Tag: GST

Categories
News

The Centre released the 17tth Installment of GST Compensation: What it means for States & UTs?

gst
GST

The 17th weekly installment of INR 5,000crore has been released by the Centre on 19 February 2021 to the states to meet the shortfall of Goods & Services Tax (GST).

Previously, the installment of ₹6,000crores was released on 15 February 2021 on Monday. A large amount of financial aid has been borrowed by the states this week at an interest rate of 5.5924%.

According to the latest press release by the department of expenditure of the Finance Ministry an amount of total amount ₹4,730.41crores has been released to 23 states.

The three union territories with the Legislative Assembly (Delhi, J&K, and Puducherry) who are the members of the GST council also received the amount of ₹269.59crores, the statement read.

The remaining five states Manipur, Arunachal Pradesh, Nagaland, Sikkim, and Mizoram do not have a gap in revenue on account of GST Implementation.

In October 2020, the Centre established a special borrowing window to meet the estimated shortfall of ₹1.10 lakh crores in the revenue due to the implementation of GST. The government has also granted the additional borrowing permission equivalent to 0.50% of Gross States Domestic Product.  In addition to this special window, the Centre has also provided funds through the special window to meet the shortfall.

“All the states have given their preference for Option-I. Permission for borrowing the entire additional amount of ₹1, 06,830 crores (0.50% of GSDP) has been granted to 28 states under this provision,” the Finance Ministry said.

Categories
Finance

Mandatory 1% Cash Payment of GST Liability will Reduce Fake Invoicing & Tax Evasion

good and service tax
GST (Photo Credits: Wikimedia Commons)

To curb the menace of fake invoicing, the Central Board of Indirect Taxes and Customs has amended the GST rule. According to the new GST amendment, the taxpayers now will be required to pay 1% of GST liability in cash with effect from January 1, 2021.

This rule applies to registered taxpayers whose taxable income, other than exempt supply and export is more than Rs 50 lakh, monthly or the annual turnover is more than 6 crore. The rule, however, is not applicable in the cases where the registered person has deposited income tax more than Rs 1 Lakh in each of the last two years.

 

Also, the registered users who have received a fund of more than Rs 1 Lakh in the preceding FY on account of the export or inverted tax structure, are out of the purview of this rule. If the registered person belongs to a government body, PSU, from a local authority or any statutory body the rule will not apply to him/her. Small businesses including MSMEs and composition dealers are also exempted from the new rule.

 

Registered users who have paid output tax through cash over 1% of the total output tax liability, will be exempted from paying 1% of GST liability in cash. The mandatory requirement of 1% cash payment of GST liability will be applied to about 45,000 taxpayers, which only constitutes 0.37% of the total businesses registered in the Goods & Services Tax System.

 

The provision is meant to bring fraudsters or suspicious dealers who use a lot of fake credit to evade tax and make no cash payment under control. It would neither affect any genuine business dealer nor it will affect ‘ease of doing business’ in any manner. The new rule also restricts the use of Input Tax Credit for discharging GST liability to 99 percent.

Categories
Business motivation

GST Portal: Know Everything About GST Portal, Registration Process, And Documents Required

Goods And Services Tax (GST) was introduced back in 2017 and has now emerged as one of the biggest tax reforms ever. This tag of the biggest tax reform ever has been rightfully earned by GST as this has not only reduced the overall cost of goods and services but also has saved businesses a lot of complications with the whole process of filing returns for getting the registration done in the first place. 

This article is entirely dedicated to the GST portal that the government introduced to uncomplicate the process with great help from technology. 

What Is The Process To Register For GST?

  • The very first step is to open the GST portal and then clicking on Services. After that select “registration” to finally get your hands on new registration.
  • You will now be asked to fill in the details in PART A. These details are
  1. In the drop-down under ‘I am a’ – select Taxpayer
  2. Select State and District from the drop-down
  3. Enter the Name of Business and PAN of the business
  4. Key in the Email Address and Mobile Number. The registered email id and mobile number will receive the OTPs.
  5. Click on Proceed
  • On both your email address and mobile number, you will receive OTPs. You will have to submit these necessary OTPs in order to process further
  • You will now receive TRN (temporary reference number) on again both your email address and phone number. Save this reference number for the later formalities. You will also see the next part of the details to fill in the form of PART-B for which you will have the next 15 days.
  • Now go to the GST portal, again and again, select the new registration option where you will be asked to submit the TRN. Submit the number and click on proceed.
  • At this point you will receive an OTP both on your email address and mobile number. Submit the OTP to go further. After this, the current status of your application will be shown as a draft. On the right-hand side, you will see the edit icon, click on that to proceed further to complete the PART B details.
  • You will be asked to provide the necessary documents. To make sure the process goes smoothly and conveniently. Please have these things ready
  1. Photographs
  2. Constitution of the taxpayer
  3. Proof for the place of business
  4. Bank account details*
  5. Verification and Aadhaar authentication, if chosen
  • Once all details are provided, please go to the verification option. Tick on the declaration and submit the application.
  • If all things have been done successfully, a message will be displayed thereafter showing that the application has been submitted successfully and you will receive the Application Reference Number on your email and mobile.
Documents Required

Additionally, ensure that before you enroll on the GST portal, you have the following information with you:

  • Provisional ID and Password received from VAT authority
  • Valid email address
  • Valid Mobile Number
  • Bank Account Number
  • Bank IFSC code
  • Proof of Registration of Business (Shop Establishment Certificate in case of Proprietorship, Partnership Deed in case of Companies and Memorandum of Association for Companies)

The GST is now a very integral part of the Indian Taxation system as GST is paid by anyone and everyone who is an eligible taxpayer and a citizen of India. If you have still not registered for GST, we hope the process that we have shared with you made things a bit easy in terms of overall understanding and execution.

Categories
Business motivation

How To Let Goods And Services Tax Play To Its Strength To Support And Grow Your Business

goods and service tax

The moment Goods And Services Tax was introduced back in 2017, it was met with mixed reaction from the nation. GST made some huge changes in the form of removal of VAT, excise, and service tax by absorbing them all in it and bringing down the overall cost of goods and services of a product. We all know nothing great has been ever achieved without a few challenges here and there and the same happened with GST reform as well.

Nonetheless, gradually GST has proven its mettle and convinced all of us that it is doing way more good than causing incontinence. In this article, we will be discussing the various benefits GST offers that can end up being in the favour of your business.

Convenience With Filing Returns

Earlier businesses, especially businesses that belonged to the MSME sector, used to face a lot of difficulty in tracking the number of taxes there were back such as excise duty, VAT, purchase tax, luxury tax, etc. Things were so complicated that a normal businessman without great knowledge in this domain would end struggling and hire an expert to crunch those numbers. Since GST has been introduced, filing returns has become easier than ever as businesses now have to take care of just 1 tax that has subsumed all other taxes. 

Shipping Made Super Easy

With so many tax checks and different kinds of taxes, while shipping goods from one place to another, the process was extremely inefficient as it would increase the cost of transportation in terms of fuel and time.  The process was made much easier when the government removed the border checkpoints from the process when GST was introduced. Now with GST, the shipping has not only been made efficient but has been made less time consuming than ever.

Canopy Of Technology

There is a reason why technology is said to your best friend these days. With the help and backing of technology, many businesses are now getting to enjoy a much more convenient way to deal with their taxes. Yes, we are talking about the GST online portal. This online portal has made the process extremely easy where you are just required to get GSTIN to pay your taxes every month. Also, you need not worry about keeping all the paperwork safe, because it is automatically getting saved for you in your personal account. Amazing, isn’t it?

Put An End On Cascading Tax Effect

The Biggest relief and joy GST has brought into the lives of business owners and consumers is the elimination of the cascading Tax Effect. Cascading tax effect is the concept where good is taxed on each and every step of its creation which sums up to be a huge amount of burden, which the consumer bears in the end. GST put an end to this by introducing Input Tax Credit. ITC allows you to subtract the GST you paid to your vendors from the amount you owe to the government.

Sure, the GST might take you a bit to get familiar with, as it involves a great deal of technology and digitization, you will only thank the government later to have introduced this in the first place. 

Categories
Business motivation

GST: Types Of Goods And Services Tax And Different GST Rates Across The Nation

In the simplest of words, GST can be defined as the value-added tax that is levied on the goods as well as services which are sold indigenously. GST is the expense that is taken care of by the end consumer and is ultimately remitted to the government by the businesses that sold the goods to the end consumers.

Now, there are basically 4 kinds of GST which we are listing below

  • The Central Goods and Services Tax (CGST)
  • The State Goods and Services Tax (SGST)
  • The Union Territory Goods and Services Tax (UTGST)
  • The Integrated Goods and Services Tax (IGST)

Central Goods And Services Tax (CGST)

CGST is the tax that is levied by the central government on the transactions of Goods And Services that take place within the same starters, which is Intrastate transactions. The Tax is levied along with the other two taxes known as SGST. Please note that the revenue that is collected in the form of GST on intrastate transactions is shared equally between the state government and the central government. 

State Goods And Services Tax (SGST)

Let’s now try and understand what SGST is. SGST is the tax levied by the state government over the transaction of the goods that are manufactured and sold within the same state. This Tax is levied along with CGST.

Union Territory Goods and Services Tax (UTGST)

UGST could be defined the same way as SGST, only it is applicable in the union territories. The only aim to introduce Union Territory tax is to provide the same benefits to all the businesses in a union territory that a business would enjoy in any state. The UTGST is applicable to five Union Territories namely Lakshadweep, Daman and Diu, Dadra and Nagar Haveli, Andaman and Nicobar Islands, and Chandigarh.

Integrated Goods and Services Tax (IGST)

Now, this one is a bit different from others as it deals with the transaction of goods and services between two states. If any good or service is transacted from one state to another, there is a tax that will be levied on those transactions and it is called the Integrated Goods and Services Tax. IGST is also applied to goods and services that are imported and then distributed among various states.

Rates Of GST

There is a slab proposed by the government which is divided into 4 categories of GST rates applied to various kinds of goods and services. The rates are 5%, 12%, 18%, and 28%.

  • 5% GST is for the goods that are included are the day-to-day household items like kitchen essentials such as sugar, spices, tea, coffee, edible oil, etc.
  • 12% GST would be applied to goods such as computers and processed foods are included like cheese, ghee, ayurvedic medicines, cell phones, and fertilizers, etc. Services like work contracts, business-class air tickets
  • 18% GST will be applied to products like jams, sauces, soups, ice cream, instant food mixes, mineral water, tissues, envelopes, tampons, notebook, steel products, printed circuits, camera, etc.
  • 28% of GST will be applied to various luxurious items.

It is important for each and everyone, be it a consumer or a businessman, to understand the concept of GST inside out in order to make the entire process more convenient with everybody being on the same page. We hope this article was of some help to enhance your information on various kinds of GST and the different rates that vary with the category. 

Categories
Business motivation

GST: What Is Goods And Services Tax And What Are The Benefits It Offers?

The change that is now recognized as one of the biggest reforms made in India that changed the entire game of how and what taxes are paid. Yes, We are talking about GST, goods and services tax, that includes many indirect taxes which were imposed by the central government such as excise, VAT, and service tax. GST has helped the MSME sector a lot by simplifying the process of filing returns, hence, decreasing their dependence on the experts who used to help them earlier with filing their taxes.

Components of GST
  • State Goods and Services Tax (SGST): Tax levied by the State Government
  • Central Goods and Services Tax (CGST): Tax collected by the central government
  • Integrated Goods and Services Tax (IGST): Tax applicable on inter-State supply of goods and services by the central government

There are many such benefits and advantages that GST offers, and anybody who is an aware and responsible citizen of India should know about it as it affects not only the entrepreneurs but the customer as well. Some of the main benefits are

Technical Advantage It Offers

The best thing about the introduction of GST is the technology that is involved in the process which is playing to its strengths. It is now way easier to register and to file the returns. There is an online GST portal that will help you with

  • Registration
  • Return filing
  • Application for refund
  • Response to notices
  • Consumer grievances

Uniformity In Taxes

Earlier, when GST was not in existence, there were several other taxes that unintentionally increased the cost of goods and services. However, GST has not absorbed all these taxes such as VAT, Excise, and service tax to rescue the cascading effect they had on the entire process. GST has brought that uniformity that much required and has ultimately resulted in the reduction of the total cost.

The Composition Scheme

GST offers a composition scheme under which small businesses that have a turnover of up to 75 lakhs can benefit by lowering their taxes by making the required changes. This has helped so many businesses with the unnecessary burden of tax and compliance.

Higher Threshold

According to this very beneficial reform, businesses that have a turnover of up to Rs. 20 Lakhs will be exempted from paying the GST. Earlier, with VAT, businesses that had a turnover of more than Rs 5 lakhs had to pay this tax. This change is speaking for the evident relaxation that has been provided to small businesses.

These are only a few of the many changes that were brought into existence to ease up the burden on the needy and to bring transparency in the whole system, Sure, which reform of this magnitude, there were some difficulties that were introduced, but the number and magnitude of the positives it brought can any day overweight the negatives.

 

Categories
Finance

GST: Businesses Not Ready With E-invoicing Will Get 30-Day Grace Period, Here’s How E-Invoicing Will Lead to Improvement in Overall Business Efficiency

good and service tax
GST (Photo Credits: Wikimedia Commons)

Mumbai, October 1: The Central Board of Indirect Taxes and Customs (CBIC) on Wednesday announced a 30 day grace period for those businesses which are not yet ready for GST e-invoicing.

In a notification on Wednesday evening, CBIC noted that even after more than nine months of the first notification in this regard, some of these taxpayers having aggregate turnover of Rs 500 crore and above are still not ready.

According to an IANS update, the notification said, “In case a registered person has issued an invoice dated October 3, 2020, without obtaining IRNA but reports the details of such invoice to IRP and obtains the IRN of the invoice on or before 2nd November 2020 then it shall be deemed that the provisions of rule 48 (5) of the CGST Rules, 2017 are complied with and the penalty imposable under section 122 of the CGST Act, 2017 shall also stand waived.”

E-invoicing essentially involves reporting details of specified GST documents to a government-notified portal and obtaining a reference number. According to reports, the corporates, experts had strongly advocated postponement.

How will e-invoicing help?

Use of e-invoicing will make filing the returns easier as all the information will be auto-populated. It will also facilitate standardisation and inter-operability, leading to reduction of disputes among transacting parties. There will also be an improvement of payment cycles, and reduction of processing costs, which will lead to the improvement in the overall business efficiency.

Categories
Finance

GST Council Meet: Compensation Gap Stands at Rs 2.35 Lakh Crore for FY 2020-21 Amid COVID-19 Pandemic, Centre Places 2 Options Before States

41st GST council meeting. (Photo Credit: PIB)
41st GST council meeting. (Photo Credit: PIB)

New Delhi, August 27: Union Finance Minister Nirmala Sitharaman on Thursday chaired the 41st Goods and Services Tax Council Meeting. During the meeting, the council estimated the compensation gap at around Rs 2.35 lakh crore in GST collections due to COVID-19 pandemic.

Addressing the press conference, Revenue Secretary Ajay Bhushan Pandey stated that the total shortfall in collection of GST is estimated at Rs 2.35 lakh crore, out of which Rs 97,000 crore is on account of GST shortfall while the rest is due to COVID-19 pandemic.

Following this, the Union Finance Ministry gave the states seven days time to get back on filling the compensation gap of Rs 2.35 lakh crore and hinted brief GST Council meeting soon. The Union Ministry also gave two options for states to fill the compensation gap.

The first includes a special window which can be provided to the states, in consultation with the Reserve Bank of India, at a reasonable interest rate for the borrowing of Rs 97,000 crore. The amount can be repaid after five years (of GST implementation) ending 2022 from cess collection. While the second option is to borrow the entire Rs 2.35 lakh crore shortfall under the special window.

Apart from this, the Union Ministry stated that it will provide a further relaxation of 0.5 per cent in states’ borrowing limit under Fiscal Responsibility and Budget Management Act, 2003 (FRBM Act, 2003). With this, states can choose to borrow more, beyond the expected compensation itself, since that is the injury caused by COVID-19.

Among other details, Union FM Revenue Secretary said that there was hardly any GST Collection in April and May. Adding more, he said, “Total GST compensation during April-July 2020 to be paid is Rs 1.5 lakh crores.” The Union Ministry informed that Centre released more than Rs 1.65 lakh crore as GST compensation to states for FY 2019-20, including Rs 13,806 crore for March.

Categories
Finance

Delayed GST Payment: Govt Changes Interest Liability Rules, Interest to Be Charged on Net Tax Liability From September 1, 2020

GST Payment (Photo Credits: Unsplash)

New Delhi, August 26: The government on Wednesday changed the interest liability rules and said that the interest on delayed payment of Goods and Services Tax (GST) will be charged on net tax liability with effect from September 1. Reports inform that the industry had earlier this year raised concern over the directive of recovery of about Rs 46,000 crore of unpaid interest on delayed GST payment. The interest was charged on gross tax liability.

It was in March that the GST Council, which comprises of centre and state finance ministers, had decided in its 39th meeting that interest for delay in payment of GST to be charged on net tax liability with effect from July 1, 2017, and law would be amended retrospectively. However, on August 25, the Central Board of Indirect Taxes and Customs (CBIC) notified September 1, 2020, as the date from which interest would be charged on net tax liability.

Earlier, the CBIC had said that GST law permits interest calculation on delayed GST payment on the basis of gross tax liability. This position has been upheld in the Telangana High Court’s decision dated April 18, 2019. It must be noted that the net GST liability is arrived at after deducting input tax credit from gross GST liability. Therefore, calculating interest on gross GST liability increases the payout burden on businesses.

According to AMRG & Associates Senior Partner Rajat Mohan, this notification seems to be in disconnect with decisions of GST Council wherein it was assured to the taxpayers that the said benefit would be available retrospectively from July 1, 2017. “Prospective availability of this benefit would mean that millions of taxpayers may be looking at demand of interest for over 3 years from the date of GST implementation. Businesses are expected to approach the High Courts again on this unjustified and illegal demand of interest basis the ”principle of estoppel”, Mohan said.

Businesses, which are other than those under the composition scheme and quarterly return filers, registered under goods and services tax (GST) have to file returns (GSTR-1). They have to show tax liability by 11th of following month and pay taxes by filing GSTR-3B between 20-24 (due date varies according to the state in which businesses are registered). There have been cases where GST assessees have paid taxes after due date but did not pay the interest due on account of delayed payment.

Categories
Technology

Aadhaar Authentication to Help Businesses Get GST Registration Within 3 Days

Aadhaar For All (Photo Credits: Facebook)

In what is believed to be a major boost for businesses in India, the businesses that provide Aadhaar number while applying for registration under the Goods and Services Tax (GST) will get the approval in three working days. Last week, the Central Board of Indirect Taxes and Customs (CBIC) had notified Aadhaar authentication for GST registration with effect from August 21, 2020. The notification also provides that in case businesses do not provide Aadhaar number, then GST registration would be granted only after physical verification of the place of business.

Sources believe that the Aadhaar authentication is expected to facilitate genuine and honest taxpayers while at the same time keeping fake and fraudulent entities away from GST.

Two important things to know:

  1. For a person opting for Aadhaar authentication for new GST registration would get it within just three working days, if no notice is issued and would not need to wait for physical verification.
  2. While applicants not opting for Aadhaar authentication for GST registration would be granted it only after physical verification of the place of business or documentary verification which may take up to 21 working days or more if notice is issued, sources said.

According to a report by PTI, sources of the Finance Ministry said the GST Council in its 39th meeting held on March 14, 2020, had approved operationalisation of Aadhaar authentication for new taxpayers. However, its implementation was postponed due to the lockdown on account of COVID-19 pandemic.

Sources further said that keeping the COVID-19 pandemic in view, it has been provided that the officer may, if the circumstances warrant, opt for asking for additional documents in lieu of the pre-registration for physical verification of the premises.