Goods and Services Tax

GST 2020, How it will change the way you carry your business (Keshav R Garg) B.com, FCA, CS, ISA(ICAI), AMP-IIM-A, LLB We are all set to welcome 2020 with a hope that business would witness growth in the next decade. Unlike 2019 when the graph has moved up and down, businesses would be expecting 2020 to bring stability and also brighten the future head. But is it going to be that easy, doesn’t seem so. 2020 will bring another set of challenges for business and would change the way businesses had been working in India since GST came in. 2020 version of GST will have everything in its kitty, be it increasing compliance burden, overhauling ERP systems, stern audits by tax departments, assessments including search/seizures and top of it complete overhauling of the invoicing and return filing system under GST. The experience businesses have had with GST Network since 2017, surely greys the sky as to how GSTN will the meet the plethora of changes government is likely to mak

Council should reconsider increase in GST Rates There is a buzz in North Block that the Council is considering increase in GST Rates for items falling under 5% and 12% categories to 10% and 18% respectively. Not only the rates of GST are being increased but government is also considering to levy tax on goods exempted at present. The revamp of GST rates will not only increase the burden on the consumers but also prepare new set of challenges for business community. We hereby set out the challenges new GST rates are going to bring: 1.      Inflationary Impact: The new increased GST rates will have huge inflationary impact on the goods covered under lowest GST Slab. If the rates are increased, the prices are tend to increase which will prove an additional burden on consumers. Although such increase may not have impact on B2B transactions as ITC is permitted, but certainly not in case of B2C transactions. The increase will not only impact the goods in question but also h

In yet another judgment from Appellate Authority to Advance Ruling of Karnataka it has been established that the employee cost borne by the head office for rendering of services to the branches in other states shall be a taxable supply. For instance A company registered under GST has corporate office in Delhi and branch in Chandigarh. In such a case the employee cost borne by the head office at Delhi for assistance to Chandigarh shall be treated as supply chargeable to GST. The authority held that two units which are separately registered shall be distinct person in terms of section 25(4) of the Central GST Act 2017. It further held that employee working in one unit shall be treated as an employee for that particular unit for the purposes of employer-employee exemption under Schedule III of the Act. In our above example the employee who is working for Delhi unit shall be treated as employee of Delhi Unit and not of Chandigarh for claiming exemption. The authority ruled out

ITC admissible in respect of building used for rental purposes, Concept of Tax Chain : Analysis by KRG Legal: Odisha High Court in the recent case have held that expenditure made on the construction of building for letting out shall be permissible. The moot point before the court was whether section 17(5)(d) of the CGST Act 2017 restricts the admissibility of input tax credit in respect of construction of building used for letting out by the taxpayer. The Court held that the taxpayer was indeed eligible for claiming input tax credit as the said building was used for making outward taxable supply. Concept of Tax Chain: The petitioner pleaded that in their case the tax chain was not breaking and hence ITC should be allowed. As per this case, the concept of continuation of tax chain has emerged to a large extent. It was on this ground that there was no break in the tax chain, court held that the credit shall be allowed in respect of construction of building utilised for t

What does linking Income Tax and GST mean for you Explains – Keshav R Garg, Partner, K D & Associates The idea which we had been propagating since long has finally seen light by linking data between income tax department and GSTIN. We feel the next step would be to link banking sector also with data filed with tax authorities. If you are a genuine taxpayer who likes to declare his figures honestly, you may not find yourself in trouble but for others so called smart tax planners, tough times are awaiting. There had been lot of instances where in order to reduce complexity and evade tax, taxpayer preferred to file income tax returns and not GST returns. With instructions flowing to link income tax with GSTIN, those hidden figures would prove to be troublesome. Here are few issues which a taxpayer might have to face: 1.        In case of deviation in turnover as submitted in GST returns and Income Tax, taxpayer has to prepare the detailed reconciliations keeping in

GST Annual Return (GSTR 9) becoming a nightmare for Manufacturing industry Explains – CA Keshav R Garg, Partner,   K D & Associates India With about 60 days left for filing of annual return (GSTR 9 and GSTR 9C) by the taxpayers for FY 2017-18, it is turning out to be a nightmare especially for the manufacturing industry. There had been various substantial issues which are leading to total chaos while finalizing the figures for annual return. Here are some of the practical challenges, industry is facing which are not easy to resolve: 1.        Reconciliation of Input Tax Credit claimed with Input Tax Credit declared by the corresponding vendors. Most taxpayers have claimed ITC based upon the tax invoice in their possession. Since Government itself deferred matching concept during monthly filing for FY 2017-18, introduction of same in GSTR 9 is leading to lot of manual clerical work.   2.        Preparation of GSTIN financial statements including Balance Sheet,

Ice-Cream sold by Ice-cream parlour is sale of goods and not restaurant services . n   By Keshav R Garg, Partner, K D & Associates +91-98880-90008, keshavgarg@kdai.in In a very recent Advance Ruling by AAR, Maharashtra in case of Arihant Entreprises it has been held that serving of ice-cream in a parlour shall be trading of goods instead of restaurant services chargeable at 5% without ITC. The moot point before the Authority was whether the sale of ice-creams in small scoops would be treated as supply of goods or restaurant services. The authority held that since there is no change in the nature of goods being sold by the ice-cream parlour, merely because the good are sold in lesser quantity as per need of customer would not tantamount as a restaurant. The ruling held that the transaction of selling ice cream received in bulk and selling them in scoops is akin to sales made by grocery shops in the case of sale of edible oil wherein the grocer sells such oil in various

Big Relief to Industry Claiming Budgetary Support under GST n   By Keshav R Garg Notification No. 16/2019- Central Tax dated 29.03.2019 will prove to be a life saving drug for most of the industries claiming budgetary support under the scheme of   DIPP after GST was enforced. The industries which were enjoying excise exemption vide notification 49/50-2003 were offered budgetary support post GST implementation. As per this scheme these industries were eligible to claim 29% of IGST and 58% of the CGST actually paid by them to the government. Since most of the industries procured inputs/input services/capital goods from out side the state, they had huge IGST credit available with them. It was also true that majority of such industries sold their output within the state itself. This meant that their output liability resulted into CGST and SGST paid by them. Since as per the set-off mechanism the IGST credit accumulated on purchase was first utilised against CGST liabilit