Skip navigation
All Places > Discuss > Current Issues > GST > Blog
1 2 3 4 Previous Next

GST

55 posts

Internal Auditor not to undertake Goods and Service Tax (GST) Audit simultaneously We have received enquiries from the members at large and other stakeholders as to whether an internal auditor of an entity can also undertake GST Audit of the same entity as required under the Central Goods and Service Act, 2017. The Council of the Institute, while considering the issue at its 378th Meeting held on 26th and 27th September, 2018, noted its earlier decision taken at its 281st Meeting held from 3rd to 5th October, 2008, that internal auditor of an assesee, whether working with the organization or independently practising Chartered Accountant being an individual chartered accountant or a firm of chartered accountants, cannot be appointed as his Tax auditor (under the Income Tax Act, 1961).

 

Upon consideration, the Council has decided that based on the conflict in roles as statutory and internal auditor simultaneously, the bar on internal auditor of an entity to accept tax audit (under Income Tax Act, 1961) will also be applicable to GST Audit (under the Central Goods and Service Act, 2017). Accordingly, it is clarified that an Internal Auditor of an entity cannot undertake GST Audit of the same entity.

 

enComply is a comprehensive tax automation platform and specialised GST Software for Enterprises on which the GST Returns, Reconciliation, invoicing and other GST applications can be processed. Visit: GST Software for Enterprises | GST Filing Software | GST Reconciliation | enComply  for more information.

The much awaited notification on STPI / EOU exemption from IGST on import of goods is released extending the benefit of exemption from Integrated Tax and Compensation Cess up to 31.03.2019 on goods imported by STPI/ EOU.  

 

You would recall that in October last year we had requested for this exemption which was allowed until 30 September 2018 (Notification No 78/ 2017 – Customs dated October 13, 2017). This came as a huge relief for EOU/ STPI units as till the issuance of the said notification, imports of capital goods attracted IGST and no refund was eligible of the said duties, thereby increasing the cost of doing business. 

 

Over the last few months NASSCOM has been asking for an extension of this exemption and had very recently represented the matter with the GST council secretariat and concerned CBIC officials. We are glad that our recommendations are considered and the exemption is now available till March 31, 2019.

 

 

51/2018-Central Tax ,dt. 13-09-2018

Seeks to bring section 52 of the CGST Act (provisions related to TCS) into force w.e.f 01.10.2018

50/2018-Central Tax ,dt. 13-09-2018

Seeks to bring section 51 of the CGST Act (provisions related to TDS) into force w.e.f 01.10.2018

49/2018-Central Tax ,dt. 13-09-2018

Notification amending the CGST Rules, 2017 (Tenth Amendment Rules, 2018)

FORM GSTR-9C

 

Glad to share that the much needed definition of ‘adjusted total turnover’ relevant for determination of refund eligible has been amended vide Notification No. 39/2018. Basis the concerns raised by many members NASSCOM has been requesting for this amendment for quite some time now and have had series of engagements with the GST council secretariat and concerned officials. We are glad that our recommendations are considered.

 

The amendment puts to rest the anomaly in the mechanism of determination of zero rated supplies vis-à-vis adjusted total turnover for refund purposes.  The formula was inconsistent in that it considered realisation for the purpose of determination of export turnover but total turnover was based on discloses made in the returns (i.e. as per billings).  A copy of the notification is attached to this mail for your reference.

 

Several other issues raised by NASSCOM are being addressed as part of the Notification 39 and circular 59 attached herewith. Summary of these issues is provided below.

 

  • Submission of invoices: Refund claims to be accompanied by print out of GSTR-2A.  Hard copies of invoices may be called for if required in case of details not appearing GSTR-2A.  Proper office should not insist of copies of invoices appearing in GSTR-2A. Further the Applicant to submit details of input invoices in format provided with declaration on eligibility of credit.

 

  • Clarification on scope of Rule 96(10): Restriction under rule 96(10) of the CGST Rules, applies only to those purchasers/importers who are directly purchasing/importing supplies on which the benefit of certain notifications, as specified in the said sub-rule, has been availed

 

  • Disbursal of refund amount after sanction: If any discrepancy is noticed by the disbursing authority, the same should be brought to the notice of the counterpart refund sanctioning authority, the concerned counterpart reviewing authority and the nodal officer, but the disbursal of the refund should not be withheld

 

  • System validation in calculating refund: Least of refund due, credit balance at end of tax period in which refund is filed and credit balance at the time of filing the refund application

 

  • Re-credit of rejected refund amount: Proper officer shall order for the rejected amount to be re-credited to the electronic credit ledger of the claimant using FORM GST RFD-01B

 

  • Status of refund claim after deficiency memo: Show-cause-notices are not required to be issued where deficiency memos have been issued. A refund application which is re-submitted after the issuance of a deficiency memo shall have to be treated as a fresh application.

 

Please feel free to share your feedback if any.

The Finance bills have been passed by the Lok Sabha proposing amendments in the GST laws and are pending President’s assent.  Please find below the key amendments relevant to the Technology sector which were raised by NASSCOM as part of our engagements with the Government on proposed amendments. The bills passed are attached herewith for your reference.

 

  • SEZ Registration - An amendment by way of insertion of proviso in Section 25(1) is proposed.  This proviso allows SEZ units to obtain a registration separate from other DTA units in the same State/ UT.  It may be recalled that the GST amendment proposals published on the CBIC website contained another proviso which had an inference of separate registration for each SEZ unit in a state without any option to do otherwise.  NASSCOM raised the issue requesting that it should come through as an option and we are glad it has been accepted.

 

  • Issuance of consolidated credit notes – An amendment to Section 34 of the CGST Act is proposed to provide option to the supplier to issue consolidated credit notes for multiple invoices. 

 

  • Rectification of returns - Section 39(9) of the CGST Act to be amended to provide for rectification of omission in a return.  

 

  • Credit in respect of KKC - Amendment to Section 140(1) of the CGST Act with retrospective effect from July 1, 2017.  As a result, closing balance of KKC as on June 30, 2017 will not qualify as “eligible credit” for transition into GST. 

 

  • High sea sales and bonded warehouse sales - Schedule III (Activities to be neither treated as supply of goods or services) is proposed to be amended to include within its purview, the high sea sales and bonded warehouse sales.  As a result such transactions will not qualify as “exempt” supplies and no reversal of input tax credit is therefore required. 

 

Addressing an important request from NASSCOM and the technology industry, the GST portal has recently allowed companies to file consolidated refund claims for multiple tax period instead on monthly refund claim.  You would recall that through a circular (37/11/2018 – GST dated March 15, 2018),  it was clarified that an exporter, at his option, may file refund claims for one calendar month/ quarter or by clubbing successive calendar months/ quarters. However this functionality was not enabled in the GSTIN portal. The GSTIN portal has now been enabled filing of GST refund clubbing multiple months/quarter in a financial year. The screen shot of the same is provided below:

 

 

Further, an advisory has been uploaded on the GST portal providing important clarifications. Please access the same here: https://www.gst.gov.in/newsandupdates/read/228. Do share your feedback if any.

Please find attached the Report of the Parliamentary Standing Committee on Exports covering the impact of GST on exports. You would recall that NASSCOM had represented to the committee in November 2017 highlighting key issues of the technology industry. Some of the observations of the committee are welcome and we will continue to engage with them for further deliberations and consultations.

 

This is a follow-up report to the earlier report (139th report) issued in December 2017. Some of the key aspects covered in the report are summarised below. 

 

  • Delays in granting of refunds -  Committee has expressed its displeasure in the delays in sanctioning of refunds although the time frame provided under the Act is 60 days.  The Committee also hopes that a semi-automatic system currently in place be replaced by a completely automatic system with no human interference. 

 

  • Supplies to SEZ/ EOUs -  Committee has noted that all supplies to an SEZ unit are required to be made in foreign currency under the IGST Act.  Earlier, SEZ units were not required to pay in foreign exchange for all supplies.  It was only in case of services.  However, now this requirement has been extended to goods as well.  This issue has been referred to the TRU, Dept. of Commerce, Ministry of Finance and a favourable consideration is expected. 

 

  • Refund of credit in respect of capital goods - Committee has noted that a temporary relief has been given to exporters till March 2018 (it is now actually upto September 30, 2018).  However, this does not solve the problem of non-refund of IGST on capital goods imported post this period.  The Committee has reiterated that there must a permanent solution to this problem. 

 

However, no action is proposed in view of the fact that this the same treatment that was in existence in the pre-GST regime also.  Further, that the rebate mechanism would enable liquidation of such credits.  Also that the proposed e-wallet scheme would help address this issue. 

 

  • HO-BO transactions -  On the aspect of export of services, the Committee has recognised the need for Section 2(6), ie, the definition of “export of services” to be revisited in order to keep transactions between HO-BO outside its ambit.  The issue and response captured in the report are extracted below. 

 

“2.47 The Committee desires that the Government may revisit section 2(6) of the IGST Act and ensure that such transactions between Head office and its branches may be kept outside of its ambit. 

 

2.48 Head office and branch office being two distinct taxable entities, [Under section 8 of IGST Act, establishment of a person in India and another establishment of the said person outside India, are establishments of distinct persons] transaction between them would be leviable to tax.  However, GST is leviable on a supply and/ or services and not on mere transactions.  If overseas Branch Office of an Indian entity provides services to Head office in India, it will be taxable but if the Branch Office merely remits money or profits to Head office for service provided by Branch office or Head office to a third party located overseas, it will not be taxable.  Taxability would depend on the terms of contract, agreement, working arrangement between the Branch Office and Head Office.”

 

Do share your views and comments on observations listed above and any other observations which you may want to share.

Despite one year having passed since the implementation of GST, some people are still confused as to what it is and what its purpose is. So here are a few things about GST that everyone should know about:

1) What is GST?

The GST is a single indirect tax that has replaced most of the indirect taxes that were prevalent in our country before July 2017. It has paved the way for a pan-Indian comprehensive system.

What GST has made possible is that there will only be a single tax applicable on the supply of goods and services, from the manufacturer to the consumer.

2) When is GST levied?

One of the most important aspects of GST is the point of the levy. Under GST laws, the point of the tax levy is ‘supply’. Supply here means the sale of goods and services. It has to be kept in mind, however, is that supply of goods and services can also take place without any actual sale occurring. Thus, supply may also include transfer, barter, rent, exchange, lease or even a supply made to a branch or an agent.

Therefore, a business will have to pay GST on supply. It will no longer have pay taxes on purchases.

3) Which Central and State Taxes have been subsumed under GST?

Central taxes that have been subsumed by GST include:

• Service Tax

• Duties of Excise

• Central Excise Duty

• Additional Excise Duties

• Additional Duties of Customs

• Central Surcharges and Cesses related to the supply of goods and services

The State taxes that have been subsumed under GST are:

• Luxury Tax

• Entertainment Tax (not for local bodies)

• VAT/ Sales Tax

• Taxes on gambling, betting and lottery

• Entry tax not in lieu of Octroi

• State cesses and surcharges related to the supply of goods and services

 

4) What are the types of GST?

GST is referred to as a destination-based tax. This is because GST is levied at the place where the supply of goods/services is done and not at the place of origin. Supplies can be done within a particular state (intra-state) and within two different states (interstate).

SGST or State GST is one of the two taxes levied on all intrastate transaction of goods and services. SGST replaced all other state taxes.

CGST or Central GST is the tax that is levied by the Central Government on transactions taking place within a state. It has replaced all the central taxes that were prevalent.

IGST or Integrated GST is applicable on the inter-state transaction of goods and services and on imports. This tax is collected by the Central Government and later given to the states.

Finally, there is UTGST or Union Territory Goods and Services Tax and it is applicable on the supply of goods and services in the Union Territories of India, including Andaman and Nicobar Islands, Dadra and Nagar Haveli and the Lakshadweep Islands.

5) What are different tax slabs in GST?

At present, there are eight tax slabs in GST- 0, 0.l, 0.25, 3, 5, 12, 18, 28. Discussions have been going regarding decreasing the number of slabs.

6) Which items have been kept outside the purview of the GST?

Petrol, diesel, natural gas, jet fuel and crude oil are currently outside the purview of GST. Alcohol for human consumption is also outside GST. However, it is taxed under the state taxes, as was the case before the implementation of GST.

#GSTReturnfilingServices #GSTServices #GSTR1Filing #GST2AReconciliation #GSTReconciliation #GSTR3B gstmanagedservices

[To be published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection(i)]

Government of India

Ministry of Finance Department of Revenue

Central Board of Indirect Taxes and Customs

Notification No. 30/2018 – Central Tax

                                                                                                           New Delhi, the 30th July, 2018

G.S.R....(E).- In exercise of the powers conferred by sub-section (6) of section 39 read with section 168 of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereinafter referred to as the said Act) and in supersession of notification No. 25/2018-Central Tax, dated the 31st May, 2018, published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i), vide number G.S.R. 517 (E), dated the 31st May, 2018, except as respects things done or omitted to be done before such supersession, the Commissioner hereby extends the time limit for furnishing the return by an Input Service Distributor in FORM GSTR-6 under sub-section (4) of section 39 of the said Act read with rule 65 of the Central Goods and Services Tax Rules, 2017, for the months of July, 2017 to August, 2018 till the 30th day of September, 2018.

[F. No.349/58/2017-GST(Pt.)]

(Dr. Sreeparvathy S.L.)

Under Secretary to the Government of India

Further to the concern expressed by many of our members regarding input tax distribution (ISD) registrations and returns, we had requested the GST council for an extension of due date for filing ISD returns.

 

Please find attached the notification with extended timelines.

 

While this should offer interim relief, we will continue to engage with the Government in resolving key issues on ISD registration for a long term resolution.

 

This is in reference to a recent press release by Ministry of Finance on postponement of TDS and TCS provisions under GST.  This confirms several news reports published in the last week where officials had confirmed that the provisions would not come into effect July 1, 2018 as was proposed.

 

The press release confirms that the applicability of TCS stands postponed until September 30, 2018.

 

You would recall that NASSCOM had advocated on this aspect and had urged the Council to postpone enactment of the TDS and TCS provisions as the Industry is still grappling with the sea of changes that the general compliances GST has brought about. NASSCOM urged that the postponement was also required given that the return mechanism is expected to undergo an overhaul in the upcoming Council meeting. 

 

While this should offer an interim relief, we will continue to engage with Government towards a long term resolution.

The classification scheme applicable for services under GST as available on the CBIC website is being relied upon by companies for determination of GST rates in the various rates notifications. This classification scheme released is based on the National Product Classification for Services sector pertaining to National Statistical Organisation which in turn is based on the Central Product Classification (“CPC”) of the United Nations (“UN”) adopted in India.

 

The CPC of the UN contains explanatory notes which aid in determination of appropriate classification of services. However, no such guidelines were prescribed under GST leading to confusion in case of classification of certain services. NASSCOM had asked for detailed explanatory notes so as to avoid ambiguities.

 

CBIC has now issued the attached explanatory notes in relation to the scheme of classification of services under the GST regime. The said explanatory notes are modified version of United Nations Central Product Classification.   This would be a useful guide towards ascertaining the correct classification/sub-classification of services, where there is no clarity based on reading of the heading. 

The Chief Commissioner of Central tax, central Excise and custom have recently announced to initiate a special drive for GST refunds from 31st May to 14 June. It will be the second phase of GST refunds after a successful special drive for export return between March 15 to March 30 where the Central Board of indirect taxes and Customs (CBITC) have refunded a total of INR 17616 crore. Out of which, 9604 crore was integrated GST refunds, 5510 crore was ITC refund by the centre and 2502 crore was ITC refund by State. Under this second phase of GST refund, special camps will be organized on June 4 and June 8 in order to settle any refund cases of IGST, SGST, CGST, ITC, excess tax payment, etc. As reported by Indian Express, the Central Bureau of indirect taxes and Customs has sanctioned the GST refund of Rs. 2500 crores which is about 18% of the total pending amount by June 7 2018. Read More

The Government has come up with second phase of fast track clearance drive in respect of GST refunds.  The drive is proposed to start from May 31 till June 14 and in respect of refund claims filed prior to April 30, 2018.  The said drive would be applicable for all GST refunds.

 

Please feel free to write to us at policyquery@nasscom.in

 

Please find attached a recent circular issued by the CBIC regarding setting up of a IT grievance redressal mechanism for glitches experienced on the GSTN portal.   You would recall that NASSCOM had shared concerns pertaining to the technical glitches on GSTN and the resultant inability of companies to file TRAN 1 under the stipulated time frame. The circular seems to have addressed some of the concerns and even allows filing of TRAN 1 till May 2018 in certain specific cases.

 

Key important points emerging from the circular are as below:

 

  • Facility of filing of TRAN-1 shall be made available to those who could not file TRAN-1 earlier on the basis of electronic audit trail, no extension of date of filing, facility to be re-opened up to May 31, 2018 in specific cases. 
  • Issues to be addressed shall be identified by the GSTN, method of resolution shall be approved by the GST Implementation Committee (GIC) acting as the IT Grievance Redressal Committee;
  • Nodal officers to be appointed to address issues, taxpayers to make applications to filed officers or nodal officers where a glitch is experienced and the due process envisaged in law could not be completed;
  • Fine/ penalty to be waived where IT related glitch is identified as reason for failure in filing a return or form;

 

Please keep us updated on your feedback and experienced as we continue to engage with the GST council secretariat to raise key sector issues.