Technology will play a pivot role for businesses under GST as GST is highly transaction based compliance system. The technology should help you to seamlessly prevent, detect and correct the exceptions before the filing of return and reconcile your books with GSTN.

With the right technology, businesses will have timely compliance, manage cash flows better and adding up to compliance credibility.

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

Advise for contacting VidyaSunil & Associates;

E Mail ID : vidyasunilassociates@gmail.com

Cell No. : +91 9739834819