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Showing posts from April 5, 2017

How the GST Network works

GST Network, the IT infrastructure backbone that powers the new indirect tax system, is geared to accept up to three billion invoices a month from 8.5 million tax payers from day one. 

The common portal( acts as an interface between different stakeholders in the GST ecosystem, namely taxpayers, tax departments, banks, the Reserve Bank of India, external service providers, among others.

The portal becomes the touch point for taxpayer registration, invoice upload, tax payment, getting input tax credit, maintaining the cash ledger and liability register, generating MIS reports for taxpayers, tax officials and other stakeholders, and keeping track of status of returns.

The system matches (or reconciles) the invoice data in a decentralised manner. The sales data uploaded by the seller (GSTR-1) get auto-populated by the GST system in the purchase register of the buyer (GSTR-2). The buyer has to accept, reject or modify the same based on invoice(s) in his possession.

The accepted …

Litigation and tax disputes concerns before new regime kicks in

“Dealing with legacy issues,” responded the chief financial officer of a large manufacturing conglomerate when asked to comment on his biggest concern about the goods and services tax (GST).

As corporate India gears up to be GST-ready, the ongoing litigation and tax dispute cases are something most businesses are cagey about.

According to the Comptroller and Auditor General (CAG) report for the period ended March 2016, there were 243,167 demand and 76,151 refund cases pending across forums under service tax and central excise.

Tax experts say the litigation before the tribunal and courts largely relate to exports, classification of goods, and credits under central excise and value added tax (VAT).

“The overall objective of the central and state governments has been to close as much litigation as possible before the advent of the GST,” says Anita Rastogi, partner, indirect tax, PwC.

However, given the volume of pending cases and disputes, it may not be possible to clear the backlog before G…

Tax collection beats expectation, up 18%

Government gets Rs.17.1 lakh crore in its kitty 

Tax collections at Rs 17.1 lakh crore for 201617 exceeded the Revised Estimates (RE) of ~16.97 lakh crore by 0.8 per cent, official figures showed on Tuesday.Corporate tax and excise duty collections fell short of RE, which implies that industrial recovery could be prolonged.The tax collection figures in 201617 were 18 per cent higher than the previous fiscal year´s figures and the highest growth in the past six years, according to Revenue Secretary Hasmukh Adhia.

With these tax numbers coupled with a spurt in dis investment proceeds in March, the Centre will be able to rein in its fiscal deficit  at 3.5 per cent of the country´s gross domestic product (GDP), as budgeted despite figures till February exceeding the targeted 13 per cent, said Devendra Pant, chief economist, India Ratings.Direct tax collections were ~8.47 lakh crore, same as in the RE, and 
14.2 per cent higher than in the previous year.

Indirect tax collections were Rs 8.63 l…

Sebi circulars cannot be challenged in SAT, rules Supreme Court

In a move that might ease the judicial load on the market regulator, the Supreme Court has ruled that the circulars issued by the Securities and Exchange Board of India (Sebi) cannot be challenged before the Securities and Appellate Tribunal (SAT).

Circulars, which could be administrative orders, were not necessarily quasi judicial and hence could not be appealed in SAT, the apex court said, while pronouncing an order in the case between Sebi and National Depository Services Ltd (NDSL).

SAT is a quasi-judicial body that hears appeals against orders given by Sebi. 

“Administrative orders such as circulars issued under the present case referable to Section 11(1) of the (Sebi) Act are obviously outside the appellate jurisdiction of the tribunal …the preliminary objection taken before the SAT is sustained.The judgment of the SAT is, accordingly, set aside,” said the Supreme Court in the order on March 7.

NDSL and Sebi were in dispute over an administrative circular of 2005.The circular —capti…

New tax plans worry market participants

Wording of draft circular spells uncertainty for ESOPs, off-market transactions and shares acquired through mergers

Aset of proposals for capital gains tax on shares acquired without paying the Securities Transaction Tax (STT) is creating nervousness in the stock markets. 

The government has asked for reactions to be sent by the coming Tuesday. Legal experts say the wording of the draft notification could expose employee stock options (ESOPs) and off-market share purchases to capital gains. 

According to the circular's Clause (B), acquiring any listed company's shares other than through a recognised stock exchange would attract capital gains. Although ESOPs are commonly considered subscriptions, several judgments delivered by courts have highlighted that these are purchases made by employees in the form of services rendered to the company. Also, allotment of ESOPs doesn’t take place on a stock exchange platform. Hence, ESOPs would attract Clause (B).

“If the intention is not to ta…

Revenue wing allows time till Apr for GST registration

The revenue department has extended by a month till Aprilend the enrolment of dealers with the goods and services tax network (GSTN), the information technology (IT) backbone for the new setup, as so far only 60 per cent of the existing assessees are done with the switch over.

Revenue Secretary Hasmukh Adhia reviewed the IT preparedness of the GSTN last week and progress in registration of eight million excise, service tax and valueadded tax (VAT) assessees with the portal.

“So far, 74 per cent of the VAT assessees have migrated to the GSTN portal, while only 28 per cent of the excise and service tax assesses have enrolled for the new regime,” said Adhia.


Five things to know about GST

What is goods and services tax (GST)?

It is a destination-based tax on consumption of goods and services. This means the tax would accrue to the taxing authority, which has the jurisdiction over the place of consumption — also termed as place of supply.

How does it work?

It will be levied at all stages right from manufacture up to final consumption with credit of taxes paid at previous stages available as set-off. In a nutshell, only value addition will be taxed and burden of tax is to be borne by the final consumer.

Which of the existing taxes are proposed to be subsumed under GST?

(i) Central taxes: 
a. Central excise duty 
b. Duties of excise (Medicinal and Toilet Preparations) 
c. Additional duties of excise (Goods of special importance) 
d. Additional duties of excise (textiles and textile products) 
e. Additional duties of customs (commonly known as CVD) 
f. Special additional duty of customs (SAD) 
g. Service tax 
h. Central surcharges and cesses so far as they relate to supply of goods and…

Rent Receipts Under I-T Lens

Lease deed, power bill etc may be needed for claiming HRA rebate For as long as anyone can remember, producing fake property rent receipt, often from parents and relatives, has been an easy way to lower tax burden.Such cavalier disregard for tax rule was overlooked by most employers as well as taxman, who possibly felt it was a minor transgression. Perhaps, not anymore.
The income tax department now has good reason to insist on proof from the tax payer showing that he is indeed a genuine tenant, staying in the property in question. A salaried employee receiving `house rent allowance' from the employer could escape paying tax on at least 60% of this amount by generating sham rent receipt. However, according to a recent tribunal ruling, the assessing officer can now demand proof -such as leave and licence agreement, letter to the housing co-operative society informing about the tenancy , electricity bill, water bill etc. -in allowing a lower taxable income as computed by a salaried empl…

Expats Stressed As Aadhaar Becomes Mandatory for ITRs

Rush to tax consultants for a way around; fear their privacy may be compromised Expatriates living in India would often complain about heat, food and dirt. Applying, registering and getting an Aadhaar card might just extend the list of woes with another mandatory tryst with India's famed red tape. Many expatriates would be required to obtain an Aadhaar number. The Finance Act, 2017 has made it mandatory to enrol for Aadhaar to file tax returns in India or apply for a PAN or keep the existing PAN active effective July 1. This applies to those who are eligible for Aadhaar and under the Aadhaar Act, anyone who is in India for more than 182 days in aggregate in the past 12 months becomes eligible to obtain Aadhaar, experts said. The possibility of giving out details including biometric ones has caused panic among the expat community. “Many expats have reached out to us and sought clarity around whether they require getting Aadhaar card for filing income tax returns in India. This would be…