Post Covid-19 second wave, it has become imperative to reassess growth estimates for the current fiscal. Second wave was less destructive as production and logistics faced less destruction. This was supplemented by enhanced vaccination efforts leading to increase in pace of economic activities. Besides, various initiatives such as privatization of enterprises, asset monetization, production linked incentives, new labour code etc many spur growth in medium to long term. However, long term economic prospects of India look to be positive and robust. Indian economy is expected to be on recovery path soon.

In view of the recent second wave of Covid, in March- May, 2021, IMF has cut India’s economic growth forecast for the FY 2022 to 9.5% from earlier 12.5%. However, it raises GDP projection for FY 2023 to 8.5%. It has opined that high vaccination rate will be the key to economic recovery. IMF’s growth projection for China and US in 2020 are 5.7% and 4.9% respectively, whereas the World growth projection is @ 4.90%. Now revised projections for India’s growth in 2022 by various agencies is – IMF(9.5%), World bank (83%), OECD (9.9%) and ADB (10.0%).

GST Goods and services tax made up of wooden cubes that stand on a burgundy notebook

Increased tax collection in Q1 of current fiscal indicates that economy is on the path of recovery. Net indirect tax collection (GST and non-GST) isRs. 3.11 lakh crore. Net direct tax collection is over Rs. 2.46 lakh crore. The increased tax collection (direct & indirect) as reported in the first quarter of the current financial year as compared to the same period previous financial year shows that the economy is on the recovery path. Higher Tax collection would enable Government in increasing public expenditure, which would have a positive impact on GDP.

There is a economic cost of Covid-19. Our economy has been pushed back. Urban un-employment rate had gone up from 8.9% in April 2019 to 20.09% in June, 2020. Labour segment faced a squeeze in jobs, wages, savings etc. According to Periodic Labour Force Report, 2020 (June quarter) released recently, the pandemic has pushed people from more productive Urban economy to a less productive rural sector. Restoring economy as well as jobs ought to be topmost priority now.

According to Chief Economic Advisor, GST rates rationalization may happen and is on the Government’s agenda. Three rate structure is important but at the same time, there is a need to fix issues in inverted duty structure.

The Central Board of Indirect Taxes and Customs (CBIC) has clarified that issuance of summons, search, enquiry or investigations, and even consequential arrest, as prescribed under GST law, will not be affected by the Supreme Court’s recent order on limitation dated 27.04.2021. Actions such as scrutiny of returns, issuance of summons, search, enquiry or investigations and even consequential arrest in accordance with GST law would not be covered by the apex court ruling. Also, issuance of show-cause notice, granting time for replies and passing orders will not be covered.

CBIC has issued new notification Nos. 29, 30 & 31, all dated 30th July, 2021 notifying effective date of 01.08.2021 for section 110 and 111 of Finance Act, 2021. Other amendments include requirement of furnishing annual return in Form GSTR 9, 9A and 9B, exemption to taxpayers from filing annual return, change in Form GSTR 9C  making it self-certifiable by taxable person and exemption from filing annual return for FY 2020-2021.

GSTN data indicates that e-way bill generation in July, 2021 may exceed 5 crore. It already touched 4.96 crore as on 25th July, 2021. This also hints that July GST collection may be better than the previous month which will be reflected in August payments. GST collections are expected to bounce back to one lakh crore plus figure.

Tax buoyancy in India in Q1 of current fiscal has contained fiscal deficit to 8 years low, i.e. @ 18.2% of Budget Estimates against 83.2% in same period last year. This is mainly due to tax revenues, non-tax revenue and non-debt capital receipts, alongwith contraction in revenue expenditure.

The gross GST revenue collected in the month of July 2021 is Rs. 1,16,393 crore of which CGST is Rs. 22,197 crore, SGST is Rs. 28,541 crore, IGST is Rs. 57,864 crore (including Rs. 27,900 crore collected on import of goods) and Cess is Rs. 7,790 crore (including Rs. 815 crore collected on import of goods). The revenues for the month of July 2021 are 33% higher than the GST revenues in the same month last year. During the month, revenues from import of goods was 36% higher and the revenues from domestic transaction (including import of services) are 32% higher than the revenues from these sources during the same month last year. GST collection, after posting above Rs. one lakh crore mark for eight months in a row, dropped below Rs. one lakh crore in June 2021 as the collections during the month of June 2021 predominantly related to the month of May 2021 and during May2021, most of the States/UTs were under either complete or partial lock down due to COVID. With the easing out of COVID restrictions, GST collection for July2021 has again crossedRs.1 lakh crore, which clearly indicates that the economy is recovering at a fast pace. The YoY growth in GST collection in July, 2021 is positive in all states barring two states. The highest growth is seen in Arunachal Pradesh, Haryana, Manipur, Jharkhand, Ladakh, J & K etc.

Effective date for section 110 and 111 of Finance Act, 2021

  • Finance Act, 2021 had amended section 35(5) and 44 of CGST Act, 2017 by section 110 and 111 respectively:
  • Section 35(5) on mandatory requirement of audit of annual return and reconciliation statement was omitted.
  • Section 44 of CGST Act, 2017 on annual return was substituted to remove mandatory requirement of furnishing a reconciliation statement duly audited by specified professionals and to provide for filing of annual return on self certification basis. Commissioner was also empowered to exempt any class of taxpayers from such requirements.
  • These amendments have been notified to come into force w.e.f. 1st day of August, 2021.

 (Source: Notification No. 29/2021-Central Tax dated 30.07.2021)

Annual Return (CGST Rules, 2017)

(1) Rule 80 of CGST Rules, 2017 has been substituted by CGST (6th Amendment) Rules, 2021 w.e.f. 01.08.2021, consequent upon new section 44 being made applicable from 01.08.2021.

(2) All specified persons shall be required to file annual return u/s 44 of the CGST Act, 2017 in Form GSTR-9 on or before 31st December following the end of relevant financial year.

(3) Specified persons include registered persons (other than exempt), input service distributor, persons deducting tax (TDS) or collecting Tax (TCS), casual taxable person and non -resident taxable persons.

(4) Annual return shall be filed electronically through common portal directly or through notified Facilitation Centre.

(5) Persons paying tax u/s 10 (Composition dealers) shall file annual return in Form GSTR 9A.

(6) E-commerce operators required to collect tax at source (TCS) shall file annual statement as per section 52 (5) in Form GSTR-9B.

(7) Specified persons as above whose aggregate turnover during a financial year exceeds Rs. 5 crore shall also furnish a self-certified reconciliation statement in Form GSTR 9C alongwith annual return on or before 31st December following the end of relevant financial year electronically on common portal or through a notified facilitation centre.

(8) Enabling amendments have also been made in Form GSTR 9 and GSTR 9C.

 (Source: Notification No. 30/2021-Central Tax dated 30.07.2021)

Exemption from filing of annual returns

(1) Exemption has been provided to registered persons under GST law from filing of annual return for the financial year 2020-21

(2) Exemption shall be available to those persons whose aggregate turnover in FY is upto Rs. two crore only

(3) This exemption has been provided by Commissioner on the recommendations of GST Council in terms of new section 44.

(4) This exemption is effective from 01.08.2021.

(Source: Notification No. 31/2021-Central Tax dated 30.07.2021)

Reduced compliance burden under Customs

1) CBIC has taken steps to reduce compliance burden / procedures under Customs Act, 1962 for renewal of licenses  / registrations.

2) It has been decided to abolish renewals of Licence/Registration in Customs Brokers Licensing Regulations, 2021 and Sea Cargo Manifest and Transhipment Regulations, 2018 with the following changes:

a) To provide lifetime validity of the licenses/registrations;

b) To enable provision for making the licenses/registrations invalid in case the licensee/registration holder is inactive for the period exceeding 1 year at a time;

c) To empower Principal Commissioner or Commissioner of Customs to renew a license/registration which has been invalidated due to inactivity; and

d) To provide for voluntary surrender of license/registration.

[Source:   CBIC Circular  No. 17/2021-Customs dated 23.7.2021]

No Flood Cess in Kerala after 31.07.2021

  •  Kerala Flood Cess (KFS) was imposed two years back w.e.f. 01.08.2019 for a period of two years.
  • The KFS was levied @ 1 percent on GST of more than 5% and @ 0.25% on gold.
  • It has been notified that KFS imposed alongwith GST for reconstruction of post-flood Kerala will end on July 31, 2021.
  • Therefore, KFS shall not be applicable w.e.f. 01.08.2021.

 [Source:   F.No. CT/15318/2018-P2 dated 23.07.2021 issued by  Commissioner,  State GST Department , Thiruvananthapuram]

Advisory on ITC availment /Returns mismatch

  • It has been observed that there are considerable gaps in the input tax credit available in GSTR 2A as compared with actual lax credit availed in GSTR 3B .
  • It has been advised to the taxpayers to ensure that there are no gaps / mismatch in:

a) Liability declared in FORM GSTR I and liability paid in FORM GSTR-3B

b) Input tax credit availed in FORM GSTR -3B as compared with tax credit available in FORM GSTR-2A / GSTR 2B.

c) Liability as per E-Way Bills and that declared in FORM GSTR -3B.

 [Source: Press Release dated 26.07.2021 issued by Haryana State GST-Intelligence Unit, Government of Haryana ]

GSTN Functionality on Annual Aggregate Turnover (AATO)

A new functionality on AATO has been made available on GSTN portal for taxpayers:

  • The taxpayers can now see:

a) Exact Annual Aggregate Turnover (AATO) for the previous FY, instead of just the two slabs of Above or Upto Rs. 5 Cr.

b) Aggregate Turnover of the current FY based on the returns filed till date.

  • The taxpayers have also now been provided with the facility of turnover update in case taxpayers feel that the system calculated turnover displayed on their dashboard varies from the turnover as per their records.
  • This facility of turnover update shall be provided to all the GSTINs registered on a common PAN. All the changes by any of the GSTINs in their turnover shall be summed up for computation of Annual Aggregate Turnover for each of the GSTINs.
  • The taxpayer can amend the turnover twice within a period of one month from the date of roll out of this functionality after which the figures will be sent for review of the Jurisdictional Tax Officer who then can amend the values furnished by the taxpayer.

[Source: www. dated 27.07.2021]

GSTN Functionality on Bank Accounts

  • Now taxpayers can check, add and update bank account details on GSTN portal.
  • A functionality to check status of bank account details update for the taxpayers who have taken new registration at GST Portal but have not yet furnished the same, has been introduced, in view of Rule 10A of the CGST Rules 2017. Such taxpayers are required to update their Bank Account Details within 45 days of the first login henceforth.
  • The taxpayers may login and update Bank Account details through Non-core amendment in the manner as specified. In case the taxpayers who had not updated bank account after registration and are also failed to update within 45 days of their first login henceforth, the system will prompt and force them to comply with the requirements.
  • Taxpayers will have to follow the following steps
    • Login to the taxpayer portal
    • Go to ‘Services’
    • Click on ‘Registration’
    • Click on the tab ‘Amendment of Registration Non-Core Fields’
    • Select tab ‘Bank Accounts’
    • Add details of Bank Account (Account No., IFSC, Address, Bank Account type)
    • Click on the verification tab, select authorized signatory, enter a place
    • Sign application using DSC, E-sign or EVC
  • After completion of Bank Account update, a success message will appear on the screen, and the acknowledgment will be sent at the registered email and mobile phone.

[Source: www. dated 29.07.2021]


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September 2021