Here’s how a missing column in GST return form is creating trouble for India Inc

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Many cos don’t know whether the govt will rectify this problem by Friday and are following different options for resolving the quandary.

A top conglomerate may have to shell out a bit extra in advance tax this quarter due to an unusual glitch in the tax returns form. Another Delhi-based firm, which does not want to bear any extra tax, may simply deduct the dues before the GST kicked in on July 1 and pay a smaller net amount.

The absence of a column in the new GST form for claiming credit on sales made before July 1 this year is causing a lot of worries for India Inc as the filing deadline for the first month of tax returns under GST comes up this week.

Many companies don’t know whether the government will rectify this problem by Friday, the deadline for filing returns, and are following different options for resolving the quandary. Multinationals and some of India’s biggest companies are not taking into account past input credit while paying GST while smaller companies that can’t afford to let their working capital rise are paying the tax after deducting the input tax credit.

GST“A procedural lapse by the government doesn’t take away companies’ right to what’s prescribed in the law. GST law prescribes that companies can adjust past credits with July and August liabilities,” said the CFO of a Delhi-based company.

 

Industry trackers, however, say that doing so may be “technically incorrect.” “Certain businesses may prefer being cautious and pay the tax for July and August without considering the opening credit balance, while other businesses would adjust the credit and pay the tax, leading to disparities in tax treatment from the first GST return,” said MS Mani, partner, Deloitte Haskins & Sells.

The deadline for filing the GST Transition Credit Form, titled GSTTran 1, is September 28, while that of making payments for July and August is much earlier. There is no column in GSTR 3B form where companies can mention the advance taxes paid before July 1. The government had said last week that it would sort out the issue, but with just four days left for filing the GSTR 3B form companies are not waiting for clarification.

“Companies are puzzled by what they should be doing and why they could be required to fork out large sums as GST in July and August and the apparent inability of the government to simply permit the utilisation of the opening credit while computing the tax liability for July and August,” said a tax expert advising four of the biggest Indian companies.

Back of envelope calculations by two tax consultants show Indian companies may end up paying anywhere around Rs 13,000 crore more to government for July and August. If this happens, working capital costs are likely to rise across the board.

“There would be a significant impact on the working capital of several companies if they are not permitted to use the opening balance of credits. It does appear that the legislative intent of permitting carrying forward of credit from the earlier regime without any timing intervals has not been appropriately reflected in the GST returns for July and August,” said Mani.The government may just see a windfall gain for July and August GST in advance tax collection thanks to this procedural lapse.

ET View: Clear the Air
 The GST Council should clear the air to avoid disputes. The purpose of GST is to provide set offs across the production and value chain to avoid tax on tax and cascading tax rates for goods and services. Rightly, the compliance regime was easy to start with. A true picture on how well GST is working would be known when companies start getting refunds on the taxes paid by them. So, procedural lapses, if any, must be corrected to remove any confusion for companies.

10 days to go; GSTN set for last minute rush on slow pace of returns filing

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With barely 10 days left for goods and services tax (GST) assessees to file summarised interim returns, the GST Network (GSTN), the IT back end for the indirect tax regime, hasn’t yet started witnessing high-frequency traffic, indicating a possible last-minute rush. Till August 5, nearly 87 lakh taxpayers had registered on the GSTN portal as taxpayers under GST.

With barely 10 days left for goods and services tax (GST) assessees to file summarised interim returns, the GST Network (GSTN), the IT back end for the indirect tax regime, hasn’t yet started witnessing high-frequency traffic, indicating a possible last-minute rush. “We have just 16,000 returns till August 8 while there are 87 lakh businesses registered with us,” GSTN chairman Navin Kumar told FE on Wednesday. However, he added that the back end was equipped to handle even a last-minute rush. “Half of the people might come on the last day,” he said, attributing the low traffic on the portal so far to assessees’ behaviour pattern.

Only a little over half of the registrants on GSTN have so far completed the process by filling up part B of the registration form.

The interim return, GSTR 3B, requires taxpayers to provide a summary of outward sales, purchases, input tax credit demand and tax liability. The window for filing these returns commenced on August 5 and it will remain open till August 20. The GST Council had earlier postponed the requirement for filing full-fledged returns to September, and allowed the taxpayers to file interim return for July and August, in a bid to reduce their initial hassles.

Kumar, however, told FE that not all of the 16,000 taxpayers had completed the return filing process as many are yet to pay the tax. “The taxpayers have come to the site and saved the relevant data on the portal but not submitted it as they need to first pay the tax before submission, which hasn’t happened,” Kumar said .

He admitted that the the traffic on the portal had been slow thus far, and urged the assessees to not wait for the last day to file returns. However, he assured that the GSTN system was robust enough to handle the heavy traffic it might experience closer to the last date.

“We have designed the system keeping the possible deluge of taxpayers in the final hours as our study suggests that a very large number of taxpayers sign up on the last two days of the deadline,” Kumar said.

Additionally, businesses have the option of filing return with the help of GST suvidha providers (GSPs). GSTN has authorised 34 such firms to upload data onto the portal on behalf of taxpayers. However, only 18 such GSPs have been able to connect to the GSTN servers for filing the interim returns.

“I have been urging them to speed up their work,” Kumar said about GSPs that are yet to go live.

Till August 5, nearly 87 lakh taxpayers had registered on the GSTN portal as taxpayers under GST. Of this, nearly 71 lakh businesses have migrated from earlier VAT or central excise or service tax regime while 16 lakh new taxpayers too have registered with the portal. What could further compound the problem is the incomplete registrations submitted by the registrants. GSTN had earlier said that over 30% of the firm registered on the portal had not completed the second form. This would prevent these businesses from filing returns.

Source: Financial Express

Millions of firms not ready to file returns under GST: Kumar

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Millions of companies are still not ready to file their first returns under the new GST ahead of an 20 August deadline, says Navin Kumar. Photo: Bloomberg

Millions of companies in India are still not ready to file their first returns under the new goods and services tax (GST) ahead of an 20 August deadline, a top official told Reuters, urging them not to leave things to the eleventh hour.

Navin Kumar, chairman of the GST Network, also said barely half of the 34 service providers accredited to help firms bulk-file invoices online had received approval to go live.

Yet he gave an assurance that the huge IT back end that is designed to crunch up to 3 billion invoices a month and calculate companies’ taxes would be stable, even if there is a last-minute rush to file.

“It will not crash,” he told Reuters in an interview. “We are working on the assumption that 50% of the people will come on the last day.”

Billed as India’s biggest-ever tax reform, the GST has replaced a slew of federal and state levies. It has also cleared barriers between India’s 29 states, uniting its 1.3 billion people into a common market for the first time.

Yet the complexity of the tax — which has main rates of 5, 12, 18 and 28% and multiple exceptions — has raised concerns that companies will struggle to comply and file their monthly returns on time.

Even before the GST filings kick in, business surveys showed both the services and manufacturing sectors contracting at their fastest rate in years, heralding a likely dip in indirect tax revenues.

The government has allowed firms to file simplified, self-assessed GST returns by 20 August for the month of July, when the tax was launched.

They will have to file complete returns in early September that itemise and reconcile every single sales invoice under a regime that, by comparison with other countries, is labour- and data-intensive.

More than 7 million existing taxpayers have activated accounts on the GST’s portal — although around a third have yet to complete the form-filling required to file a full tax return, Kumar said.

Another 1.3 million new firms have registered to pay GST.

He waved away concerns that companies would not be able to cope, saying that those used to paying value-added tax —now abolished — were used to online filing.

Although companies can upload invoices directly into the GST portal, big businesses will rely on a new breed of service provider whose applications can format, reconcile and upload invoices in bulk.

Of a first batch of 34 services providers that have been accredited, only 18 have received permission to go live. “I have been urging them to speed up their work,” Kumar said.

Source: http://www.livemint.com

Syndicate Bank to raise ₹4,500-crore capital this fiscal

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Melwyn Rego
Melwyn Rego. Looking to strengthen capital position via equity and Basel-III compliant bonds: MD

Syndicate Bank is planning to raise ₹4,500 crore this financial year (2017-18) to bolster its share capital base.

“The bank this fiscal is planning to raise ₹2,500 crore under common equity (CET-1), ₹1,000 crore under AT-1, and ₹1,000 crore Basel-III compliant bonds,” said Melwyn Rego, Managing Director and CEO, Syndicate Bank.

“Each raising will be determined by the market. ₹500 crore of Basel-III compliant tier-II bonds was raised on May 3 to strengthen the capital position of the bank,” he added.

“In July, the bank raised AT-I bonds of ₹450 crore. Now we are evaluating various options to strengthen the capital position through equity and Basel-III compliant bonds,” he added.

The Capital Adequacy Ratio (CRAR) (Basel III) improved to 12.30 per cent as on June 30, 2017, from 11 per cent a year ago. Talking about net worth, Rego said: “The net worth of the bank as on June 30, 2017, was ₹11,856 crore in comparison to ₹11,488 crore last year (June 30, 2016).”

To bring down interest cost, the bank has launched a CASA (current and savings account) deposit campaign with the theme ‘Customised for business, personalised for individuals’.

“During the August 1 to September 30 campaign, we will be targeting corporates. This is mainly to increase opening of salary accounts. HNIs too will be targeted, and we will also focus on new account acquisition,” he added.

In addition to CASA deposits, the bank is also aggressively pushing for housing loan disbursements. Post demonetisation, the bank has strengthened its digital banking. “As part of providing enhanced customer service, we have implemented ‘Green PIN Project’ which allows our customers to generate new/reset existing debit card PIN through ATM any time.”

The bank has also launched “UPI application for the iOS platform of mobile phones”.

Customers can use Synd UPI on iPhones to send and receive money. Synd UPI is already available for mobile phones that run on android platform.

Source: http://www.thehindubusinessline.com/money-and-banking/syndicate-bank-to-raise-4500crore-capital-this-fiscal/article9805958.ece

Income Tax Return Filings Grew 25%, Says Government

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Income tax collection showed a surge. The number of returns filed as on August 5, 2017, grew to 2.82 crore as compared to 2.26 crore last year, the government said.

The number of Income Tax Returns (ITRs) filed for 2016-17 year grew by 25 per cent to 2.82 crore, as increased number of individuals filed their tax returns post demonetisation, the tax department said today. The growth in ITRs filed by individuals is 25.3 per cent with over 2.79 crore returns having been received up to August 5 as against over 2.22 crore returns filed in the corresponding period last fiscal.

“As a result of demonetisation and Operation Clean Money, there is a substantial increase in the number of Income Tax Returns (ITRs) filed,” an official statement said. The total number of returns filed as on August 5 stands at over 2.82 crore as against over 2.26 crore filed during the corresponding period of 2016-17. This was an increase of 24.7 per cent compared to growth rate of 9.9 per cent in the previous year.

The last date for filing of income tax returns by individuals and HUFs, who need not get their accounts audited, was August 5.

The finance ministry said that the number of ITRs filed showed that substantial number of new tax payers have been brought into the tax net subsequent to demonetisation. The effect of demonetisation is also clearly visible in the growth in direct tax collections, it said.

Advance tax collections of personal income tax (other than Corporate Tax) as on August 5 showed a growth of about 41.79 per cent over the corresponding period in 2016-17. Personal Income Tax under Self Assessment Tax (SAT) grew at 34.25 per cent over the corresponding period in 2016-17.

“The above figures amply demonstrate the positive results of the government’s commitment to fight the menace of black money,” it added.

The Central Board of Direct Taxes (CBDT), which is the apex policy making body of the I-T department, is committed in its resolve to eradicate tax evasion in a non-intrusive manner and widening of tax base.

To fight the menace of black money, the government had on November 8, 2016, demonetised old 500 and 1000 rupee notes and asked holders of such notes to deposit in bank accounts. The I-T department had then launched operation clean money to clamp down on unaccounted money funnelled into bank accounts post demonetisation.

 

Source: http://www.ndtv.com/business/notes-ban-impact-income-tax-return-filings-grew-25-collections-jump-1734604

GST impact on companies: Gloom and doom vanishes, India Inc at ease

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Contrary to gloomy predictions, the roll-out of the goods and services tax (GST) has been a much smoother affair and the industry has adapted to it without major hassles.

Contrary to gloomy predictions, the roll-out of the goods and services tax (GST) has been a much smoother affair and the industry has adapted to it without major hassles. As FE spoke to a cross-section of the industry, several government officials and the administrative and field levels, tax experts and analysts, some things came out clearly: The gap between the country’s existing indirect tax assessee base and those registered on the GST Network has almost vanished, indicating that even large sections of small businesses that had the option of composition scheme decided to join the GST bandwagon. Grouses over the compliance burden that the new tax has imposed on small businesses are fast disappearing except for the cavils of those not wanting to report their entire transaction volume for fear of increased income tax liability. There are of course some niggling issues like how to compute the tax liability under the reverse charge mechanism but these too are getting resolved.

FE spoke to Delhi-based companies consisting of electronics dealers, auto parts dealers, small chartered accountant (CA) firms among others. While most of the businesses were VAT assessees in the previous era, the CA firm registered on the GSTN portal as a first-time taxpayer.

“Migrating to GSTN was a simple process that only took ten minutes,” Nitin Gupta of Siyaram Bros, a company sells automobile parts to retailers across the country. Gupta said with over `30 crore in annual turnover, his company has had a smooth ride in the first ten days of the new indirect taxation regime, that marks a giant leap towards a one-nation- one-tax regime. Although, businesses have often stated that filing returns in GST would be complicated, Gupta said that most of the processes are similar to what companies were doing under the VAT system. “We are still a month away from filing the first return but I don’t see a problem,” he said.

Govind Kumar of Baba Computers and Sandeep Mittal of Mittal Sandeep and Associates, a CA firm, concurred.

For them, the GSTN registration did not involve any glitches. Both the companies had been using accounting and tax software from Tally, and have now switched to GST-enabled version of the same. The software solution is expected to cost about `11,000 per year.

Gupta, however, added that those retailers the company deals with have been in state of panic largely due to lack of awareness. The company expects smooth flow of input tax credits as it buys from big businesses who are expected to be GST-compliant. “Some of the retailers who we sell to may not be ready, which could impact our sale volume,” Gupta said.

Mittal, who runs the CA firm, said that most of his clients were assessees before and have migrated to GSTN without a hiccup. Among other issues, his firm has advised small businesses on whether to opt for general GSTN registration or become a taxpayer under composition scheme.

The scheme allows easier compliance for certain businesses with annual turnover of less than Rs 75 lakh. However, according to the law, firms under the scheme can neither avail input tax credit nor supply to other states.

“Most of my client deal with inter-state supplies and hence they aren’t eligible for the composition scheme so far,” Mittal said. He added that he has advised a few firm to opt for the scheme based on a cost-benefit analysis but even these businesses are keen to avail input tax credits.

Speaking about the the issues faced by his business, Gupta admitted that he wasn’t quite clear about the reverse charge mechanism and how to deposit tax collected under it with the government at the time of filing returns.

According to GST law, a recipient is required to collect and deposit taxes under reverse charge mechanism for certain services including transportation. Of the 81 lakh existing taxpayers, 68 lakh have migrated to GSTN while nearly 2 lakh new taxpayers have also registered on the portal at the end of June. The GST tax base appearing smaller than in the previous regime is a misnomer. Earlier, a large section of the taxpayers needed to register seperately with the Centre (for excise, countervailing duty on imports and service tax) and states (for VAT). The GST has removed these duplications.

Source: http://www.financialexpress.com/economy/gst-impact-on-companies-gloom-and-doom-vanishes-india-inc-at-ease/758103/

EPFO’s new enrolment scheme works, 10 million members added in three months

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The government’s idea of including the number of Employees Provident Fund Organisation (EPFO) subscribers to calculate formal jobs is likely to swell the latter’s formal number.

 

For, the PF body has added a little more than 10 million members in the past three months, taking its membership to around 48 mn, from 37 mn on March 31.

 

This has been due to EPFO’s new enrolment scheme. Under it, employers got the opportunity to file declarations for unregistered employees with a nominal fine of Rs 1 per annum. According to data reviewed by Business Standard, the body has added 10,131,453 subscribers under the new scheme, higher than its expectation of 10 mn new ones. Most of the rise has come from urban areas such as Mumbai, Delhi and Bengaluru — Mumbai has added the highest number of subscribers, at 1,287,500.

 

NITI Aayog vice-chairman Arvind Panagariya had earlier said a task force for calculation of employment would use other data sources such as EPFO, National Pension System and other private pension schemes for formalisation of the workforce, beside existing sources like the National Sample Survey Office and labour bureau.

 

The panel is headed by Panagariya himself. It was set up to suggest a revamp of employment data surveys, to ensure timely and reliable data for policy making. There was a view within the government that the current surveys did not provide a real picture on job creation.

 

However, the EPFO subscriber base might only be showing a formalisation of the workforce, not an addition to the job numbers. “As a result of this (our move), workers who earlier were out of the social protection coverage will now get these benefits,” V P Joy, the central PF commissioner, told Business Standard.

 

Source: http://www.business-standard.com/article/economy-policy/epfo-s-new-enrolment-scheme-works-10-million-members-added-in-three-months-117071000045_1.html