1 Feb 2018

GST mop-up on track; fisc not under threat

by | posted in: Corporate Updates, Economy, Business Updates, Corporate Affairs, Income Tax,e-Filing- Individuals, Firms, Companies | 0
A monthly collection of around ₹80,000 cr appears sufficient to meet the Centre’s and States’ needs

The Goods and Services Tax (GST) collections for December 2017 show an increase, but despite this there are concerns that the tepid collections since July could pose a problem on the fiscal deficit front.

However, a closer look at the numbers shows that these fears are misplaced. The Centre’s tax collection, as per the CGA (Controller General of Accounts), appears to be on track to achieving the Budget estimates for 2017-18. There are, however, many trouble spots in the new regime.

The complexity of the GST, which combines many of the indirect taxes of the Centre and States, has made it quite difficult to estimate the expected monthly collection target.

At a press conference in August 2017, Finance Minister Arun Jaitley said that the collections in July were better than the target of ₹91,000 crore for that month. This figure has been used since then as a ball-park figure for measuring monthly GST collections.

If we use this figure, GST collections in October (₹83,346 crore), November (₹80,808 crore) and December (₹86,703 crore) are well short of the target. But that may not really be the case.

To estimate the targeted monthly GST collection, we worked backward to see the projected revenue in the Budget estimate for 2017-18 from goods and services that have been put under GST. While service taxes have mostly moved under GST, only about a third of excise duty collections are under GST since the taxes on many petroleum products are still outside the new regime. Under Customs duty, almost 64 per cent of the collections are now under GST.

Using this basis, around ₹43,000 crore of GST need to be collected by the Centre monthly towards its indirect tax collections. A portion of this will devolve to the States as part of their share in the Centre’s revenue.

States totally have to be disbursed ₹43,000 crore every month, assuming 14 per cent annual growth from their 2015-16 revenue. Working with these numbers, a monthly GST collection of around ₹80,000 crore appears sufficient to meet the Centre’s and States’ needs.

Actual numbers

The fact that the Centre has not fallen short in its indirect tax collections is borne out by the numbers from the CGA. Gross tax revenue of the Centre for the period between April to November 2017 was ₹10,87,302 crore, up 16.5 per cent from the amount collected in the same period in 2016-17.

Interestingly, gross indirect tax collection of the Centre in this period was up 18.2 per cent, having risen from ₹5,08,924 crore to ₹6,01,904 crore.

While the devolution to States was 25 per cent higher, the Centre’s net tax revenue has managed to increase 12.59 per cent, showing that the Finance Minister will not have too much difficulty in balancing the fisc.

The catch

While the Centre’s collections are on track, allocations to States can pose a problem. “Due to the fact that IGST revenue is disbursed over a period of time, there is a thinking amongst States that there is a revenue shortfall,” explains Gautam Khattar, Partner, Indirect tax, PwC.

Disputes on input-tax credit claimed by businesses in the provisional GSTR 3B form are another issue that could impede calculations. “Definitely, this is the major concern for the Department because invoice matching is the backbone of GST,” says Vishal Raheja, DGM, Taxmann.

 

Source: Press Reader

 

22 Jan 2018

Government sends tax notices to cryptocurrency investors as trading hits $3.5 billion

by | posted in: Corporate & Business Advisory Services, Corporate Updates, Economy, Business Updates, Corporate Affairs | 0

 

– The government has issued repeated warnings against digital currency investments
– Tech-savvy young investors, real estate players and jewellers are among those invested in bitcoin and other virtual currencies

The government has sent tax notices to tens of thousands of people dealing in cryptocurrency after a nationwide survey showed more than $3.5 billion worth of transactions have been conducted over a 17-month period, the income tax department said.

Tech-savvy young investors, real estate players and jewellers are among those invested in bitcoin and other virtual currencies, tax officials told Reuters after gathering data from nine exchanges in Mumbai, Delhi, Bengaluru and Pune.

Governments around the world are grappling with how to regulate cryptocurrency trading, and policymakers are expected to discuss the matter at a G20 summit in Argentina in March.

The government has issued repeated warnings against digital currency investments, saying these were like “Ponzi schemes” that offer unusually high returns to early investors.

But it has not so far imposed curbs on an industry estimated to be adding 200,000 users in India every month.

B.R. Balakrishnan, a director general of investigations at the income tax department in the southern state of Karnataka, said notices were sent following the survey to assess the penetration and patterns of virtual currency trade.

“We cannot turn a blind eye. It would have been disastrous to wait until the final verdict was out on its legality,” he told Reuters.

The tax department has asked people dealing in bitcoin and other virtual currencies such as ethereum and ripple to pay tax on capital gains. They have also asked for details about their total holdings and the source of funds in the tax notice seen by Reuters.

“We found that investors were not reflecting it on their tax returns and in many cases, the investment was not accounted for,” Balakrishnan said.

Bitcoin, the world’s biggest cryptocurrency, soared more than 1,700 percent last year, hitting a record high just shy of $20,000 as institutional and retail investors around the world snapped up the virtual currency.

Its huge gains have attracted the attention of global regulators tasked with protecting investors from fraud.

In recent weeks, Japan and China have made noises about a regulatory crackdown, while South Korean policymakers said they were considering shutting down domestic virtual currency exchanges.

REGULATION

An Indian finance ministry official said a federal committee was looking into the possibility of imposing restrictions on virtual currencies and that eventually parliament would have to legislate a regulatory regime.

Officials at Zebpay, India’s leading bitcoin exchange, said the industry was adding near 200,000 users every month with an estimated trade volume of about 20 billion Indian rupees ($315 million).

“Many of our customers are treating digital currency like gold,” said Zebpay co-founder Saurabh Agarwal.

Aman Kalra, marketing head of Coinsecure, a bitcoin exchange in New Delhi, said more than 150 bitcoins were changing hands every week through its platform. The company has 100,000 registered users and is now launching a platform to sell ethereum and other digital currencies.

“I don’t think anyone in the government should label our business as a ‘Ponzi scheme’, we are not doing anything illegal,” said Kalra.

Tax inspectors said they sought help from experts in blockchain, the technology that underpins bitcoin, to conduct the survey.

In some cases, tax officials themselves participated in the trade to identify loopholes after they found investors had poured in billions of dollars through unregulated exchanges.

Source: Times of India

18 Jan 2018

Direct tax mop-up jumps 19% in FY18

by | posted in: Corporate & Business Advisory Services, Corporate Updates, Economy, Business Updates, Corporate Affairs, Income Tax,e-Filing- Individuals, Firms, Companies | 0

Direct tax collections during the first nine-and-a-half months of the current fiscal have risen by 18.7% to Rs 6.89 lakh crore, the tax department said on Wednesday.

The collections till January 15, 2018 represent over 70% of the Rs 9.8-lakh-crore revenue target from direct taxes, the Central Board of Direct Taxes (CBDT) said in a statement.

 

Gross collections (before adjusting for refunds) have increased by 13.5% to Rs 8.11 lakh crore during April, 2017 to January 15, 2018. Refunds amounting to Rs 1.22 lakh crore have been issued during this period.

Stating that there has been “consistent and significant” improvement in the position of direct tax collections during the current fiscal, the CBDT said the growth rate of total gross collections has improved from 10% in Q1, to 10.3% in Q2, to 12.6% in Q3 and to 13.5% as on January 15, 2018.

Similarly, the growth rate of total net direct tax collections has climbed up from 14.8% in Q1, to 15.8% in Q2, to 18.2% in Q3 and to 18.7% as on January 15, 2018.

The growth in corporate tax collections has risen from 4.8% in the first quarter of current fiscal to 10.1% in Q3 and 11.4% as on January 15, 2018.

Similarly, the growth rate of net corporate tax collections increased from 10.8% in Q2 to 17.4% in Q3 and to 18.2% as on January 15, 2018.

 

Source: Times of India

4 Jan 2018

Taxman plans to match GST invoices to plug leakage

by | posted in: Corporate Updates, Economy, Business Updates, Corporate Affairs, Income Tax,e-Filing- Individuals, Firms, Companies | 0
Move in response to falling GST revenue collections

The GST Council may move the sales and purchase invoice matching system to the back end. It will do so to keep tabs on missing transactions and check over-claim of input tax credits in the goods and services tax (GST).

At present, assessees claim input credits themselves by filing summary input- output returns, and the tax authorities do not have any clue whether the claims are correct or not. The process of invoice matching was supposed to be done by the assessees, though it was deferred till March. However, slowing GST revenues have now prompted the government to design an alternative mechanism, under which tax officials will do the matching themselves.

“Instead of asking taxpayers to match invoices, we may do it ourselves at the back end. We may follow a risk-based approach; when the gross level of transactions does not match, we may match invoices,” an official said, adding the proposal was under consideration.

GSTR-1 (sales) and GSTR-2 (purchase) returns have to be matched with GSTR-3 to ensure that claims by taxpayers are correct. Both GSTR-2 and GSTR-3 returns have been postponed.

A committee, under GSTN Chairman Ajay Bhushan Pandey, is looking at ways of making the filing of the GSTR-2 and GSTR-3 forms business-friendly. The time period for filing the GSTR-2 and GSTR-3 forms for the months of July to March is also being worked out. The committee has recommended merging the GSTR-1, 2 and 3 forms as one option to simplify filing returns.

According to estimates, there is a 15-20 per cent GST revenue leakage at the moment.

GSTR-1 is used to file details of outward sales of a dealer. After submission, the details of purchases made by the dealer are automatically populated in the GSTR-2 form. The dealer is required to verify the details and submit the form. Finally, GSTR-3 calculates a taxpayer’s tax liability and the available input tax credit.

GST revenue collections touched their lowest in November at ~808 billion. According t0o the government’s estimates, if this trend continues, there could be a shortfall of ~250-300 billion in indirect tax collections this fiscal year. The government had attributed the slowing revenue to postponement of features of the GST such as matching of returns, electronic way bills and the reverse charge mechanism.

The revenue slowdown prompted the GST Council to call an urgent meeting on December 16 and advance the introduction of the electronicway bill for inter-state movements of goods to February 1 and for intra-state carriage from June 1.

“It is important that the concept of invoice matching continues as it is part of the basic design of the GST. If it is not done electronically, it will be needed at the time of assessment or audit, which will lead to more paperwork. The process can, however, be simplified,” said Pratik Jain, leader-indirect taxes, PwC India.

M S Mani, senior director-indirect taxes, Deloitte, said invoice matching provided taxpayers the ability to view transactions and take corrective steps on an ongoing basis. “While this may be cumbersome for small businesses, there are significant benefits for taxpayers and the government. However, the technology challenges will have to be overcome so that the matching happens seamlessly online in real time,” he said.

Bipin Sapra, partner— indirect taxes, EY, said, “In the absence of invoice level matching, the alternative is to match revenues and credits with GSTR1 but since the process will not be automated, it will be possible for a limited number of clients on the basis of risk assessment.”

30 Dec 2017

Filing of final GST returns deadline extended till Jan 10

by | posted in: Corporate & Business Advisory Services, Corporate Updates, Economy, Business Updates, Corporate Affairs, Income Tax,e-Filing- Individuals, Firms, Companies | 0
The GST Council had in November allowed businesses with turnover of up to Rs. 1.5 crore to file final returns GSTR-1 quarterly

The government has extended by 10 days the last date for filing of final sales return GSTR-1 till January 10 under the Goods and Services Tax, sources said.

Businesses with turnover of up to Rs. 1.5 crore will have to file GSTR-1 for July-September by January 10, 2018, as against December 31, 2017 earlier. For businesses with turnover of more than Rs. 1.5 crore GSTR-1 has to be filed for the period July-November by January 10.

Earlier these businesses were required to file GSTR-1 return for July-October by December 31 and that for November by January 10. For the month of December, GSTR-1 is to be filed by February 10 and for subsequent months, it would be 10th day of the succeeding month.

The GST Council had in November allowed businesses with turnover of up to Rs. 1.5 crore to file final returns GSTR-1 quarterly. Businesses with turnover of up to Rs. 1.5 crore will have to file returns by February 15 for the period October- December and that for January-March by April 30.

 

Source: The Hindu Business Line

24 Dec 2017

You can shift residence, fudge address but you can’t avoid income tax notice anymore

by | posted in: Corporate Updates, Economy, Business Updates, Corporate Affairs, Income Tax,e-Filing- Individuals, Firms, Companies | 0

Avoiding income tax notices by fudging addresses or shifting residence will now become difficult. Income tax rules have been amended that will allow the tax department to deliver notices to assessees at addresses given by them to banks, insurance companies, post offices etc in case the notice is undeliverable at the address supplied to the tax department.

The government issued a notification dated December 20, 2017 amending the Income Tax Rules to ensure that all notices, summons, requisitions or any other communication issued in your name is delivered to you either via post or e-mail.

As per the notification, in case the communication or notice to be served to the assessee cannot be delivered/transmitted to the available address, as per Rule 127 of the Income Tax Rules, the government may use the address mentioned in the following databases to deliver the communication:
a) Address given by you to the bank;
b) Address given by you to the insurance company;
c) Address given by you to the post office while investing in the Post Office schemes;
d) Address as available in government records;
e) Address available in the records of local authorities;
f) Address of the assessee as furnished in Form 61 to the income tax department under Rule 114D;
g) Address as furnished in Form 61A to the tax department under rule 114E.

As per the earlier norms, the communication to the assessee was sent through post or email at the any of the following addresses:

a) Address available in the PAN database;
b) Address available in the income tax return (ITR) to which the communication pertains to;
c) Address as available in the previous year’s ITR;
d) E-mail address available in the ITR for which communication pertains to;
e) E-mail address as available in the last ITR;
f) Any e-mail address available with the income tax authority.

The notification has been published in the Gazette of India by the Minsitry of India vide Notification No. 98/2017/F. No. 370142/36/2017-TPL

Link: Economic Times