GST Network reopens for registration

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Opened for first time for new assessees, tax practitioners

With barely five days left for the roll-out of the goods and services tax (GST), the GST Network (GSTN), a company that provides information technology systems for the GST, reopened registration for assessees on Sunday.

 

That was for new assessees not enrolled in the existing tax system — central excise duty, service tax and state-level value added tax — and for tax practitioners such as chartered accountants. Existing assessees which did not apply earlier can also enrol. The system also opened for those to be registered as tax deducted at source (TDS) or tax collected at source (TCS).

 

So far as smoothness of registration is concerned, Archit Gupta, chief executive officer (CEO) of Cleartax, that helps assessees register on GSTN, said, “We have an online service for fresh registrations and have received applications form small & medium businesses. So far, we haven’t faced any issues in the registration process for our customers.”

 

As many as 6.56 million registrations have already been made on the GSTN, which is 81 per cent of the existing 8.01 million registrations.

 

The new assessees, as well as existing ones, will be given a month’s time to register on the GSTN from Sunday.

 

Earlier, GSTN was opened in phases since November 16 for existing tax assessees. The GSTN had stopped registrations in between, as it was to transfer data to its own data centre from an earlier hired data centre. The GST portal has already opened two windows for enrolments — first between November 8 and April 30 and then from June 1 to June 15. This is the third window to allow all taxpayers enough time to migrate to the new regime.

 

Navin Kumar, chairman of GSTN, said, “We started the migration of existing taxpayers in November and wanted to close the process by March. The government however asked us not to close it, as many were still to register. At that time, the number of people coming to the portal fell to a few thousands compared to 200,000 a day (now). But we halted the process briefly, hoping it would trigger more people to come and register when we reopen the window.” Interestingly, there was no law that required them to register as GSTs then; the Bills were passed later.

 

“In fact, I am surprised why they came. We asked the tax department to persuade them to come and migrate, so the entire credit goes to CBEC. About six million came in the first instance and then 600,000 more came in the 15 days after that,” he said.

 

There were 8.01 million registrations in the existing system. Kumar said he wondered why the 1.4 million didn’t come. He believed one factor could be the exemption threshold under VAT for most states is Rs 5 lakh, and is Rs 20 lakh under the GST. Those with a turnover below the threshold have to register if they want to claim input tax credit.

 

It is expected not all assessees would migrate to the GSTN portal as, businesses with turnover of up to Rs 5 lakh are currently exempt from VAT. But, if they are supplying to other businesses or if want to pass on credit, then they need to register their business.

 

The existing assessees were given provisional IDs if they registered with their email ID and mobile numbers. But, for the second stage and final registration, the businesses have to give details of its business, such as the shareholding pattern of business, main place of business, additional place of business, directors and bank account details etc.

 

Revenue Secretary Hasmukh Adhia had cautioned those with provisional IDs not to rush for registration on GSTN, as they had got one month more for registration.

 

The GST Council has given relaxation for filing of returns. The assessees can file detailed, invoice-based returns by September 5 for the month of July. Had this relaxation not been given, they would have to file these returns by August 10.

 

Similarly for August, these returns could be filed by September 20, a relaxation of 10 days.

 

Meanwhile, the GSTN released three sets of videos to reach out to assessees and help them register.

 

“To help the people register themselves to the new GST portal smoothly, we have released three videos just after the opening of the portal today (Sunday). The videos are an official guide for registration which will ensure a smooth roll out of the regime. The videos have been crafted to help all taxpayers including those who are not well versed with technology to complete their enrolments,” Kumar said.

 

Source: http://www.business-standard.com/article/economy-policy/gst-network-reopens-for-registration-117062600049_1.html

Companies can avail input tax credit for most business expenses

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This will bring down the incidence of taxation on business, which can be shared with consumers through lower prices.

Buying cleaning liquids for ‘Swachh Bharat’ as part of corporate social responsibility or taking a business associate out for lunch, companies will be able to set off all taxes paid on their consumption of goods and services when they clear their own GST liability.

The upcoming indirect tax reform seeks to revamp the entire credit process, allowing credit for any tax paid towards the furtherance of business barring a few items.

“Uninterrupted and seamless chain of input tax credit is one of the key features of GST, which will prevent cascading of taxes” .

This will bring down the incidence of taxation on business, which can be shared with consumers through lower prices.

Goods and services tax (GST), India’s most ambitious indirect tax reform, is set to roll out from July 1.

Tax charged by central and state governments would also be part of the same tax regime with credit available for tax paid at every stage for set off against GST liability.

“Any registered person can avail credit of tax paid on the inward supply of goods or services or both which is used or intended to be used in the course or furtherance of business,” the provision reads.

Under the current tax regime, if a retailer purchases a refrigerator to store perishable goods, he is not able to claim credit for tax paid on it. But under GST, he will be able to claim credit for tax paid on new refrigerator when he files his own taxes.

Similarly, credit could be claimed on tax paid on taking business associates out for lunch, or on goods or service used for corporate social responsibility. There are some exceptions, such as contribution towards employee provident fund and car lease, which are not covered under input tax credit.

“Under GST, input credit is available on all business expense except few that are specifically denied,  such as employee benefits and construction,” said Pratik Jain, leader, indirect tax, at PwC.

“This is much more liberal than the current laws and would significantly increase the credit pool for the businesses,” he said.

“One would hope that authorities will interpret the law also liberally as this would need in change in mindset both for the industry as well as the government,” Jain said.

There is a pass through available for tax paid on a good or service consumed to ensure that tax is not levied on tax.

Source: http://economictimes.indiatimes.com/articleshow/59327384.cms

Foreign exchange reserves in India hit record high of $382 bn, grows 6% in 2017

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Foreign exchange reserves touched a record high of $381.96 billion as on June 16, compared $381.16 billion in the previous week, the Reserve Bank of India said in its weekly statistical supplement on Friday. Foreign currency assets (FCAs), the largest component of the foreign exchange reserves, increased to $358.08 billion from $357.28 billion in the previous week, central bank data showed. Expressed in US dollar terms, FCAs include the effects of appreciation/depreciation of non-US currencies, such as the euro, pound and the yen, held in the reserves. So far in 2017, foreign exchange reserves have grown 6% and have touched record levels five times since April, as the RBI has aggressively been buying dollars to prevent a sudden jump in the rupee.

The central bank has been buying dollars on a daily basis, both in the spot market as well as in the forward market, to limit the appreciation of the local currency, which has been gaining steadily, traders said. The rupee has gained about 5% since the beginning of the year. Among other factors, strong demand for the local currency from foreign portfolio investors (FPIs) looking to invest in Indian assets has caused the rupee to appreciate. FPIs have bought Indian shares and bonds worth around $22 billion so far in 2017. Given India’s low current account and fiscal deficits, and the advantage it offers in terms of interest rate differential, traders expect the inflows to continue in the near-term.

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 available data, the RBI’s outstanding net forward purchases in April stood at $13.55 billion, up from $10.84 billion in the previous month. On the other hand, net purchase in the spot market dropped to $0.57 billion in April from $3.54 billion in March. The RBI publishes data on the sale and purchase of dollar with a lag of two months.

Source: http://www.financialexpress.com/economy/foreign-exchange-reserves-in-india-hit-record-high-of-382-bn-grow-6-pct-in-2017/733287/

RBI Increases Scope of Banking Ombudsman

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The Reserve Bank of India has widened the scope of its banking ombudsman platform by including issues regarding mis-selling of third-party products, and customer grievances related to mobile banking and electronic banking issues.

The new rule will be effective from July 1, and the banking ombudsmen will enjoy more power in their pecuniary jurisdiction.

Banks sell third-party insurance or MF products to earn a fee, but they were so far not liable to address customer grievances.

Now, the deficiencies arising out of sale of insurance, mutual fund and other third-party products will be looked into.

Banks would now have to take the onus of providing after-sales service on third-party products.

RBI has also simplified the process of making complaints.

Under the amended scheme, a customer would also be able to lodge a complaint against the bank for its non-adherence to RBI instructions with regard to mobile banking and electronic banking services.

The pecuniary jurisdiction of the banking ombudsman to pass an award has been increased from existing, Rs.10 lakh to Rs. 20 lakh.

Ombudsman can direct banks to pay compensation up to Rs. 1 lakh to the complainant for loss of time, expenses incurred as also, harassment and mental anguish suffered.

Source: https://www.pressreader.com/india/economic-times/20170624/281930247985177

 

Bankruptcy Code: Banks to refer Essar Steel, Electrosteel, Bhushan Steel to NCLT

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The fate of three near-bankrupt steel companies — Essar Steel, Bhushan Steel and Electrosteel Steels — which together owe lenders nearly Rs.1 lakh crore will now be decided by the National Company Law Tribunal (NCLT).

The fate of three near-bankrupt steel companies — Essar Steel, Bhushan Steel and Electrosteel Steels — which together owe lenders nearly `1 lakh crore will now be decided by the National Company Law Tribunal (NCLT). Having failed to recover their dues or rope in either strategic or financial investors, lenders to these companies finally agreed on Thursday to resort to the Insolvency and Bankruptcy Code (IBC), bankers familiar with the development said. The decision follows a directive by Reserve Bank of India (RBI) on June 13 to banks asking them to refer a dozen troubled companies — with a combined debt of close to Rs.2.4 lakh crore — to the tribunal.

Corporate watchers said a new chapter was unfolding for India Inc, traditionally unfamiliar with insolvencies and, more often than not, able to wrangle concessions and bailouts, often with the help of those in power. Both the RBI and the government are attempting a speedy resolution to the problem of non-performing assets (NPAs) that is paralysing banks and stymieing investments.
While it has been known for several years now that many of the country’s top corporates are financially fragile, it was former RBI governor Raghuram Rajan who first forced banks to accept the reality and classify assets correctly in December 2015.

Bankers have been given a fortnight within which to move the tribunal. Among the other companies that have been refereed to the NCLT are Jyoti Structures, Lanco Infratech, Monnet Ispat and JP Infratech. The 12 accounts identified by the central bank are those to which banks have an exposure of more than Rs 5,000 crore, more than 60% of which has been recognised as NPAs. Once these cases are with the NCLT, the lenders need to set up a committee of creditors that will come up with a plan on how the asset will be tackled. If the committee is unable to find a solution within 180 days — this can be extended to 270 days — the borrowing entity will go into liquidation.

The three steelcos — Essar, Bhushan and Electrosteel — together have a manufacturing capacity of close to 18 million tonnes per annum. The total debt of the Essar Group is estimated at Rs.1.17 lakh crore. Most private banks have sold off their Essar Steel exposure to asset reconstruction companies, taking a haircut of more than 50%; most PSU banks have declared Essar Steel an NPA.
Essar Steel, promoted by the Ruias, had at a meeting last year requested banks to convert Rs.12,200 crore of loans into preference capital and equity shares.

While Rs.9,000 crore was sought to be converted into preference shares, to be redeemed after 12-18 years, the company had requested the remaining Rs 3,200 crore be converted into common equity. For the balance Rs 31,800 crore, the company had sought a prolonged repayment period. Senior bankers had told FE such a deep restructuring proposal, if approved by the consortium, would amount to taking a haircut of nearly 30%.

Bhushan Steel, promoted by the Singals, has been unable to service its loans for several years now thanks to the stress on cash flows, partly the result of large steel imports into the country which drove down prices. While banks had been monitoring the company’s operations and financials, they were unable to come up with a solution. In August 2014, a senior company executive was arrested around the time the former chairman and managing director of Syndicate Bank SK Jain was arrested in an alleged case of bribery.

In the case of Electrosteel Steels, banks decided to initiate a strategic debt restructuring, with a view to roping in a new investor and beefing the equity capital of the company. However, despite many attempts, banks were unable to find a buyer within the stipulated 18 months, and were compelled to classify the account as an NPA.

Source: http://www.financialexpress.com/economy/bankruptcy-code-banks-to-refer-essar-steel-electrosteel-bhushan-steel-to-nclt/731747/

Capital gains tax evasion under CBI scanner

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The Central Bureau of Investigation (CBI) is probing if any government officials were involved in misusing stock exchange platforms to benefit from the long-term capital gains tax (LTCG) exemption.

According to sources, CBI officials visited the headquarters of the Securities and Exchange Board of India (SEBI) in Mumbai to get relevant files pertaining to LTCG cases probed by the markets regulator.

This comes at a time the income tax (I-T) department is probing the entities which had allegedly misused capital gains provisions to evade taxes worth Rs 34,000 crore.

Gains made from the sale of shares held for more than a year are exempt from taxes.

According to sources, the CBI is trying to gather information if any government official made any undue gains by being the end-beneficiaries. “We have collected some relevant documents along with transaction trails with regard to the companies that appeared to have misused the trading platforms to evade taxes. We suspect that there are high chances of government officials being involved, especially as end-beneficiaries,” a CBI source said. “The undue advantage could be hidden and may have been done in a multi-layered arrangement, which needs to be identified.”

Sources said the central agency was in the process of vetting the documents and would accordingly take a call on registering a case against the suspected beneficiaries.

The issue is critical as a few instances of abuse have been reported despite several measures taken by the regulator and the bourses. The intensity of the matter has raised the probability of revocation of capital gains benefits.

So far, investigations by the SEBI revealed that 11,000 entities have bought shares of more than Rs 5 lakh each in the past three years in listed firms that might not have any business operations. The SEBI has identified these entities using data analytics and trading and surveillance data.

The probe suggests that such deals were aimed at evading capital gains tax by showing the source of income as legitimate from stock markets. The so-called losses, actually bogus losses, are showed in the books to offset the same against capital gains.

The modus operandi is thus: Operators advise beneficiaries to invest in the listed companies, which allot shares on preferential basis at a nominal rate. These shares are under a lock-in period for a year.

Subsequently, these operators manipulate the scrip. They also rope in entities to provide the “last traded price” to book LTCG and also to buy shares at a higher price. The beneficiary pays cash to the operator through a multi-layered structure from the gains made by evading taxes.

The markets regulator had reservations that the cases were about tax evasion, which do not fall under its purview. However, if share prices were manipulated, it could proceed under section 11B of the SEBI Act, which allows it to impound the sale proceeds.

It also pointed out that the evidence provided by the tax department was not sufficient to establish connections between promoters of companies, beneficiaries and the “last traded price” and “exit” providers.

Source: http://www.business-standard.com/article/markets/capital-gains-tax-evasion-under-cbi-scanner-117062100019_1.html

GST Council meet clears 5 set of rules, defers e-way bill rule, relaxes deadline for filing returns

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The GST Council on Sunday made the dreaded anti-profiteering clause more palatable specifying a sunset clause of two years even as it relaxed the deadline for filing returns under the goods and services tax (GST) till September

The GST Council on Sunday made the dreaded anti-profiteering clause more palatable specifying a sunset clause of two years even as it relaxed the deadline for filing returns under the goods and services tax (GST) till September. The Council also approved five sets of rules but deferred a decision on the E-Way Bill rule. The GST — a uniform levy across the country — will be rolled out at midnight on June 30, ahead of which the council will meet again. Jammu and Kashmir and Kerala are yet to approve the State GST law.

The GST Council tweaked rates for luxury hotels giving relief to states relying on tourism. State-run lottery tickets will attract a levy of 12% while those run by private players will attract a higher GST of 28%. Rates for hybrid vehicles were not discussed at the meeting, the 17th Council meeting.

The anti-profiteering clause seeks to penalise businesses that do not pass on the benefit of a reduced incidence to customers. Any firm found to be profiteering, will pay a penalty equivalent to the amount of benefits gained under GST but not passed on to customers.

At a press conference, finance minister Arun Jaitley said he hoped the anti-profiteering rule would not be used.

Explaining how the anti-profiteering clause would work, revenue secretary Hasmukh Adhia said the GST implementation committee, a body comprising officers from states and central government, would pass on any complaints that it receives to the Director General of Safegaurd. “The DG of Safeguard will then take about three months to investigate the complaint and send its findings to the anti-profiteering authority,” Adhia explained.

“We may be able to refund the penalty to consumers in the case of commodities that can be tracked. However, for other commodities, the penalty amount will be deposited in the consumer welfare fund as provided under the GST Act,” Adhia added.

The simplified rules for filing returns require a taxpayer to file only a simple, self-certified return —by August 20 for July and September 20 for August. This would summarise inward and outward supplies rather than specify invoice-wise detailed returns as per GST rules. However, assesses must file the return with invoice details in September for both months. These will be matched with the simpler returns filed earlier, and any discrepancy would be liable to a fine, Adhia said.

The FM observed the IT platform—GSTN– was ready. “So far, 65.6 lakh of the 80.91 lakh existing assessees have migrated to the GSTN. This is a reasonably good number given many current taxpayers would be out of GST ambit due to the annual turnover ceiling of Rs 20 lakh,” Jaitley said. The FM added that there was a window of more than 30 days for new businesses to register.

The GST council approved five sets of rules including those relating to advance ruling, appeal and revision, assessment, anti-profiteering and fund settlement.

The anti-profiteering authority will be a five-member body; the chairman will be a secretary- level officer with four joint secretary level officers as members.

With the GST Council divided on the E-way rule—the manner in which consignments moving across states will be tracked–Jaitley said the transient rule would prevail pending a final decision.

Meanwhile, the Council raised the ceiling for hotel rooms attracting the highest tax rate of 28%– rooms costing more than Rs 7,500 per night will now be taxed at 28% compared to Rs 5,000 and above earlier. Similarly, services provided by restaurants in five-star hotels will now also charge 18%, down from 28% earlier. This has brought these restaurants at par with other air-conditioned restaurants.

The Council lowered the annual turnover limit for the composition scheme to Rs 50 lakh for the north-eastern and some other hilly states, at their request. Earlier, the composition limit for all states was increased from Rs 50 lakh to Rs 75 lakh. The composition scheme is applicable only to traders, manufacturers and restaurants.

Source: http://www.financialexpress.com/india-news/gst-council-meet-clears-5-set-of-rules-defers-e-way-bill-rule-relaxes-deadline-for-filing-returns/725238/