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Latest GST News

More GST rate changes likely to address inverted duty, exemption

In addition to deleting some further exemptions, the GST Commission may consider another set of rate modifications to address the outstanding instances of inverted duty.

 

According to the officials, inverted duty refers to systems in which the rate of tax on inputs is higher than the rate of tax on external suppliers, discouraging value creation.

 

Saurabh Agarwal, a tax partner at EY, stated that the rectification of inverted duty structures in industries such as textiles, electric cars, and others will assist the business in liquidating accrued credits, smoothing working capital concerns, and reducing compliances. Also, resolving inverted tariff frameworks in areas where production-linked incentive (PLI) programs have been implemented can enhance the internal rate of return.

- Aug 19, 2022

Tax Body Clarifies: Employees Don't Need To Pay GST On Perk

As per a recent notice issued by the Board of Central Excise and Customs, perks received by employees do not need to be taxed under GST. This topic has remained a bone of contention for some time now, with previous notifications stating that any transaction between two parties would fall under the purview of GST, even if no considerations were involved. This latest notification follows Schedule III of the GST Act (2017) which states that perks do not fall under the purview of GST, given that they fall under the ambit of the contract of employment.

- Aug 05, 2022

GST e-invoicing threshold halved to Rs 10-crore from October

In an effort to reinforce steps towards preventing avoidance, the Central Government has mandated the e-invoicing of GST for firms with a turnover of over ₹10 Crores. This will now bring in 0.36 million more firms under the ambit of the digital framework. The aim of this measure undertaken by the Government is to expand the scope of the digitisation of GST and prevent further evasion by firms. Since its introduction, the e-invoicing system has resulted in the augmentation in the number of taxpayers – from 12.5 million in 2020 to 13.8 million currently. It has also augmented revenue collected from GST, from ₹0.9 trillion in 2018, to ₹1.23 trillion in 2022 and ₹ 1.5 trillion in the first quarter of the financial year 2023.

- Aug 05, 2022

Only GST-Registered Tenants Face 18% Tax On Rent Paid, Say Experts

GST has been introduced on the rent or lease fee paid for residential property from July 18, 2022. As per the new norms, 18% GST will be applied when a person who has not registered under GST gives their property on rent or lease to a GST 'registered person'. The new norms do not apply to tenants who are not registered for the tax.

 

Under the reverse charge mechanism, the GST-registered tenant has to pay GST for the rented property. If both the tenant and the owner are unregistered parties, these new norms will not apply. Salaried individuals, small business persons, or business entities are not required to register under GST. Service providers with turnover of ₹20 Lakhs and above and goods suppliers with ₹40 Lakh annual turnover and above, must have a GST registration.

 

- Aug 01, 2022

Pre-packaged and labelled food packs over 25 kg will not attract 5% GST

The government has announced that food grains and products including pulses, cereals, rice, wheat,etc in a single container holding above than 25 kg do not come under the category of pre-packaged and labelled goods. As a result GST will not be imposed on these products.

 

After receiving criticism for imposing a significant economic hardship on consumers, the Central Board of Indirect Taxes and Customs issued a series of FAQs justifying the 5% fee on the aforementioned commodities.

 

In addition, under the new rates, if a grocery store sells food goods packaged with any mark for identification of his item solely, or under his own label, a GST will be paid on that food item.

- Jul 25, 2022

GST made it easier to do business: Deloitte survey

Industry professionals believe that the introduction of GST legislation has decreased hurdles across the country and made conducting business easier and more effective for both enterprises and consumers, according to a survey conducted by Deloitte Touche Tohmatsu India LLP. 

 

According to the report, the GST system has significantly impacted the pricing and expenses of products and services to end customers, as well as assisting businesses in streamlining their distribution networks.

 

Since its introduction, the majority of industry experts believe that overall input credit management in relation to GST regulations is one of the main challenges encountered in complying with the GST legislation.

 

The statement also stated that automation of tax compliance has resulted in significant economies and advantages as compared to the previous system.

- Jun 17, 2022

GST: Small Online Retailers May Soon Be Exempted From Indirect Tax Registration

An exemption from GST is a relief for all small business owners online. The Central and State government has been continuously discussing the pros and cons of the registration and exemption of the GST process for small-scale e-commerce enterprises.

 

Currently, every small-scale e-commerce enterprise has to register its firm under the Goods and Services Tax Network irrespective of its turnover and profit ratio, whereas the offline retail sellers do not have to register themselves for GST if their annual sales do not cross Rs. 40 Lakhs landmark. With the approval of this proposal in Parliament, all types of small-scale enterprises will be at par for GST processes.

 

GST Council is also planning to reduce the tax slab on some items in the next council meeting. As per reports, mass-consumption goods will have 3% and other good categories will have 8% GST applicable after the five per cent GST tax reduction. The council will also revise the non-food items list by moving some of the goods into a 3% tax slab.

 

Currently, there are four tax slabs in the GST system - 5% tax slab, 12% tax slab, 18% tax slab, and 28% tax slab consisting around 480 items . Around 70% of GST collection comes from the 18% tax slab. The non-branded items are not included in the list and do not significantly contribute to the GST collections.

 

The GST council is also discussing with the states on increasing the tax slabs on luxury items like perfumes, bags, dry fruits, etc. and a 28% GST will be levied on cryptocurrency to par it with the casinos, lotteries, etc.

 

The official said that the final call will be taken at the GST council meeting next month

- Jun 03, 2022

GST Portal facilitates the addition of ‘Additional Trade Name’ under the Same GSTIN

The Goods and Services Tax portal is now offering a new service of adding another trade name under the same GSTIN number. The Goods and Services Tax Identification Number is a 15-digit unique number issued by the GSTN (Goods and Services Tax Network).

 

The GST return forms have separate sections that require the taxpayer to mention the legal and trade name. With this new feature, the taxpayers can register two trade names under one registration with the same PAN card in the same state.

 

With this, ‘Additional Trade Name’ feature the taxpayers can now operate multiple types of businesses under the same registration and legal name, but with a different trade name.

- Jun 03, 2022

India puts GST rate tweaks on hold till it has a grip on inflation

Owing to pressures relating to inflation and a spate of geopolitical agitations, the Finance Ministry has decided to push the rejig of the rate of Goods and Services Tax (GST). For the time being, the government plans to adhere to its original plan of market borrowing and will gauge other methods of financing subsidies pertaining to food and fertilizer, and income loss on the same, as a part of its process of reigning in inflation.

 

The government agrees that the timing isn’t right to introduce fewer slabs of GST, as this would translate to higher GST rates on certain goods, raising the prices of consumer goods when the inflation rate has reached 7.79%, the highest in eight years.

 

The council overseeing GST shall meet later this year in June and shall review Conrad Sangma’s (Chief Minister of Meghalaya) report that favours levying a rate of 28% on racing, online gaming, and casinos. In addition to this, they shall also discuss rates to be levied on ocean freight, which was recently debunked by the Supreme Court.

 

The government plans to adhere to its borrowing policy even in FY 23 and may also tap into the resources of the Consolidated Fund of India to further its infrastructure spending scheme.

- May 27, 2022

Why homebuyers are likely to pay less GST on buying under-construction properties

In a recent announcement, the High Court of Gujarat stated that when pertaining to a property that is under construction, builders are eligible to discount the actual land value stated in the contract, for the purpose of paying GST.

Before this announcement was made, builders were required to mandate ‘Value of Land’ as one-third of the total contract value and had to pay GST on the remaining two-thirds.

With this landmark judgment, those looking to purchase under-construction property will greatly benefit, especially in cases where the value of the land exceeds the one-third amount.

When it comes to construction services, the GST levied will be lesser when the actual value of the land in question is deducted from the total value. This deduction will then be advantageous when the percentage of the value of land is greater than 33.33% of the total value.

While ready-to-move-in flats and land are not taxable under GST laws currently, GST is applicable on services relating to construction if the partial or full consideration pertaining to construction is received by the builder before they issue the occupancy certificate.

- May 23, 2022

GST Collection At All-Time High Of Rs 1.68 Lakh Crore In April

The Finance Ministry has officially recorded a record-breaking Goods and Service Tax collection of Rs. 1.68 lakh crore in April 2022 by breaking its record of March 2022 when the GST collection was Rs. 1.42 lakh crore. April 20th, 2022, was the highest tax collection day, with a GST collection of Rs. 57,847 crore through 9.58 lakh transactions throughout the day. A sum of Rs. 8,000 crore was deposited between 4 pm - 5 pm via 88,000 transactions, making it the highest GST collection hour of the month. The Ministry of Finance has also disclosed a systematic breakdown of Rs. 1,67,540 crore of GST collection. The department collected Rs. 41,793 crore as SGST, Rs. 33,159 crore as CGST, Rs. 81,939, crore as IGST and Rs. 10,649 as cess. The above-mentioned gross GST collection also includes the tax on imported goods. Compared to April 2021, the country has witnessed a growth of 20% in GST revenue generation, 30% of the revenue earned is from imported goods, and 17% is from domestic transaction services in the first month of the 2022-2023 financial year. The department has also witnessed the responsible behaviour and timely payment of the tax by the citizens due to the strict enforcement of laws and stringent penalties levied.

- May 05, 2022

Collections of Rs. 1.44 trillion mark record high for India’s GST revenue

The government registered collections of Rs. 1.44 trillion, or Rs. 1,40,986 crore in January 2022. The announcement was made by Finance Minister Nirmala Sitharaman as part of presenting her Budget for 2022-2023.

 

The collection amount is headline-making in many ways: It is the highest since the  tax regime was announced. It also beats the previous high of 1.39 trillion by a large margin. It marks a 24% increase over GST collected last year and a 35% over GST collected two years ago.

 

Why is a high GST collection a good thing? Because it bodes well for the country’s economic status. It reduces the fiscal deficit (or the difference between the government’s expenditure and its income) and it increases the country’s tax buoyancy.

 

The figure of Rs. 1.44 trillion is indeed encouraging, but one should also note that the amount that has to be refunded to general service taxpayers has not been deducted from this figure, and must be taken into consideration. Meanwhile, the breakup of GST is as follows: CGST contributed to Rs. 24,264 crore, while SGST comprised Rs. 32,016 crore. Rs. 72,030 crore including over Rs. 35 crore from imported goods came from IGST and Rs. 9,674 crore of cess was received, of which Rs. 517 crore came from collections on goods imported.

 

Lauding taxpayers for due diligence, the finance minister also stated that January 2022 witnessed over 1 crore GSTR-3B submissions.

- Feb 3, 2022

Insurers Push For Cut In GST On Health Policies

During the time of the pandemic,  health insurance became one of the fastest-growing sectors of the insurance market. The medical costs in the country have surged significantly. The paramount importance of health protection paved the way for viewing health insurance as an essential commodity. Now, the insurance sector is pushing for a reduction in the GST on health policies to attract more customers to get insurance coverage. Currently, 18% GST is levied on health policies. Shanai Ghosh, Executive Director & CEO of Edelweiss General Insurance suggests that it should be brought down to the lowest slab of 5%, to make insurance cover more affordable for people. Roopam Asthana, CEO & Whole-Time Director of Liberty General Insurance, believes this will encourage people to purchase health insurance and additional top-up plans.

 

According to the experts, the pandemic has made people realize the importance of having health insurance. If the government would revise the tax for health policies, it could mend the gap between this realization and reality. The insurance penetration in India is 4.2 percent of the GDP whereas, the global average is 7.4 percent. The pandemic has increased the premium collected under health insurance policies as well as the number of COVID claims. Insurance officials find this an opportunity to increase insurance penetration in the country.

 

The tariffs at hospitals keep on changing regularly. There are no centralized regulations for the tariff structure and grading in hospitals since health is a state subject. It is crucial to have health insurance coverage to get prepared for unexpected emergencies. A reduction in GST on health policies will bring more people under the insurance umbrella.

- Jan 24, 2022

Textiles would have a standard GST across all categories, announced the Textile Ministry, which will encourage growth and create jobs

The Textile Ministry has stated that the removal of the inverted duty structure in the Man-Made Fibre (MMF) sector, as well as the notification of a uniform GST of 12% on MMF yarn, fabrics, and apparel, which will take effect on January 1, 2022, will save working capital and reduce compliance burden, resulting in increased growth and job creation. On the other hand, some manufacturers believe that the decision to impose a universal GST of 12% on all clothing, including those priced under Rs 1,000 and previously subject to a 5% duty, will hurt small businesses.

Other industry players have applauded the government's decision to address the inverted tax structure that has harmed the industry. Addressing the inverted duty structure is a critical reform that will improve manufacturing efficiency while also making GST more progressive. Improving the cost competitiveness of the MMF value chain is critical for a company's next stage of expansion, and this move will aid in that effort.

- Nov 22, 2021

In Karnataka, there is no need to re-register for GST

A secondary GST registration is not needed in the state by a subcontractor who is implementing an infrastructure project, according to the Karnataka bench of the GST Authority for Advance Rulings (AAR). In a recent judgement, the bench upheld the principle of 'Ease of Doing Business,' saying the subcontractor can hike the invoice by imposing integrated goods and service tax (IGST) from its location in Noida, Uttar Pradesh.

When goods and services are supplied between states, the IGST is imposed. The AAR's decisions have persuasive power. According to tax professionals, if this judgement is implemented across the country, it will help businesses save money on registration and other miscellaneous expenses.

- Nov 16, 2021

A quick glance at the GST system’s evolution over the past four years

As GST enters its fourth year, the words of our former Finance Minister, Arun Jaitley, delivered in Parliament's Central Hall on the midnight of June 30, 2017, still ring in our ears: "The goods and service tax may be a destination tax, but for India it will begin an entirely new journey." Indeed, on July 1, 2017, India embarked on an entirely new journey with the implementation of the goods and services tax, which is being hailed as one of the country's most significant economic changes, following a decade of deliberation. For all sections of society, the four-year journey has been a roller-coaster ride.

In the last four years, taxpayers' experiences have been varied, with organised and major industrial players adapting quickly to the new GST world, while small and medium firms are still struggling to adjust to the tech-enabled regime. While it is critical that the flaws be addressed quickly, it is also crucial to recognise that reaping the advantages of such a massive structural transformation takes time. The system is still a work in progress, and in such a complex trip, the process of evolution cannot be avoided. In the future, the new India is certain that the government will continue to take steps to fulfil its promise of a "Good and Simple Tax."

- Jul 1, 2021

In the middle of the second pandemic wave, the government grants GST support for businesses

In view of the second pandemic wave, which in most states has affected economic activity, the Finance Ministry has issued several notifications to provide companies with relief. The government issued notifications relieving companies from the outbreak in accordance with GST law to comply with statutory and regulatory conformity.

In order to reduce compliance burdens during the second wave of pandemic, the Government extended key income tax compliance schedules and GST as well as waived late charges. In order to get relaxation for a maximum of three months, the Ministry of Finance received multiple industrial representatives, as well from MSMEs. Analysts believe that the government will have to expand timelines further due to increasing pandemic cases in the country. For financial year 2019-20 - GSTR-1, GSTR-3 and GSTR-4 as well as submissions of any appeal have been extended for the filing of revised income tax returns and tax payment. The interest rate has been streamlined and in certain cases late fees have been waived off.

- May 3, 2021

GST Collections Crossed ₹ 1 Lakh Crore Mark For Fifth Month In A Row 

The Goods and Services(GST) Tax collections for India have crossed the 1 Lakh Crore mark for the 5th month in a row, in February. The collections for the month of February have dramatically risen by 7% to stand at Rs. 1.13 Lakh crore from Rs. 1.05 Lakh crore last year. The rising GST collections are direct indicators of a rise in economic activity and represent the prosperous state of economic affairs in our country.

The collections are a sigh of relief as the revenue recorded for the month of April 2020 had plummeted to a record low of Rs. 32,172 Crores due to the lockdown. This rise in revenue is also a result of the  stringent measures introduced by the government  to improve tax compliance.

- Feb 25, 2021

A major GST reform could have a major effect on Indian exporters. 

Budget 2021 was praised for striking an admirable balance between boosting the economy, improving medical facilities, and raising funds through privatization rather than raising the tax burden on individuals and businesses. But recently, the Finance Minister introduced an amendment to the Finance Bill that would allow only exports on Letters of Understanding (LUT) without GST and require exporters to apply for Input Tax Credit (ITC) Refund.

Exporters have been seeking to grasp and obey the law's mechanism since the day it was enforced. The IGST refund option was a well-established practice, and exporters were familiar with the required compliances and procedures. Merchant exporters may have to face liquidity problems as a result of the proposed changes, as their margins get thin since they depend on the local market for their purchases.

- March 5, 2021

At the GST Council meeting, states may raise shortfalls in payments. 

At the GST Council meeting in March, states are expected to raise the question of a massive shortfall in GST payments before the first quarter of 2022-23. The council may not make a decision on tax slab rationalization or the inverted duty structure in industries like textiles, footwear, and fertilizers.

The council could be unable to make a decision on these matters because the model code of conduct was in effect due to assembly elections in five states. In addition, the council would like revenue to stabilize after the pandemic so that it can make an informed decision. The dates for the forthcoming meeting have yet to be determined. The GST Council is expected to focus solely on administrative issues and debate the recommendations of different committees.

- March 5, 2021