This week in economy: From the agricultural boost to the landmark GST collection

Everything you may have missed this week …

By Shreya Maskara 

“Landmark” collection of Rs 1 lakh crore GST collection for April

According to official data released last week, revenue from the Goods and Services Tax (GST) finally crossed the Rs 1 lakh crore mark. “GST collections in April exceeding ₹1 lakh crore is a landmark achievement and a confirmation of increased economic activity as brought out by other reports,” Finance Minister Arun Jaitley tweeted. Jaitley is optimistic of the a further increase in GST revenue stating the improvement in economic climate, and the introduction of the e-way bill will all promote GST compliance.

However, the government said to be cautious in using April figures as a prediction of the GST revenue for upcoming months. “It is usually noticed that in the last month of the financial year, people also try to pay arrears of some of the previous months also and, therefore, this month’s revenue cannot be taken as trend for the future,” read the press release.

Modi’s Rs. 33,000 crore boost to agriculture

The Union Cabinet chaired by Prime Minister Narendra Modi finally approved the continuation of the ‘Green Revolution — Krishonnati Yojana’ which is the agriculture umbrella program for two more years, with an outlay of over Rs 33,000 crore. Launched last year, the mission includes programs such as the Mission for Integrated Development of Horticulture with a central outlay of Rs 7,533 crore, National Food Security Mission Rs 6,893 crore and National Mission for Sustainable Agriculture Rs 3,981 crore amongst several others.

Earlier this year, Modi shared this strategy to improve incomes of farmers around the country, including decreasing their production costs, increasing minimum support prices, provide additional income to farmers and also reduce wastage of crops.

China reduces import duties on medicines, India to benefit

China has removed import duties on over 28 medicines, including all cancer drugs, effective from May. “Good news for India’s pharmaceutical industry and medicine export to China. I believe this will help reduce trade imbalance between China and India in the future,” Chinese Ambassador to India Luo Zhaohui said in a tweet. During the period April-October 2017-18, trade deficit with China was a whopping $ 36.73 billion.

Tirupur GST Jurisdiction

ZoneCommissionerateDivisionRangeJurisdiction
ChennaiCoimbatoreTirupurAnnurAreas covering under Annur Taluk of Coimbatore District.
ChennaiCoimbatoreTirupurTirupur - IAreas covering Ward Nos.01 to 15 of Tirupur Municipal Corporation and Velampalayam Firka of Tirupur North Taluk of Tirupur District.
ChennaiCoimbatoreTirupurTirupur - IIAreas covering Ward Nos.16 to 30 of Tirupur Municipal Corporation, Tirupur North Firka of Tirupur North Taluk and Perumanallur Firka of AVInashi Taluk of Tirupur District.
ChennaiCoimbatoreTirupurTirupur - IIIAreas covering Ward Nos.31 to 45 of Tirupur Municipal Corporation, Nallur Firka of Tirupur South Taluk of Tirupur District.
ChennaiCoimbatoreTirupurTirupur - IVAreas covering Ward Nos.46 to 60 of Tirupur Municipal Corporation, Tirupur South Firka and South AVInashipalayam Firka of Tirupur South Taluk of Tirupur District.
ChennaiCoimbatoreTirupurTirupur - VAreas covering AVInashi Taluk of Tirupur District except Perumanallur Firka.

Indian GST ruling at Delhi International will not hit duty free retailers

INDIA. A decision by the Authority for Advance Ruling (AAR) on the applicability of a new Goods & Services Tax (GST) to a retailer at Delhi Indira Gandhi International Airport (IGIA) will not affect duty free stores, according to two informed sources that The Moodie Davitt Report has contacted.

According to a Press Trust of India report that was widely circulated on Sunday in the Indian media, the AAR has ruled – in relation to an application filed by Rod Retail Pvt Ltd – that the company cannot be exempted from paying GST. Rod Retail operates a Sunglass Hut duty paid shop in Terminal 3 (International).

The new tax came into effect on 1 July 2017, replacing indirect tax laws that previously existed in India encompassing, for example, VAT, central sales tax (CST) and excise duty. Indian duty free sales are exempt from such levies – as in many other jurisdictions – because sales from airport departure shops are considered exports.

The Press Trust of India quotes AAR, part of India’s Ministry of Finance, as follows on the matter: “The said outlet is not outside India… but within the territory of India as defined under section 2(56) of the CGST Act, 2017 and section 2(27) of the Customs Act, 1962. Hence the applicant is not taking goods out of India and hence their supply cannot be called ‘export’ under Section 2(5) of the IGST Act, 2017, or ‘zero rated supply’ under Section 2(23) and Section 16(1) of the IGST Act, 2017. Accordingly, the applicant is required to pay GST at the applicable rates.”

The decision arises due to definition. The IGST Act says the export of goods requires them to leave the territory of India. The Customs Act defines that area as including India’s territorial waters as well.

Interpreting the AAR ruling

The ruling has been interpreted by some media as implying that international passengers buying goods at duty free shops at the airport will have to pay the GST as they are ‘not free from duties’ under the new indirect tax regime.

However, reliable Indian sources contacted by The Moodie Davitt Report stated that the ruling specifically applies to Rod Retail – a domestic retailer that was seeking a GST exemption – and not to major duty free and travel retail operators in the country such as Flemingo International and Delhi Duty Free.

Another source said it was seeking clarity on the ruling, but added: “It does not apply to retailers that operate under a customs bond. Those goods are effectively never imported. Rod Retail sources domestically and so has a different treatment.”

Duty free shops were exempt from the levy of central sales tax (CST) and value added tax (VAT) prior to the roll-out of GST last summer. If they were forced to apply the GST to any of their products they would lose some price advantage compared to the domestic market.

Source : https://www.moodiedavittreport.com/indian-gst-ruling-at-delhi-international-will-not-hit-duty-free-retailers/

GST Returns for Regular Business Entities in India

The Goods and Services Tax came into effect July 1, 2017. In the months since, the GST Council, responsible for monitoring the roll-out of this indirect tax, has made several clarifications and reforms to the original GST Act.

There are three components to GST:

  • CGST– Central Goods and Services tax, levied on an intra-state sale and collected by the federal government.
  • SGST– State Goods and Services tax, levied on an intra-state sale and collected by the state governments.
  • IGST – Integrated Goods and Services tax, levied on an inter-state sale and collected by the federal government.

All GST returns have to be filed electronically, through a common e-portal provided by the Goods and Services Tax Network (GSTN). GSTN is a not-for-profit, private limited company, which provides the Indian government with information technology support for implementing the GST.

The GST Identification Number obtained when a company registers is required for all returns filing. Nil returns must also be filed on a monthly or quarterly basis.

Any business or professional entity in India with an annual turnover exceeding Rs 2 million (US$31,000), and Rs 1 million (US$15,500) in the northeastern states of India, will be required to obtain GST registration.

This article discusses the basic forms that have to be submitted by all normal business ventures falling in the above criteria.

For an understanding of filing GST returns for specific cases, read our explanation of the GSTR-3B, the e-way bill, the Composition Scheme, GSTR 5 (non-resident taxable persons in India), GSTR 11 (diplomatic missions, UN personnel), GSTR 6 (input service distributors), GSTR 7 (tax deduction at source), and GSTR 8 (tax collection at source).

GSTR 1 – Form for outward supply

Every GST registered dealer needs to file the GSTR 1 form. It requires all the details of the sales made in that month. All invoices raised have to be uploaded onto the system. These can be edited until the GSTR 1 is submitted but any mistakes after submission can only be corrected in the next month.

Submit this form monthly – if the aggregate annual turnover of the business is above Rs 1.5 crore (US$ 230,550). Otherwise, it may be filed quarterly. Submission date is by the 10th of the next month.

This GSTR 1 is then sent to the buyer, who will file the GSTR 2. There is no tax payment made at this point.

GSTR-1A – Making changes in GSTR 1

Any changes made by the purchaser to the GSTR 1 form are reflected in the GSTR 1A, and will be verified by the supplier. Once these changes are accepted, the GSTR 1 form is filed.

GSTR 2 – Form for purchase transactions

GSTR 2 is a validation form for the GSTR 1 raised by the supplier. It is received as a GSTR-2A form, which when confirmed and filed is the purchaser’s GSTR 2.

In case of any discrepancies, the changes made will be reflected in the GSTR 1A and returned to the supplier for verification.

It is an invoice matching process.

The form needs to be submitted by the 15th of the next month.

GSTR 3 – Monthly return based on GSTR 1 and 2

GSTR 3 is a consolidation of GSTR 1 and 2. It is automatically generated to show the entire tax liability. This tax needs to be paid and returns filed on the GST portal. As per the Act, it needs to be submitted by the 20th of the next month.

GSTR-3B – Simple return until June 2018

GSTR-3B is an alternate form to the GSTR 3. The only difference is that no reconciliation between supplier and purchaser is necessary to file GST returns. The government recently released a simplified version of the form. This form has to be filed by the 20th of the next month for which GST is being calculated.

Forms GSTR 4, 5, 6, 7 and 8 are special returns to be filed by different categories of people.

GSTR 9 – Annual return

This form consolidates the returns made throughout the year. Details of sales and purchases under different tax types (SGST, CGST, and IGST) are furnished in this form. Any sales or purchases that have not been shown in the monthly filings can be corrected here. It is effectively a summary of the monthly/quarterly GST returns.

A statutory audit report has to be additionally submitted in case of companies and individual/HUF – if turnover exceeds Rs 10 million (US$153,700).

If the annual turnover exceeds Rs 20 million (US$307,400), GSTR-9C has to be filed instead of GSTR 9.

Such taxpayers also need to file an audit for the company’s annual accounts, and a reconciliation account of tax paid versus tax payable.

Submission for all annual returns is required by December 31 of the following tax year.

GSTR 10 – Final return

Any business whose GST registration has been cancelled or surrendered needs to file this form. It has to be filed within 3 months of cancellation or surrender. It is a one-time form for final GST settlement.

Penalty structure under GST

Penalty fees for delayed monthly returns is charged at Rs 50 (US$0.77) per day for GSTR 1, 3B, 4, 5, 6 and Rs 20 (US$0.31) per day for nil returns; the maximum being Rs 5,000 (US$76.70).

For GSTR 5A, the government recently reduced late fees to Rs 200 (US$3.07) per day of delay and Rs 100 (US$1.53) per day for nil returns; with a maximum penalty of Rs 5,000 (US$76.70).

For annual returns – GSTR 9, 9A, 9B, and 9C – the penalty is Rs 200 (US$3.07) per day of delay, or Rs 100 (US$1.53) per day for nil returns, up to 0.25 percent of the firm’s turnover.

The GST Council has also waived the late fee for the form GSTR-3B for the period of July to September 2017.

In addition, interest is calculated at 18 percent annually – starting from the day after the deadline – on the amount of outstanding tax.

Taxpayers should also note that the GST forms have to be filed in order. For example, the forms for January have to be filed before the forms for February. In case of outstanding non-compliance, late fees and interest charged can result in a cascading effect and a large accumulation of fines and taxes.

Source : https://www.india-briefing.com/news/gst-returns-regular-business-entities-india-16673.html/

There are no free lunches under the GST, literally; here is why

It was not clear whether GST would be levied at 5 per cent (without input credit) as canteen shall apply on all such recoveries from employees or a residual rate of 18 per cent will be applicable, treating it as outdoor catering services.

Yes, that is true! There really are no free lunches under the Goods and Services Tax (GST), literally, with the Authority for Advance Ruling (AAR) saying that recovery of food expenses from employees for canteen services would attract the new indirect tax. The Kerala bench of the AAR in its order said that recovery of food expenses from the employees for canteen services provided by a company are taxable as a supply of service under the Goods and Services Tax (GST). The ruling was given by the AAR on an application filed by Malappuram-based Caltech Polymers. The company approached the AAR to seek advance ruling on whether recovery of food expenses from employees for canteen services would come under definition of outward supplies and attract the GST.

“… Recovery of food expenses from the employees for the canteen services provided by company would come under the definition of ‘outward supply’ as defined in Section 2(83) of the Act, 2017, and therefore, taxable as a supply of service under GST,” said the AAR order. Under the Factories Act, 1948, any factory employing more than 250 workers is required to provide canteen facility to its employees. Levying of GST on canteen services provided by employers to employees would increase the compliance burden of companies, PwC Partner and Leader Indirect Tax Pratik Jain said.

“The revenue collections for the Government in such cases is not likely to be substantial, given that input credit might be available to businesses in many cases. However, the compliance burden on industry would be significant, along with possible disputes on valuation,” he said.

The government, Jain said, should either provide some guidance on such aspects or consider providing an exemption from GST on such recoveries.

He further said that it was not clear whether GST would be levied at 5 per cent (without input credit) as canteen shall apply on all such recoveries from employees or a residual rate of 18 per cent will be applicable, treating it as outdoor catering services.

Yes, that is true! There really are no free lunches under the Goods and Services Tax (GST), literally, with the Authority for Advance Ruling (AAR) saying that recovery of food expenses from employees for canteen services would attract the new indirect tax. The Kerala bench of the AAR in its order said that recovery of food expenses from the employees for canteen services provided by a company are taxable as a supply of service under the Goods and Services Tax (GST). The ruling was given by the AAR on an application filed by Malappuram-based Caltech Polymers. The company approached the AAR to seek advance ruling on whether recovery of food expenses from employees for canteen services would come under definition of outward supplies and attract the GST.

“… Recovery of food expenses from the employees for the canteen services provided by company would come under the definition of ‘outward supply’ as defined in Section 2(83) of the Act, 2017, and therefore, taxable as a supply of service under GST,” said the AAR order. Under the Factories Act, 1948, any factory employing more than 250 workers is required to provide canteen facility to its employees. Levying of GST on canteen services provided by employers to employees would increase the compliance burden of companies, PwC Partner and Leader Indirect Tax Pratik Jain said.

“The revenue collections for the Government in such cases is not likely to be substantial, given that input credit might be available to businesses in many cases. However, the compliance burden on industry would be significant, along with possible disputes on valuation,” he said.

The government, Jain said, should either provide some guidance on such aspects or consider providing an exemption from GST on such recoveries.

He further said that it was not clear whether GST would be levied at 5 per cent(without input credit) as canteen shall apply on all such recoveries from employees or a residual rate of 18 per cent will be applicable, treating it as outdoor catering services.

Last week, the finance ministry had clarified that a 5 per cent GST will be levied on food and drinks supplied by the Indian Railways or IRCTC in trains, platforms or stations.

This was done to bring uniformity in the rate of GST applicable to supply of food and drinks made available in trains, platforms or stations.

AMRG & Associates Partner Rajat Mohan said this verdict would push up the cost of food for factory workers.

“Also if such decisions are pursued from July 2017, we could see considerable tax demands in corporate sector with matching interest and penalties,” Mohan said.

Source : http://www.zeebiz.com/india/news-there-are-no-free-lunches-under-the-gst-literally-here-is-why-42469

Union Minister Dharmendra Pradhan for inclusion of petroleum products in GST ambit

Amid an uproar over higher fuel rates, Union Petroleum Minister Dharmendra Pradhan today said the inclusion of petroleum products under the ambit of the Goods and Services Tax (GST) will bring the products under a rational tax mechanism.

Speaking to reporters at the Raipur airport this evening, he said the prices of petrol and diesel are linked with the international market and they fluctuate as per the global prices.
Amid an uproar over higher fuel rates, Union Petroleum Minister Dharmendra Pradhan today said the inclusion of petroleum products under the ambit of the Goods and Services Tax (GST) will bring the products under a rational tax mechanism. Speaking to reporters at the Raipur airport this evening, he said the prices of petrol and diesel are linked with the international market and they fluctuate as per the global prices.
Whenever there is hike in crude petroleum rates in the international market, it leads to an increase in fuel prices in the Indian market, Pradhan said while replying to a query on taxes and cess imposed on petrol and diesel.
Pradhan said his Ministry wanted the petroleum products to be included under the purview of GST and that several requests and suggestions have already been made to the GST Council.
The state governments are gradually making up their mind in this direction.
Pradhan said the states had an apprehension of losses earlier, but now that the GST is giving benefits, a consensus is building in this direction slowly.
“The inclusion of petroleum products under GST will bring it into a rational tax mechanism,” he added.
Reacting to Rahul Gandhi’s statement at a rally in poll-bound Karnataka, the union minister said it was very irresponsible act on the part of the Congress president.
“Gandhi has been speaking blatant lies in public forum and is spreading rumours under a conspiracy with an intention to create trouble in the society, which is not acceptable in democracy,” he said.
Quoting BJP president Amit Shah, Pradhan said the party is in favour of reservation and it will not let anyone to end the system.
He further said the BJP organisation in Odisha has become stronger and the way it is being strengthened, in the next elections the BJP will come to power in the eastern state.
“The political scenario is fast changing in Odisha and people are being attracted towards PM Narendra Modi and his policies,” he added.

AIOCD seeks GST guidelines on return of expired and non resaleable drugs

The All India Organisation of Chemists and Druggists Association (AIOCD), a representative body of 8.5 lakh chemists in the country, has urged the GST Council to come out with a clear policy framework on date expired, damaged and non resaleable drugs in Goods and Services Tax (GST).

AIOCD in a letter to Sushil Kumar Modi, deputy chairman, GST Council on March 31, 2018 highlighted difficulties faced in relation to expired goods of transitional stocks i.e. sold prior to June 30, 2017.

In pharmaceutical industry and trade, drugs normally have a shelf-life period of two-three years which are afterwards date expired and are returned by retailers and stockists to the manufacturers. The drugs are first returned by retailers to stockists and thereafter the stockists to manufacturers.

As per Section 142(1) of GST Act, any goods on which duty, if any, had been paid under the existing law at the time of removal thereof, not being earlier than six months prior to the appointed day, are returned to any place of business on or after the appointed day, the registered person shall be eligible for refund of the duty paid under the existing law where such goods are returned by a person, other than a registered person, to the said place of business within a period of six months from the appointed day and such goods are identifiable to the satisfaction of the proper officer.

Provided that if the said goods are returned by a registered person, the return of such goods shall be deemed to be a supply.

The aforesaid proviso establishes a deeming fiction that any return of transitional goods by a registered person shall be treated as supply. As per Section 31(1), for any taxable supply of goods, the supplier has to issue a tax invoice. Thus on a combined reading of Section 142(1) ans Section 31, the law mandates issue of tax invoice for return of those goods on which excise/VAT was paid prior to GST but which are returned after GST.

AIOCD in its recommendation to the GST Council stated that the expiry return/near expiry goods should be treated as a return of goods and not as supply. Thus such goods to be allowed to be returned without GST on the basis of delivery challan under Section 142(1). This will be in line with the earlier clarification issued.

The trade body also suggested that medicines not for human consumption such as expiry, leakage, breakages and notified as substandard, near expiry products need to be delcared as hazardous and a separate HSN code having nil tax be alloted to such products. Medicines should be allowed to be returned within 36 months, instead of 12 months (financial year) as specified in Section 34(2) of CGST Act.

Due to the ambiguity in the subject matter, there is hue and cry in pharmaceutical traders in the country. We have appealed to the GST Council to resolve the issue at the earliest, said AIOCD president J S Shinde.

A delegation of AIOCD led by Shinde and general secretary Rajiv Singhal among others called on Sushil Modi and Arun Mishra, member of GST Law Committee and discussed issue related to return of expired and damaged drugs post GST.

Source: http://www.pharmabiz.com/NewsDetails.aspx?aid=108202&sid=1

Tax department issues notices to realtors for inflated credit claims under GST

About 400 real estate developers, including listed companies, have received notices from the indirect tax department for inflated credit claims under the Goods and Services Tax (GST), said two people aware of the development.

The developers have been asked to pay a fine of 100% and interest of about 18% on the wrongly claimed credit, according to the notices. Many developers, especially those with a substantial presence in commercial property and retail malls, have been served with the notices, tax officials said.

“About 20 developers from Mumbai, including some of the listed players, have submitted input credit claims for raw material that had already been used when GST was rolled out. These companies will now face steep fines,” said a tax official.

The companies had claimed credit on input costs such as steel, cement and sand used for under-construction buildings to offset future GST liabilities, tax officials said. However, the indirect tax department claims that some developers also claimed credit in cases where buildings were already completed when GST was rolled out on July 1, 2017.

“A developer had already constructed 10 floors of a building on July 1, 2017. But while taking credit he claimed that only two floors had been constructed and availed of additional credit for eight floors,” said another person aware of the development. In this case, the tax department has disallowed credit of Rs 100 crore and demanded penalty of an equivalent amount.

Industry experts said the rules for availing tax credits are very transparent. Eligibility of input tax credits for real estate developers depends on whether the apartments are sold before receipt of occupation certificate and the proportion of activities completed in a project before and after July 1.

CBEC member holds meeting with exporters on GST refunds

At least ten export promotion councils and industry chambers on Friday discussed with the government solutions for expediting the process to clear pending dues to exporters on account of Goods and Services Tax (GST).

In a bid to expedite GST refund clearances to exporters, the Central Board of Excise and Customs (CBEC) took up issues like invoice mismatch and procedure to expedite shipments at Integrated Container Depots and asked the councils to share their issues.

“They want everyone to speak to members and know their issues,” said an industry representative who was present at the meeting.

The Centre and states have sanctioned more than Rs 10,000 crore as GST refunds to exporters.

Export promotion councils from engineering, chemical, pharmaceutical and leather sectors, among items took part in the meeting where initiatives under the ‘GST refund fortnight’ were discussed.

The CBEC field formations have launched ‘GST refund fortnight’ beginning March 15 in which tax officers are guiding exporters with their stuck refund.
GST was rolled out from July 1, 2017 but refunds to exporters have been delayed for over eight months. While exporters complain that delay in GST refunds has blocked their working capital, the revenue department has argued that there are discrepancies in forms submitted by exporters with the customs department and those with the GST Network (GSTN).

GST on tickets to amusement parks lowered to 18%

Tickets to amusement parks, including theme parks, water parks and merry-go-rounds, will have 18 per cent GST with effect from January 25, lower than 28 per cent earlier, the Finance Ministry said on Wednesday.

The ministry hoped that states through authorities, like panchayats and municipalities, would not increase the local taxes on entertainment and amusement and help keep the tax burden low.

“This will ensure that the rate cut in GST is passed on to the children and families,” it said.

The ministry said it received requests from several quarters that amusement parks promote social wellness and beget fun and learning for children and their families and, therefore, the rate should be reduced to 18 per cent.

“The GST Council had recommended reduction of GST rate on services by way of admission to amusement parks including theme parks, water parks, joy rides, merry-go-rounds, go- carting and ballet from 28 per cent to 18 per cent,” the ministry said in a statement.

It said the exemption threshold for admission tickets to circus, dance and theatrical performances has been doubled to Rs 500.
“From January 25, 2018, the admission tickets to circus, dance, theatrical performances including drama or dance, award functions, pageants, concerts, musical performances, recognised sporting events and planetarium up to Rs 500 per person have been exempted from GST. This measure is expected to promote such cultural and sports events in the country,” it said.
The GST Council has also hiked the monthly subscription threshold for deducting GST by resident welfare association (RWA) with turnover of over Rs 20 lakh with effect from January 25.
RWAs will now be required to pay GST on subscription/ contribution charged from its members if such payment is more than Rs 7,500 per month per member, as against Rs 5,000 per month per member earlier.

Further, if the aggregate turnover of such RWA is up to Rs 20 lakh in a financial year, then such supplies will be exempted from GST.
“Under GST, the tax burden on RWAs will be lower for the reason that they would now be entitled to Input Tax Credit (ITC) in respect of taxes paid by them on capital goods (generators, water pumps, lawn furniture), goods (taps, pipes, other sanitary/hardware fillings) and input services such as repair and maintenance services,” the ministry said.
ITC of central excise and VAT paid on goods and capital goods was not available in the pre-GST period and these were a cost to RWA, it added.

Source:https://economictimes.indiatimes.com/news/economy/policy/gst-on-tickets-to-amusement-parks-lowered-to-18/articleshow/62820480.cms