Exception from Online Filing of Application under Section 197 and 206C (9) in the cases of NRIs and Resident Applicants

The Central Board of Direct Taxes (CBDT) has decided to allow exception from online filing of application under Section 197 and 206C (9) in the cases of NRIs and Resident Applicants.

Vide Notification No. 74/2018 dated 25.10.2018, Rule 28 of the Income Tax Rules, 1962 was amended to prescribe electronic filing of application for lower deduction or no deduction under section 197 of Income Tax Act, 1961 using digital signature or EVC. Similar changes were also made in Rule 37G to prescribe electronic filing of application under section 206C (9) for lower or nil rate of tax collection at source (TCS). The functionality for online filing has since been made available by CPC-TDS through TRACES portal. Form No. 13 is the common form for application under Section 197 and 206C (9).

For proper administration of the provisions of Section 197 and 206C (9) and to remove genuine hardship being faced by certain applicants in filing online application in Form No. 13, the Central Board of Direct Taxes (CBDT) by virtue of the powers conferred under Section 119(1) of the Income Tax Act has:

• allowed Non-Resident Indians (NRIs), who are not able to register themselves on TRACES, to file manual application in Form No. 13 before the TDS officer or in ASK Centers till 31.03.2019.
• allowed Resident Applicants to file Manual Application in Form No. 13 before the TDS officer or in ASK Centers till 31.12.2018.

Decisions taken by the GST Council in the 31st meeting held regarding GST rate on services

GST Council in the 31st meeting held on 22nd December, 2018 at New Delhi took following decisions relating to changes in GST rates, ITC eligibility criteria, exemptions and clarifications on connected issues.The decisions of the GST Council have been presented in this note in simple language for easy understanding. The same would be given effect to through Gazette notifications/ circulars which shall have force of law.

Reduction inGST rates/exemptions on services:

• GST rate on cinema tickets above Rs. 100 shall be reduced from 28% to 18% and on cinema tickets upto Rs. 100 from 18% to 12%.
• GST rate on third party insurance premium of goods carrying vehicles shall be reduced from 18% to 12%
• Services supplied by banks to Basic Saving Bank Deposit (BSBD) account holders under Pradhan Mantri Jan Dhan Yojana (PMJDY) shall be exempted.
• Services supplied by rehabilitation professionals recognised under Rehabilitation Council of India Act, 1992 at medical establishments, educational institutions, rehabilitation centers established by Central Government / State Government or Union Territories or entity registered under section 12AA of the Income-tax Act shall be exempted.
• Services provided by GTA to Government departments/local authorities which have taken registration only for the purpose of deducting tax under Section 51 shall be excluded from payment of tax under RCM and the same shall be exempted. 
• Exemption on services provided by Central or State Government or Union Territory Government to their undertakings or PSUs by way of guaranteeing loans taken by them from financial institutions is being extended to guaranteeing of such loans taken from banks.
• Air travel of pilgrims by non-scheduled/charter operations, for religious pilgrimage facilitated by the Government of India under bilateral arrangements shall attract the same rate of GST as applicable to similar flights in Economy class (i.e. 5% with ITC of input services).

Rationalization

• Parliament and State legislatures shall be extended the same tax treatment with regard to payment of tax under RCM (reverse charge mechanism)as available to Central and State Governments.
• Security services (supply of security personnel) provided to a registered person,except Government Departments which have taken registration for TDS and entities registered under composition scheme, shall be put under RCM.
• Services provided by unregistered Business Facilitator (BF) to a bank and agent of Business correspondent (BC) toa BC shall be put under RCM.

Clarifications

• To clarify that with effect from 31st January, 2018 degrees/ diploma awarded by IIMs under IIM Act, 2017 will be exempt from GST.
• To clarify that the services provided by IFC and ADB are exempt from GST in terms of provisions of IFC Act, 1958 and ADB Act, 1966.
• To clarify to West Bengal that services provided by Council/ Board of Primary/ Secondary/ Higher Secondary Education for conduct of examination to its students are exempt.
• To clarify that “printing of pictures” falls under service code “998386: Photographic and video-graphic processing services” of the scheme of classification of services and attract GST @18% and not under “998912: Printing and reproduction services of recorded media, on a fee or contract basis”which attracts GST @12%.
• To clarify that leasing of pumps and reservoirs by the OMCs to petrol pump dealers is a mixed supply and the Licence Fee Recovery (LFR) charged for the same shall be leviable to GST @ 28%, the rate applicable to pumps. Leasing of land and buildings along with equipment shall fall under heading 9972 (real estate services) and attract GST rate of 18%.
• To clarify that the incentives paid by RBI to Banks under “Currency Distribution and Exchange Scheme” (CDES)are taxable.
• To clarify under section 11(3) of the CGST Act, 2017 that scope of entry for multi-modal transport with GST rate of 12% inserted w.e.f. date 26.07.2018, covers only transport of goods from a place in India to another place in India, that is, only domestic multi-modal transport.
• To clarify that the nature of business establishment making supply of food, drinks and other articles for human consumption will not determine whether the supply by such establishments is a supply of goods or services. It will rather depend on the constituents of each individual supply and whether same satisfies the conditions / ingredients of a ‘composite supply’ or ‘mixed supply’.
• To clarify that GST is exempt on supply of food and drinks by an educational institution when provided by the institution itself to its students, faculty and staff and is leviable to GST of 5% when provided by any other person based on a contractual arrangement with such institutions.
• To clarify that the banking company is liable to pay GST on the entire value of service charge or fee charged to customers whether or not received via business facilitator or the business correspondent.
• To issue a clarification to Food Corporation of India (FCI) that the service provided by godown owner in case of lease with services, where the godown owner, besides leasing the warehouse, undertakes to carry out activities of storage and preservation of stored food grains, is the service of storage and warehousing of agricultural produce and the same is exempt.

Recommendations made during 31st Meeting of the GST Council held regarding Rate changes and clarification in Goods

GST Council in the 31st meeting held on 22nd December, 2018 at New Delhi took following decisions relating to changes in GST rates, and clarification (on Goods). The decisions of the GST Council have been presented in this note for easy understanding. The same would be given effect to through Gazette notifications/ circulars which shall have force of law.

GST rate reduction on goods which were attracting GST rate of 28% :

• 28% to 18%
• Pulleys, transmission shafts and cranks, gear boxes etc., falling under HS Code 8483
• Monitors and TVs of upto screen size of 32 inches
• Re-treaded or used pneumatic tyres of rubber;
• Power banks of lithium ion batteries. Lithium ion batteries are already at 18%. This will bring parity in GST rate of power bank and lithium ion battery.
• Digital cameras and video camera recorders
• Video game consoles and other games and sports requisites falling under HS code 9504.

• 28% to 5%
• Parts and accessories for the carriages for disabled persons

GST rate reduction on other goods:

• 18% to 12%
• Cork roughly squared or debagged
• Articles of natural cork
• Agglomerated cork

• 18% to 5%
• Marble rubble

• 12% to 5%
• Natural cork
• Walking Stick
• Fly ash Blocks

• 12% to Nil:
• Music Books

• 5% to Nil
• Vegetables, (uncooked or cooked by steaming or boiling in water), frozen, branded and put in a unit container
• Vegetable provisionally preserved (for example by sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions), but unsuitable in that state for immediate consumption.

• Miscellaneous
• Exemption from GST on supply of gold by Nominated Agencies to exporters of article of gold Jewellery.
• Exemption from GST on proceeds received by Government from auction of gifts received by President, Prime Minister, Governor or Chief Minister of a State and public servants, the proceeds of which is used for public or charitable cause.
• Exemption from IGST/Compensation cess on vehicles imported for temporary purposes under the Customs Convention on the Temporary importation of Private Road Vehicles (carnet de passages-en-douane).
• Rate of 5%/18% to be applied based on transaction value of footwear
• Uniform GST rate of 12% on Flexible Intermediate Bulk Container (FIBC) from existing 5%/12% (depending on the value)

GST on solar power generating plant and other renewable energy plants

• GST rate of 5% rate has been prescribed on renewable energy devices & parts for their manufacture (bio gas plant/solar power based devices, solar power generating system (SGPS) etc) [falling under chapter 84, 85 or 94 of the Tariff]. Other goods or services used in these plants attract applicable GST.
• Certain disputes have arisen regarding GST rates where specified goods attracting 5% GST are supplied along with services of construction etc and other goods for solar power plant.
• To resolve the dispute the Council has recommended that in all such cases, the 70% of the gross value shall be deemed as the value of supply of said goods attracting 5% rate and the remaining portion (30%) of the aggregate value of such EPC contract shall be deemed as the value of supply of taxable service attracting standard GST rate.

Clarifications:

• Sprinkler system consisting of nozzles, lateral and other components would attract 12% GST rate under S.No. 195B of notification No. 1/2017-Central Tax (Rate) dated 28.6.2018
• Movement of Rigs, Tools & Spares and all goods on wheels on own account where such movement is not intended for further supply of such goods but for the provision of service does not involve a supply (e.g., movement of testing equipment etc.) and is not be liable to GST.
• The goods with description Bagasse Board [whether plain or laminated] falling under Chapter 44 attract GST at the rate of 12%.
• Concessional GST rate of 5% applies to the LPG supplied in bulk to an OMC by refiners/fractioners for bottling for further supply to household domestic consumers.
• While animal/cattle/aquatic/poultry feed are exempt vide S. No. 102 of notification No. 2/2017-Central Tax (Rate), this exemption would not apply to their inputs such as fish meal, meat bone meal, bran, sharps, oil cakes of various oil seeds etc.
• Manure of determination of classification of vitamins, provitamins etc. as animal feed supplements
• Sattu or Chattua falling under HS code 1106 and attracts the applicable GST rate.
• Polypropylene Woven and Non-Woven Bags and PP Woven and Non-Woven Bags laminated with BOPP falls under HS code 3923 and attract 18% GST rate.
• 18% GST is applicable on wood logs including the wood in rough/log used for pulping.
• Turbo charger is classified under heading 8414 and attracts 18% GST and not 5% GST.
• Fabric even if embroidered or has stitching of lace and tikki etc., and even if sold in three piece fabric as ladies suit set, will be classifiable as fabric and would attract 5% GST.
• Scope of concessional rate of 5% GST rate for specified equipment for waste to energy plant.

This is for information only. For exact details of changes, the notification/Circular/ Clarification may please be referred to, as and when they are issued.

Recommendations made during 31st Meeting of the GST Council

The GST Council in its 31st meeting held today at New Delhi made the following policy recommendations:

• There would be a single cash ledger for each tax head. The modalities for implementation would be finalised in consultation with GSTN and the Accounting authorities.
• A scheme of single authority for disbursement of the refund amount sanctioned by either the Centre or the State tax authorities would be implemented on pilot basis. The modalities for the same shall be finalized shortly.
• The new return filing system shall be introduced on a trial basis from 01.04.2019 and on mandatory basis from 01.07.2019.
• The due date for furnishing the annual returns in FORM GSTR-9, FORM GSTR-9A and reconciliation statement in FORM GSTR-9C for the Financial Year 2017 – 2018 shall be further extended till 30.06.2019.
• The following clarificatory changes, inter-alia, shall be carried out in the formats/instructions according to which the annual return / reconciliation statement is to be submitted by the taxpayers:
• Amendment of headings in the forms to specify that the return in FORM GSTR-9 &FORM GSTR-9A would be in respect of supplies etc. ‘made during the year’ and not ‘as declared in returns filed during the year’;
• All returns in FORM GSTR-1&FORM GSTR-3B have to be filed before filing of FORM GSTR-9&FORM GSTR-9C;
• All returns in FORM GSTR-4 have to be filed before filing of FORM GSTR-9A;
• HSN code may be declared only for those inward supplies whose value independently accounts for 10% or more of the total value of inward supplies;
• Additional payments, if any, required to be paid can be done through FORM GST DRC-03 only in cash;
• ITC cannot be availed through FORM GSTR-9 &FORM GSTR-9C;
• All invoices pertaining to previous FY (irrespective of month in which such invoice is reported in FORM GSTR-1) would be auto-populated in Table 8A of FORM GSTR-9;
• Value of “non-GST supply” shall also include the value of “no supply” and may be reported in Table 5D, 5E and 5F of FORM GSTR-9;
• Verification by taxpayer who is uploading reconciliation statement would be included in FORM GSTR-9C.

• The due date for furnishing FORM GSTR-8 by e-commerce operators for the months of October, November and December, 2018 shall be extended till 31.01.2019.
• The due date for submitting FORM GST ITC-04 for the period July 2017 to December 2018 shall be extended till 31.03.2019.
• ITC in relation to invoices issued by the supplier during FY 2017-18 may be availed by the recipient till the due date for furnishing of FORM GSTR-3B for the month of March, 2019, subject to specified conditions.
• All the supporting documents/invoices in relation to a claim for refund in FORM GST RFD-01A shall be uploaded electronically on the common portal at the time of filing of the refund application itself, thereby obviating the need for a taxpayer to physically visit a tax office for submission of a refund application. GSTN will enable this functionality on the common portal shortly.
• The following types of refunds shall also be made available through FORM GST RFD-01A:
• Refund on account of Assessment/Provisional Assessment/Appeal/Any Other Order;
• Tax paid on an intra-State supply which is subsequently held to be inter-State supply and vice-versa;
• Excess payment of Tax; and
• Any other refund.

• In case of applications for refund in FORM GST RFD-01A(except those relating to refund of excess balance in the cash ledger)which are generated on the common portal before the roll out of the functionality described in point (10) above, and which have not been submitted in the jurisdictional tax office within 60 days of the generation of ARN, the claimants shall be sent communications on their registered email ids containing information on where to submit the said refund applications. If the applications are not submitted within 15 days of the date of the email, the said refund applications shall be summarily rejected, and the debited amount, if any, shall be re-credited to the electronic credit ledger of the claimant.
• One more window for completion of migration process is being allowed. The due date for the taxpayers who did not file the complete FORM GST REG-26 but received only a Provisional ID (PID) till 31.12.2017 for furnishing the requisite details to the jurisdictional nodal officer shall be extended till 31.01.2019. Also, the due date for furnishing FORM GSTR-3B and FORM GSTR-1 for the period July, 2017 to February, 2019/quarters July, 2017 to December, 2018 by such taxpayers shall be extended till 31.03.2019.
• Late fee shall be completely waived for all taxpayers in case FORM GSTR-1, FORM GSTR-3B &FORM GSTR-4 for the months / quarters July, 2017 to September, 2018, are furnished after 22.12.2018 but on or before 31.03.2019.
• Taxpayers who have not filed the returns for two consecutive tax periods shall be restricted from generating e-way bills. This provision shall be made effective once GSTN/NIC make available the required functionality.
• Clarifications shall be issued on certain refund related matters like refund of ITC accumulated on account of inverted duty structure, disbursal of refunds within the stipulated time, time allowed for availment of ITC on invoices, refund of accumulated ITC of compensation cess etc.
• Changes made by CGST (Amendment) Act, 2018, IGST (Amendment) Act, 2018, UTGST (Amendment) Act, 2018 and GST (Compensation to States) Amendment Act, 2018 and the corresponding changes in SGST Acts would be notified w.e.f. 01.02.2019.

The requisite Notifications/Circulars for implementing the above recommendations of the GST Council shall be issued shortly.

In-Principle approval given for Law Amendments during 31stMeeting of the GST Council

The GST Council in its 31st meeting held today at New Delhi gave in principle approval to the following amendments in the GST Acts:

• Creation of a Centralised Appellate Authority for Advance Ruling (AAAR) to deal withcases of conflicting decisions by two or more State Appellate Advance Ruling Authorities on the same issue.
• Amendment of section 50 of the CGST Act to provide that interest should be charged only on the net tax liability of the taxpayer, after taking into account the admissible input tax credit, i.e. interest would be leviable only on the amount payable through the electronic cash ledger.

The above recommendations of the Council will be made effective only after the necessary amendments in the GST Acts are carried out.

Action against Illegal Operations of Shell Companies

The term ‘shell company’ has not been defined under the Income-tax Act, 1961 or under the Companies Act, 2013. However, the Special Task Force set up by the Government to look into the issue of shell companies has, inter alia, recommended the use of certain red flag indicators as alerts for identification of shell companies.

Further, section 248(1)(c) of the Companies Act, 2013 provides for removal of name of company from the register of companies, if it is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application for obtaining the status of a dormant company under section 455 of the Companies Act, 2013 within such period.

Accordingly, the Government has undertaken a special drive for identification and strike-off of companies by following due process of law. Around 2.26 lakhs companies were struck off from the register of companies in the first drive undertaken by the Government. Similarly, 1,00,150 companies were struck off in the second drive.

Further, 3.09 lakh directors were also disqualified under section 164(2)(a) read with Section 167(1) of the Companies Act, 2013 for non-filing of Financial Statements or Annual Returns for continuous period of three financial years by the companies.

Central Bureau of Investigation (CBI) has registered 91 cases against 632 shell companies during the last 3 years (2015, 2016 and 2017) and 2018 (up to 30.11.2018).

Effective tax rate on complex, building, flat etc.

It is brought to the notice of buyers of constructed property that there is no GST on sale of complex/ building and ready to move-in flats where sale takes place after issue of completion certificate by the competent authority. GST is applicable on sale of under construction property or ready to move-in flats where completion certificate has not been issued at the time of sale.

Effective rate of tax and credit available to the builders for payment of tax are summarized in the table for pre-GST and GST regime.

Period	Output Tax Rate	Input Tax Credit details		Effective Rate of Tax
Pre- GST	Service Tax: 4.5% VAT: 1% to 5% (composition scheme)	Central Excise on most of the construction materials: 12.5% VAT: 12.5 to 14.5% Entry Tax: Yes	No input tax credit (ITC) of VAT and Central Excise duty paid on inputs was available to the builder for payment of output tax, hence it got embedded in the value of properties. Considering that goods constitute approximately 45% of the value, embedded ITC was approximately 10- 12%.	Effective pre-GST tax incidence: 15- 18%
GST	Affordable housing segment: 8%, Other segment: 12% after 1/3rd abatement of value of land	Major construction materials, capital goods and input services used for construction of flats, houses, etc. attract GST of 18% or more.	ITC available and weighted average of ITC incidence is approximately 8 to 10%.	Effective GST incidence, for affordable segment and for other segment has not increased as compared to pre- GST regime.

Housing projects in the affordable segment such as Jawaharlal Nehru National Urban Renewal Mission, Rajiv Awas Yojana, Pradhan Mantri Awas Yojana or any other housing scheme of State Government etc., attract GST of 8%. For such projects, after offsetting input tax credit, the builder or developer in most cases will not be required to pay GST in cash as the builder would have enough ITC in his books of account to pay the output GST.

For projects other than affordable segment, it is expected that the cost of the complex/ buildings/ flats would not have gone up due to implementation of GST. Builders are also required to pass on the benefits of lower tax burden to the buyers of property by way of reduced prices/ installments, where effective tax rate has been down.

Direct Tax Collections for F.Y. 2018-19 up to November, 2018

The Provisional Figures of Direct Tax Collections up to November, 2018 show that gross collections are at Rs. 6.75 lakh crore which is 15.7% higher than the gross collections for the corresponding period of last year.

Refunds amounting to Rs.1.23 lakh crore have been issued during April, 2018 to November, 2018, which is 20.8% higher than refunds issued during the same period in the preceding year. Net collections (after adjusting for refunds) have increased by 14.7% to Rs. 5.51 lakh crore during April - November, 2018. The Net Direct Tax collections represent 48% of the total Budget Estimates of Direct Taxes for F.Y. 2018-19 (Rs. 11.50 lakh crore).

So far as the Growth Rate for Corporate Income Tax (CIT) and Personal Income Tax (PIT) is concerned, the Growth Rate of Gross Collections for CIT is 17.7% while that for PIT (including STT) is 18.3%. After adjustment of refunds, the Net Growth in CIT collections is 18.4% and that in PIT collections is 16.0%. It is pertinent to mention that collections of the corresponding period of F.Y. 2017-18 also included extraordinary collections under the Income Declaration Scheme (IDS), 2016 amounting to Rs.10,833 crore (Third and last instalment of IDS), which do not form part of the Current Year’s collections.

Due Date for Filing FORM GSTR-9, FORM GSTR-9A and FORM GSTR-9C extended till 31st March, 2019

The competent authority has decided to extend the Due Date for filing FORM GSTR-9, FORM GSTR-9A and FORM GSTR-9C till 31st March, 2019. The requisite FORMs shall be made available on the GST common portal shortly. Relevant Order is being issued.

Earlier, FORM GSTR-9 and FORM GSTR-9A were notified vide Notification No. 39/2018-Central Tax, dated 04.09.2018 while FORM GSTR-9C was notified vide Notification no. 49/2018-Central Tax, dated 13.09.2018 as part of the CGST Rules.

Status of GST Refunds

Total GST refunds to the tune of Rs 91,149 crores have been disposed by CBIC and State authorities out of the total refund claims of Rs 97,202 crores received so far. Thus, the disposal rate of 93.77 per cent has been achieved. The pending GST refund claims amounting to Rs 6,053 crores are being expeditiously processed so as to provide relief to eligible claimants. Refund claims without any deficiency are being cleared expeditiously.

In case of IGST refunds, about 95 % (Rs 48,455 crores) of the total IGST refund claims (Rs. 50,928 crore) transmitted to Customs from GSTN as on 28.11.2018 have already been disposed. The remaining claims amounting to Rs. 2,473 crores are held up on account of various deficiencies which have been communicated to exporters for remedial action.

In the case of RFD-01A (ITC Refunds plus other refunds) claims, out of the total refund claims of Rs. 46,274 crores received in the jurisdictional tax offices, the pendency as on 03.12.2018 is Rs. 902 crores with Centre and Rs 2,678 crore with States. Provisional/final order has been issued in case of refunds amounting to Rs. 37,406 crores. In claims amounting to Rs. 5,288 crore, deficiency memos have been issued by respective GST authorities and action will be taken after receipt of replies from the claimants.

Efforts are being made continuously to clear all the pending refund claims, where ever requisite information is provided and found eligible. Co-operation of the exporter community is solicited to ensure that they respond to the deficiency memos and errors communicated by Centre and State GST as well as Customs Authorities and also exercise due diligence while filing GSTR 1 and GSTR 3B returns as well as Shipping Bills.

Extension of due dates for filing GST returns

In view of the disturbances caused to daily life by Cyclone Titli in the district of Srikakulam, Andhra Pradesh, and by Cyclone Gaza in eleven districts of Tamil Nadu viz., Cuddalore, Thiruvarur, Puddukottai, Dindigul, Nagapatinam, Theni, Thanjavur, Sivagangai, Tiruchirappalli, Karur and Ramanathapuram, the competent authority has decided to extend the due dates for filing various GST returns as detailed below:

Sl. No.	Return/Form	Extended due date	Taxpayers eligible for extension
1	FORM GSTR-3B for the months of September and October, 2018	30th November, 2018	Taxpayers whose principal place of business is in the district of Srikakulam in Andhra Pradesh
2	FORM GSTR-3Bfor the month of October, 2018	20th December, 2018	Taxpayers whose principal place of business is in the 11 specified districts of Tamil Nadu
3	FORM GSTR-1 for the months of September and October, 2018	30thNovember, 2018	Taxpayers having aggregate turnover of more than 1.5 crore rupees and whose principal place of business is in the district of Srikakulam in Andhra Pradesh
4	FORM GSTR-1 for the month of October, 2018	20th December, 2018	Taxpayers having aggregate turnover of more than 1.5 crore rupees and whose principal place of business is in the eleven specified districts of Tamil Nadu
5	FORM GSTR-1 for the quarter July-September, 2018	30th November, 2018	Taxpayers having aggregate turnover of upto 1.5 crore rupees and whose principal place of business is in the district of Srikakulam in Andhra Pradesh
6	FORM GSTR-4 for the quarter July to September, 2018	30th November, 2018	Taxpayers whose principal place of business is in the district of Srikakulam in Andhra Pradesh
7	FORM GSTR-7 for the months October to December, 2018	31st January, 2019	All taxpayers

Task Force for drafting a New Direct Tax Legislation

In order to review the Income-tax Act, 1961 and to draft a new direct tax law in consonance with the economic needs of the country, a Task Force was constituted by the Government of India in November, 2017.

In partial modification of the earlier order, the Government has appointed Shri Akhilesh Ranjan, Member (Legislation), CBDT as Convenor of the Task Force. Other members of the Task Force remain unchanged.

The Task Force shall submit its report to the Government by February 28, 2019.

Key takeaways from Companies (Amendment) Ordinance, 2018

In order to strengthen the regulatory framework, The Government takes Ordinance route to bring amendment to the Companies Act, 2013. The key takeaways have been discussed hereunder:

1. Central Govt. gets the power to change the financial Year

Currently if Companies are required to change the Financial Year, they have to file an application with the NCLT. Now, the Central Govt. has the power to entertain the applications from a company, being a holding/ subsidiary/ associate company of a company incorporated outside India, to follow a different financial year for the purpose of consolidation of its accounts outside India.

2. Receipt of Share Money and Verification of Address must to obtain certificate of commencement

Companies with share capital, which are incorporated after date on which this ordinance comes into force, can’t start the business unless a declaration is filed by them with the Registrar of Companies that every subscriber has paid the value of the shares and its registered office has been verified. Any failure in filing such declaration would be one of the grounds to strike off the name of the companies.

3. Physical verification of registered office

A Registrar may physically verify the registered office of the company and if any default is found in complying with the requirement of maintenance of registered office, he may initiate action for the removal of name of the company from the register of companies.

4. Time for registration and modification of charges

The Ordinance reduces the maximum time period for registration and modification of charge with the ROC from existing 300 days to 60 days from date of creation/modification.

5. Hike in penalty for not appointing Key Managerial Personnel

It is mandatory for specified companies to appoint Key Managerial Personnel (i.e., CEO, CFO and CS) under Section 203. Currently, any failure in appointing the KMP would result in levy of penalty of Rs. 1 Lakh to Rs. 5 Lakhs on the company and up to Rs. 50,000 on every officer-in-default. The Ordinance now levies an absolute penalty of Rs. 5 lakhs on the company and penalty of Rs. 50,000 on every Officer-in-default. In case of continuous default there would be an additional penalty of Rs. 1,000 per day for each day subject to maximum of Rs. 5 lakh.

6. Removal of imprisonment provision for certain defaults

As per existing provisions, every officer-in-default shall be prosecuted with an imprisonment for term of 6 months and penalty if company fails to file the annual return before the specified period. The Ordinance removes the provisions of imprisonment of an officer-in-default in case of non-compliance of Section 92.

Similarly, the Ordinance removes the imprisonment provision against all directors of the company in default for non-filing of copy of financials to ROC.

7. Penalty for failure to issue statement along with notice about voting by proxy

Section 105(2) requires every company (with share capital), or where Article of Association provides for voting by proxy, to provide a statement along with notice for calling general meeting that a member is entitled to attend and vote or to appoint a proxy.

Any failure to comply with this requirement results in levy of penalty of up to Rs. 5,000.

The Ordinance levies the absolute penalty of Rs. 5,000 for such non-compliance.

8. Penalty on non-filing of resolutions and agreements to ROC

The Ordinance introduces a penalty of Rs. 500 per day in case of continuing failure of non-filing of resolutions or agreements as specified under Section 117(3) in addition to penalty of Rs. 1 lakh to Rs. 5 lakh against company and Rs. 50, 000 against every officerin-default including liquidator of the company.

CBDT releases Direct Tax Statistics

Continuing the practice of placing key statistics relating to direct tax collections and administration in public domain, the Central Board of Direct Taxes (CBDT) has further released time-series data as updated up to FY 2017-18 and income-distribution data for AY 2016-17 and AY 2017-18. The key highlights of these statistics are as under:

• There is a constant growth in direct tax-GDP ratio over last three years and the ratio of 5.98% in FY 2017-18 is the best DT-GDP ratio in last 10 years.
• There is a growth of more than 80% in the number of returns filed in the last four financial years from 3.79 crore in FY 2013-14 (base year) to 6.85 crore in FY 2017-18.
• The number of persons filing return of income has also increased by about 65% during this period from 3.31 crore in FY 2013-14 to 5.44 crore in FY 2017-18.

There has been continuous increase in the amount of income declared in the returns filed by all categories of taxpayers over the last three Assessment Years (AYs). For AY 2014-15, corresponding to FY 2013-14 (base year), the return filers had declared gross total income of Rs.26.92 lakh crore, which has increased by 67%to Rs.44.88 lakh crore for AY 2017-18, showing higher level of compliance resulting from various legislative and administrative measures taken by the Government, including effective enforcement measures against tax evasion.

The total number of taxpayers (including corporates, firms, HUFs, etc.) showing income of above Rs. 1 crore has also registered sharp increase over the three-year horizon. While 88,649 taxpayers disclosed income above Rs. 1 crore in AY 2014-15, the figure was 1,40,139 for AY 2017-18 (growth of about 60%). Similarly, the number of individual taxpayers disclosing income above Rs. 1 crore increased during the period under reference from 48,416 to 81,344, which translates into a growth of 68%.

The average tax paid by corporate taxpayers has increased from Rs.32.28 lakh in AY 2014-15 to Rs.49.95 lakh in AY 2017-18 (growth of 55%). There is also an increase of 26% in the average tax paid by individual taxpayers from Rs.46,377/- in AY 2014-15 to Rs.58,576/- in AY 2017-18.

During the three-year period under reference, the number of salaried taxpayers has increased from 1.70 crore for AY 2014-15 to 2.33 crore for AY 2017-18 (up by 37%). The average income declared by the salaried taxpayers has gone up by 19% from Rs.5.76 lakh to Rs.6.84 lakh.

During the same period, there has also been a growth of 19% in the number of non-salaried individual taxpayers from 1.95 crore to 2.33 crore and the average non-salary income declared has increased by 27%from Rs. 4.11 lakh in AY 2014-15 to Rs. 5.23 lakh in AY 2017-18.

The availability of the time-series data and the income-distribution data of fairly long periods in the public domain will be found to be useful by the academicians, scholars, researchers, economists and the public at large in studying long-term trends of various indices of the effectiveness and efficiency of direct tax administration in India.

The new releases are available alongwith older publications at www.incometaxindia.gov.in.

IBBI notifies the Insolvency and Bankruptcy Board of India (Mechanism for Issuing Regulations) Regulations, 2018

The Insolvency and Bankruptcy Code, 2016 (Code) is a modern economic legislation. Section 240 of the Code empowers the Insolvency and Bankruptcy Board of India (IBBI) to make regulations subject to the conditions that the regulations: (a) carry out the provisions of the Code, (b) are consistent with the Code and the rules made thereunder; (c) are made by a notification published in the official gazette; and (d) are laid, as soon as possible, before each House of Parliament for 30 days.

Given the importance of subordinate legislations for the various processes under the Code, it is essential that the IBBI has a structured, robust mechanism, which includes effective engagement with the stakeholders, for making regulations. Section 196 (1) (s) of the Code requires the IBBI to specify mechanisms for issuing regulations, including the conduct of public consultation processes, before notification of regulations. In sync with this philosophy and the statutory requirement, the IBBI notified the Insolvency and Bankruptcy Board of India (Mechanism for Issuing Regulations) Regulations, 2018 (Issuing Regulations) to govern the process of making regulations and consulting the public .

The Issuing Regulations provide that for the purpose of making or amending any regulations, the IBBI shall upload the following, with the approval of the Governing Board, on its website seeking comments from the public-

• draft of proposed regulations;
• the specific provision of the Code under which the Board proposes regulations;
• a statement of the problem that the proposed regulation seeks to address;
• an economic analysis of the proposed regulations;
• a statement carrying norms advocated by international standard setting agencies and the international best practices, if any, relevant to the proposed regulation;
• the manner of implementation of the proposed regulations; and
• the manner, process and timelines for receiving comments from the public.

The IBBI shall allow at least twenty-one days for public to submit their comments. It shall consider the public comments received and upload the same on its website along with a general statement of its response on the comments, not later than the date of notification of regulations. If the Governing Board decides to approve regulations in a form substantially different from the proposed regulations, it shall repeat the process under the Issuing Regulations. The regulations shall be notified promptly after it is approved by the Governing Board and the date of their enforcement shall ordinarily be after thirty days from the date of notification unless a different date is specified therein.

However, where the IBBI is of the opinion that certain regulations are required to be made or existing regulations are required to be amended urgently, it may make regulations or amend the existing regulations, as the case may be, with the approval of the Governing Board, without following the above process of consultation.

The Issuing Regulations are effective from 22nd October, 2018. These are available at ww.mca.gov.in and www.ibbi.gov.in

Clarification on the manner of filing the Quarterly Return by Composition Dealers in FORM GSTR-4

It has been brought to notice that doubts regarding the manner of filing the quarterly return by Composition Dealers in FORM GSTR-4 in the absence of auto-population of the details of inward supplies (other than supplies attracting reverse charge) received from registered suppliers exist amongst taxpayers.

In this regard, it is to clarify that the taxpayers who have opted to pay tax under the composition levy shall not furnish the data in serial number 4A of Table 4 of FORM GSTR-4. The required changes in the CGST Rules, 2017 would be notified shortly.

Last date to avail Input Tax Credit in respect of invoices or Debit Notes relating to such invoices pertaining to period from July, 2017 to March, 2018.

There appears to be misgiving about the last date for taking Input Tax Credit (ITC) in relation to invoices or debit notes relating to such invoices pertaining to period from July, 2017 to March, 2018. Such uncertainty seems to stem from the Government’s decision to extend the last date for furnishing of details of outward supplies in FORM GSTR-1 from time to time.

According to Section 16 (4) of the CGST Act, 2017, a registered person shall not be entitled to take ITC in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under Section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such Debit Note pertains (hereinafter referred to as “the said invoices”) or furnishing of the relevant Annual Return, whichever is earlier.

With taxpayers self-assessing and availing ITC through return in FORM GSTR-3B, the last date for availing ITC in relation to the said invoices issued by the corresponding supplier(s) during the period from July, 2017 to March, 2018 is the last date for the filing of such return for the month of September, 2018 i.e. 20th October, 2018.

It is clarified that the furnishing of outward details in FORM GSTR-1 by the corresponding supplier(s) and the facility to view the same in FORM GSTR-2A by the recipient is in the nature of taxpayer facilitation and does not impact the ability of the taxpayer to avail ITC on self-assessment basis in consonance with the provisions of Section 16 of the Act. The apprehension that ITC can be availed only on the basis of reconciliation between FORM GSTR-2A and FORM GSTR-3B conducted before the due date for filing of return in FORM GSTR-3B for the month of September, 2018 is unfounded as the same exercise can be done thereafter also.

It may, however, be noted that the Government has extended the last date for furnishing of return in FORM GSTR-3B for the month of September, 2018 for certain taxpayers who have been recently migrated from erstwhile tax regime to GST regime vide Notification No. 47/2018- Central Tax dated 10th September, 2018. For such taxpayers, the extended date i.e. 31st December, 2018 or the date of filing of Annual Return whichever is earlier will be the last date for availing ITC in relation to the said invoices issued by the corresponding suppliers during the period from July, 2017 to March, 2018.

All the taxpayers are encouraged to take note of the legal requirements and be compliance savvy.

Extension of date for filing of Income Tax Returns and Audit Reports from 30th September, 2018 to 15th October, 2018

The due date for filing of Income Tax Returns and Audit Reports for Assessment Year 2018-19 is 30th September, 2018 for certain categories of taxpayers. Upon consideration of representations from various stakeholders, the Central Board of Direct Taxes(CBDT) extends the ‘due date’ for filing of Income Tax Returns as well as reports of Audit (which were required to be filed by the said specified date) from 30th September, 2018 to 15th October, 2018 in respect of the said categories of taxpayers. However, there shall be no extension of the due date for the purpose of section 234A (Explanation 1) of the I.T. Act, 1961 pertaining to Interest for defaults in furnishing return, and the assessee shall remain liable for payment of interest as per provisions of section 234A of the Act.

MCA notifies issue & transfer of all shares in dematerialised form only by all unlisted Public companies

The Ministry of Corporate Affairs (MCA) has notified that with effect from 2nd October, 2018, issue of further shares and transfer of all shares by unlisted public companies shall be in dematerialised form only. The MCA has taken this step as a measure for further enhancing transparency, investor protection and governance in the corporate sector. The rules in this regard have been amended accordingly.

According to the MCA, the major benefits of dematerialisation of securities which will now be available to unlisted Public companies include:-

• Elimination of risks associated with physical certificates such as loss, theft, mutilation, fraud etc.

• Improving the corporate governance system by increasing transparency and preventing mal-practices such as benami shareholding, back dated issuance of shares, etc.

• Exemption from payment of stamp duty on transfer.

• Ease in transfer, pledge etc. of securities.

Unlisted Public Companies are expected to facilitate the dematerialisation of their securities in coordination with Depositories and Share Transfer Agents. Any grievances arising out of such Dematerialization of securities will be handled by the IEPF Authority. The measure is expected to significantly enhance the Corporate Governance standards in the country.

Filing of Income Tax Returns registers an upsurge of 71% upto 31st August,2018

There has been a marked improvement in the number of Income Tax Returns(ITRs) filed during FY 2018 (upto 31/08/2018, the extended due date of filing) compared to the corresponding period in the preceding year. The total number of ITRs e-filed upto 31/08/2018 was 5.42 crore as against 3.17 crore upto 31/08/2017, marking an increase of 70.86%. Almost 34.95 lakh returns were uploaded on 31/08/2018 itself, being the last date of the extended due date of filing of ITRs.

A remarkable increase is seen in the number of ITRs in 2 categories i.e. ITRs filed by salaried Individuals (ITR-1& 2) as also those availing the benefit of the Presumptive Taxation Scheme(ITR-4).

The total number of e-returns of salaried Individual taxpayers filed till 31/08/2018 increased to 3.37 crore from 2.19 crore returns filed during the corresponding period of 2017, registering an increase of 1.18 crore returns translating into a growth of almost 54%.

A stupendous growth has been witnessed in the number of returns e-filed by persons availing the benefit of Presumptive Tax, with 1.17 crore returns having been filed upto 31st August, 2018 compared to 14.93 lakh returns upto 31st August, 2017 registering a massive increase of 681.69%.

The increase in the number of returns reveals a marked improvement in the level of voluntary compliance of taxpayers which can be attributed to several factors, including the impact of demonetisation, enhanced persuasion & education of taxpayers as also the impending provision of late fee which would be effective on late filing of returns. This is indicative of an India moving steadily towards a more tax compliant society & reflects the impact of continuous leveraging of technology to improve taxpayer service delivery.

Assessing Officer couldn't step into shoes of assessee to decide amount to be paid to avail a particular services

[2018] 96 taxmann.com 272 (Hyderabad - Tribunal)

Facts:

• The assessee-company was an investment company and filed its return of income. It was found by Assessing Officer (AO) that a sum of Rs. 18 lakhs was claimed towards service charges paid to company SRSR.
• Said service charges were paid for the services like advisory services in its business area, accounting services, collection of interest and dividend, taxation, ROC related matters and maintenance of its land properties, etc.
• AO was of the opinion that the Directors of SRSR were related persons to the Directions of assessee-company. He estimated sum of Rs. 3 lakhs at Rs. 25,000 per month as reasonable expenditure considering the nature and volume of business of assessee-company and the nature of services rendered by SRSR. The balance of Rs. 15 lakhs was disallowed under section 37(1).
• CIT(A) confirmed the disallowance. Aggrieved-assessee filed the instant appeal before the ITAT.

The ITAT held in favour of assessee as under:

• There was no power of AO to reduce the claim. He could only examine whether the amount could be allowed in full or not. There was no dispute that the amount was paid for the purpose of business, as Assessing Officer had allowed the amount partly.
• Since the provisions of section 37(1) do not have any restriction to allow the amount partly, so long as the expenditure is incurred for the purpose of the business wholly and exclusively, the same has to be allowed.
• The restrictions placed in other provisions like that of section 36(1)(iii) for the purpose of interest, under section 40A (expenses or payment not deductible in certain circumstances) and also restrictions placed under sections 30 and 31 won’t apply to the facts of the case.
• Since the restrictions under section 37(1) were not applicable, the whole of the amount claimed was to be allowed as the expenditure was not of personal or capital in nature, as provided in the section itself.

Cleaning of agricultural produce away from agricultural farm not entitled to GST exemption: AAR

Rara Udhyog, In re- [2018] 95 taxmann.com 118 (AAR- Rajasthan) 

The assessee is engaged into the activities of cleaning of the various agriculture produce like Saunf (Fennel) Dhaniya (Coriander), Jeera (Cumin seeds), etc. It removes the various impurities which do not change the essential character of the agriculture produce and makes the product marketable for primary market. It filed an application for Advance Ruling on the issue whether such activity would attract nil rate of tax? 

The Authority for Advance Ruling held that the exemption is available only on those processes which are carried at Agriculture Farm and which do not change the essential characteristics of the Agricultural Produce but only make it marketable for primary market. In the given case, the activity of cleaning using specific machines are installed at its premises, i.e., away from Agricultural farm. Therefore, the activity of the assessee will not attract nil rate of tax.

Determination of place of supply is kept out of purview of Authority for Advance Ruling

Utility Powertech Ltd., In re [2018] 95 taxmann.com 88 (AAR-Chhattisgarh) 

The assesse is registered in the State of Chhattisgarh. It received a contract for supply of manpower from NTPC BHEL Power Project Pvt. Ltd. (NBPPL), Andhra Pradesh. It procured and deputed the manpower in the State of Andhra Pradesh. It filed an application for Advance Ruling on the issue whether it is required to charge IGST or CGST and SGST on such services and if IGST is charged on such transaction, will the credit of IGST be available to NBPPL against their output tax liability. 

The Authority for Advance Ruling, Chhattisgarh is not the proper authority to pronounce the ruling regarding the availability of ITC to a firm which is registered outside the State of Chhattisgarh. Therefore, it is held that the determination of place of supply has been kept out of the purview of Authority for Advance Ruling (AAR) stipulated under the provisions of section 97(2) of the CGST Act, 2017.

GST is chargeable on surplus profit transferred by beer manufacturer to brand owner

United Breweries Ltd., In re - [2018] 95 taxmann.com 87 (AAR-Karnataka) 

The assessee entered into an arrangement with contract bottling units (CBU) for using its brand name on beer bottles. The CBU had manufactured the beer using the brand name of assessee and supplied such beer to market. The assessee filed an appeal for Advance Ruling on the issue whether the sale of beer by CBU under its invoicing would be considered as supply of services and Whether GST is payable by the Brand owner on the surplus profit transferred by the CBU to the assessee out of such manufacturing activity? 

The Authority for Advance Ruling held that the CBU is not engaged in supply of service to the assessee. Further, the GST would be payable by the assessee, i.e., brand owner on surplus profit transferred by the CBU. The supply of service to the CBUs is classified under Service Code 999799 and would be taxable at the rate of 18% GST. 

Hydent-K Toothpaste is classifiable as medicament

'Hydent-K Toothpaste' is classifiable as medicament under Heading No. 3003.10 

Time Pharma v. CCE, Thane-II - [2018] 94 taxmann.com 439 (Mumbai) 

The assessee was engaged in the manufacture of a product ‘Hydent-K toothpaste’. It was made of Potassium Nitrate BP and Sodium Monofluorophosphate USP. It classified the said product as Medicament under Heading No. 3003 10. 

The department held that the product in question was classified as Toothpaste under Heading No. 3306 10. The assessee filed an appeal before the Commissioner (Appeals) who allowed the appeal in favour of revenue. Being aggrieved by the order, it filed an appeal in the Tribunal. 

The Tribunal held that only pharmacopeia drugs were used in the product ‘Hydent-K toothpaste’. Therefore, the product in question was classified as Medicament under Heading No. 3003 10. Hence, the appeal filed by assessee was to be allowed.

Cold storage services in respect of agricultural produce exempt from GST: AAR

FACTS:

The applicant is the owner of the cold storage house and provides storage and warehousing facilities to variety of agriculture produce. The applicant submitted an application, seeking an advance ruling on taxability of storage services for various products namely Fennel (Saunf), Coriander (Dhaniya), Cumin Seeds (Jeera), Carom Seeds (Ajwain), Fenugreek Seeds (Kasoori Methi), Mustard Seeds (Sarson), Brown Mustard Seeds (Rai), Nigella Seeds (Kalonji), Poppy Seeds (Posara Dana). 

HELD:

The Court held that above mentioned goods fall under definition of Agricultural Produce, and therefore supply of cold storage service in relation to these products is exempt from levy of GST. However, if any processing is done on these products as is not usually done by a cultivator or producer at farm level, then these would fall outside the definition of agricultural produce and in such case, supply of cold storage service in relation to these would remain chargeable to GST.

[2018] 95 taxmann.com 122 (AAR- RAJASTHAN)

Extension of Last Date for filing GSTR-3B for July, 2018 extended till 24th August, 2018 for all class of taxpayers

The last date for Filing of Return in FORM GSTR-3B for the month of July, 2018 has been extended till 24thAugust, 2018 for all class of taxpayers by the Competent Authority. The relevant Notification for the same shall be issued shortly.

No GST on salary remitted by HO to liaison office in India for normal functioning of liaison office: AAR

Habufa Meubelen B.V., In re - [2018] 95 taxmann.com 120 (AAR- Rajasthan) 

The assessee is the Indian liaison office of a company incorporated at Netherlands. It shall not undertake any activity of a trading, commercial or industrial nature, except activities required for normal functioning of office. The salaries of the employees are remitted by HO to liaison office. The HO also reimburses the other expenses incurred by liaison office for their operation. 

The assessee filed an application for Advance Ruling on the issue ‘whether the reimbursement of expenses and salary is liable to GST and whether it is required to get registered under the GST? 

The Authority for Advance Ruling held that the liaison office in India does not render any consultancy or other services directly or indirectly. Therefore, the reimbursement of expenses and salary paid by head office to liaison office is not liable to GST. Further, no taxable supplies are made by the liaison office. Therefore, they are not required to get registered under GST.

CBDT issues Circular on amendment of Tax Audit Report

Section 44AB of the Income-tax Act, 1961 (‘the Act’) read with Rule 6G of the Income-tax Rules, 1962 (‘the Rules’) requires prescribed persons to furnish the Tax Audit Report along with the prescribed particulars in Form No. 3CD. The existing Form No. 3CD was amended vide Notification No. GSR 666(E) dated 20th July, 2018 with effect from 20th August, 2018.

Representations have been received by the Central Board of Direct Taxes (CBDT) that the implementation of reporting requirements under the proposed Clause 30C (pertaining to General Anti-Avoidance Rules (GAAR)) and proposed Clause 44 (pertaining to Goods and Services Tax (GST) compliance) of the Form No. 3CD may be deferred. 

On consideration of the matter, the CBDT has decided, vide Circular No. 6/2018 dated 17th August, 2018, that the reporting under the proposed Clause 30C and proposed Clause 44 of the Tax Audit Report shall be kept in abeyance till 31st March, 2019. The Circular has been uploaded on the Departmental websitewww.incometaxindia.gov.in

Income Tax Notices

Income Tax Notices have been issued by the Income Tax Department and the Enforcement Directorate. In respect of Income Tax Department, assesses including, non-resident assesses are served notices/summons consequent to the initiation of various proceedings under the Income-Tax Act, 1961, including, for assessment of income, collection, recovery and taxes, whenever required. Where information is received indicating holding of assets by NRIs, necessary enquiry is made to examine whether the assets have been disclosed in any returns of income and whether the assets would have been acquired from income chargeable to tax in India.

No such incidence has come to the notice of Enforcement Directorate (ED) and Ministry of External Affairs whereby to escape this harassment, NRIs are changing their addresses in their passports to their current addresses in countries where they reside thereby establishing their tax residency status abroad. In respect of Income Tax department, the persons are liable for taxation on income/transaction originated/attributed to India irrespective of their addresses. Giving-up of Indian addresses may not result in escaping scrutiny by the Department. Specific cases of NRIs giving-up Indian addresses solely for this purpose have not been noticed.

Under the Exchange of Information (EOI) Article present in Indian tax treaties, Indian Tax authorities can make requests for banking information. In cases where a request is made, the concerned authorities in the requested jurisdiction are able to gather banking information from the relevant banks which is then exchanged with India. In cases where the treaty does not contain a provision to exchange banking information, such exchange may not be possible.

The information for assistance in Criminal matters under Prevention of Money Laundering Act (PMLA), 2002 is sought under Mutual Legal Assistance Treaty (MLAT) or Assurance of Reciprocity. The Central authorities of the requested jurisdictions arrange banking information according to their domestic laws and share with Indian authorities.

Filings of GST Returns

The Goods and Services Tax Council has simplified the return filing process for small businesses. The GST Council, in its 28th meeting held on 21st July, 2018 in New Delhi, in principle approved the new return formats and associated changes in law for small businesses. Taxpayers who have a turnover upto Rs. 5 crores in the previous financial year shall have facility to file quarterly return with monthly payment of taxes on self-declaration basis. For such taxpayers, simplified returns have been designed called Sahaj and Sugam. Those taxpayers who have no purchases, no output tax liability and no input tax credit to avail in any quarter of the financial year shall file one NIL return for the entire quarter. NIL return filers shall have the facility to file return by sending SMS.

The Goods and Services Tax Network (GSTN) will focus on development of new return filing system, improving the user interface and business intelligence and analytics. It is working to improve the “Offline Tool” for returns under GST and is focusing on improving the user interface constantly. The user interface of FORM GSTR-3B has been made simpler and user friendly. Taxpayers have been given the facility to file NIL return by simply pressing one button. Further, GSTN is working on business intelligence and analytics such as predictive analysis, statistical scoring, 360 degree view of taxpayers etc.

Comparison of data in FORM GSTR-1 and FORM GSTR-3B is being done by GSTN for tax liability analysis. Reports based on such analysis are being shared with tax authorities for taking necessary action.

GST COUNCIL RECOMMENDS GST RATES REDUCTION ON SEVERAL GOODS & for specified handicraft items

The GST Council in its 28th meeting held under the Chairmanship of Shri Piyush Goyal , Union Minister for Railways , Coal , Finance & Corporate Affairs took following decisions on GST Rate on Goods .

• GST rates reduction on 28% items:
• 28% to 18%
• Paints and varnishes (including enamels and lacquers)
• Glaziers’ putty, grafting putty, resin cements
• Refrigerators, freezers and other refrigerating or freezing equipment including water cooler, milk coolers, refrigerating equipment for leather industry, ice cream freezer etc.
• Washing machines.
• Lithium-ion batteries
• Vacuum cleaners
• Domestic electrical appliances such as food grinders and mixers & food or vegetable juice extractor, shaver, hair clippers etc
• Storage water heaters and immersion heaters, hair dryers, hand dryers, electric smoothing irons etc
• Televisions upto the size of 68 cm
• Special purpose motor vehicles. e.g., crane lorries, fire fighting vehicle, concrete mixer lorries, spraying lorries
• Works trucks [self-propelled, not fitted with lifting or handling equipment] of the type used in factories, warehouses, dock areas or airports for short transport of goods.
• Trailers and semi-trailers.
• Miscellaneous articles such as scent sprays and similar toilet sprays, powder-puffs and pads for the application of cosmetics or toilet preparations.

• 28% to 12%
• Fuel Cell Vehicle. Further, Compensation cess shall also be exempted on fuel cell vehicle.

• Refund of accumulated credit on account of inverted duty structure to fabric manufacturers:Fabrics attract GST at the rate of 5% subject to the condition that refund of accumulated ITC on account of inversion will not be allowed. However, considering the difficulty faced by the Fabric sector on account of this condition, the GST Council has recommended for allowing refund to fabrics on account of inverted duty structure. The refund of accumulated ITC shall be allowed only with the prospective effect on the purchases made after the notification is issued.

• GST rates have been recommended to be brought down from:
• 18%12%/5% to Nil:
• Stone/Marble/Wood Deities
• Rakhi [other than that of precious or semi-precious material of chapter 71]
• Sanitary Napkins,
• Coir pith compost
• Sal Leaves siali leaves and their products and Sabai Rope
• PhoolBhariJhadoo [Raw material for Jhadoo]
• Khali dona.
• Circulation and commemorative coins, sold by Security Printing and Minting Corporation of India Ltd [SPMCIL] to Ministry of Finance.
• 12% to 5%:
• Chenille fabrics and other fabrics under heading 5801
• Handloom dari
• Phosphoric acid (fertilizer grade only).
• Knitted cap/topi having retail sale value not exceeding Rs 1000
• 18% to 12%:
• Bamboo flooring
• Brass Kerosene Pressure Stove.
• Hand Operated Rubber Roller
• Zip and Slide Fasteners
• 18% to 5%:
• Ethanol for sale to Oil Marketing Companies for blending with fuel
• Solid bio fuel pellets

• Rate change made in respect of footwear
• 5% GST is being extended to footwear having a retail sale price up to Rs. 1000 per pair
• Footwear having a retail sale price exceeding Rs. 1000 per pair will continue to attract 18%

• GST rates have been recommended to be brought down for specified handicraft items [as per the definition of handicraft, as approved by the GST council] from:
• 18% to 12%:
• Handbags including pouches and purses; jewellery box
• Wooden frames for painting, photographs, mirrors etc
• Art ware of cork [including articles of sholapith]
• Stone art ware, stone inlay work
• Ornamental framed mirrors
• Glass statues [other than those of crystal]
• Glass art ware [ incl. pots, jars, votive, cask, cake cover, tulip bottle, vase]
• Art ware of iron
• Art ware of brass, copper/ copper alloys, electro plated with nickel/silver
• Aluminium art ware
• Handcrafted lamps (including panchloga lamp)
• Worked vegetable or mineral carving, articles thereof, articles of wax, of stearin, of natural gums or natural resins or of modelling pastes etc, (including articles of lac, shellac)
• Ganjifa card

• 12% to 5%:
• Handmade carpets and other handmade textile floor coverings (including namda/gabba)
• Handmade lace
• Hand-woven tapestries
• Hand-made braids and ornamental trimming in the piece
• Toran

• Miscellaneous Change relating to valuation of a supply:
• IGST @5% on Pool Issue Price (PIP) of Urea imported on Govt. account for direct agriculture use, instead of assessable value plus custom duty.
• Exemption from Compensation cess to Coal rejects from washery [arising out of cess paid coal on which ITC has not been taken]. 

• Clarifications/amendments as regards applicability of GST rate in respect of certain goods recommended by GST Council which inter-alia includes:
• Milk enriched with vitamins or minerals salt (fortified milk) is classifiable under HS code 0401 as milk and exempt from GST.
• 5% GST on both treated (modified) tamarind kernel powder and plain (unmodified) tamarind kernel powder.
• Beet and cane sugar, including refined beet and cane sugar, (falling under heading 1701) attracts 5% GST rate.
• Water supplied for public purposes (other than in sealed containers) does not attract GST.
• Marine engine (falling under sub-heading 8408 10 93) attracts 5% GST rate.
• Kota stone and similar stones [ other than marble and granite] other than polished will attracts 5% GST, while ready to use polished Kota stoneand similar stones will attracts 18%.
• Certain other miscellaneous clarification as regards classification/rate have been recommended

[This note presents the decision of the GST Council in simple language for ease of understanding which would be given effect to through Gazette notifications/circulars which shall have force of law.]