Dr. Sanjiv Agarwal, FCA, FCS
The Union Budget 2019-20 shall be presented in Parliament on 5th July, 2019. With new Government at the centre with full five years at its disposal, expectations are running high from the new Finance Minister. Tax payers expect slashing of tax rates, removal of surcharge, some tax sops for individuals and corporates etc. Digital payments could be incentivized. So far as indirect taxes are concerned, we don’t expect much to happen as GST Council is seized of many matters and changes if any, in GST laws may be made not though the Finance Act, 2019 but by separate amendment Bills, once approved by the GST Council.
GST Council has already proposed new return forms which shall be rolled out from January 1, 2020 but pilot testing will start now. The GST Council took some important decisions in 35th Council meeting held on 21st June, 2019 including e-invoicing, extension of due dates for returns including ones extension of tenure of National Anti-profiteering Authority etc. Some clarifications on refunds and taxability of post supply discounts etc have also been issued, besides amendments in GST rules.
GST implementation has completed two years on 1st July, 2019. As we enter the third year of GST in India, the emphasis is now more on simplification of the processes and checking tax evasion which would eventually lead to better and effective compliances. During last two years, GST law has seen major revamp and transformation with flood of Circulars and Notifications. This only indicates that Government has responded proactively to the issues raised.
Once the GST, which is two years old settles down, albeit slowly, one nation, one tax may become a reality in true sense. The focus should be now on convergence of rates and rationalization of returns alongwith plugging technological hiccups. 1st July is also being celebrated by all across the country as ‘GST day’ as GST was introduced in India w.e.f. mid night of 30th June – 1st July, 2017.
Select recent changes in GST
♦ Due dates for returns/ forms
|S.No.||Return||Period||Due date||Vide Notification No|
|1.||FORM GST ITC-04||July, 2017 to June, 2019||31.08.2019||32/2019 – Central Tax dated 28.06.2019|
|2.||FORM GSTR-3B||July, 2019||20.08.2019||29/2019 – Central Tax dated 28.06.2019|
|3.||FORM GSTR-1||July, 2019||11.08.2019||28/2019 – Central Tax dated 28.06.2019|
|4.||FORM GSTR-1||July to September, 2019 (Quarterly)||31.10.2019||27/2019 – Central Tax dated 28.06.2019|
|5.||FORM GSTR-7||October, 2018 to July, 2019||31.08.2019||26/2019 – Central Tax dated 28.06.2019|
|6.||FORM GSTR-9 and GSTR-9C||July,2017 to March,2018||31.08.2019||31.08.2019|
♦ Suppliers of Online Information Database Access and Retrieval Services exempted from furnishing of Annual Return / Reconciliation Statement
Persons supplying online information and data base access or retrieval services from a place outside India to a person in India, other than a registered person, shall not be required to furnish an annual return in FORM GSTR-9 and GSTR-9C.
♦ GST Applicability : Penal interest v. Interest
> As per section 15(2)(d), the amount of penal interest is to be included in the value of supply and would be taxable irrespective of the manner of invoicing.
> The interest charged for a loan transaction shall be covered under Sl. No. 27 of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 and hence would be exempt.
> The transaction of levy of additional / penal interest does not fall within the ambit of entry 5(e) of Schedule II of the CGST Act i.e. “agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act”, if this levy of additional / penal interest satisfies the definition of “interest” as contained in exemption notification.
> Any service fee/charge or any other charges that are levied by loan providing company in respect of the transaction related to extending deposits, loans or advances does not qualify to be “interest” as defined in Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017, and hence, will not be exempt.
♦ Clarification regarding determination of place of supply in certain cases
|S.No.||Issue||Place of supply|
|1.||Services provided by the port authorities to its clients in relation to cargo handling like services of arrival of wagons at port, haulage of wagons inside port area up-to place of unloading etc.||As per the provisions contained in sub-section (2) of Section 12 or sub-section (2) of Section 13 of the IGST Act, as the case may be, depending upon the terms of the contract between the supplier and recipient of such services.|
|2.||Supply of services on unpolished diamonds such as cutting and polishing activity which have been temporarily imported into India and are not put to any use in India.||The place of supply would be determined as per the provisions contained in sub-section (2) of Section 13 of the IGST Act.|
♦ Processing of Refund Applications
CBIC has issued following clarification vide Circular No. 104/23/2019-GST dated 28.06.2019 regarding the process of refund application submitted by taxpayers wrongly mapped on common portal:
> Prior to 31.12.2018, refund applications were being processed only after submission of printed copies of FORM GST RFD 01A in the respective jurisdictional tax offices. After issuance of Circular No.79/53/2018-GST dated 31.12.2018, copies of refund applications are no longer required to be submitted physically in the jurisdictional tax office.
> The common portal forwards the refund applications submitted on the said portal to the jurisdictional proper officer of the tax authority to whom the taxpayer has been administratively assigned.
> In case a refund application is wrongly mapped on the common portal and where reassignment of refund applications to the correct jurisdictional tax authority is not possible then:
> application should be processed by the tax authority to whom the refund application has been electronically transferred by the common portal.
> After the processing of the refund application is complete, the refund processing authority may inform the common portal about the incorrect mapping with a request to update it suitably on the common portal so that all subsequent refund applications are transferred to the correct jurisdictional tax authority.
♦ Clarification related to treatment of secondary or post-sales discounts under GST
> If the post-sale discount is given without any further obligation or action required at the dealer’s end, then the post sales discount shall not be included in the value of supply, in the hands of supplier of goods.
> If the post-sale discount is post-sale incentive requiring the dealer to do some act like undertaking special sales drive, advertisement campaign, exhibition etc., then the additional discount will be the consideration for undertaking such activity and therefore would be in relation to supply of service by dealer to the supplier of goods.
> The dealer, being supplier of services, would be required to charge applicable GST on the value of such additional discount and the supplier of goods, being recipient of services, will be eligible to claim input tax credit of the GST so charged by the dealer.
> If the additional discount is given by the supplier of goods to the dealer to offer a special reduced price by the dealer to the customer to augment the sales volume, then such additional discount as consideration, payable by supplier of goods would be liable to be added to the consideration payable by the customer, for the purpose of arriving value of supply, in the hands of the dealer.
> Customer, if registered, would be eligible to claim ITC of the tax charged by the dealer only to the extent of the tax paid by the said customer.
> In case the supplier of goods issues financial / commercial credit notes, he shall not be required to reverse ITC attributable to the tax already paid on such post-sale discount received by him through issuance of financial / commercial credit notes by the supplier of goods.
♦ GST collections in June, 2019
GST collection during June, 2019 is Rs. 99,939 crore, 4.52% higher the in June, 2018 but lower than last three months mark of Rs. 1 lakh crore. The break-up of Rs. 99,939 crore is Rs. 18,366 crore CGST, Rs. 25,343 crore SGST and Rs. 47,772 IGST. Compensation Cess amounted to Rs. 8,457 crore.
May, 2018 returns filed in June, 2019 were 74.38 lakh.