Govt cancels GST registration of 163k business entities over non-filing of tax returns

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The government has cancelled Goods and Services Tax (GST) registration of over 163,000 business entities due to non-filing of tax returns for more than six months to curb the menace of fly-by-night operators who create bogus firms and fraudulently avail input tax credit (ITC) worth thousands of crores.

The Government has canceled the Goods and Service Tax (GST) registration of 163,000 business entities who have not filed monthly tax returns (GSTR-3B) for the last six months or more.

Furthermore, the department would persuade 25,000 taxpayers, who have not filed returns for October that was due by November 24, to comply with tax return deadlines.

 “All these business entities, who had not filed their GSTR-3B returns for more than six months, were first issued the cancellation notices and then their registrations were cancelled as per standard operating procedure,” one of the officials said.

The Tax officers have been directed to follow up personally with these defaulting taxpayers so that their GSTR-3B returns due for the month are filed by November 30.

The push for better compliance comes on the heels of the tax department’s nationwide drive against fake invoice scams.

It is suspected that fraudsters often register firms under GST but remain mostly dormant on compliance while using the status to claim invalid input tax credit (ITC). As per the sources, in the Ahmedabad zone 11,048 GST registrations have been cancelled.

In the Chennai zone, 19,586 suo motu cancellations have been done so far in respect of GST taxpayers who have failed to file returns for more than six months.

The officials said that the tax authority is also scanning newly registered entities that have not provided correct details at the time of registration.

Out of 720 deemed registrations granted between August 21 and November 16 this year, where Aadhaar authentication was not done, 55 deemed registrations have been identified for the discrepancy and the process of cancellation was initiated in these cases.

Furthermore, the department would persuade 25,000 taxpayers, who have not filed returns for October that was due by November 24, to comply with tax return deadlines.

After PM Modi Order, Enforcement Directorate’s crackdown on Shell Companies begins across 100 cities

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Enforcement Directorate is carrying out searches at 100 locations to detect shell companies.

Weeks after the Prime Minister Narendra Modi’s office ordered a crackdown on shell companies used to launder money, the Enforcement Directorate on Saturday carried out nationwide searches across 100 locations targeting nearly 300 shell companies.

Sources said Saturday’s ED raids on shell firms across more than a dozen states was a direct fallout of the coordinated action against these firms. Among the cities where the Enforcement Directorate teams were conducting raids are Kolkata, Chennai, Delhi, Ahmedabad, Chandigarh, Patna and Bengaluru. In Chennai, officials said searches were being carried out at 13 locations linked to 8 companies.

The PMO had last month identified paper companies, which do not conduct any operations but are used to launder money and evade taxes by other firms, as a big challenge to PM Modi’s war against black money.

As part of this exercise, the government had also decided to create a database of shell companies and their directors. A task force chaired jointly by the Revenue Secretary and Corporate Affairs Secretary was mandated to coordinate action against these dubious companies.

That the 1,155 shell companies detected over the last three years had been used as conduits by over 22,000 beneficiaries to launder money, one government official said, indicated how important it was to target shell companies. These companies face charges of dubious transactions running into more than Rs. 13,300 crore.

It is not clear if today’s multiple ED raids on shell firms are linked to the government’s finding that over 550 people had laundered Rs. 3,900 crore through such companies after the November 8 ban on the high-denomination notes.

An official report had earlier pointed that only 6 lakh of the 15 lakh registered companies file annual return. While it was possible that many of them may be defunct, officials said it could be possible that some of these could be involved in dubious transactions.

The Special Investigation Team to fight Black Money set up on the Supreme Court’s directions had also pointed that proactive detection of shell companies was going to be a key to the success of the government’s campaign.

Source: http://www.ndtv.com/india-news/after-pm-order-crackdown-on-shell-companies-begins-across-100-cities-1676030

Vizag, 4 other cities lead the way under smart cities mission

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Visakhapatnam along with four other cities — Pune, Bhubaneshwar, Surat and Ahmedabad — is leading the progress made under the first round of the government’s flagship scheme.

Mission Director (Smart Cities) Sameer Sharma told BusinessLine, “We have reviewed the progress of Visakhapatnam under the smart cities mission with the consultants and CEO of the special purpose vehicle (SPV) formed. Under the project, development of footpaths will go for bidding by October 31; water supply for the city by September 30, sewerage also by September 30, etc.”

Visakhapatnam had ranked eighth in the first round of the smart cities challenge.

On the overall progress made, he added that all 20 cities in the first round have already formed SPVs and most have readied Production Management Contracts ( PMCs) also. “Projects across all these cities are expected to kick-start by December,” Sharma said at the sidelines of the 3rd BRICS Urbanisation Forum here.

In January this year, 20 winning cities which were announced under the first round covered only 12 States and Union Territories. The government had then decided to conduct a ‘fast-track competition’ to offer an opportunity to the highest ranked city in each of the unrepresented 23 States and UTs. In May this year, the Ministry of Urban Development had announced 13 more winners of the smart city tag under the fast-track round.

On the progress under this round, Sharma said, “Out of the 13 selected in the fast-track round, six cities, including Panaji, Chandigarh, Port Blair, Lucknow, have formed SPVs and remaining seven are in the last stage of formation of SPV and are expected to do so by the end of this month.”

Moreover, on Monday, the Centre will announce 27 more cities which will bag the smart city tag.

 

Funding plans

Meanwhile, the government is also pursuing a loan of $1 billion from Asian Development Bank and another $500 million from the World Bank to provide funds to the city SPVs, apart from Japanese International Cooperation Agency ($500 million), BRICS Bank ($ 500 million per city), AFD (€100-200 million).

“The funds from World Bank are expected to flow in 6 months. It will be in phases,” Sharma added.

Source :http://www.thehindubusinessline.com/todays-paper/tp-news/vizag-4-other-cities-lead-the-way-under-smart-cities-mission/article9108718.ece

GST bringing realty shake-up

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Retailers, both of physical stores and e-commerce entities, fast moving consumer goods (FMCG) companies and those in consumer durables have started rejigging their warehouse strategy.

This is in preparation for the national goods and services tax (GST), with the government working to an April 2017 deadline. All this could mean a shake-up in real estate, say analysts. A rough calculation suggests these businesses could look at reducing their warehouse count to half, while stepping up the total space acquisition in select destinations, once GST comes into play. In the next two to three years, businesses could see significant cost reduction due to the revised strategy.

Hindustan Unilever, Nestle, Johnson & Johnson and Shoppers Stop are among those to have begun work on consolidating their warehouses, according to a source. These companies will take up mega space, in millions of square feet, to set up ‘mother warehouses’, he said. In the online space, top companies such as Flipkart and Amazon have been on an expansion spree for warehouses and fulfillment centres in the past two years, primarily to suit the complex tax structure through the country. Now, however, they won’t feel the need to have warehouses in every state and can strategise accordingly, Vijaya Ganesh Thangavel, managing director, Land & Industrial (India), Cushman & Wakefield, told this newspaper.

For instance, Max Fashion, a prominent retailer, has eight warehouses totaling 400,000 sq ft. The number is likely to come down to four after GST, says chief executive Vasanth Kumar. “The number will get firmed up once we know the full GST details and the implications such as the reverse logistics needs,’’ he said. Post GST, their warehouse count will be down but the total space covered could go up to around 600,000 sq ft by 2018 “to meet future business needs, as well our rate of growth at a 30-plus per cent CAGR (compounded annual rate)”.

If a typical e-commerce company was taking 300,000 to 400,000 sq ft in metros and tier-1 cities for warehouses, 100,000 sq ft in tier-2 and 40,000 to 50,000 sq ft in tier-3, the plan now will be to go for million sq ft space and more, away from big cities and in fewer locations, primarily where real estate cost won’t be prohibitive, says Thangavel of Cushman. Distribution centres, smaller in size in the range of 40,000 to 50,000 sq ft, could be set up closer to cities.

The biggest trend now is that prominent developers are getting into the warehouse space, which has mostly been a domain of local land owners till recently, according to Thangavel. Along with realtors, a new breed of advisors are coming up, only for warehouse planning. Also, warehouse parks are being set up for large structures. While the exercise of restructuring the warehouses will take a couple of years, he projects a cost reduction of at least 10 to 15 per cent by 2019-2020. Estimates are that big companies which have on an average one warehouse in every state, totaling to anything from 20 to 25, might look at eight to 10, pan-India post-GST.

“We understand that a few of the larger companies have started consolidating their warehousing requirements in strategic locations, in anticipation of GST, with a view to bringing efficiency into their supply chain,’’ said Rami Kaushal, managing director, Consulting and Valuations, CBRE South Asia.

Besides retailers and FMCG companies, even pharmaceutical companies would look at rationalising the number of operational warehouses and swap these for better quality and larger format ones, he said.

“Implementation of GST is expected to lead to rationalisation of warehousing demand, leading to lower logistics cost and reduced delivery time of manufactured goods,’’ Kaushal explained. The current complicated tax structure meant that choice in setting up inventory and distribution centres were based on the tax regime, rather than on operational efficiency, he said.

GST, when implemented, will free the decisions on warehousing and distribution from these tax considerations, according to Kaushal. ”This would enable occupiers to create larger hubs, servicing two or more states from a single location, which would help optimise inventory costs and increase efficiency.’’ This shift in operational planning would ultimately result in a hub and spoke model being adopted by many of the occupiers, he added.

Industrial warehousing space is estimated at approximately 800 million sq ft across the country and is expected to grow by nine to 10 per cent annually. A few sectors such as e-commerce, modern retailing and FMCG are expected to grow at about 20 per cent annually in the short term, according to CBRE.

A recent JLL report listed the National Capital Region, Mumbai, Pune, Bengaluru, Chennai, Hyderabad, Kolkata and Ahmedabad as top warehouse hubs. These eight city hubs together had a cumulative supply of organised Grade-A and Grade-B warehousing space of around 97 mn sq ft in 2015; this is expected to grow to around 116 mn sq ft by the end of 2016. It added that GST will result in emergence of new hubs such as Belgaum, Bhubaneswar, Coimbatore, Goa, Guwahati, Indore, Jaipur, Kolhapur, Lucknow/ Kanpur, Ludhiana, Nagpur, Patna, Raipur, Ranchi, Vapi and Vijayawada.

 

Source: http://www.business-standard.com/article/companies/gst-bringing-realty-shake-up-116090801173_1.html

Paperless I-T assessment: CBDT plans to take project to more taxpayers

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After successfully completing over 1,000 scrutiny I-T assessments under a maiden taxpayer-friendly paperless inquiry system, CBDT is set to extend the initiative as it is mulling seeking taxpayers’ consent to opt for the scheme at ITR filing stage itself.

Central Board of Direct Taxes (CBDT), the policy-making body of the Income Tax department, had launched a pilot project last year to reduce taxpayers’ visit to the tax office and their interface with the taxman.

Under the project, the first set of e-communications were decided to be mailed to the assessees in DELHI, Mumbai, Bengaluru, Ahmedabad and Chennai region.

As per official data accessed by PTI, the department in these five cities has completed scrutiny assessments in 1,001 cases till now, after a total of 6,481 assesses were contacted of which 1,812 responded positively.

A senior official said the biggest “challenge” in achieving better success in this new project was obtaining the consent of the taxpayers.

The Assessing Officers (AOs) found that while in some cases the taxpayer could not be reached as their personal email ids were with their CAs or authorised representatives, in a few other cases the assessee withdrew his consent to join the scheme, the official said.

“It is now being mulled if the I-T department can print a footnote on the Income Tax Return (ITR) or on the scrutiny notice itself that the taxpayer is invited to participate in the exercise over email in a paperless manner.

“The results are encouraging and the CBDT wants to make this an institutional system for scrutiny assessments henceforth,” the official said, adding the scheme is expected to be widened and rolled out with new features within this financial year.
The success of the project, initiated last year, is evident from the fact that CBDT recently added two more cities (Hyderabad and Kolkata), to the existing five metros, under the paperless assessment system exercise.

With this project, CBDT aims to end corruption and bring hassle-free experience for the taxpayers who undergo a time-consuming scrutiny assessment procedure which entails production of a number of documents and financial statements.

The department, however, says it brings only about 1 per cent of cases under the said procedure.

An official notification had been issued earlier which spells out the procedure, formats and standards for ensuring “secured transmission” of emails between the AO and the assessee stating all communication between the two sides will be done in PDF file format and over bonafide email ids.

This followed an amendment in the I-T Act in December last year, which allowed emails to become the new mode of interaction between the AO and the tax-paying individual.

Under the new procedure, the taxman will send emails, for issuing notices and summons, through the government registered ‘@incometax.gov.in’ email domain and the attached PDF document will have his or her designation and signature.

In response to such I-T notice, taxpayers will have to submit the details called for, in a Portable Document Format (PDF) through their email id registered with the department.

The notification states, “Any email, in response to the notice issued by the AO, received from the primary email address of the assessee, shall be considered as a valid response to the notice.”

In the same notification, CBDT had also mandated that the taxman will maintain an audit trail of all e-communication with a taxpayer in the IT department’s central database for future reference and as record management of the entire transaction.

The new directives also allow a taxpayer to physically submit a reply to such e-notices in case of a technical problem in their email. “This shall be treated as adequate compliance,” it had said.

The project was launched after CBDT had asked the I-T department to “initiate the concept of using emails for corresponding with taxpayers and sending through emails the questionnaire, notice etc at the time of scrutiny proceedings and getting responses from them”.

“This would eliminate the necessity of visiting the Income Tax offices by the taxpayers, particularly in smaller cases, involving limited issues and where taxpayer is able to provide details required by the AO without necessitating his physical presence,” the order had said.

Source : http://economictimes.indiatimes.com/articleshow/53061801.cms

 

CBDT lays down norms for e-assessments

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CBDTThe Central Board of Direct Taxes (CBDT) has laid down operational guidelines for e-assessments of select non-corporate taxpayers to be undertaken as a pilot in five metros.

 

It has now specified the format and standards for ensuring secured transmission of electronic communication between the taxpayer and the Income-Tax Department.

 

The move comes three months after the CBDT announced its intent use ‘electronic mail’-based communication for assessment.

 

It had then announced that a pilot project would be launched in five “non-corporate charges” at Delhi, Mumbai, Bengaluru, Ahmedabad and Chennai.

 

Non-corporate charges

 

Non-corporate charges are those dealing with assessments of individuals, Hindu Undivided Families and partnerships.

 

Initially, 100 cases would be identified for e-hearing in each of these five regions and a major part of the assessment would be done electronically, the CBDT had then decided. Only cases taken up for scrutiny were to be covered under the pilot.

 

Commenting on the move, Aseem Chawla, Partner, MPC Legal, a law firm, said: “If this IT-enabled exercise does succeed, it would usher in a new era in taxpayers’ interaction with tax department in making the process, simpler, economical and hassle-free.”

 

Amit Maheshwari, Partner, Ashok Maheshwary & Associates, a CA firm, said, “The guidelines allay various concerns of the taxpayers on the scheme and once it’s successful would enable quick percolation across the entire tax department and make it a standard practice. One good move is that the communication status would be displayed to the taxpayer in their online account.

 

“This would prevent missed dates, miscommunications and effective follow-ups.”

 

Vikas Vasal, Partner –Tax, KPMG in India, said the Centre has clarified the procedural aspects of usage of electronic communication regarding paperless assessment proceedings.

 

Saving time

 

“Gradually, the aim is to move most of the communication to the electronic format.

 

“Once done, it would save time and effort both for the tax payers and the tax department.

 

“Also, it would bring in more transparency and consistency in tax positions” .

 

A number of tax simplification measures have been announced by the government recently and more are expected in the forthcoming Union Budget, he added.

 

“If this IT-enabled exercise does succeed, it would usher in a new era in taxpayers’ interaction with the department in making the process, simpler, economical and hassle free”.

 

Source: http://www.thehindubusinessline.com/todays-paper/tp-news/cbdt-lays-down-norms-for-eassessments/article8200085.ece

All communication of tax scrutiny to be via e-mail from FY17

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The I-T department in the recent times has taken a host of initiatives to reduce human interface between tax official and assessees and make the tax system non-adversarial

 

The income tax department is planning to carry out all communication related to the scrutiny of returns through e-mails from the next fiscal to reduce harassment of tax payers by eliminating interface between assessees and taxmen.

 

The I-T department, on a pilot basis, has already started scrutiny of returns through e-mails in 5 metropolitan cities- Delhi, Mumbai, Bengaluru, Ahmedabad and Chennai regions.

 

“We are working on a software so that all scrutiny communications can be stored in a specified server. Once it is ready, we will shift to e-environment as far as scrutiny, and all communications in this regard are concerned,” a top revenue department official told PTI.

 

The official further said that moving to e-scrutiny would help in combating corruption, as it would reduce the interface between assessee and tax officials. Also, he added that all the communication records with regard to scrutiny would be stored in one place and can be verified whenever needed.

 

“There has been an encouraging response to the pilot project undertaken by the tax department. From next fiscal we want to make all scrutiny communication through emails,” the official said.

 

The Central Board of Direct Taxes (CBDT) has already asked the officials to initiate the concept of using emails for corresponding with taxpayers.

 

The I-T department in the recent times has taken a host of initiatives to reduce human interface between tax official and assessees and make the tax system non-adversarial. These include directing field offices to raise only specific queries in income tax assessment cases picked up for scrutiny. It also directed expeditious completion of those scrutiny cases where income concealed is up to Rs.5 lakh.

 

The department had also stipulated that appeals before I-T commissioner should be filed in electronic format by those assessees who e-file their returns.

 

Source: http://www.livemint.com/Politics/q7dtcfDoj7LMFeJkTG1VRK/All-communication-of-tax-scrutiny-to-be-via-email-from-FY17.html