GST: Filing returns will no longer be taxing

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By Prakash Kumar, CEO, GSTN and Upender Gupta, Commissioner (GST Policy), Ministry of Finance

There is an excitement in the country about GST. People want to understand the process of GST. Through this article, we present some points about the process of filing returns.

Every trader will have to file returns once a month and pay tax. The input credits of taxes that have been paid on purchases will be automatic and will be available to every trader. The whole process of filing returns is online. If accounts are kept in the Excel sheet provided by GSTN, then the same account will automatically be converted into returns with the help of an offline tool every month.

If a trader sells all his merchandise only to retail customers, then the returns of such a trader will be very simple – the summary of rate-wise turnover will be shown. If a trader avails of the composition scheme and has a turnover of less than Rs.50 lakh, such a trader will not have to file returns every month, but every three months, showing the total turnover.

Traders selling business-to-business merchandise must give specific details for each sale invoice in their returns. When a trader’s sales details are entered into the form of returns on the GST website by the 10th of the month, the complete details of purchases made by his buyers will be seen in his GSTR-2 (GST Online Account). That means it will auto-populate.

With the purchasing buyer clicking okay, after looking at these details, the merchant’s GSTR-3 return will appear in the computer itself. The GSTN system will auto prepare and show the merchant’s tax liability and the complete details of the input tax credit, along with net tax liability. The trader would be required to deposit the difference between tax liability and input tax credit. Taxes must be deposited online or in the bank.

After this, the trader will have to submit the final return made by computer by clicking on GSTR-3 and submitting it by the 20th of the month. There is an arrangement in business-to-business transactions which we call the input tax credit reversal, which is to return the input tax credit taken. A lot of people have expressed concern about this, but if you understand the whole process, then you would fully support it.

If the trader from whom you buy goods has shown that transaction in his return by the 10th of the month, you will get input tax credit. Suppose the person selling the goods does not put that invoice in his returns, even then you will get an opportunity to show it in your GSTR-2 return by the 15th of the month, and by doing so, you will get full input tax credit.

After that, you have to contact the businessman (the supplier) and explain that he must show that transaction in his return so that there is no reversal of the input tax credit received in the next month. You will get 30 days for this and if even then the merchant who sells the merchandise does not accept this transaction and does not show it in his return, then the input tax credit tax that you got would be reversed in your returns next month.

It is the duty of every businessman to deal with such traders who have deposited the tax with the government after collecting the tax from you.On the basis of the default of each merchant, they will be given a compliance rating, which will be visible to all other traders so that you do not do business with frequent defaulters.

Source: http://blogs.economictimes.indiatimes.com/et-commentary/gst-filing-returns-will-no-longer-be-taxing/

No tax scrutiny of big transaction if it matches income

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I-T department gathered a huge amount of data as part of Operation Clean Money, which followed demonetisation, and is subjecting it to analytics to detect patterns and discover attempts at tax evasion.

If you splurged on something really expensive or made an enormous investment recently, rest assured your accounts won’t be opened up for scrutiny by the income tax department as long as these can be squared with your declared income.

“Scrutiny will be based on specific information,” a senior income tax official told ET. In other words, big transactions will no longer automatically qualify a person for scrutiny. The income tax department will only start asking questions if it has clear information that calls for an investigation, sparing honest taxpayers.

This was the outcome of a high-level meeting held by the Central Board of Direct Taxes (CBDT) last week to review the conditions for scrutiny. Such cases are currently picked up through computer-based criteria related to transactions above a certain ceiling. This idea is to ensure that regular taxpayers such as salaried employees don’t face unnecessary hassle and to allow tax authorities to focus their energies on high-risk individuals or entities where information of possible wrongdoing is available.

The department’s multiple data sources include the tax authorities of other countries and high-value transactions in India that will likely be the basis of any scrutiny.

Those identified under the department’s Operation Clean Money as having made large cash deposits in banks and bought costly items after demonetisation was announced could also face scrutiny if they have not explained their transactions satisfactorily.

The department gathered a huge amount of data as part of Operation Clean Money, which followed demonetisation, and is subjecting it to analytics to detect patterns and discover attempts at tax evasion. It has already identified 60,000 individuals, who will now face closer investigation.

But there is a conscious effort to make a shift towards quality rather than quantity to ensure the effectiveness of the exercise. The focus will be on limited scrutiny based on information with the department rather than a general one. Roving enquiries won’t be permitted and a limited scrutiny can only be converted to a general one after following adequate procedures.

Source: http://economictimes.indiatimes.com/news/economy/policy/no-tax-scrutiny-of-big-transaction-if-it-matches-income/articleshow/58689453.cms

India’s foreign exchange reserves zoom to new all-time record, touch $375.7 bn

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India’s foreign exchange reserves zoomed past their previous week’s record to touch a new high of $375.7 billion on May 5, data released by the central bank showed.

Foreign currency assets (FCAs), the largest component of the foreign exchange reserves, grew to $351.5 billion from $349.1 billion in the previous week, RBI data showed. Expressed in US dollar terms, FCAs include the effects of appreciation / depreciation of non-US currencies, such as the euro, pound and yen, held in the reserves.

India’s foreign exchange reserves zoomed past their previous week’s record to touch a new high of $375.7 billion on May 5, data released by the central bank on Friday showed. On April 28, the reserves were at $372.7 billion, the highest since September 9, 2016.

Dollar purchases by the Reserve Bank of India to ease volatility in the rupee exchange rate and increase in valuation of its assets has led to the jump in the forex reserves, traders said. The rupee has gained 5.3% against the dollar since the beginning of 2017. On April 26, it appreciated to 63.93 to a dollar, its highest level since August 10, 2015.

The central bank has always maintained that it does not want to influence the exchange rate for the rupee, but would take steps, including intervention in the spot market, to curb extreme volatility. According to the latest data available, the RBI bought $3.5 billion in the spot market on a net basis in March, while outstanding net forward sales stood at $10.8 billion during the month. The RBI publishes data on the sale and purchase of dollar with a lag of two months.

Source: http://www.financialexpress.com/economy/indias-foreign-exchange-reserves-zoom-to-new-all-time-record-touch-375-7-bn/666524/

High-value transactions by doctors, lawyers under income tax lens

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Salaried individuals are not required to file the newly introduced statement of financial transactions (SFT).

Senior tax officials are reaching out to chartered accountants and CFOs to drive home the point that by May 31 business establishments, various financial institutions and professionals, including doctors, lawyers and architects, will have to report a slew of high-value transactions such as cash deposit, credit card payments, share sale, property deals, debentures and mutual fund units among others.

Salaried individuals are not required to file the newly introduced statement of financial transactions (SFT). Entities that will have to report are banks, professionals, fund houses, forex dealers, post office, nidhis, non-banking finance companies, property registrars, companies issuing bonds and debentures, and listed companies buying back shares from specific persons.

“Many are not fully aware of the new requirement. Under the modified rules, the earlier requirement of filing annual information return (AIR) has now been replaced by SFT. The changes have created new classes of first time filers who have to file SFT of specified transactions for FY 2016-17,” said Jai Raj Kajla, Director of Income Tax (Intelligence & Criminal Investigation) while addressing tax practitioners here on Friday.

The nature of transactions includes cash payment for purchase of demand drafts or pay orders of Rs 10 lakh or more in a year; cash payment of Rs 10 lakh or more for purchase of pre-paid RBI instruments, cash deposit or withdrawal of Rs 50 lakh or more from current account; one-time deposit of Rs 10 lakh or more with banks, nidhis, NBFCs and post offices; payment of Rs 1 lakh or more in cash and Rs 10 lakh or more by other mode against credit card bill issued to a person during the year; and property registrars for deals worth Rs 30 lakh or more.

Kajla and his colleagues met close to 300 tax practitioners and corporate CFOs to explain the new rules, which would require the reporting entity to register online with the tax office. SFTs have to be filed in separate form and not along with the regular Income tax returns.

“The Directorate is conducting workshops to address various categories of reporting entities like bullion dealers, stock brokers, and dealers of automobiles and luxury goods,” said Anu Krishna Aggarwal, Additional Director of Income Tax (I&CI).

As per the new requirements, apart from specific filers like banks which used to file similar AIR returns, SFT regulations would cover any person who is liable to audit under Section 44AB of the Income Tax Act, 1961. The particular section relates to audit of businesses and professions.

The purpose of the workshops was to spell out the rules to the chartered accountants who in turn can assist taxpayers in ensuring timely and accurate SFT compliance.

Laxman Singh Gurjar, Manpreet Singh Duggal, and Aastha Madhur – all deputy directors of Income Tax – and Vishnu Agarwal, chairman of the western India council of ICAI, participated in the discussions which also dealt with the finer points of compliance ..For instance, while reporting an entity will have to take into account all the accounts of the same nature maintained in respect of a person during a financial year; also, while attributing the entire value of the transactions to all the persons in cases where the account is maintained or transactions recorded in the name of more than one person.

Filing of inaccurate information will attract penalty of Rs 50,000.

Source: http://economictimes.indiatimes.com/articleshow/58651349.cms

No more rejection for start-ups seeking tax sops

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Companies will be given a chance to amend and re-submit proposals, says DIPP

In what could be a morale booster for start-ups, the government has decided to do away with the practice of rejecting applications for tax sops.

Instead, start-ups will get an opportunity to apply again after making changes to the proposal based on the explanation given to them on the initial one.

Supportive policy

The Department of Industrial Policy and Promotion is also reworking the qualification criteria for start-ups for non-tax benefits, a government official told Business Line.

“Instead of dismissing proposals that do not meet the mark for tax-sops with a simple ‘rejected’, the inter-ministerial group examining it will give details of where they fell short. This will give the start-ups an opportunity to rework their proposals, and apply again for tax benefits,” the official said. “There has been no change in the criteria of judging whether a start-up qualifies for tax benefits. It still depends on how innovative the idea is.”

In the last meeting of the Inter Ministerial Group (IMG) on startups which met on May 1, about a dozen applications were approved.

The change in the Central government’s stance has been triggered by a general sense of dissatisfaction among start-ups with the new policy, as only about 10 proposals had qualified for tax sops till last month out of the 140 proposals vetted by the inter-ministerial group since the policy was announced last year. “The DIPP has decided to be a bit more empathetic while dealing with start-ups. After all, what good are tax sops if very few are able to benefit from it,” the official said. The 130 applicants for tax apps, who were rejected over the past year, will also get a detailed note on why their cases did not pass the test. As per the existing rules, start-ups (companies and Limited Liability Partnerships or LLPs) can get income tax exemption for three years in a block of seven years, if they are incorporated between April 1, 2016, and March 31, 2019.

Expanding definition

An IMG, including officials from the Department of Bio-technology, Department of Science and Technology and the DIPP, examine the proposals on the basis of innovation and use, and determine whether they qualify for tax sops or not.

“An official from the Ministry of Electronics, IT and Technology has been added to the IMG from May 1,” the official said.

The DIPP will come up with a new set of rules over the next few weeks, tweaking the definition of a start-up that will result in more companies and LLPs coming under in the category.

Source: https://www.pressreader.com/india/the-hindu-business-line/20170508/

RBI makes it easier for banks to implement joint lenders forum

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RBI gives more powers to tackle NPAs: Arun Jaitley

The Reserve Bank of India sprang into action as soon as the government notified the ordinance on bad loans, with the regulator offering more teeth to groups of lenders to deal with recovery proceedings and telling banks to stick to majority-agreed plans or face a penalty.

 

Any resolution plan agreed to by 60% of members in a joint lenders’ forum is binding on everyone in the group and no bank board will have the power to overrule the decision, the central bank said. Banks will have to implement the plan agreed upon without any additional conditions and there would be a monetary penalty on those who veer away from the decision.

 

“Delays have been observed in finalising and implementation of the CAP (corrective action plan), leading to delays in resolution of stressed assets in the banking system,” RBI said in a notification.

“It is reiterated that lenders must scrupulously adhere to the timelines prescribed in the framework for finalising and implementing the CAP.”

RBI’s strong measures come on a day when the regulator was empowered by law to direct banks to take action against bad loans which have been plaguing the sector for the better part of the last decade. Banks, because of differences between them over the recovery procedures, had often failed to resolve the problem.

In new timelines released on Friday, the RBI said henceforth decisions agreed to by a minimum of 60% creditors by value and 50% by number in the forum would be enough to approve a restructuring plan for the loans. The earlier rule required approval of 75% creditors by value and 60% by number.

The new corrective action plan covers restructuring of project loans, change in ownership under strategic debt restructuring and the scheme for sustainable structuring of stressed assets.

Source: http://economictimes.indiatimes.com/articleshow/58538315.cms