Monday, December 31, 2018

Centre, States Move to Implement Latest Round of GST Rate Cuts Announcements


Central and state governments are expected to issue more notifications shortly as they give effect to the tax rate cuts on about 22 items

The central government on Monday night notified goods and service tax rate cuts on movie tickets and certain services like third party insurance as had been announced by the federal indirect tax body, the Goods and Services Tax (GST) Council on 22 December.

The notifications are effective from 1 January. Central and state governments are expected to issue more notifications shortly as they give effect to the tax rate cuts on about 22 items that the Council had announced.

While the central government notifies the rate reduction on central GST (CGST) and integrated GST (IGST) applicable on imports and inter-state sales, states notify the state (SGST) rates.

The Council had at its last meeting decided to lower rates on seven items which were in the highest slab of 28% as part of a tax slab rationalisation.

The items in the highest slab benefiting from the rate cut included pulleys and transmission shafts used in farming, monitors and TVs up to screen size of 32 inches, power banks, retreaded tyres, digital cameras and video camera recorders, and video game consoles. The rate on these items are being lowered to 18%.

It was also announced that parts of carriages for disabled people, which were earlier taxed at 28%, will be reduced to 5%. The rate cuts will have a revenue impact of Rs 5,500 crore for the full year.

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Friday, December 28, 2018

P Chidambaram Attacks Centre Over Change In Stance On GST

P-Chidambaram Attacks

Former finance minister P Chidambaram on Wednesday attacked the Centre over its alleged change in stance on the Goods and Services Tax regime, saying that till yesterday a single standard GST rate was a stupid idea, but was now the "declared goal" of the Modi government.

The senior Congress leader's sharp criticism of the government comes days after the GST council at its 31st meeting slashed tax rates for 23 commonly-used items. The rates were reduced from 18 per cent to 12 and 5 per cent respectively.

Finance Minister Arun Jaitley on Monday had hinted at further rationalisation of the GST by merging the 12 and 18 per cent slabs. He had also accused the Congress of oppressing the country with a high indirect tax rate of 31 per cent.

Hitting out at the government, Mr Chidambaram said, "Until yesterday a single standard rate of GST was a stupid idea. Since yesterday, it is the declared goal of the government!"

"Until yesterday capping GST at 18 per cent was impracticable. Since yesterday, the Congress party's original demand of an 18 per cent cap is the declared goal of the government," he said in a series of tweets.

"Until yesterday, the chief economic adviser's RNR (Revenue Neutral Rate) report to fix the standard rate at 15 per cent was in the dustbin. Yesterday it was retrieved and placed on the finance minister's table and was promptly accepted," Mr Chidambaram tweeted.

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GST Focus Shifts to Enforcement Actions, Returns, Refund Simplification

GST Update
It faced a huge political backlash and became the butt of jokes with opponents calling it 'Gabbar Singh Tax', but weathered all of it in 2018 and its proponents are confident the GST is fast emerging as a strong tax-compliance tool and may eventually evolve into a single-slab taxation rate.

Dismissing the criticism that it was a 'good law, badly implemented', those in support point out it took two years for a GST to be implemented in Malaysia -- the last country before India to have introduced such a tax -- but only to be scrapped in the end by a new government there.

In India, it has been about one and half years since the GST (Goods and Services Tax) was introduced in July 2017.

Confident that the new indirect tax regime has stabilised now, the authorities feel it is time to reap the benefits now and therefore the focus has shifted to enforcement actions, as also streamlining returns and refund processes.


Confident that the new indirect tax regime has stabilised now, the authorities feel it is time to reap the benefits now and therefore the focus has shifted to enforcement actions, as also streamlining returns and refund processes.

The GST, which replaced a tangle of local taxes and entry levies, saw a chaotic roll-out on July 1, 2017, following a decade of political debate but only three months of concrete planning.



Like any reform, the GST faced its own teething troubles and the main opposition party Congress's president Rahul Gandhi famously called it 'Gabbar Singh Tax' -- after the famous villain of all-time Bollywood blockbuster 'Sholay'.

The opposition parties vehemently criticised the new 'one nation, one tax' system having four different rates instead of a single rate adopted in some countries including the UK and Singapore.

Then there were concerns about an onerous reporting system and frequent policy changes disrupting supply chains, and in turn consumption, requiring first few months being spent on streamlining the back-end systems, educating businesses and finding appropriate slabs between 0, 5, 12, 18 and 28 per  ..

It was finally in 2018 that the actual work on 'one nation, one tax' began to be seen with banishing of inter-state check posts with implementation of an electronic permit.

By mid-2018, tax collections rose in a country where compliance historically has been low. The tax-to-GDP ratio, which touched its highest level of 11.6 per cent last fiscal, is expected to rise further to 12.1 per cent this financial year ending March 2019.


Throughout 2018, a broad rationalisation of rates was carried out and after the last round last week only about two dozen goods were left in the top 28 per cent bracket, with officials saying essential and daily use items of commoners have been put in the lowest slabs.

However, a large part of the economy - fuel, electricity, land and real estate excluding construction contracts are still outside the GST, probably due to revenue considerations of both the central and state governments.


Also, many believe the real impact of the GST on the GDP growth rate hasn't yet been seen although it has made doing business in India easier as seen by the jump in India's ranking on the World Bank's index.

Inflation too has eased because of doing away of tax-on-tax that was levied in pre-GST era where states charged VAT even on the excise duty levied by the Centre on ex-factory price of goods.

Despite the political opposition, India has stuck to the GST while Malaysia scrapped its 6 per cent GST, fulfilling a campaign promise by Prime Minister Mahathir Mohamad that gave him an unexpected win earlier this year. The disgruntled voters there had blamed this consumption tax, imposed in 2015, for increase in their cost of living.

In India, officials say, the taxpayer base has swelled post-GST as traders can now claim certain tax credits only if they can show that every supplier in in the chain has paid the required tax.


An analysis of various changes in the tax rates through 2018 shows that the effective tax has come down on about half of the commodities. Besides, Finance Minister Arun Jaitley has dropped broad hints at moving towards a single GST rate although he had previously ridiculed the idea when it was proposed by Congress.

To ensure businesses pass on the tax rate cuts to consumers, an anti-profiteering authority has been set up which has already levied fines, including on big corporate like HU ..


Talking to PTI, Revenue Secretary Ajay Bhushan Pandey, the man now overseeing the GST after retirement of its main architect Hasmukh Adhia, said the focus now is on enforcement action and streamlining returns and refund process.

Further rationalisation of rates is also on cards, including in housing sector and cement, while an increase in exemption threshold for small and medium enterprises (MSME) would be considered by the GST Council next month.


Currently, businesses with a turnover of up to Rs 20 lakh are exempt from GST.

Monthly GST revenues have averaged Rs 97,100 crore in the April-November period of current fiscal, up from Rs 89,100 crore in the last fiscal.

Stating that the revenue department will ensure that honest taxpayers are not harassed, Pandey said the first step would be to identify only those defaulters where there are gaps in returns and which need to be clarified.

The government has detected GST evasion worth Rs 12,000 crore between April and November, while recovery stands at around Rs 8,000 crore.

Pandey said a continuous and constant endeavour under the GST would be to simplify the process, especially relating to filing returns, or claiming refunds, or rate rationalisation.

A simplified GST returns forms will be launched on a trial basis in April 2019 and will be made mandatory from July onwards. Also on the anvil is filing of 'nil' return by sending an SMS and online refund applications.

Stating that 28 per cent slab is "gradually moving towards a sunset", Pandey said going forward the slabs would be 0, 5 per cent and one standard rate between 12-18 per cent.

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GST Evasion Worth Rs 38,896 cr Detected During April-Oct

GST Evansion
The government has detected GST evasion worth Rs 38,896 crore in 6,585 cases in the April-October period of 2018-19, Parliament was informed Friday.

Minister of State for Finance Shiv Pratap Shukla said while central excise evasion of Rs 3,028.58 crore in 398 cases was unearthed during the seven-month period, service tax evasion of Rs 26,108.43 crore was detected in 3,922 cases.

Customs evasion was detected in 12,711 cases involving Rs 6,966.04 crore and Goods and Services Tax (GST) evasion worth Rs 38,895.97 crore was unearthed in 6,585 cases, he said in a written reply in the Lok Sabha.

The total amount of evasion in indirect taxes (GST, service tax, excise and customs) during April-October adds up to about Rs 75,000 crore.

During the seven-month period, the Central Board of Indirect Taxes and Customs (CBIC) recovered evasion worth Rs 9,480 crore in GST, Rs 3,188 crore in service tax, Rs 1,600.84 crore in customs and Rs 383.5 crore in central excise, Shukla said.


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Thursday, December 27, 2018

GST Journey Since Launch and the Road Ahead


Since India introduced the goods and services tax (GST) in July 2017, the tax reform has seen numerous changes. About 18 months into its life, it is still under intense scrutiny. Mint takes a look at GST’s evolution and its future direction.

In the pre-GST tax regime, each commodity would attract up to 17 taxes, Under the GST, four tax slabs were introduced, with each item taxed at one rate. The plan is to move towards a single standard rate in the future of around 15% Since its implementation GST rates have been sharply cut on many items. The highest slab of 28% has only 27 categories of products, down from close to 228 at the time of rollout Has GST succeeded in achieving its goals?

The goods and services tax (GST) replaced 17 central and state taxes that existed before and has led to the removal of check posts at state borders, transforming India into a single market. It cut business costs by removing what is called “tax on tax”. GST has also increased the number of taxpayers to 3.4 million, according to the fiscal year 2017-18 Economic Survey. The increase in the tax base will help the exchequer with higher receipts when economic growth quickens. However, a large part of the economy—fuels, electricity, land and real estate excluding construction contracts are still outside GST.

Why has this tax regime been criticized?
One of the criticisms from the opposition Congress party is that GST has multiple tax slabs and that the highest slab is 28% against a cap of 18% it had proposed. The National Democratic Alliance government contests this saying that GST has brought down the tax rate on 97.5% of commodities to 18% or less, as against an effective rate on most of the items in the pre-GST era of 31%. The opposition also alleges that the GST regime was rolled out in a hurry and without adequate preparation, which resulted in hardship for traders across the country.

Why has India adopted multiple GST Rates?

Income inequality makes it difficult for India to adopt a single tax rate for all commodities as in the city state of Singapore, which taxes all items at the rate of 7%.

Have consumers benefited?
Yes, through tax cuts. Transparency in its computation has made the high incidence of indirect tax on many daily use items apparent, which has prompted the federal tax body, the GST Council, to cut tax rates. The Council estimates the tax cuts announced so far amount to a benefit of ?80,000 crore a year. However, the issue of businesses not passing on tax cut benefits to consumers remains a serious concern. Many consumers have filed complaints which are being examined by the National Anti-profiteering Authority.

What direction is the GST heading towards now?
The GST Council plans to converge the 12% and 18% slabs, which would make GST a two-slab tax, barring the items on the exempt category and the few luxury and sin goods taxed at 28%. When revenue receipts improve, the council will also consider inclusion of crude oil, petrol, diesel, natural gas and aviation turbine fuel in GST. This will help businesses into oil and gas exploration, refineries, as well as industries such as airlines in reducing their tax burden.

The Mint, 26th December 2018

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Inflation in Control, RBI Needs to Cut Rates: Sanyal



The cost of capital needs to be lowered to support economic growth, said principal economic adviser in the finance ministry Sanjeev Sanyal, building a case for a rate cut by the Reserve Bank of India (RBI) in its February monetary policy review. The macro environment has by and large improved and conditions are in place for re-acceleration of the economy, Sanyal said in an interview. “Now that we have anchored inflation to a lower level, we need to bring down interest rates to be in sync with the new inflation rates. How we achieve this transition is, of course, the RBI’s and monetary policy committee’s prerogative,” said Sanyal.

Sanjeev Sanyal, principal economic adviser in the finance ministry, maintains a fine balance between his profession of an economist advising the government on the financial sector and his interest in reading and writing on history. In an interview, Sanyal talks about supervising more closely the larger systemically important nonbanking financial companies (NBFCs) and the need for structurally lowering real interest rates in sync with lower inflation level. Edited excerpts:

The Indian economy slowed in the second quarter and the global economy is expected to decelerate in 2019. How do you assess India’s economic outlook for the next year?

India’s gross domestic product (GDP) growth rate slowed from 8.2% year-onyear in the first quarter of the financial year to 7.1% in the second quarter. Part of it was expected because of a base effect, which was anticipated. However, it slowed down more than expected because of a number of factors. From end-August, there were disruptions in NBFC lending and a spike in global energy prices. Interest rates were also tightening because of global factors. The bunching up of these factors seems to have affected the September number and probably into October as well.

The good news is that these factors have unwound since midNovember. Oil prices have come down very dramatically. The debt roll-over situation for NBFCs is much better now. The tightening path of the US Fed is likely to be less steep. You can see Indian bond yields have come off quite a bit. Meanwhile, bank lending has accelerated and is growing at about 14% year-onyear. While somewhat slower global growth may have some impact on exports, by and large, the macro environment for us has improved. The conditions are in place for re-acceleration of the economy.


What will be the overall GDP growth this fiscal and the next?
The government doesn’t forecast GDP growth rates. Most forecasters such as the Reserve Bank of India (RBI) and International Monetary Fund (IMF) have forecast 7.3-7.4% for 2018-19. For the first half, we have done 7.6%. So, the range seems doable. If energy prices remain at current levels and the external environment does not deteriorate, our growth should accelerate in 2019-20. However, we need to think about how we lower the cost of capital for our business sector. The inflation trajectory has remained well below RBI’ comfort level.

Do you expect the RBI to change its stance and cut policy rate?
Obviously, I cannot comment on what the monetary policy committee (MPC) should do. Nonetheless, I would say that Consumer Price Index (CPI) inflation is at the bottom of the RBI’s band and this drop in inflation needs to be seen in a wider context. We have had low inflation for quite a long period now and, therefore, it is fair to say that structural inflation has come down very significantly from the old 7-10% range. However, since nominal interest rates have not fallen as quickly, our real interest rates are very high. Real lending rates for MSMEs is above 800 basis points, which is clearly too high.

We need to structurally lower real interest rates. That is very clear for multiple reasons. One, if you keep real interest rates high for a long period of time, it causes unnecessary fiscal and financial stress to the economy. Second, it will generate higher supply-side inflation in the long run because industrial capacity and infrastructure remain under-invested. Economists very often forget that the second-round supply side impact of high interest rates eventually leads to higher inflation. Now that we have anchored inflation to a lower level, we need to bring down interest rates to be in sync with the new inflation rates.

How we achieve this transition is, of course, the RBI’s and MPC’s prerogative. This will be the last budget of this government... Yes, it will be an interim budget as you know. But will it have forward looking policy guidance for the next five years?
Perhaps there will be some policy guidance, but I am not in a position to comment on it.

Will there be an Economic Survey?
The Economic Survey will come out only with the full-fledged budget announcements in June-July.

Did the RBI governor’s resignation affect the central bank’s institutional integrity and send bad signals to foreign investors?
 The RBI is a valued institution and its autonomy is also valued by this government. This autonomy, however, is within the context of the RBI Act. Greater autonomy always means greater accountability and, therefore, its accountability is to its board. Consequently, the board should be an important part of how the RBI functions in the future. It’s true not only for the RBI, we need to take boards more seriously for all regulators and for all public institutions. Some critics point out that the government is trying to control RBI through its board and that RBI is becoming a board-driven institution.

It doesn’t have to be driven by the board, it needs to be accountable to the board. There is some confusion here. Board-driven would mean that it is being actively managed by the board. That is not the case. All that is happening is that the decisions of the management of an institution is being made accountable. One cannot have autonomy without accountability. Every institution is accountable to somebody. The government is accountable to Parliament, which in turn is accountable to the people of India. So, the question is to whom are regulators accountable? They are accountable to their boards. But, so far, the RBI board used to play an advisory role. As per the RBI Act, the management is accountable to the board. The RBI Act is very clear about this. It’s a board of directors not a board of advisers.

Is the government justified in demanding a portion of the capital reserves of the RBI?
There is nothing disreputable about the finance ministry wanting to discuss this. Every central bank in the world gains certain income from doing activities such as creating money, doing monetary operations, income from foreign exchange reserves and so on. After holding back some of this money for running the dayto-day activities and for capitalization, the rest of the money is transferred to the government. This is what is loosely called seigniorage. It has been an unremarkable, routine transfer in every country, including in India, and is also mentioned in the RBI Act. I don’t know why it is even a matter of debate. The only question of debate is the formula for deciding how much capitalization the RBI needs to retain. For that a committee will be set up to decide on a rules-based system. It is entirely legitimate for the government to ask for a mutually agreed rules-based system to do this.

Former chief economic adviser Arvind Subramanian has called for asset quality review of NBFCs along the lines of the review done for banks. I agree that since NBFCs are now systemically larger part of our financial system, we clearly need to pay more attention, particularly in regulating the larger institutions. But we also have to be careful that we don’t over-regulate them. So, a balanced approach is needed. But yes, the larger systemically important institutions certainly need to be supervised more closely.

How do you see the government’s announcement for providing additional ?41,000 crore for recapitalization of public sector banks?
 This is something that the government had committed to already. We are now going to carry out the commitment to recapitalize our public sector banks. We have spent quite some time cleaning up these banks—ensuring better NPA (nonperforming assets) recognition, using the IBC (Insolvency and Bankruptcy Code) process to liquefy the assets, improving creditor rights, introducing much stricter capitalization requirements and so on. Now we have come to a stage where many of the banks can think about growing again. As a part of that, we need to recapitalize them so that they are in a position to expand. So, that is the context in which recapitalization should be seen.

Do you think loan waivers announced by states is the right way to address farmers’ distress?
The state governments can make a decision about how to best utilize their resources. It is their prerogative. The central government will not tell the states what they should or should not do. At the central government level, as far as I know, we have no plans of doing a nation-wide farm loan waiver.

The Mint, 26th December 2018


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Tuesday, December 25, 2018

GST Roadmap To Be To Work Towards A Single Rate Between 12%, 18% | Arun Jaitley

GST Roadmap

Finance Minister Arun Jaitley said the country should look towards having slabs of zero, five percent and a standard rate for luxury and sin goods.

Highlights

  1. Government aims to simplify Goods and Services Tax Structure
  2. A single standard rate instead of two rates of 12%, 18% on the cards
  3. Government to also look at transferring cement into a lower GST Rate


The government is working towards a single national sales tax rate which could be a mid-point between 12% and 18%, Finance Minister Arun Jaitley said on Monday, in an effort to simplify the tax structure. The government set the range for the  Goods and Service Tax (GST) from 28 per cent to 5 percent on most items when the signature reform was introduced last year.

"Multiple slabs were fixed transiently in order to ensure the tax of no commodity goes up radically. This contained the inflation impact," Mr Jaitley wrote in his blog.

A future road map could well be to work towards a single standard rate instead of two standard rates of 12% and 18%. It could be a rate at some mid-point between the two."

He also said the country should look towards having slabs of zero, five per cent and a standard rate for luxury and sin goods (alcohol, drugs, cigarettes, etc.).
The government will also look at transferring cement into a lower tax slab as the next priority, he wrote.

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RBI To Issue New 20 Rupee Note Soon: 10 Things To Know


The RBI has already issued new currency notes in denominations of Rs. 10, Rs. 50, Rs. 100 and Rs. 500, besides introducing Rs. 200 and Rs. 2,000 bank notes.

There were 492 crore pieces of the Rs. 20 note in circulation as on March 31, 2016, according to RBI data Soon, a new currency note of Rs. 20 denomination will be introduced in the market. The Reserve Bank of India (RBI) would soon introduce the new 20-rupee bank note, news agency Press Trust of India reported on Tuesday, citing a central bank document. The launch of the new Rs. 20 note will mark the latest addition to the new currency introduced by the RBI after the shock move to withdraw the bank notes of Rs. 500 and Rs. 1,000 denominations in November 2016.

Here are 10 things to know:
The new 20-rupee note will have additional features compared with the existing currency note, Press Trust of India reported.

The central bank has already replaced the Rs. 10, Rs. 50, Rs. 100, and Rs. 500 currency notes, and introduced denominations Rs. 200 and Rs. 2,000. (Also read: Here's what new currency notes look like)

Since the notes ban in 2016, a surprise move by the government which led to withdrawal of 86 per cent of the country's banknotes from circulation overnight, the central bank has launched currency notes under the Mahatma Gandhi (New) series.
The new notes, under the Mahatma Gandhi (New) series, are different in size and design compared to the notes issued previously.

All other currency notes, except for the banned Rs. 500 and Rs. 1,000 issued under the old series, continue to remain legal tender. There are 492 crore pieces of the existing Rs. 20 note in circulation, as of March 31, 2016, Press Trust of India reported citing RBI data.

The number more than doubled to about 1,000 crore pieces by March 2018, according to the agency.
The Rs. 20 notes accounted for 9.8 per cent of the total number of currency notes in circulation at the end of March 2018.
The central bank had in July last year announced launch of 20-rupee bank notes in the Mahatma Gandhi series 2005.

These notes were similar to the design of the notes of same denomination in circulation at the time, and bore the signature of the then central bank governor Urjit Patel. (Also read: RBI board reviews governance framework under new governor Shaktikanta Das)


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Monday, December 24, 2018

RBI Cancels Registration of 1,490 NBFCs in 2 Years Kolkata Tops the List


Kolkata tops list with 617 cancellations, Delhi second with 203 Stepping up oversight over credit companies, the Reserve Bank of India has cancelled the registration of 1,490 non-banking financial companies (NBFCs). These included NBFCs that failed to meet prudential norms and those that voluntarily surrendered registration. Kolkata tops the list with 617 cancellations, and New Delhi stands at second spot with 203, followed by Mumbai at 190, according to the data provided by the RBI for parliamentary questions (Lok Sabha).

These cancellations happened owing to non-compliance with mandatory requirements like minimum net-owned funds (NoF) of Rs 20 million, not submitting statutory returns, and companies not being traced at the addresses they gave. In some cases, NBFCS surrendered the certificate of registration, the RBI said. The RBI said NBFCs registered with the regulator were subject to on-site inspection and off-site monitoring through return submission and statutory auditors’ reports. Analysts said finance companies had become crucial in extending support in the last mile to reach customers where banks experience limitations due to structure and staff strength. Finance companies have a nimble set-up, reach and flexibility to reach even remotest locations.

NBFCs are a key link in extending credit and other financial services to micro, small and medium enterprises (MSMEs) and those at the bottom of the pyramid across the country. According to the Financial Stability Report published by the RBI in June 2018, loans and advances of the sector increased 21.2 per cent and investments 13.4 per cent. The aggregate balance sheet size at the end of March was Rs 22.1 trillion. Senior NBFC executives said the quality of risk management and governance by finance companies had a bearing on the financial stability of the system. Defaults by Infrastructure Leasing & Financial Services (IL&FS) and its group entities in the second quarter of the current financial year (FY19) were a major setback to the financial system and hit liquidity for finance companies.

The RBI has stepped up supervision and now looks at liquidity management and loan books for asset quality to spot gaps and risks. The major concerns flagged about finance companies include borrowing short-term for lending to long-term assets, often leading to asset-liability mismatch. Governance and risk management practices need improvement. According to the Financial Stability Report, there was a deceleration in the share capital growth of NBFCs, whereas borrowing grew 19.1 per cent, implying rising leverage. NBFCs have to maintain minimum Tier I and II capital of not less than 15 per cent of aggregate risk-weighted assets. All finance companies are subjected to prudential regulations such as capital adequacy requirements and provisioning norms, along with reporting requirements. In March 2018, there were 11,402 of these companies registered with the RBI. Of those 156 were deposit-accepting (NBFCs-D). There were 249 deemed systemically important non-deposit accepting NBFCs. The number has come down to 10,102 by the end of September 2018, according to the RBI data.


The Business Standard, 24th December 2018

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GST Intelligence Unit Unearths Rs 2.2-Billion Fake Tax-Invoices Scam


The Directorate General of GST Intelligence (DGGI) has busted a racket of fraudulent companies engaged in raising fake tax invoices worth Rs 2.2 billion to avail input-tax credit. According to the DGGI, searches were conducted at several official as well as residential premises last Thursday in Chennai and Coimbatore in Tamil Nadu and busted the racket and arrested two persons. "Several incriminating documents, including copies of fake invoices, issued on the letter heads of several firms that existed merely on paper, were seized", an official release issued on Sunday by Additional Director General K Balaji Majumdar said.

The modus operandi was that several bogus companies and bank accounts were created using PAN and Aadhaar number of family members and employees, and complex transactions were made without the supply of goods, the release said. According to the documents seized, fake invoices covering goods worth more than Rs 2.2 billion were issued without supply of goods, it said.The officials seized chequebooks with pre-signed cheque leaves pertaining to 45 bank accounts, rubber stamps in the name of 30 companies and computer hard disks, the release said. Two persons have been arrested on Saturday and the DGGI provisionally attached bank accounts that were operated by the imposters, it said, adding that the arrested had been remanded to judicial custody.


The Business Standard, 24th December 2018

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Sunday, December 23, 2018

GST Council Meeting Highlights: Movie Tickets, Video Games To Be Cheaper, Says Arun Jaitley


Earlier this week, PM Modi had said the government is aiming to bring 99% of items below the 18 per cent GST slab and warned of stringent action against defaulters of bank loan and fugitives.
The Goods and Services Tax (GST) Council on Saturday cut rates of 33 items from 18 per cent to 12 per cent and 5 per cent, Puducherry Chief Minister V Narayanasamy said, following a meeting chaired by Finance Minister Arun Jaitley. The meeting at Vigyan Bhawan was attended by finance ministers all the states.

Earlier this week, Prime Minister Narendra Modi had said the government is aiming to bring 99 per cent of items below the 18 per cent GST slab and warned of stringent action against defaulters of bank loan and fugitives.

Here are the Highlights on the GST Council Meeting:

The Goods and Services Tax (GST) Council on Saturday decided to form a seven-member Group of Ministers (GoM) to study anomalies in tax collection in some of the states which showed wide deviation from what was expected, according to news agency Press Trust of India. "The Council has approved the proposal to form a seven-member GoM to study the revenue trend, including analysing reasons for structural patterns affecting revenue collection in some of the states," Finance Minister Arun Jaitley said after the meeting, according to news agency PTI.
The study would include the underlying reasons for deviation from revenue collection targets vis-a-vis original assumptions discussed during the design of the GST system, its implementation and related structural issues, he said.

Reduction in GST Rates/Exemptions on Services:
GST rate on cinema tickets above Rs. 100 shall be reduced from 28% to 18% and on cinema tickets upto Rs. 100 from 18% to 12%.
GST rate on third party insurance premium of goods carrying vehicles shall be reduced from 18% to 12% Services supplied by banks to Basic Saving Bank Deposit (BSBD) account holders under Pradhan Mantri Jan Dhan Yojana (PMJDY) shall be exempted.

Air travel of pilgrims by non-scheduled/charter operations, for religious pilgrimage facilitated by the Government of India under bilateral arrangements shall attract the same rate of GST as applicable to similar flights in Economy class (i.e. 5% with ITC of input services).

GST Rate Reduction on Goods which were attracting GST rate of 28% :

From 28% to 18% GST slab rate-Pulleys, transmission shafts and cranks, gear boxes etc, falling under HS Code 8483 Monitors and TVs of upto screen size of 32 inches Re-treaded or used pneumatic tyres of rubber Power banks of lithium ion batteries. Lithium ion batteries are already at 18%. This will bring parity in GST rate of power bank and lithium ion battery
Digital cameras and video camera recorders Video game consoles and other games and sports requisites falling under HS code 9504

Saturday, December 22, 2018

GST Registration Online & New GST Registration Number by Company Setup India


GST Registration Process

1. Fill Part A of Form GST REG-01 on GSTN Portal.

2. The GST portal verifies the submitted details using the One Time Password (OTP).

3. You are expected to acknowledge the temporary reference number (TRN) sent to the registered mobile number and e-mail address through the GST REG-02 Form.

4. Fill up Part- B of the GST REG-01 form and mention the TRN. You need to attach all the necessary documents in this part. After submitting Part-B, you will receive the Application Reference Number (ARN) through an e-mail or SMS. It can be used later to track status of your application.

5. If you miss to fill any information or any other extra information is required, then you will receive GST REG-03. This is to be replied through the GST REG-04 form with all the additional information within seven working days of receiving the GST REG-03.

6. After submission of all the details through the above mentioned forms, you will receive GST REG-06, this contains the registration certificate issued for the principal place of business and other additional places of business. If there are several different business verticals within a single state, then, one has to file different and separate applications under GST REG-01 for each individual vertical.

*The authority may also reject your application if they find the details provided to be unsatisfactory. You will be informed about this in Form GST REG-05.

*If you are required to collect TCS or deduct TDS, you are required to submit an application through GST REG-07 for the same.

Documents Required in the Process of GST Registration

Copy of PAN
Copy of Aadhaar
Business address proof (Electricity bill/ Rent agreement / Tax paid receipts / Municipal Khata copy)
Description of top 5 goods / services to be dealt in.

The proof of constitution such as partnership deed / Memorandum of Association (MOA) / Articles of Association (AOA) / Certificate of Incorporation (COI).

Details of authorised signatory such as list of partners along with their address and identity proof in case of partnership firm or a list of directors with their address and identity proof in case of a company.

A cancelled cheque of your bank account showing the name of the account holder, IFSC code, MICR code and bank branch details

Board resolution or letter of authorisation in respective cases of company and partnership firm.
With highly qualified & skilled professionals, we can assist you in a speedy GST registration process.


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Tuesday, December 18, 2018

GST Leading to Hawala Transaction, Input Tax Credit Black Money


West Bengal Finance Minister Amit Mitra Tuesday said the GST is leading to hawala transactions as businesses are claiming input tax credit and authorities are not matching those claims with invoices.

Stating that Goods and Services Tax (GST) was implemented in haste on July 1, 2017, Mitra said he had then opposed such hasty rollout as the computer systems were not prepared to deal with uploading of as many as 3 billion invoices.

"Today a short (returns) form is being filled and when you do not upload invoices, according to me, today hawala is happening out of GST. If invoice is not required to be uploaded, when you file GSTR-3B then you claim input tax credit (ITC), which is black money because there was no transaction. It was unprepared GST, Mitra said at the 'Agenda Aaj Tak (news channel)' event here.

Under the GST regime, businesses currently file summary sales return GSTR-3B and final sales return GSTR-1.

Initially, when GST was implemented, businesses were required to fill up 3 forms-- GSTR-1 (sales return), GSTR-2 (purchase return) and GSTR-3 (final return which combines both GSTR-1 and 2).

However, businesses complained of difficulties in filing of three returns a month as the GST systems could not accept the last minute rush on the due date of filing those returns.

Following this, the GST Council, chaired by Union Finance Minister and comprising state finance ministers, decided to come out with a summary sales returns form GSTR-3B for businesses to pay taxes by the 20th day of the succeeding month.

The system of filing GSTR-3B and GSTR-1 does not require businesses to upload invoices to match purchase and sales returns.

While GSTR-2 and 3 has been kept in abeyance, the tax authorities are working on simplified returns forms which should be launched sometime in 2019.

"I had said that GST should not be launched on July 1, 2017. Computers were required to process 3 billion invoices, but there was no testing or pilot run," Mitra said.

GST, which amalgamated 17 different central and state taxes including excise duty and sales tax or VAT, not just made India one market by levying a uniform tax rate on a good or service, it also did away with tax-on-tax prevalent in the previous system.

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Will Try to Get 99% Items in 18% Slab or Lower, says PM Narendra Modi

GST Registration Services

Prime Minister Narendra Modi said on Tuesday the government would make efforts to bring 99 per cent of items under the goods and services tax (GST) into the 18 per cent slab or lower. The next GST Council meeting is four days away.

“Only 0.5 to 1 per cent of the items — luxury goods such as aircraft, cigarettes, alcohol and SUVs — will be taxed at 28 per cent,” Modi said.

Currently, 39 items, or about 3 per cent, of about 1,280 items that draw the GST attract a levy of 28 per cent. If Modi’s announcement turns into reality, only up to 13 items would remain in the 28 per cent bracket, pushing goods such as two-wheelers, cars, cement, and computer screens into the 18 per cent slab.

However, this announcement has drawn severe criticism from finance ministers (FM) of Opposition-ruled states. Manpreet Badal, finance minister of Punjab, said that a suo motu announcement by the PM without the approval of the GST Council, a constitutional body, was unwarranted. “The PM should not make unilateral announcements like this… since even the agenda for the coming GST Council meeting is not yet finalised,” he said.

Badal Criticised the Union Government’s Frequent Changes to GST Law. 

The New GST Test

“This is a badly designed GST, difficult to fix. The Congress viewpoint is that if we come to power, we will bring in GST 2.0,” he added.

Experts have voiced a concern that rate cuts might not be the only solution to make the GST seamless. “Taxing nearly all items at less than or equal to 18 per cent will be challenging. Businesses also want simplicity of return filing and ease in claiming input-tax credit refunds,” said Archit Gupta, founder and chief executive officer of ClearTax.

M S Mani, Partner, Deloitte India, pointed out the reduction in revenue after cutting rates remained a concern. “The move would surely herald the movement to fewer rates in future, but then there might be headwinds in revenue collections. The overall collections would reduce in the short term, but lead to tax rationalisation on the one hand and fewer disputes on the other,” he said.

Kerala Finance Minister Thomas Isaac also voiced these concerns on Monday

Will make efforts to bring 99% things in sub-18% GST slab, says PM Modi Badal said the Union government should be patient and wait for issues arising out of GST implementation to stabilise. Modi, however, said the exact opposite.

“The GST as a system has stabilised and as a result, we are reaching a situation where 99 per cent of the items can be brought within the tax bracket of up to 18 per cent,” he said at the Mumbai event.

He added the number of registered enterprises rose from 6.6 million before GST roll-out to 12 million now, justifying the rate cut.

The November 2017 meeting of the GST Council — which preceded Gujarat assembly elections — had reduced the tax rate on items in the top slab. Eight months later, the July 2018 meeting chaired by the interim FM Piyush Goyalhad too generously pruned the 28 per cent slab.

Union Finance Minister Arun Jaitley Had Lauded the Move, Back Then. 

Multi-State GST, Input Tax Credit fraud worth Rs 2 billion detected “The GST Council within a record period of thirteen months has almost phased out the 28 percent category items remaining in this category are only luxury items or sin goods. It is only a matter of time that the final obituary of the ‘Congress Legacy Tax’ is written,” he had written in his blog.

GST - Debit and Credit Notes

GST Registration Services

Background

1. Credit Notes & Debit Notes have been used in accounting since a very long time. Their use is considered as established business practice by any industry, whereas Credit and Debit Notes in GST have a specified meaning attached to them. The same should be used in specific scenarios and by specific persons as per the provisions of the CGST Act. In this article we will be analyzing the meaning of these two terms as per GST Law, difference between Accounting or Financial Credit Debit Notes and GST Credit Debit Notes, Various Legal provisions of GST Law Regarding Credit/Debit Notes.

2. Credit/Debit Notes – Meaning and Conditions for Issuing these Documents :

2.1 Credit Notes - As per provisions of Section 2(37), "credit note" means a document issued by a registered person under sub-section (1) of section 34

As per the provisions of Section 34(1), where a tax invoice has been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or where the goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient, the registered person, who has supplied such goods or services or both, may issue to the recipient a credit note containing such particulars as may be prescribed

Considering the Above Provisions We may Interpret that

(1)GST will only recognize the credit notes issued by Supplier of Goods or Services or both. Which means, though the practice of issuance of credit notes by recipient of supply will continue for all commercial purposes, yet the same has no relevance in GST parlance or GST compliance requirements, e.g., filing of Returns. Only the supplier will disclose the Credit Notes issued by him/her in the returns filed periodically.

(2)Credit Notes in GST shall only be issued for specific reasons mentioned in the Section 34 and not in all cases when it can be issued, e.g., to rectify the mistakes done in invoicing or accounting. So only the credit notes issued by the supplier for the following purposes shall be recognized in GST:

(a)The taxable value shown in the invoice exceeds the taxable value of the supply Example: Taxable value shown in Invoice as 105 plus taxes instead of 100 plus taxes. So credit note is to be issued for 5 plus taxes.

(b)The tax charged in the invoice exceeds the tax payable on the supply. Example: Tax payable in Invoice of 100 @ 18% instead of @12%. So credit note should be issued for tax of Rs. 6.. (Please note that there are still some technical issues to show the said credit note in GSTR-1)
(c)The goods supplied are returned by the recipient. Example is any standard goods rejection transaction.

(d)The goods/services are found to be deficient. Example is Invoice issued for 100 quantities and supplied 98 quantities. Proportionate reduction should be by way of Credit Notes.
(3)There may be other credit notes as discussed earlier which are commercial/accounting credit notes which as per prevailing practice in the industry are used but not recognized by the GST, the examples of which are as follows:

(a)Credit Note issued by the recipient in the name of the supplier to record the accounting of Debit Note issued by Supplier.

(b)Credit Note issued by the supplier for any other reason than above
To sum up the above understanding we will consider the following representative example of Goods Returned:

Goods Supplied and dispatched on 01.01.2018 Rs. 1,00,000 (100 Lots) [1,00,000+ GST @18% Rs. 18,000 = Total Rs. 1,18,000]. On account of defects identified during quality checks 2 lots returned to supplier on 03.01.2018 and 98 accepted (Rs. 98,000)

For the rejected material, the supplier will issue a credit note of Rs. 2,000 (2 Lots) [2,000+GST@18% Rs. 360 = Total Rs. 2360]

The Supplier will disclose the details of Outward Supplies-B2B Rs. 1,00,000 plus taxes, and further Credit Notes-B2B Rs. 2,000 plus taxes in the GSTR-1 of the Month of January 2018.

Due to the said disclosure in the return by the supplier alone, the recipient will have reflected in his/her GSTR 2A all details having a net impact of Rs. 98,000+ taxes (ITC) on it. The recipient need not show any details for the Credit Notes issued by his/her supplier. The recipient may record an accounting debit note for the purpose of recording the transactions in books of account (to give debit to the supplier for the rejected quantity the recipient might record debit note and reduce the amount payable to supplier due to rejected lots), but the same need not be disclosed in any returns except the impact of this in Form 3B. The same should also not be confused with the debit notes issued by him/her in capacity of supplier to his customers, as the same would require the disclosure in the returns.

In some of the cases, where it's technically not possible for the customer to collect the credit notes from respective suppliers, the customers themselves issue a tax invoice to supplier to reduce the impact of Sales by the supplier to him/her. In such scenarios credit notes are not issued by the Supplier. This practice, according to some of the experts, is correct as the net impact of taxes through the returns filed is same as issuing a credit note and reducing the sales. According to another school of thought this is wrong commercial practice due to reasons such as:

  1. When material is returned, it's just the returning of the original material sent and not a supply by itself. Similarly, in case of charging of higher amount for supply or for tax is reduced by way of credit note in not a supply in itself.
  2. So issuing a tax invoice without actual supply may not be tenable by the tax authorities and chances are there that it may also be treated as an offence under the provisions of Section 122, issuing tax invoice without actually supplying goods or services or both 2.2 Debit Notes - As per the provisions of Section 2(38) of the CGST Act "debit note" means a document issued by a registered person under sub-section (3) of section 34.


As per the provisions of Section 34(3) of the CGST Act, "Where a tax invoice has been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to be less than the taxable value or tax payable in respect of such supply, the registered person, who has supplied such goods or services or both, shall issue to the recipient a debit note containing such particulars as may be prescribed"

Considering the above provisions we may interpret that :

(A) GST will only recognise the debit notes issued by Supplier of Goods or Services or both, which means, though the practice of issuance of debit notes by recipient of supply will continue for all commercial purposes, the same has no relevance in GST parlance or GST compliance requirements, e.g., filing of Returns. Only the supplier will disclose the Debit Notes issued by him/her in the returns filed periodically.

(B) Debit Notes in GST shall only be issued for specific reasons mentioned in the Section 34 and not in all cases when it can be issued, e.g., to rectify the mistakes done in invoicing or accounting. So only the debit notes issued by the supplier for the following purposes shall be recognised in GST:

(a) The taxable value shown in the invoice is lesser than the taxable value of the supply. To illustrate, Taxable value shown in Invoice as 95 plus taxes instead of 100 plus taxes. So debit note to has to be issued for 5 plus taxes.

(c) The tax charged in the invoice is less than the tax payable on the supply. Example: Tax payable in Invoice of 100 @ 12% instead of @18%. So debit note should be issued for tax of Rs. 6. (Please note that there are still some technical issues to show the said credit note in GSTR-1)

(C) There may be other debit notes as we discussed earlier which are commercial/accounting debit notes which as per prevailing practice in the industry are used but not recognized by the GST, the example of which are as follows:

(a) Debit Note issued by the recipient in the name of the supplier to record the accounting of Credit Note issued by Supplier.

(b)Debit Note issued by the supplier for any other reason than above
To sum up the above understanding we will consider the following representative example of Supplementary Invoicing:

Goods Supplied and dispatched on 01.01.2018 Rs. 1,00,000 (100 Lots)[1,00,000+ GST @18% Rs. 18,000 = Total 1,18,000]. On account of unit rate finalization the basic price comes to Rs. 1,02,000 on 03.01.2018 and the same is accepted by recipient.

For the additional value of Rs. 2,000, the supplier will issue a debit note Rs. 2,000 [2,000+GST@18% Rs. 360 = Total Rs. 2360]

The Supplier will disclose the details of Outward Supplies-B2B Rs. 1,00,000 plus taxes, and further Debit Notes-B2B Rs. 2,000 plus taxes in the GSTR-1 of the Month January 2018.

Due to the said disclosure in the return by the supplier alone, the recipient will have reflected in his/her GSTR 2A all details having a net impact of Rs. 1,02,000+ taxes (ITC) on it. The recipient need not show any details for the Debit Notes issued by his/her supplier in GSTR 1. The recipient may record an accounting credit note for the purpose of recording the transaction in books of account (to give credit to the supplier for additional consideration, the recipient might record credit note and increase the amount payable to supplier), but the same need not be disclosed in any returns except the impact of this in Form 3B. The same should also not be confused with the credit notes issued by him/her in capacity of supplier to his customers as the same would require the disclosure in the returns.

Contents of Credit-Debit Notes:

3. As per Rule 53, read with Section 34 of the CGST Act, following should be the contents of Credit – Debit Notes:

(A) Name, address and Goods and Services Tax Identification Number of the supplier

(B) Signature or digital signature of the supplier or his authorised representative nature of the document.

(C) A consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets or numerals or special characters-hyphen or dash and slash symbolised as "-" and "/", respectively, and any combination thereof, unique for a financial year

(D) Date of issue of the document

(E) Name, address and Goods and Services Tax Identification Number or Unique Identity Number, if registered, of the recipient

(F) Name and address of the recipient and the address of delivery, along with the name of State and its code, if such recipient is un-registered

(G) Serial number and date of the corresponding tax invoice or, as the case may be, bill of supply value of taxable supply of goods or services, rate of tax and the amount of the tax credited or, as the case may be, debited to the recipient

Credit-Debit Notes Timelines to Issue These Documents and Its Implications:

4. The credit note cannot be issued any time after either of the following 2 events:

(1) Annual return has been filed for the FY in which the original tax invoice was issued, or

(2) September of the FY immediately succeeding the FY in which the original tax invoice was issued (i.e., for a tax invoice issued in April 2018, as well as a tax invoice issued in March 2019, the relevant credit notes cannot be issued after September 2019)

Therefore, in case of price negotiations, etc., which is predominant feature of various industries, let's say metal based industry, one should keep in mind that any benefit of rate reduction of the earlier year has to be passed on to the recipient on or before September 30thof following year by issuing appropriate credit notes or filing of annual return for the earlier year, whichever is earlier.

Further, there is no such condition in case of issuance of debit notes. Hence, a debit note related to say FY 2018-19 may also be issued by the supplier after September 30, 2019. But there is one provision which restricts the benefit of input tax credit of Debit Notes issued after September 30 of following year which are related to the invoices issued in earlier year.

As per provisions of Section 16 (4) of the CGST Act, "A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier"

As per the views of some of the experts, 'Rights that are not yet vested can lapse by limitation unless effective steps to actualize those rights are taken by the person, but once the right stands vested, it becomes indefeasible except by operation of subsequent inherent conditions'. In other words, input tax credit which is a right, in law, of the taxable person and also a prime factor in designing the concept of GST Laws in India, is not fully mature and is not available to the taxable person until all pre-conditions, i.e., steps mentioned in Section 16(2) are followed. If the same are fulfilled, then the right becomes a right that can be 'availed'.

Once the credit is availed, it is available without any time limit except a condition that if the outward supplies become exempted, the credit availed needs to be reversed. Other than the said situation, the credit availed is available in entirety to the taxable person.

Now, in a situation where the credit that is 'available' is due to any reasons 'not availed' or missed, it may still be available but not beyond the limitation prescribed in Section 16(4). Therefore, in case of doubts one may avail of the credit and then reverse it under protest with specific intimation to the department. This is to ensure that the time limitation would not be the reason for non-availment till the time the principle is settled through court decisions.

5. Other miscellaneous points regarding credit & debit notes :
  1. The credit note issued as per the provisions discussed above must be declared in the returns for the month in which they are issued, by the supplier and also the impact of the same on tax payment by the recipient,
  2. The same disclosure should be latest by the due date for credit note as specified above
  3. The recipient, to show the impact, should reduce the input tax credit if the same had been availed against the original tax invoice
  4. Every credit note must be linked to specific original tax invoice
  5. In case of a credit note issued for a discount, the discount should be as per the provisions of Section 15(2) of the Act
  6. The debit note needs to be linked to the original tax invoice
  7.  A debit note issued under Sections 74, 129 or 130 would not entitle the recipient to avail of credit in respect thereof, and the supplier shall specify prominently on such debit note the words "INPUT TAX CREDIT NOT ADMISSIBLE
  8. As per the current provisions of law, a consolidated credit-debit note cannot be issued for multiple invoices. Additionally, the date and serial number of the original tax invoice is mandatory to be disclosed. The proposed amended law may exclude this requirement.
  9. Credit -Debit notes have to be raised with reference to specific invoice and not otherwise to get the benefit of tax adjustment
  10. Conclusion

6. One has to unlearn the practices under the earlier tax laws in order to clearly understand the concepts of credit note and debit note under the GST Law. A credit note or a debit note, for the purpose of the GST Law, can be issued by the registered person who has issued a tax invoice, i.e., the supplier, only under specific scenarios before the time-limits discussed above. Any such document, by whatever name called, when issued by the recipient to the registered supplier, is not a document recognized under the GST Law.

Monday, December 17, 2018

Giving Excess Reserve to Govt may Pulldown RBI Credit Rating, Warns Rajan


Former RBI Governor Raghuram Rajan has cautioned that transfer of excess reserve to the government may bring down rating of the central bank.  Ratings downgrade of the RBI from 'AAA' would make borrowing costlier for the central bank and will have implication for the entire economy. Asked if the transfer of excess reserve by the RBI to the government could lead to a downgrade of the rating, Rajan said: "It could...it depends on how much. It may not be an issue now...may be an issue at some point of time. That's one concern". This is something both the government and RBI should discuss before reaching some conclusion, he told NDTV news channel in an interview.

"We are 'Baa' country. We are barely investment grade. Sometimes, we need to undertake international transactions which require a really high credit rating. For example, swap we did in 2013. So, for that, we need unimpeachable balance sheet. Why don't we keep the RBI as an unimpeachable balance sheet with AAA credit rating that requires certain amount of equity," he said. Highlighting that profit of the central bank largely comes due to devaluation of Indian currency, Rajan said keeping a portion for the contingency reserves, RBI usually pays entire profit.

"RBI can pay profit and not whatever it holds for contingency reserves for movement up and down. For example, rupee that depreciated could also strengthen...so we should accommodate for that," he said.There seems to be a tussle going on between the RBI and government over various issues, including the transfer of excess capital of the apex bank. Last month, the RBI board decided to set up a high-level committee soon for examining the Economic Capital Framework (ECF) to determine the appropriate levels of reserve the central bank should hold.

Asked whether he also faced pressure when he was the governor, he said there is always a pressure on the central bank to pay the government more. "I had it as well. I wrote a letter to the RBI when I was Chief Economic Advisor saying perhaps the RBI should look at how much it needs to hold. When I came to RBI as governor I set up a committee which essentially said we have enough capital to pay out our entire profit." "The three years that I was Governor, we paid the highest dividend in RBI's history to the government. The issue at stake is not that anymore. The issue is more than that. It's not just the profit, they want the excess. And the Malegam Committee had opined that you cannot pay more than the profit," he said. Rajan, who was RBI governor for three years till September 2016, is currently teaching at the Chicago Booth School of Business.


The Business Standard, 18th December 2018

No Deadline Extension to File GST Returns for ITC


GST Registration Services in Delhi India

The due date for filing of return for availing input tax credit for financial year 2017-18 is Saturday as the government has turned down corporate India’s plea for an extension. The finance ministry, however, clarified that filing of details by suppliers and the facility to view it did not impact taxpayers’ ability to avail input tax credit (ITC 1.05 %).

“It is clarified that the furnishing of outward details in Form GSTR-1 by the corresponding supplier and the facility to view the same in GSTR-2A by the recipient is in the nature of taxpayer facilitation and does not impact the ability of the taxpayer to avail the ITC on self-assessment basis in consonance with the provisions of the Section 16 of the Act,” the ministry said in a statement on last Thursday.

The statement said the apprehension that ITC can be availed only on basis of reconciliation between Form GSTR-2A and Form GSTR 3B for September 2018 is “unfounded” as the exercise can be done thereafter also.

Tax analyzers said the government should allow for rectification of the return form at least once after the due date considering that hundreds of crores of rupees are at stake “While the press release says reconciliation between GSTR 2A (vendor’s invoices) and GSTR 3B is not needed, the law does clearly state that input credit will not be allowed unless vendors have paid tax and filed their returns,” said Pratik Jain, national indirect taxes leader at PwC.

Sachin Menon, national head, indirect tax, KPMG in India, told, “The government release seems to be hinting that the receiver of taxable supply shall claim all input credits even in anticipation of potential uploading of invoices by suppliers post the filing of September 18 returns. Being the first year of GST, even to figure out missing invoices through reconciliation is time consuming and hence industry expects government to be lenient.”

Friday, December 7, 2018

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