India: SKP GST Trends July 2018

Last Updated: 14 August 2018
Article by SKP  

The month of July witnessed frantic activity on the GST front with the GST Council (the Council) approving a host of changes to the GST law in its 28th meeting held on 21 July 2018. The Council has approved a three-pronged change to the GST law consisting of amendments to returns, GST rates and the GST law with a view to improve compliance rates which as an upshot should give impetus to governments GST collections.

Top Trends

  • The 28th meeting of the Council was held on 21 July 2018 in New Delhi. The Council took certain important decisions such as:

    • Simplification of the return filing procedure;
    • Reduction of tax rates and rationalization of Input Tax Credit (ITC);
    • Recommendation of proposed amendments to the GST law.
  • The draft simplified GST returns formats have been published for stakeholder comments. In view of requests raised by the majority of businesses, draft formats include a return to amend the original return.
  • The Institute of Chartered Accountants of India recently hosted a webinar on GST audit. The general consensus among indirect tax professionals on certain key aspects relating to GST audit is as follows:
  • The turnover limit of INR 20 million for the purpose of determining the applicability of GST audit for a given GST registration is to be considered PAN-wise, i.e., aggregate turnover of all GST Identification Number (GSTIN) across India having the same Permanent Account Number (PAN) should be considered.

    Example: Company 'A' has GST registration in the state of Maharashtra and Gujarat. Its GST turnover is INR 15 million and INR 9 million in the state of Maharashtra and Gujarat respectively. In this scenario, even though individually the turnover for each state does not exceed the statutory threshold of INR 20 million, Company 'A' is liable to GST audit both in the state of Maharashtra and Gujarat as its aggregate turnover across India is INR 24 million (15+9).
  • The turnover should be determined on the basis of the entire financial year from April 2017 to March 2018, and not just for the post- GST implementation period, i.e., from July 2017 to March 2018.
  • The purpose of a GST audit report is to explain the reason for deviation and not just to 'report deviation.'

Judicial Pronouncements

Compliance Chart for Upcoming GST Due Dates

OTHER KEY ASPECTS

GST from a Macro Perspective

Key features of simplified returns

The Council has released the salient features and the format of the simplified return filing procedure which is proposed to be implemented once the Goods and Services Tax Network (GSTN) carries out the required changes in the IT system. The key features of the same are as follows:

  • Outward Supplies

    • Facility for continuous uploading of invoices by the supplier and viewing of such invoices by the recipient on the GST common portal.
    • These would be auto-populated as "Annexure of Outward Supplies" in the main return.
  • Inward Supplies and ITC

    • Annexure of inward supplies

      • To be auto-drafted based on invoices uploaded by suppliers.
    • Credit mechanism

      • Recipient to avail ITC only on the basis of invoices uploaded by the supplier.
      • ITC pertaining to invoices uploaded by supplier by the tenth of the subsequent month to be available in the same month. Invoices uploaded by the supplier after the tenth of the subsequent month shall be available to the recipient only in the return of the next month. For e.g., if an invoice of April 2018 is uploaded by the supplier on 11 May 2018, the recipient can claim ITC available in uch invoice in its return for the month of May 2018 and not of April 2018 resulting in working capital blockage.
    • Provisional ITC in transition phase

      • The ITC availment mechanism would be relaxed in the transition phase of six months after the new system of return filing is implemented.
      • In the transition phase, the recipient would be able to avail provisional ITC on a self-declaration basis even in respect of invoices not uploaded by the supplier by the tenth of the next month.
      • A 'missing invoice' facility would be available for this purpose. Reporting of 'missing invoices' can be delayed by the recipient for up to two tax periods to allow him time to follow up and get the missing invoice uploaded from the supplier.
  • Main return - One monthly return for all registered persons to be called as "monthly return" in form GSTR to be filed by 20th of the subsequent month. Most of the details of outward and inward supplies to be auto-populated. Certain fields would be required to be entered manually by the taxpayer such as:
  • Advances
  • Exempt and non-GST supply
  • ITC reversal
  • Amount of tax, interest or late fee.

Proposed amendments to GST law

The Council has engaged in continuous discussions with industry representatives and the revenue officials with the view to ease avoidable burden on businesses, plug loopholes and provide clarity in the GST law. Certain key recommended amendments are as follows:

  • Interest not applicable on the reversal of ITC on account of non-payment to the supplier within 180 days - Second Proviso to Section 16(2)
    The Council has re-visited the provision of levying interest on outward liability incurred due to the reversal of ITC and has deemed it as too onerous. It has therefore been proposed to be removed.
  • RCM on inward supplies from unregistered dealers only if specifically notified - Section 9(4) Addressing the concerns raised by the industry, it has been proposed to permanently suspend the provision of Reverse Charge Mechanism (RCM) on inward supplies from unregistered dealers to the extent that they apply to all registered persons. Now, the government may notify certain select category of registered persons who will be required to adhere to this provision.
  • Linkage of credit notes to specific invoices proposed to be discontinued - Sections 34(1) and 34(3)
    At present, credit note and debit note are to be linked with specific invoices. It has been proposed to allow issuance of consolidated credit and debit notes in respect of multiple invoices issued in a financial year, without linking them invoice-wise.
  • ITC on motor vehicles and certain employee benefits proposed to be liberalized - Section 17(5) The proposed amendment seeks to clarify that ITC would now be available in respect of dumpers, work-trucks, fork-lift trucks and other special purpose motor vehicles. After the amendment is carried out, ITC would be denied only in respect of motor vehicles for transport of persons having approved seating capacity of not more than 13 persons (including the driver), vessels and aircraft when these are used for personal purposes.

    Furthermore, allowing ITC when the goods or services provided to employees are obligatory under any law will come as a major relief to businesses.

    Revenue collections

    The GST collections have continued its upward trend, albeit marginally, with the gross GST collections for the month of July 2018 standing at INR 0.96 trillion. The GST collections, however, remain slightly below the government's target of an average monthly collection of INR 1 trillion.

    GST in the news

    • GSTN is testing Information Technology (IT) tools to be implemented for tax officials to ease the process of matching GSTR-1 and GSTR-3B filed by taxpayers.
    • The Council is considering the integration of e-Way Bill with regional transport databases to develop a mechanism to remove all check-posts by doing away with various road permits.
    • The solar industry has sought urgent clarity from the Council on the GST rate applicable to solar power projects in view of the contradicting rulings pronounced by the Authority for Advance Rulings of various states.

    The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
 
Email Address
Company Name
Password
Confirm Password
Position
Industry
Mondaq Newsalert
Select Topics
Select Regions
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions