Goods and Services Tax

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 detail...

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.      ...

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 var...

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...

Tri-city Restaurants leaving Hole in your pocket by charging higher GST By: Keshav R Garg Since the day GST has been enforced in India, most of the business had remained in dilemma about the rate of tax applicable on the goods/services supplied by them. One such industry is the restaurant industry where food is served to consumers either on the table or packed for takeaway. There had been multiple rates and issues relating to non-passing of tax benefits to consumers was widely witnessed. GST ranges from 5% to 18% in this industry, but unfortunately most of the restaurants are intermingling the rate of tax applicable on wide range of food items being sold by them. There had been misconception between food and snacks supplied by the eateries. Most of them believe that snacks like tikki, samosa etc are the one pre-packaged items which are chargeable at 12%. Instead these over the counter dishes are prepared and served as per the order of the customer. There is an elemen...

*Chartered Accountants/Professionals not to gain much from composition scheme under GST* Government has vide *Notification No: 2/2019- CT(R) dated 07.03.2019* has provided for composition scheme for the service providers. As per the said notification service provider opting for composition scheme shall be required to pay tax at 3% Central GST and 3% State GST on the supplies made by him. The composition scheme for service providers is bound with certain conditions, of which one of them is that : *Person is not engaged in making any inter-state outward supply* In most of the cases involving Chartered Accountants they are engaged in one or the other audit/consulting assignments for persons situated in some other state. For Instance a CA firm registered in Chandigarh conducting audit for Bank registered in Delhi shall not be eligible to avail the benefit of composition scheme.   As per section 12 of the IGST Act the place of supply of services in case of supply to ...

Yet another round of complications coming for developers (CA. Keshav R Garg, Partner, K D & Associates, Chandigarh) Yesterday GST Council approved lower rate of tax for housing, some of the buyer might cheer for a while but for builder community there seems more troubles in near future. The reduction in rates for under construction houses has come with a clause that the developer shall not be allowed Input Tax Credit on his purchases. This not only invite mammoth calculations but also higher level of compliance complexity for them. At the very outset the unsold stock which the builders would be carrying as on 31 st March 2019 would become huge trouble. The input tax credit which has already been used against these unsold stock invites the reversal of the said credit resulting into payment of liability in cash. The government assumes that the corresponding credit would be lying in builders credit ledger against unsold stock. But that’s not the reality. Most of the ...