CBDT extends till Jan 31 deadline for compounding of I-T offences

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Taxpayers get one more chance to clear their tax dues.

The CBDT has extended till January 31 the last date for taxpayers to avail a “one-time” facility to apply for compounding of income tax offences, an order issued on Friday said.

The earlier deadline was December 31, 2019.

In I-T parlance, compounding means that the taxman does not file a prosecution case against the offender or tax evader in court in lieu of payment of due taxes and surcharges.

The decision to extend the last date was taken “in view of references received from field formations, including requests made by ICAI (Institute of Chartered Accountants of India) chapters wherein it has been brought to the notice of the CBDT that the taxpayers could not avail the benefit of the one-time relaxation window due to genuine hardships,” the order issued by the Central Board of Direct Taxation (CBDT) said.

The order was accessed by PTI.

Final opportunity
Hence, the order stated, the date has been extended to give a final opportunity to such taxpayers and reduce the pendency of existing prosecution cases before the courts.

Applications, as per the procedure of the scheme, are to be filed before the appropriate competent authority that is either a principal chief commissioner or a chief commissioner or a principal director general or director general of the Income-Tax Department “on or before” January 31, 2020.

The CBDT, while launching the scheme in September last year, had said that this “one-time measure” is being undertaken to mitigate unintended hardship to taxpayers in deserving cases and to reduce the pendency of existing prosecution cases before the courts.

“Cases have been brought to the notice of CBDT where the taxpayers could not apply for compounding of the offence as the compounding application was filed beyond 12 months,” it had said.

The riders
The relaxation, however, shall not be available in respect of an offence which is generally or normally not compoundable, indicating instances of serious tax evasion, financial crime, terror financing, money laundering, possession of illegal foreign assets, benami properties or conviction by a court in the past.

The CBDT circular added that application for compounding of an income tax offence can be filed in cases where: Prosecution proceedings are pending before any court of law for more than 12 months or any compounding application for an offence filed previously was withdrawn by the applicant solely for the reason that such application was filed beyond 12 months or any compounding application for an offence had been rejected previously solely for technical reasons.

The CBDT, which frames policy for the tax department, had earlier said that compounding of offences is “not a matter of right” and the department can extend such a relief only in certain cases.

This will be done keeping in view factors like “conduct of the person, the nature and magnitude of the offence on the context of the facts and circumstances of each case,” it had said.

Late fee to be waived on GSTR-1 if filed by Jan 10, 2020

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Late fee to be waived on GSTR-1 if filed by Jan 10, 2020

The Goods and Services Tax (GST) council has decided to waive off late fees for all taxpayers who have filed GSTR 1, if all refunds are filed by 10 January 2020.

In the 38th meeting of the GST Council on December 18, authorities had also waived of a late fee to be given all taxpayers in respect of all pending Form GSTR-1 from July 2017 to November 2019, if the same is filed by January 10th, 2020.

According to CBIC, the late fee waiver will be applicable only till 10 January 2020, beyond which a late fee of at least Rs 50 per day will be charged for non-filing of GSTR-1.

The late fine can also go up to a maximum of Rs 10,000 per statement as per existing provisions. The CBIC has also said that the government has planned to take a number of steps if the pending GSTR-1 is not filed by the 10th of next month, which may include steps such as blocking of the E-way bill, etc.

GSTR-1 is a monthly return that summarizes all sales (outward supplies) of a taxpayer. The due dates for GSTR-1 are based on turnover. Businesses with sales of up to Rs. 1.5 crore will file quarterly returns. Other taxpayers with sales above Rs. 1.5 crores have to file monthly return.

Availing of ITC restricted to 10% in case of GST details mismatch

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Businesses take advantage of facilities provided under existing system to generate fake invoices that cause loss to the Government

Tax authority given the right to restrict the use of balance in electronic credit ledger

In an effort to curb the menace of fake invoices and tax evasion, the Finance Ministry has notified a new norm of limiting the input tax credit to 10 per cent in case of GST details mismatch.

Experts feel that this will force businesses to restrict themselves to matched details and ignore the mismatched ones and thus incur losses, which could go into crores for big companies, due to complexities involved.

The change in the norm, the second in three months, has been initiated following a decision by the GST Council. Earlier, in October, the government limited ITC in case of details not uploaded by suppliers to 20 per cent which has now been halved. According to a new notification to be effective from January 1, ITC to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers, shall not exceed 10 per cent of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers.

Two return forms

Businesses take advantage of facilities provided under existing system to generate fake invoices that cause loss to the Government. The existing system prescribes assessees to file two return forms — GSTR 1 (outward sales with tax liability) and GSTR 3B (summary returns with final tax payment). Since both are not auto linked, this could result in showing higher liability, claiming higher input tax credit and paying less tax in cash.

In other words, irrespective of the credit being visible in GSTR 2A (auto generated return for purchases), the service recipient used to claim credit without any restriction subject to having the invoice copy and satisfying other conditions laid down under the law. There is feeling that one of the reasons for availing higher input tax credit on the basis of fake invoices was the mismatch between the two — GSTR 1 and GSTR 3B.

This was affecting the government’s revenue. This has forced it to limit the ITC in case of details not matched and encourages the companies to monitor whether the suppliers are uploading their returns on a regular basis. However, experts feel that such a mechanism will lead to compliance cost for companies. Also, the companies might not prefer to go behind suppliers to see whether they have filed returns or not. Hence, they would focus only on matched details and incur loss on account of others.

Electronic Credit Ledger

The government has introduced additional conditions for use of amount available in Electronic Credit Ledger. It has given the right to the tax authority to restrict the use of balance in electronic credit ledger by recording the reasons to believe in writing. The key reasons for restricting credit are: invoice issued by registered person not in existence and recipient is not in procession of goods/services /invoice on which credit is claimed. Post restriction, the tax authority, upon being satisfied that conditions for disallowing debit of electronic credit ledger as above, no longer exist, can allow such credit in the electronic credit ledger.

Controlling tax evasion

According to Harpreet Singh, Partner at KPMG, one hopes that automatic blocking of credit is resorted to only where fraudulent intention is proved beyond doubt and the same is not used on a regular basis, as casual resort to the said provision may lead to harsh consequences for many innocent defaulters.

Rajat Mohan, Senior Partner with AMRG, said GST frauds are on the rise and so is the fiscal deficit which is forcing the government to introduce new methods to control tax evasion and take punitive action against the accused.

Source: Business Line

Large unlisted companies face quicker disclosure rule

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Large unlisted companies may have to make quarterly or half-yearly filings, like their listed counterparts, as the government is considering amendments to the Companies Act to mandate more frequent disclosures in the aftermath of the IL&FS collapse.

The ministry of corporate affairs (MCA) is expected to prescribe a threshold for the disclosure requirement as it does not want to burden all companies, as a bulk of them are small companies, sources told TOI. The idea is to track the systemically important companies, which pose a risk to the entire system. “It will be an enabling amendment and MCA will decide on timing and extent of disclosures later,” said a source.

The assessment in the government is that there is a massive lag, often up to 18 months related to annual filings by companies, many of which have been non-compliant in the past. An entity like the beleaguered IL&FS was not on the radar till it collapsed and MCA is hoping that periodic disclosures would reduce the chances of such failures going undetected. Currently, companies are required to annually file the consolidated financial statement, balance sheet, profit & loss account, annual returns, directors’ report and certified true copy of board resolution with the designated RoC.

The proposal to increase disclosures is expected to be part of a set of amendments to be taken up by a group of ministers chaired by home minister Amit Shah, with defence minister Rajnath Singh, finance & corporate affairs minister Nirmala Sitharaman, commerce & industry minister Piyush Goyal and law & justice minister Ravi Shankar Prasad among the nine members of the committee, sources told TOI.

The ministerial panel, referred to as alternate mechanism by the Narendra Modi administration, will largely look at the recommendations of the company law panel, which submitted its report. While MCA was pushing for the introduction of the Bill during the recently concluded Winter Session, the legislation will now be placed before the Parliament as soon as it is cleared by ministers. The ministry is hoping to introduce the Bill during the budget session.

Source: Times of India

Non-filing of GST returns may lead to attachment of bank accounts

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December, 26th 2019

CBIC issues Standard Operation Procedure to deal with non-filers

Non-filing of GST (Goods & Services Tax) returns may lead to attachment of bank accounts and even cancellation of registrations. This is part of the Standard Operating Procedure (SOP) issued by the Finance Ministry to be followed in case of non-filing of returns.

The GST law makes it mandatory for a registered person to file returns either monthly (normal supplier) or on a quarterly basis (supplier opting for composition scheme). An ISD (Input Service Distributor) will have to file monthly returns showing details of credit distributed during the particular month.

Persons required to deduct tax (TDS) and persons required to collect tax (TCS or Tax Collected at Source) also have to file monthly returns showing the amount deducted/collected and other specified details. A non-resident taxable person also has to file returns for the period of activity.

Revenue hit

It is estimated that up to 20 per cent assessees do not file returns. This affects revenue collection. Since there is lack of clarity on how to proceed with non-filers and lack of uniformity in procedures, the Central Board of Indirect Taxes and Custom (CBIC), has come out with an SOP. Under the SOP, after the due date of return, a system-generated message or mail will be immediately shared with GST defaulters. Five days later a notice will be issued asking the GST payer to file the return or make payment within 15 days This notice is to be issued in Form GSTR 3A.

If the defaulter does not file the return within 15 days of the issue of the notice, the proper officer may proceed to assess the tax liability of the person to the best of his judgment taking into account all the material available or which he has gathered and would issue order under Rule 100 of the CGST Rules in Form GST ASMT-13.

If the defaulter files the GST return, then Form GST ASMT 13 will be deemed as withdrawn. If not, the officer may initiate recovery.

Though the above guidelines are to be followed in most cases, the SOP also prescribes that in some cases, based on facts, the Commissioner may resort to provisional attachment to protect revenue, under Section 83 of the CGST Act before issuance of Form GST ASMT-13.

If the return is not filed within the time prescribed under Section 29 of the CGST Act, then the process of cancellation may be initiated. The relevant Section prescribes conditions for cancellation of registration, and fulfilment of any of these will invite action.

These include a composition scheme assessee not filing returns for three consecutive tax periods, a non-composition assessee not furnishing returns for a continuous period of six months, not commencing business within six months of the voluntary registration, obtaining registration by fraud, and wilful misstatement or suppression of facts.

The Act clearly states that registration will not be cancelled without giving the person an opportunity of being heard.

After blocking of e-way bill generation for non-filers, issuing Standard Operating Procedure for non-filers is the next step by CBIC to ensure proper collection.

Not filing GST return could cost businesses their tax registration, assets

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Not filing Goods and Services Tax (GST) returns on time could cost businesses their assets as well as their tax registration, according to a set of instructions the government has issued to field officers, aimed at forcing compliance.

The standard operating procedures issued by the finance ministry instructs field officers to provisionally attach the assets of registered GST assesses, including bank accounts, in cases they think it is needed to protect revenue interests of central and state authorities. Such attachment will be resorted to in cases where businesses do not file returns even after they receive a notice asking them to do so in 15 days. Officers will also proceed to assess tax liability of the business on their best judgement based on available information.

The instructions issued on Tuesday also authorise field officers to cancel the GST registrations as allowed in the indirect tax law. Central GST Act allows cancellation of GST registration if businesses do not file returns for specified periods.

“In deserving cases, based on the facts of the case, the Commissioner may resort to provisional attachment to protect revenue…,” said the instructions. The move comes at a time when revenue collections and tax return filings remain way below expected levels. Against the total GST registrations of 12.2 million as of June 2019, only 7.8 million filed their returns for October, as per official data.

The efforts to improve compliance comes after the authorities remained lenient towards lapses in the initial two years of GST roll out to help businesses and traders migrate to the new indirect tax system. Central and state governments last week decided not to go ahead with any tax rate increase in spite of revenue shortfall and flaws in the GST structure caused by tax cuts in the past as a rate increase could discourage consumption when the economy is going through a slowdown.

Major announcements in GST council meet dt : 18th Dec 2019

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Here are some of the major announcements in GST council meet dt : 18th Dec 2019

  1. The Council decided that input tax credit will now be restricted to 10 percent as against 20 percent earlier if invoices not uploaded.
  2. Deadline for GSTR 9 and GSTR 9C return filing for 2017-18 extended to January 31, 2020 from December 31, 2019 .
  3. Penalty for non-filing of GSTR-1 from July 2017 relaxed . Late fee waived for all assessees failed to file GSTR 1 , if they file it by 10th January 2019.
  4. GST Council exempts long term lease on industrial plots to facilitate setting up of industrial parks.
  5. Land lease GST rates to be applicable from January 1, 2020.
  6. Uniform rate of 18% for woven and non-woven bags.
  7. Uniform rate of 28% for lotteries.
    At present, lotteries run by state governments attract 12% GST while those authorised by them and sold outside the state are taxed at 28%.
  8. E-way bill for those who haven’t filed GSTR-1 for 2 tax periods shall be blocked.
  9. Standard procedure for officers to be issued in respect of action to be taken in cases of non-filing of GSTR-3B.
  10. Due date of filing GST returns for Nov 19 to be extended in certain north eastern states.
  11. Grievance redressal committees will be constituted to address the general problems of the taxpayers at zonal and state level with both CGST and SGST officers and including certain representatives.