GST returns filing: Deadline ends, figures suggest robust collections

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As the extended deadline for filing the first tax returns under the goods and services tax (GST) ended on Friday evening, taxpayers inundated the GST Network (GSTN), the technology back end.
Given that the states’ combined GST tax revenue is estimated to be roughly equal to that of the Centre, a monthly GST revenue of Rs 1.55 lakh crore would meet the projections.

As the extended deadline for filing the first tax returns under the goods and services tax (GST) ended on Friday evening, taxpayers inundated the GST Network (GSTN), the technology back end. However, no official word was available on how many of the 87 lakh businesses registered on the portal filed the returns or paid taxes before the deadline.

Although it is too early to make any estimate, the tax collections under GST seem to endorse the forecast that the new tax will boost government revenues.

When just about 20 lakh of the 87 lakh taxpayers registered on the GSTN portal filed their returns and paid taxes as on Wednesday, some Rs 50,000 crore went to the total GST kitty. The Centre’s indirect tax target for the current financial year is Rs 9.26 lakh crore, which means a monthly average collection of Rs 77,200 crore.

Given that the states’ combined GST tax revenue is estimated to be roughly equal to that of the Centre, a monthly GST revenue of Rs 1.55 lakh crore would meet the projections. This doesn’t appear to be a tall order given the collection trend.

Of course, the GST collections being cited now are gross figures, without deducting the input tax credits that businesses are expected to claim and are estimated to be substantial, given the inherent nature of the new taxation system.

Till Thursday, 25 lakh taxpayers had filed their returns while an equal number had saved relevant details on the portal. GSTN officials told FE that the final numbers on the returns filed and taxes collected would be revealed by the revenue department.

The GSTN has, however, been grappling with a large number of taxpayers who are yet to complete their registration. This would prevent them from filing their return for July. The GSTN had prepared for a potential 39 lakh taxpayers to use the portal for filing tax return on Friday. This, GSTN officials said, was expected as even in the VAT regime half of the taxpayers filed returns on the last two days of the deadline.

Of the total GST amount of Rs 50,000 crore collected till Wednesday, Rs 20,000 crore had come in as integrated GST, which is levied on interstate movement of goods and imports. An amount of just over Rs 5,000 crore had been paid by assessees by way of cess on demerit goods such as cars and tobacco. The remaining Rs 25,000 crore had come in as central GST and state GST, which would be split equally between the Centre and the states.

Last Saturday, the government decided to extend the deadline for filing the interim summarised tax returns to August 25 from August 20 earlier, citing requests from taxpayers and difficulty experienced by states hit by floods.

This came after taxpayers and GST Suvidha providers — IT companies authorised to file returns on behalf of customers — complained that the GSTN system wasn’t accepting the filings.

Separately, nearly 10 lakh have registered on the portal for the composition scheme, which allows simpler compliance for businesses with an annual revenue of up to Rs 75 lakh. Of 87 lakh registered on the GSTN portal, nearly 71 lakh businesses have migrated from the earlier VAT, central excise or service tax regime, while 16 lakh are new taxpayers.

Source:  Financial Express

Debt resolution top priority in insolvency process, says IBBI chief

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The IBBI chief said as per the Insolvency and Bankruptcy Code (IBC), resolution is left with the imagination of the market participants and they are free to take any call in regards to an entity, which is down with indebtedness.

Resolution of indebtedness of a firm will be the top priority of all constituents of the insolvency and bankruptcy mechanism in the interest of the stakeholders, and it will think about liquidation only if it finds that the resolution is hard to come by, Insolvency & Bankruptcy Board of India (IBBI) chairperson MS Sahoo said on Wednesday.

“In such a process, the first endeavour is resolution. If it is not resoluble then they think about liquidation. The endeavour of the law, insolvency professionals and committee of creditors is to first find out a resolution plan,” Sahoo said while speaking at a conference organised by PHD Chamber of Commerce and Industry.

The IBBI chief said as per the Insolvency and Bankruptcy Code (IBC), resolution is left with the imagination of the market participants and they are free to take any call in regards to an entity, which is down with indebtedness. The government is just trying to create an enabling environment.

The government’s effort is also to empower the market participants in every field and that is what has been the focus of the insolvency code where one gets not just the freedom to enter into a business, but also enjoys the freedom to exit the business.

“In our scheme of things, we have segregated the role of the state and the role of the market. We have also segregated commercial aspects from judicial aspects. Bankruptcy code says that insolvency professionals will run the company; but for a resolution, the decision of resolution will be taken by the market, that is the committee of creditors,” he said.

Sahoo also pitched for a market driven institutional mechanism to facilitate and enable mergers and acquisitions with minimum regulations that can conveniently safeguard the legitimate interests of concerned stakeholders. “Why can’t we have that kind of framework where approvals of the authorities are minimised, institutions work and everything is delivered by the market?” he asked.

 

Source: Indian Express

GST amount collected hits Rs 50,000 cr mark from 20 lakh businesses

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The government has collected goods and and service tax (GST) amount of Rs 50,000 crore so far with 20 lakh assessees having filed an interim tax returns on the GST Network as of Wednesday evening.

The government has collected goods and and service tax (GST) amount of Rs 50,000 crore so far with 20 lakh assessees having filed an interim tax returns on the GST Network as of Wednesday evening.

 

In addition, 28 lakh assessees have filled in the relevant details on the portal but are yet to file returns, senior government officials said. Of the total amount of Rs 50,000 crore, Rs 20,000 crore has come in as integrated GST, which is levied on interstate movement of goods. An amount of just over Rs 5,000 crore, an official said, had been paid by assessees by way of cess on demerit goods such as cars and tobacco. The remaining Rs 25,000 crore has come in as central GST and state GST, which would be split equally between the Centre and the states, government official explained.

 

The Rs 50,000 crore collected is a gross amount and the final amount in the government’s kitty would be smaller since there would be refunds for input tax credit, experts said.

 

With just two days to go before the extended deadline for filing summarised returns expires on August 25, only 23% of nearly 86 lakh registered taxpayers have filed so far.

 

Last Saturday, the government decided to extend the deadline for filing the interim summarised tax returns to August 25 from August 20 earlier, citing requests from taxpayers and difficulty experienced by states hit by floods.

 

This came after taxpayers and GST Suvidha providers (GSPs) — IT companies authorised to file returns on behalf of customers — complained the GSTN system wasn’t accepting the filings. Approximately 87 lakh taxpayers are understood to have registered on the GSTN portal as taxpayers. Of them, nearly 71 lakh businesses have migrated from earlier VAT, central excise or service tax regime, while 16 lakh new taxpayers too have registered with the portal.

 

Source: Financial Express

Record reserves turn costly cash pile for RBI

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As India’s foreign-exchange reserves march toward the unprecedented $400 billion mark, its central bank faces a costly conundrum.

As India’s foreign-exchange reserves march toward the unprecedented $400 billion mark, its central bank faces a costly conundrum. To keep the rupee stable and exports competitive, it is having to mop up inflows that’s adding cash to the local banking system. Problem is, banks are flush with money following Prime Minister Narendra Modi’s demonetization program last year, leaving them already struggling to pay interest on the deposits in an environment where loans aren’t picking up. The resulting need to absorb both dollar- and rupee-liquidity is stretching the Reserve Bank of India’s range of tools and complicating policy. Costs to mop up these inflows have eroded the RBI’s earnings, halving its annual dividend to the government. “The RBI would be paying more on its sterilization bills than it gets on its reserve assets, so it would cut into its profits,” said Brad W. Setser, senior fellow at New York-based thinktank Council on Foreign Relations. “Selling sterilization paper in a country with a relatively high nominal interest rate like India is costly.”

Governor Urjit Patel aims to revert to neutral liquidity in the coming months from the current surplus. Lenders parked an average 2.9 trillion rupees ($45 billion) of excess cash with the central bank each day this month compared with 259 billion rupees the same time last year. This peaked at 5.5 trillion in March. The surge in liquidity has pushed the RBI to resume open-market bond sales as well as auctions of longer duration repos besides imposing costs on the government for special instruments such as cash management bills and market stabilization scheme bonds. Meanwhile foreign investors have poured $18.5 billion into Indian equities and bonds in the year through June, during which period the RBI has added $23.4 billion to its reserves. Its forward dollar book has also increased to a net long position of $17.1 billion end-June from a net short $7.4 billion a year ago. “My guess is reserves over 20 percent of GDP would start to raise questions about cost – but that is just a guess,” said Setser. India’s reserves have ranged between 15 and 20 percent of GDP since 2008 global crisis — a level that’s neither too low to create vulnerability or too high indicating excess intervention, he said.

Consistent buildup in the forward book may have cost the RBI some 70 billion rupees, while total liquidity-absorption costs due to the demonetization deluge from November to June were 100 billion rupees, according to calculations by Kotak Mahindra Bank Ltd. The RBI paid another 50 billion rupees to 70 billion rupees to print banknotes, the bank estimates. A weakening dollar would also have led to losses due to the foreign-currency cash pile, which has traditionally been dominated by the greenback. The Bloomberg Dollar Index has fallen 8.5 percent this year. After all these expenses, the RBI transferred 306.6 billion rupees as annual dividend to the government, compared with 749 billion rupees budgeted to come from the RBI and financial institutions. More clarity will emerge with the RBI’s annual report typically published in the final week of August. “This disturbs the fiscal math for the year through March 2018,” said Madhavi Arora, an economist at Kotak Mahindra Bank. Assuming everything else stays constant, she estimates the budget deficit may come in at 3.4 percent of gross domestic product rather than the government’s goal of 3.2 percent.

Apart from the high costs, there’s another dimension to the surge in liquidity. The RBI could face a shortage of bonds it places as collateral with its creditors. It is said to be preparing a fresh proposal to the government for creation of a window — the so-called standing deposit facility — which doesn’t require any collateral. “As the excess liquidity challenge looks set to persist, the RBI will need more tools to manage this, such as the standing deposit facility,” economists at Morgan Stanley, including Derrick Kam, wrote in an Aug. 16 note. He predicts that at the current rate of accretion, foreign-exchange reserves will hit $400 billion by Sept. 8 from $393 billion this month.

Source: Financial Express

India is now the hottest destination in the retail space

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Retail in India overtakes China in H1; global brands, hypermarkets expand presence: CBRE

India has topped the Global Retail Development Index in 2017, overtaking China. During the first six months of the year, there were 70 new brands which marked their presence in Mumbai, Delhi-NCR and Bengaluru.

According to CBRE’s India Retail MarketView Report – H1, 2017, seven new global brands entered the country and investments into the segment by firms/wealth funds touched $200 million.

Additionally, several retail developments were completed across select cities, resulting in around 1.5 million sq.ft. of fresh supply entering the market. During the first half of the year, demand for quality retail space remained robust with a majority of this supply concentrated in Mumbai, Bengaluru and Delhi- NCR.

Anshuman Magazine, Chairman, India and South-East Asia, CBRE, said: “Our ranking on the 2017 Global Retail Index for developing countries as well as continued investment by private equity players is a demonstration of the sustained preference of international brands to set up, or expand their operations in India.

“With several laws and policies in implementation mode, we are already seeing an increase in consumer and investor confidence. This will have a cascading effect on the retail segment. Overall, retail real estate will continue to grow and witness healthy demand across tier-I and -II cities.”

Vivek Kaul, Head, Retail Services, said, “The fact that demand for quality space continues to outstrip supply is indicative that the retail real estate segment across key cities in India is growing exponentially. While global brands continue to evaluate and consider quality retail developments in the top cities, with growing globalisation, smaller cities are also gaining prominence and witnessing traction.

“While there still remains some ambiguity around the highway liquor ban, resulting in F&B operators being in wait-and-watch mode, the overall market sentiment continues to be positive.”

During the first half of the year, a number of international brands already present in the country expanded their presence. Several hypermarkets too were in expansionary mode, including Big Bazaar, which opened new stores in Mumbai, Bengaluru and Chennai.

Clothing retailers such as Max and Pantaloons were also active during the review period.

According to the report, rental trends continued to vary across key high streets in major cities during the review period. While high streets such as Connaught Place, Khan Market, and South Extension in Delhi and Park Street and Elgin Road in Kolkata witnessed a rental appreciation, rentals in most other high streets remained stable.

At the same time, some high streets such as Linking Road in Mumbai and MG Road in Pune saw a marginal dip in rentals.

Source: The Hindu Businessline

GST Return Filing: How to handle discounts and additional cost

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In order to eliminate ambiguities and avoid litigation due to inaccurate or flawed valuation of goods and services, valuation methods have been provided by the law which act as guidelines to businesses while determining the accurate taxable value.

One of the sea changes brought about by the GST era is the way we determine the value of goods and services.

As a business, one needs to be aware of the changes in the valuation method and also how to go about valuation in some special cases, for e.g. additional charges / discounts, branch transfers (which are taxable under GST) and when a supply is made with money not being the consideration.

In order to eliminate ambiguities and avoid litigation due to inaccurate or flawed valuation of goods and services, valuation methods have been provided by the law which act as guidelines to businesses while determining the accurate taxable value.

Valuation of Taxable Supplies under GST
In the previous tax regime, different methods were adopted to determine the value of the supply, for e.g. –
a) Excise – Based on transaction value or quantity of goods or MRP

b) VAT – Based on sale value

c) Service Tax – Based on taxable value of taxable service rendered

However, in the GST regime, the value of goods and / or services supplied will solely be the transaction value, i.e. the price paid / payable at each point in the supply chain.

 GST Return Filing: How to handle discounts and additional cost

Additional Charges & Expenses
This may lead us to our next question – how do we account for additional charges and expenses, such as discount, packing charges etc. – under the GST regime? Should they be included or excluded from the transaction value?
Similarly, the following are some charges/expenses of supply, which are included in the transaction value –
a) Incidental expenses such as commission
b) Interest/late fee/penalty charged by supplier for delayed payment
c) Subsidies excluding those provided by the Central and State governments
d) Any tax other than GST

e) Any amount payable by supplier, but incurred by receiver

Thus, the transnational value is basis, for including or excluding the charges, in the valuation under GST.

Read more at: The Economic Times

 

Forex reserves hit record high of $393.612 billion

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The gold reserves remained unchanged at $19.943 billion.

The country’s foreign exchange reserves rose by USD 163.8 million to touch a new life-time high of USD 393.612 billion in the week ended August 11, helped by rise in foreign currency assets (FCAs), the Reserve Bank data showed.

In the previous week, the reserves had increased by USD 581.1 million to USD 393.448 billion.

FCAs, a major portion of the overall reserves, rose by USD 175.6 million to USD 369.899 billion, the data showed.

Expressed in US dollar terms, FCAs include effect of appreciation or depreciation of non-US currencies such as the euro, the pound and the yen held in the reserves.

The gold reserves remained unchanged at USD 19.943 billion.

 

The special drawing rights with the International Monetary Fund (IMF) declined by USD 5.8 million to USD 1.498 billion.

The country’s reserve position with the IMF also dipped by USD 6 million to USD 2.271 billion, the apex bank said.