India: GST Trends - September 2018

Last Updated: 11 October 2018
Article by SKP  

The month of September witnessed certain crucial announcements under the GST regime. The government notified formats of the much-awaited GSTR-9 - Annual Return and GSTR-9C - Reconciliation Statement. The suspended provisions relating to Tax Deduction at Source (TDS) and Tax Collection at Source (TCS) have also been made applicable with effect from 1 October 2018.

Top Trends

  • The 30th GST Council meeting was held on 28 September 2018. The Council has formed a Group of Ministers (GoM) to look into the possibility of levying a special cess to provide financial assistance to the State of Kerala, in undertaking relief and rehabilitation projects in consequence of the devastating floods, which had hit the state in August this year.
  • IGST and compensation cess exemption under FTP extended The Directorate General of Foreign Trade (DGFT) vide Notification No. 35/2015-20 dated 26 September 2018 has extended exemption of IGST and compensation cess available under the following schemes till 31 March 2019:

    • Advance Authorization (AA) under Para 4.14 of Foreign Trade Policy 2015-20 (FTP 2015-20)
    • Export Promotion Capital Goods (EPCG) Scheme under Para 5.01(a) of FTP 2015-20
    • Export Oriented Unit (EOU) Scheme under Para 6.01(d)(ii) of FTP 2015-20.
  • Increase in Customs Duty The government has notified an increase in the rate of Customs Duty on import of certain goods with effect from 27 September 2018.

  • One year time limit for availing input tax credit under Section 140(3) struck down as unconstitutional - The Honorable Gujarat High Court in Filco Trade Centre Pvt Ltd vs Union of India has struck down Clause (iv) of subsection (3) of Section 140 of the CGST Act, 2017 as unconstitutional. The court has held that the said provision takes away the vested right of the first stage dealers to avail the benefit of credit of eligible duties in accordance with the CENVAT credit rules in relation to goods, which were purchased prior to one year from 1 July 2017. However, the judgment has been stayed till 31 October 2018 on the request of the government.
  • GSTR-9 - Annual return - Key features of GSTR-9 are as follows:

    • Input Tax Credit - To be trifurcated into Input Tax Credit (ITC) on inputs, capital goods and input services.
    • ITC of IGST availed on imported goods - To be reported along with IGST paid on imports.
    • HSN wise summary of inward supplies - Although GSTR 2 remains suspended, this needs to be disclosed separately in annual return.
    • Adjustments of any errors - Contrary to industry expectations, the annual return does not provide an option to adjust/amend any errors made at the time of filing the periodical returns. Hence, it should be ensured that any pending adjustments/amendments, on account of such mistakes, are made in the return filing for September 2018, especially taking credit for the amounts remaining unavailed.
    • Credit notes - Only the credit notes declared (where GST is adjusted) through Table 9B of GSTR-1 have to be disclosed in the annual return.
    • Transactions related to previous financial year (i.e., July 2017 to March 2018 in this case) disclosed in return for the period of April 2018 to September 2018 - This would have to be disclosed separately along with the differential tax paid on account of such disclosures.
  • GSTR-9C - Reconciliation Statement - The form requires taxpayers to provide a reconciliation between the audited financial statements and GSTR-9, i.e., the annual return in respect of certain key items such as:

    • Gross turnover
    • Taxable turnover
    • Tax paid and rate wise liability
    • Net input tax credit
  • TDS provisions - In view of the implementation of the TDS provisions from 1 October 2018, businesses providing taxable supplies to government departments, local authorities, public sector undertakings and other specified agencies should ensure that they obtain TDS certificates for the tax deducted by such specified agencies. Vendors making taxable sales to such government departments must ensure that the credit of such TDS is reflected in their GSTR-2A.

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