GST Impact: Undue profit of over Rs 1 crore to come under authority’s lens

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It will take two-three months time to gauge whether the benefits of GST are being passed on to consumers. By then, the authority would be put in place

The proposed anti-profiteering authority under the new GST regime will take up for scrutiny only those cases that have mass impact and those where undue profit of more than Rs 1 crore has been earned, a senior government official said. A five member National Anti-Profiteering Authority, headed by a secretary-level officer, will be set up soon to keep a tab on businesses that have not passed on to consumers the benefit of lower tax rates under the Goods and Services Tax (GST) regime. “It will take two-three months time to gauge whether the benefits of GST are being passed on to consumers. By then, the authority would be put in place,” the official told PTI. As per the three tier structure — the GST Implementation Committee (GIC) will receive complaints and those which are state specific and involving smaller amounts will be transferred to the state screening committee.

Other cases will be referred to the Directorate General of Safeguards who will finish investigation within 3 months and send the findings to the anti-profiteering authority, which will pass an order in another 3-months time. “The issues which have a national or mass impact will be taken up by the authority. There may be many small cases which would be coming to the GIC, but only those cases where the financial implication is more than Rs 1 crore would be taken up by the authority. Rest would be transferred to the state screening committee,” the official said. ADG Safeguards will act as Secretary to the National Anti-Profiteering Authority and will coordinate between the authority and the DG Safeguards office, the official added.
The Central Board of Excise and Customs (CBEC) last week appointed Samanjasa Das as the Additional Director General (ADG) Safeguards in the Directorate General of Safeguards.

Das was ADG in the Directorate General of Central Excise Intelligence (DGCEI). In the three-tier structure for monitoring anti- profiteering, the GST implementation committee, including four officers each from the Centre and states and one officer from the GST Council, will first receive the complaints. Thereafter, DGS, which has the power to issue summons, will conduct investigation and give its findings to the authority. The anti-profiteering authority, if it finds that a company has not passed on the GST benefits, will either direct it to pass on the benefits to consumers or if the beneficiary cannot be identified will ask the company to transfer the amount to the ‘consumer welfare fund’ within a specified timeline. The authority will have the power to cancel registration of any entity or business if it fails to pass on to consumers the benefit of lower taxes under the GST regime, but it would probably be the last step against any violator.

According to the anti-profiteering rules, the authority will suggest return of the undue profit earned from not passing on the reduction in incidence of tax to consumers along with an 18 per cent interest, as also impose penalty. A five member committee, headed by Cabinet Secretary P K Sinha, comprising Revenue Secretary Hasmukh Adhia, CBEC Chairman Vanaja Sarna and chief secretaries from two states, will soon finalise the Chairman and members of the authority. It will be in existence for just two years unless the GST Council extends the tenure. The chairman will be paid a monthly salary of Rs 2.25 lakh plus other allowances and benefits, as are admissible to a central government officer holding posts carrying the same pay. Technical members will be paid a monthly salary of Rs 2,05,400. The chairman and members will hold office for a term of two years or until the age of 65-years, whichever is earlier.

Source: http://www.financialexpress.com/economy/undue-profit-of-over-rs-1-crore-to-come-under-gst-authoritys-lens/775391/

77.5L traders registered under GSTN till July 18

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The Government on Friday said as many as 77.5 lakh traders are registered on GSTN and help desks have been set up in every commissionerate to facilitate filing of tax return. “Till July 18, 2017, the total number of GSTIN (Goods and Services Taxpayer Identification Number) registration is 77,55,416,” Minister of State for Finance Santosh Kumar Gangwar said in a written reply to the Lok Sabha.

He further said Internet is not required for doing or conducting business, but it would be required only for the purpose of filing of returns under the GST. “The Government has ensured that the return filling process is made convenient for all taxpayers by setting up help desks in every commissionerate and by appointing GST Suvidha Providers,” he said.

Gangwar in another reply said it is difficult to predict whether corruption will be wiped out, but the implementation of GST will definitely bring about transparency in business operations related to taxation. The implementation of GST in itself is expected to have a positive impact on the overall growth of the economy, he said, adding that it is also expected to have a positive impact on the ease of doing business and making India an even more attractive destination for foreign investments.

Various studies, including that from NCAER, have estimated that growth in GDP to be around 1-2 per cent due to the implementation of GST.Replying to another question, Gangwar said, since GST has been implemented only with effect from July 1, it cannot be stated that it helps to bring out black money at this moment.However, he said, the provision in SGST, CGST, UTGST and IGST have a self policing mechanism.

Source: Daily Pioneer

GST deadline: Tax composition scheme last date extended till August 16

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The government today extended the deadline for small businesses to opt for the composition scheme in the GST regime by nearly four weeks to August 16.

The government today extended the deadline for small businesses to opt for the composition scheme in the GST regime by nearly four weeks to August 16.

Small businesses with turnover of up to Rs 75 lakh earlier had time till today to opt for the scheme in the Goods and Services Tax regime. “The Board hereby extends the period for filing an intimation in Form GST CMP-01… up to August 16, 2017,” the Central Board of Excise and Customs (CBEC) said in an office order.

To opt for composition scheme, the taxpayer needs to log into his account at the GST Portal www.gst.gov.in and select ‘Application to opt for the Composition Scheme’ under ‘Services’ menu. They have to fill up the Form GST CMP-01 to opt for the scheme.

Under composition scheme, traders, manufacturers and restaurants can pay tax at 1, 2 and 5 per cent, respectively.  Businesses opting for the composition scheme will see a lesser compliance burden as they will have to file returns only once in a quarter as against monthly returns to be filed by other businesses.

There are over 70 lakh excise, VAT and service taxpayers who have migrated to the GSTN portal for filing returns in the GST regime which kicked in from July 1.  Besides, there are over 8 lakh new taxpayers who have registered on the portal. These new registered taxpayers can opt for the composition scheme at the time of registration.

Source: Financial Express

Now, India Inc vendors under I-T lens, firms asked to give payment details

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The income-tax (I-T) department has asked large corporate entities, including multinational firms, to furnish details of employees off the payroll to check whether they are filing tax returns after deduction at source, or TDS.

According to I-T officials, many lawyers, chartered accountants, consultants, and designers — not on the payroll of companies — have not filed I-T returns (ITR), fearing they would have to disclose their full income.

The move is part of the government’s efforts to increase the tax base and nab potential evaders. The deadline for filing returns for the assessment year (AY) 2017-18, to track income in the fiscal year 2016-17 (FY17), is July 31.

Such professionals who could be potential evaders have been identified through a complete tax profiling, by linking their banks and transaction details.

The tax department, through its non-filer monitoring system, has identified about 13.7 million people with potential tax liabilities who have not filed returns. A preliminary examination of the data has revealed that many third-party vendors in different tax brackets have not been filing returns, while some have been inconsistent in doing so.

“Such measures are part of the second phase of the tax department’s Operation Clean Money, to bring those who have declared unaccounted cash and deposits after demonetisation under the tax net,” said a senior official of the Central Board of Direct Taxes (CBDT). Sources said the CBDT had set the target of adding 10 million taxpayers in the current financial year (FY18).

Under provisions of Section 194 (C) of the I-T Act, a company has to deduct tax at source at the rate of 10 per cent on payments made to professionals or for technical services, if their bill is Rs 30,000 or more.

“The efforts of the tax department to expand the taxpayer base are understandable. Tracking TDS is an important tool to check whether people have filed their taxes,” said Sanjay Sanghvi, partner, Khaitan & Co.

During 2015-16, there were only 55.9 million people in the country who paid income tax. Last year, the tax department had added 9.1 million taxpayers, expanding the base to 65 million.

The government had recently amended the provisions in the I-T rules dealing with the filing of returns. Those not filing on time will have to pay a fine.

For instance, for people earning below Rs 5 lakh annually, missing the deadline will make them liable to a fine of Rs 1,000; those with earnings above Rs 5 lakh annually will have to cough up Rs 5,000 as penalty.

At present, there is no fine if the returns are filed with a delay within the AY. Official data suggest that about 5 million companies registered in the country, of which only 690,000 filed I-T returns last year.

Source: Business Standard

Government draws up checklists for GST audits

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In the past week, the government has reached out to tax commissioners on the audit process, highlighting the risk areas.

The Centre has created a detailed road map for goods and services tax (GST) audits barely 20 days after the levy’s rollout, listing risks, target industries and even potential auditees for officials examining corporate India’s transition to the new regime.

In the past week, the government has reached out to tax commissioners on the audit process, highlighting the risk areas. Beginning next week, therefore, officials could visit companies to assess whether the transition from the multiple to the single producer levy from July 1 stuck to the rule book.

Their mode of inspection will also be very different from the traditional script. “They would focus on credit transfer or transition from the old tax regime to GST. The government already has the requisite sets of data in place for this,” a tax official told ET on the condition of anonymity.

The government has shared sector-wise “risk factors” companies might exploit to avoid paying GST. According to the tax official quoted above, categorisation or risk evaluation for these audits has been created by using Big Data analytics.

The government has used statistics of the last two financial years to create the audit checklist.

In the internal government note shared with middle-rung tax officials, they have also been told to cause the “least inconvenience” to auditees and to even educate the taxpayers, especially small and medium enterprises (SMEs).

Industry experts, however, pointed out that a granular scrutiny could mean additional tax-related effort at many companies, as the GST audits would also take earlier taxes into account while evaluating the transition.

‘Extra book-keeping effort’

“The decision to focus on risk-based parameters in determining the audit plan is good. However, since the audits to be undertaken now would focus on earlier legislation such as excise and service tax, taxpayers will grapple with both the earlier legislation and the new legislation (GST) simultaneously,” said MS Mani, partner, GST, Deloitte India. “It would significantly increase the focus and time taken to attend to tax matters.”

A list of auditees, made up of large, medium, and small-scale companies across the country, was also shared with the tax commissioners. “Most of the companies have manipulated the system while transitioning credits from excise and service tax to GST. This is what would be the focus of the tax audits initially,” a senior tax official told ET.

Tax officials have been asked to first examine a specific list of companies. This was disclosed in an official communication by the director general of  audit, central taxes, on July 12, with several mid-level tax officials being informed this week.
Big Data analytics are being used by the tax departments since 2016. The tool is deployed to find outliers in any industry, and the gap from industry based average taxes is used to determine targets for further scrutiny.

 

“The government would have comparables. Say, if 10 consumer goods companies of a particular size pay Rs 50 crore in taxes, it is unlikely that one company, of the same revenue size, would pay Rs 1 crore. Data analytics could easily point out such anomalies, and the lens would then be on such companies,” a person in the know said.