6 Crucial changes in GST Rules applicable from January 1st, 2021

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The year 2021 has come up with the various changes in Goods and Service Tax (GST) Rules which will have a direct impact on the business registered under the GST regime and the businessmen who are planning to get themselves registered under GST.
 
Firstly, the CBIC has revised the extent of provisional Input Tax Credit (ITC) claims from 10% to 5%, with effect from 1 January 2021.
 

Firstly, the CBIC has revised the extent of provisional Input Tax Credit (ITC) claims from 10% to 5%, with effect from 1 January 2021. As per the sub-rule (4) inserted in rule 36 of the Central Goods and Service Tax Rules, 2017, a taxpayer filing GSTR-3B can claim ITC only to the extent of 5% of the eligible credit available in GSTR-2A. The amount of eligible credit is arrived upon those invoices or debit notes, the details of which have been uploaded by the suppliers in the GSTR-2A only. The new percentage applies from 1 January 2021 onwards. The ITC claim was earlier restricted to 10% between 1 January 2020 and 31 December 2020 whereas it was 20% for the period from 9 October 2019 till 31 December 2019.

Secondly, the CBIC has amended the Rule 21, which is in respect of the suspension or cancellation of GST Registration. The amendment inserted the additional situation wherein the registration of a person can be suspended if he avails input tax credit in violation of the provisions of section 16 of the Act or the rules; or furnishes the details of outward supplies in FORM GSTR-1 for one or more tax periods which is in excess of the outward supplies declared by him in GSTR 3B for the said tax periods, or violates the provision of rule 86B.

Thirdly, the Board inserted Rule 86B wherein all the registered persons have to pay 1% cash liability so as to curb tax evasion by way of fake invoicing. The Rule 86B is applicable to only those registered persons whose value of taxable supply, other than exempt supply and export, in a month exceeds Rs 50 lakh that means those whose annual turnover is more than 6 crore.

For example, if a dealer has made a sale of Rs 1 crore of the goods whose tax rate is 12% and if he is discharging his tax liability more than 99% though ITC, then he has to pay only Rs.12,000 under this rule. On the other hand, a composition dealer would have paid Rs.1 lakh in cash with this volume of sale.

Fourthly, the CBIC has amended Rule 8 and 9 which pertained to New GST Registration, which provides for the biometric verification i.e. Aadhaar authentication and taking photographs or taking biometric information, photograph and verification of such other KYC documents for the applications for new registration.

However, in the case of those opting not to use Aadhaar, GST registration would be given only after physical verification of the business premise, which could take upto 21 days and in case a notice is issued, even more time.

Fifthly, the Board has amended Rule 59, not to permit the taxpayer to file GSTR 1 if the taxpayers have not furnished the return in FORM GSTR-3B for the preceding two months (for a taxpayer filing monthly returns); he has not furnished the return in FORM GSTR-3B for preceding tax period (for a taxpayer filing quarterly returns) and he is required to discharge the tax liability of at least 1% by cash (see the discussion on Rule 86B) and he has not furnished the return in FORM GSTR-3B for preceding tax period instead of two months.

Sixthly, the CBIC has amended Rule 138(10) which related to E-way Bill wherein the available travel time has been enhanced to 200 Kms. For example, goods dispatched to the destination located at a distance of 550 kms have taken place on February 1, 2021. As per the existing rule, the validity of the E-way bill generated would have expired on February 7, 2021, i.e. one day for 100km starting from the midnight of the generation of the E-way bill. However, as per the amendment, the e-way bill will expire on February 4, 2021, and hence the goods must reach the destination within the time frame.

Govt. cancels GST Registration of 163k Business entities for Non-Filing of Tax Returns

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GST Council, has recommended to reduce / waive the interest/ late fee for delayed filing of GSTR 3B by small taxpayers (having turnover upto Rs. 5 crores) for the tax period from July 2017 to July 2020
To handle the menace of fake firms and circular trading entities, GST officials have cancelled 1,63,042 registrations in the month of October and November this year due to non-filing of GSTR-3B returns for more than six months
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.

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.

30 important Key features of GST New Return System:

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First 15 features (1-15 points) as PART-I:-

  1. Supplier can upload the Tax Invoices on real time basis in Anx-1.
  1. Recipient can view his purchase Invoices on near real time basis.
  1. Recipient can also view whether supplier has filed his return or not.
  1. Supplier has to upload the Tax Invoices latest by 10th of Next Month.
  1. However, recipient can claim ITC on missing invoices also subject to certain conditions.
  1. In case, Invoice uploaded by the supplier in Anx-1, but RET-1 is not filed, uploading of invoices in Anx-1 will be treated as self-admitted liability and recovery proceedings will be initiated against the supplier, except in certain specified situations where recipient will be liable to pay.
  1. Recipient has to pay the amount of ITC availed on missing invoices after specified period. (Missing invoices means, invoices not uploaded in Anx-1)
  1. To find out missing invoices, Offline IT Tool will be provided for matching invoices in Anx-2 with invoices in the accounting system of recipient.
  1. Payment of tax shall be discharged full at the time of filing of RET-1 or SAHAJ or SUGAM itself.
  1. In case of Quarterly returns, tax shall be paid on monthly basis.
  1. Recipient can do the following actions on the invoices appearing in Anx-2 (auto drafted Purchase Invoice):

Accept  also called as locking

Reject (eg. Invoice not related to the recipient)

Pending

  1. If no action is taken on a particular invoice, it will be deemed by the system as accepted and ITC will be available against these invoices.
  1. Once invoice is accepted by the recipient, i.e., locked by the recipient, supplier cannot amend those invoices.
  1. Locked Invoice should be unlocked by the recipient only, for making any amendment by the supplier.
  1. Supplier will be able to issue Debit Note or Credit Note on locked invoices also. If credit/debit note is issued against any pending invoice, then system will club the credit/debit note with pending invoice.

Second set of 15 features (16-30 points) as PART-II:-

  1. Missing invoices shall be reported in RET-1 of the current month.
  1. System will calculate the interest automatically. Once the tax and interest is paid, the missing invoice will be clubbed with the monthly return to which it relates.
  1. For amendments, separate Return Form is available.
  1. Maximum 2 amendments return can be filed for any one month.
  1. “NIL” Return can be filed by “SMS”.
  1. Negative liability if any shall be carried forward to next month regular return.
  1. Higher late fee for amendment return if change in liability is more than 10%
  1. Shipping Bill details also should be entered in Anx-1 by the exporters.
  1. If the shipping bill details are not available by the time of filing the return, the same can be entered later on also.
  1. The export data then will be transmitted to ICEGATE portal for cross verification purposes.
  1. Until the facility is ready to pull the data from ICEGATE portal, importers can avail ITC on imports and supplies from SEZ on self-declaration basis.
  1. New concept of suspension of registration will be introduced. From the date of suspension till the date of cancellation, tax payer need not file returns and invoice uploading also will not be allowed.
  1. HSN should be reported at 4 digit level in monthly return.
  1. The tables in the return will be opened based on the profile of the tax payer.
  1. For all return obligations offline utility tools are made available to make filing process as easy as possible.

GST data: CBEC orders taxmen to intensify efforts against uncooperative taxpayers

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After receiving ground reports of difficulty faced by tax officials in collecting comparative data from unwilling assessees, the Central Board of Excise and Customs (CBEC) has written to all commissioners urging them to intensify their efforts and challenge the objections raised by taxpayers in sharing information.

After receiving ground reports of difficulty faced by tax officials in collecting comparative data from unwilling assessees, the Central Board of Excise and Customs (CBEC) has written to all commissioners urging them to intensify their efforts and challenge the objections raised by taxpayers in sharing information. As FE reported earlier, CBEC had asked tax commissioners to collect granular data of taxes paid and credit availed by assessees under the goods and services tax (GST) for the July-October period and compare the same with data from the corresponding period of last fiscal. This, the board hopes, will bring out any anomalies in tax payment and utilisation of input tax credits (ITC), including transitional credit, by taxpayers. “When ‘resourceful officers’ are instructed by the special secretary to get the requisite data using their unjustified pressure, he seems to have bureaucratic overreach. Tone and tenor of the letter is such, as if, CBEC has issued an indictment order against chartered accountants on a holiday. Under digital India programme, the government is spending billions to control tax terrorism by eliminating interface of tax officers with taxpayers, here we witness complete negation of such policies,” Rajat Mohan, partner at AMRG & Associates, said.

CBEC has mentioned certain objections raised by the taxpayers in sharing the required information and also suggested ways to counter such resistance. For instance, some assessees have claimed that their chartered accountant (CA) was out of station and hence data couldn’t be shared. In his letter, CBEC member John Joseph said that it was improbable for CAs to go on long leave in the month of December as they would be busy filing I-T returns, hence they should be contacted and data should be collected from them.

“The name of the CAs who are not cooperating with the department along with the name of the name of the companies being handled by them may be intimated to his office,” the board said in the latest missive to field staff.Further, some assessees have said that they come under the jurisdiction of the states’ administration and would not share data with central officials. Responding to this, the letter said: “The list of such assessees who refuse to part with the data, may be indicated and reported to this office. However, it is felt that if the officer is resourceful then he/she should be able to collect the data.”

While CBEC had earlier provided tax filing data collected through the summarised return GSTR-3b with all the commissionerates, it has now also provided them with information on transitional credit claimed by assessees through the TRAN-I forms. “Comparison of data should be possible now as you are being supplied with the GSTN data on trans credit. Please analyse the data, report discrepancies/disputed credit if any along with reasons for the same,” the letter said. Officials tasked with collecting data have said that since assessees are being asked for data informally without being under investigation, the taxpayers are within their right to refuse to share such information. This has presented a twin problem for officials tasked with the exercise, as assessees can’t be forced to share the information while the task itself requires substantial time.

On the basis of data shared with field formations, CBEC wants the top 100 assessees to be selected by each of the commissionerates based on central excise and service tax revenue of FY 17 for revenue analysis. Each official would be given a maximum of two taxpayers for detailed analysis. The analysis would be based on central GST, state GST, integrated GST and compensation cess paid by assessees against pre-GST revenue of the corresponding period. In cases where it is possible, the officials would also take VAT and CST revenue into account. Further, these will include the pattern and quantum of ITC availed and CGST utilised along with transitional credit availed in form TRAN I and its comparison with the pre-GST period. In their analysis, the officials must also note any unusual ITC claimed, which can be detected by comparing the TRAN 1 ITC availed with the average ITC balance during pre-GST. “This analysis should clearly bring out any reason for variation in total duty/tax payable during respective periods,” the official quoted above said.

Additionally, the board has directed the commissioners to collect data only in the excel format, without any change in the format provided by the department. The analysis of the data is to be submitted to the board, which will be taken up for discussion this Saturday when the revenue secretary meets state and central tax officials for a reviewing GST collections. A tax official said that the department wasn’t convinced about the validity of the ITC claims, which was one of the main reasons for lower GST mop-up in October. The department has earlier undertaken verification of large quantum of transitional credit — amounting to Rs.65,000 crore, claimed by assessees.

 

Source: Financial Express

Rs 4,000-crore investments in wind energy on brink of becoming NPAs

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“All these developers face this threat, even if they have been paying interest on their loans. This will affect their credit worthiness for future bank loans.”

Investment of Rs 4,000 crore in wind energy projects is on the verge of becoming non-performing assets, as over 550 MW of projects that are ready to generate electricity are stranded because a state utility has refused to sign power purchase agreements (PPA) or issue commissioning certificates.

 

Projects of Tata Power, ITC, Jindal Steel subsidiary Maharashtra Seamless, Hero Future Energies, Green Infra Wind Energy and Continuum Wind Energy are facing the risk. “Wind energy projects, which do not start generating power within two years of taking loans can be declared ‘non-performing’ by the RBI,” said Sunil Jain, President, Wind Independent Power Producers Association. “All these developers face this threat, even if they have been paying interest on their loans. This will affect their credit worthiness for future bank loans.”

Project developers are waiting for action from the Maharashtra State Electricity Distribution Co Ltd (MSEDCL), which has refused to sign PPAs or issue commissioning certificates.

Jain said 364.15 MW of wind projects were ready in 2014-15 and another 192.05 MW were completed in 2015-16.

The distribution company defended its position. “We are working in accordance with the state’s new renewable energy policy,” said MSEDCL Chairman Sanjeev Kumar, unwilling to go into details. The Maharashtra Energy Development Agency (MEDA), which handles nonconventional energy in the state, did not respond to queries.

Maharashtra released a new renewable energy policy in July last year, which said “a total of 5,000 MW capacity of wind energy projects shall be commissioned. Out of that, an initial 1,500 MW will be used to fulfill RPO (renewable purchase obligations) of distribution companies, and the rest, 3,500 MW capacity of wind projects, can be utilised as open access for inter-state/ intra-state open access/captive consumption/REC (renewable energy certificates), etc.”

MSEDCL, however, has conveyed to developers that the 1,500 MW of installed capacity from which it will accept wind power, will be from 2011 and not from the time of release of the new policy. Between 2011 and July 2015, when the new policy was unveiled, MSEDCL had already signed PPAs for around 1,000 MW of wind power, which meant it would accept only 500 MW more.

In practice, it has not done even that, developers said. “Not a single PPA with a wind energy producer has been signed since the new policy came out,” said Jain. “Besides, it is absurd to apply a policy retrospectively. We have projects ready to start generating at the press of a button, but we are not being allowed to do so.”

As of December 2014, Maharashtra had 3052.7 MW of installed wind capacity.

“We have complained to the Maharashtra chief minister, the Prime Minister’s Office, the finance ministry and the Ministry of New and Renewable Energy,” said Jain. “Every investor and developer in wind energy in Maharashtra is suffering.”
Source: http://economictimes.indiatimes.com/articleshow/51576997.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst