RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

The Union Budget 2019-20 / Finance Bill, 2019, which was presented in Parliament on 5th July, 2019 has been passed by the Parliament now and since enacted on 1^st August, 2019 (Act No. 2 of 2019).  The provisions relating to changes in CGST Act, 2017 in sections 10, 22, 25, 31A, 39, 49, 50, 52, 54, 171 etc. shall now become part of Act and become applicable from the date of enactment (01.08.2019). With this, all GST related amendments shall come into force. The indirect taxes dispute resolution scheme will also come in force, though rules, forms etc shall get notified soon.

The 36th meeting of the GST Council was held on 27th July, 2017 where in major decisions on e-vehicles were taken for which Notifications have been issued on 31st July, 2019 (Notification No. 12 and 13). These are effective from 1st August, 2019. GST rate on electric vehicles has been reduced from 12% to 5% while for chargers / charging stations from 18% to 5%. Hiring of electric buses (> 12 passenger capacity) by local authorities  have been exempted. The last dates for filing Form GST CMP-2 and Form GST CMP-8 have been extended to 30.09.2019 and 31.08.2019 respectively.

GSTN has issued a User Manual and FAQ’s on GST new returns offline tool on 29th July, 2019 which is a guide on how to use new return offline tool (Beta). It contains guidance on how to download and install tool, Form ANX-1 and ANX-2, process flow, how to prepare annexures and functionalities not available in trial version etc.

The first ever audit report on GST implementation has been released by CAG of India recently. While it states GST to be a land mark achievement, it makes a statement that one significant area where full potential of GST roll out has not been achieved is rollout of ‘simplified tax compliance regime’. It also reveals that growth of indirect taxes has slowed down to 5.80% in 2017-18 as contend to 21.33% in 2016-17. The payment module, despite being in operation since 1st July 2017, was fraught with operational deficiencies. System validations were not aligned to the provisions of the GST Acts and Rules. While it was expected that compliance would improve as the system would stabilize, all returns being filed showed a declining trend of filing from April, 2018 to December, 2018.

In yet another significant move, with the withdrawal of article 370 and 35A from the Constitution of India, pertaining to Jammu and Kashmir, India gets one new Union Territory of Laddhak (hitherto part of J & K State) and rest of State of Jammu & Kashmir being given the status of yet another Union Territory (with legislative assembly), i.e., like Delhi Government. On the issue of GST, now Laddhak will have UTGST and JK (UT) will have SGST but with new pieces of legislation. This will be effective from a notified date.

August, 2019 is the peak time for filing GST annual returns / reconciliations. It is reported that till now only 20 percent of assessees have filed their returns due to various confusions prevailing. The Central Board of Indirect taxes and Customs (CBIC) has expressed concern over the low filing. In a letter to the All Principal Chief Commissioners and Chief Commissioners of Central Tax, CBIC Chief has urged them to reach out to tax payers to ask and help them file the annual returns/reconciliation statement before the due date.  31st August, 2019 is the last date for GST audits and is it unlikely that it may be extended further. 

On GST revenue, the total gross GST revenue collected in the month of July, 2019 is ₹ 1,02,083 crore of which, CGST is ₹ 17,912 crore, SGST is ₹ 25,008 crore, IGST is ₹ 50,612 crore (including ₹ 24,246 crore collected on imports) and Cess is ₹ 8,551 crore (including ₹ 797 crore collected on imports).  The total number of GSTR 3B Returns filed for the month of June up to 31 July, 2019 is 75.79 lakh. Except June, 2019, this fiscal, GST collections have crossed Rs. one lakh crore every month in 2019-20. In June, 2019, it was marginally lower.

With tax authorities making efforts in unearthing GST related frauds, fake invoicing rackets and wrong ITC scans, it is expected that revenue should go in times to come, besides compliance levels improving.  However, the Government has also clarified that honest taxpayers should not be harassed.

Recommendations of 36^th GST Council meeting

The 36th GST Council Meeting was held on 27.07.2019, via Video Conference wherein following key decisions were taken:

1. GST rate related changes on supply of goods and services

1. The GST rate on all electric vehicles be reduced from 12% to 5%.
2. The GST rate on charger or charging stations for Electric vehicles be reduced from 18% to 5%.

[Notification No. 13/2019-Central Tax (Rate) dated 31-07-2019]

3. Hiring of electric buses (of carrying capacity of more than 12 passengers) by local authorities be exempted from GST.

[Notification No. 12/2019-Central Tax (Rate) dated 31-07-2019]

(These changes shall become effective from 1^st August, 2019.)

2.  Changes in GST law:

1. Last date for filing of intimation, in FORM GST CMP-02, for availing the option of payment of tax under notification No. 2/2019-Central Tax (Rate) dated 07.03.2019 (by exclusive supplier of services), to be extended from 31.07.2019 to 30.09.2019.
2. The last date for furnishing statement containing the details of the self-assessed tax in FORM GST CMP-08 for the quarter April, 2019 to June, 2019 (by taxpayers under composition scheme), to be extended from 31.07.2019 to 31.08.2019.

[Notification No.35/2019-Central Tax dated 29-07-2019]

GST on amounts charged by Residential Welfare Associations (RWA’s)

• Maintenance charges paid by residents to RWA’s in a housing scheme are exempt from GST if the amount / charge / contribution does not exceed the following amounts :

• Upto 25.01.2018  - ₹ 5000 pm
• W.e.f. 25.01.2018 -   ₹ 7500 pm

• CBIC has clarified that :

• Exemption is available subject to this limit per apartment / flat and not per person.
• Where the amount per month exceeds the limit of ₹ 7500 presently applicable, the entire amount shall be taxable, i.e. including the first ₹ 7500/-.

[Source: Circular No. 109/28/2019-GST dated 22.07.2019]

Extension in due date of CMP-08

• CBIC has extended due date of Form GST CMP-08 for the quarter April - June 2019 till 31.08.2019.

          [Source: Notification No. 35/2019 – Central Tax dated 29-07-2019]

Retail outlets in the departure area of an international airport entitled to claim refund

•  Retail outlets established in the departure area of an international airport, beyond the immigration counters, making tax free supply of goods to an outgoing international tourist, shall be entitled to claim refund of applicable central tax paid on inward supply of such goods, subject to the conditions specified in rule 95A of the Central Goods and Services Tax Rules, 2017.

[Source: Notification No. 35/2019 – Central Tax dated 29-07-2019]

Offline Tool of new GST Returns for trial run

• GST New Return Offline Tool has been released on trial basis on the GST Portal (under Download section) for familiarization of stakeholders with tool's functionalities. This tool comprising of :

• Form GST ANX-1,
• Form GST ANX-2 (with built-in matching tool), and      
• Purchase Register template (to import data of purchase register for matching).

• Documents/ data uploaded during trial run shall not create any liability in GST. Taxpayers will continue to report/ pay their GST liability in Form GSTR-I/ GSTR-3B during this period.
• After the trial period is over, the data created/entered in GST ANX-1/2 on the GST Portal will be fully erased.
• Users may give their feedback/suggestions.

[Source:  @askGSTech]

Features  available in Offline Tool of New Returns

• Preparation of GST ANX-1 by using the tool (details of invoices etc.).
• Preparation of GST ANX-1 by using Excel/csv template provided with the tool.
• Creation of JSON File of GST ANX-1 using the Tool and uploading it on GST Portal.
• Downloading the auto-drafted ANX-2 from the dashboard at GST Portal.
• Importing the Purchase Register in the Offline Tool for matching with ANX-2 downloaded from the GST Portal by use Excel/csv template provided with the tool.
• Comparing the auto populated GST ANX 2, downloaded from the Portal and the Purchase Register using the Matching Tool provided in the tool.
• Taking actions of Accept, Reject or Pending on ANX-2 downloaded and matched with Purchase register.
• Creating JSON file of final ANX-2 and uploading the same on GST Portal.

             (This offline tool is effective from 01.08.2019)

Facilities missing in trial version of new return

• Data contained in the ANX-2 uploaded by recipient taxpayer will not be flowing to supplier taxpayer (for editing/amending in case of rejected invoices) during trial period.
• HSN code validation is not available in the Offline tool
• On import of excel/CSV in offline tool to prepare ANX-1, the error file containing erroneous records will not be generated.
• The facility to delete records in ANX-1, uploaded earlier on GST Portal by using ‘Mark for Delete’ feature in offline tool.
• The facility to view summary of ANX-2 uploaded on GST Portal will be made available soon.
• On upload of ANX-2 JSON file prepared using offline tool on GST portal, the error file containing erroneous records will be generated, however, same cannot be opened in offline tool.
• Facility to ‘Refine Matching Result’ using tolerance and approximation is also missing.

[Source:  @askGSTech]

New Functionalities on GST Portal

• Form GST ITC-04

• Form GST ITC – 04 under GST is a form to be furnished by registered manufacturers, showing the details of inputs or capital goods dispatched or received from a job worker in a particular quarter.
• Old format of GST ITC-04 had been substituted with new one by CBIC vide Notification No. 39/2018 - Central Tax, dated 04-09-2018.
•  Such amended format of GST ITC-04, is now available on the GST portal.

• Filing of Application for Cancellation of Registration and filing of clarifications by GSTPs:

• Normal/Composition/ SEZ Developer/ SEZ Unit/ Casual Taxable Person/ Input Service Distributor/ Non Resident Taxable Person users can now engage a GST Practitioner for Filing of Application for Cancellation of Registration.
•  United Nations Body/Embassy/ONP users can now select a GST Practitioner for filing clarifications on issues raised by a tax official on their registration application.
• The GSTP can save draft of the application. The taxpayer/ users and GSTP’s  would be able to work on the drafts of the application, saved by either of them.

[Source:  @askGSTech]