GST Council Current Affairs

GST Council approves converting GSTN into government owned entity

The 27th meeting of GST Council chaired by Finance Minister Arun Jaitley has approved proposal of convert GST Network (GSTN) into government entity from current private entity status by taking over stakes held by private entities. The council has agreed to buy out stake of private entities in GSTN. Following the move, central government will own 50% in GSTN and the remaining will be collectively held by state governments.

Background

Majority of Goods and Services Tax (GST) processes including registration, filing of returns, payment of taxes, processing of refunds is IT driven and mainly through GSTN. For this, GSTN handles large-scale invoice level data of lakhs of business entities including data relating to exports and imports. Considering nature of state function performed by GSTN, it was felt that the network should be converted into fully government-owned company.

Goods and Services Tax Network (GSTN)

GSTN was set up as not for profit, non-Government, private limited company in 2013. It was established primarily to provide IT infrastructure and services to Central and State Governments, tax payers and other stakeholders for implementation of Goods and Services Tax (GST). Currently its 24.5% is owned by central government and similar percentage is held by state governments collectively. The remaining 51% I owned by five private financial institutions- ICICI Bank, NSE, HDFC Ltd, HDFC Bank and LIC Housing Finance Ltd. Its revenue model after Goods and Services Tax (GST) was rollout out consisted of User Charge to be paid by stakeholders who will use the system and making it self-sustaining organization.

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GST Council approves simplified tax return filing system

The Goods and Services Tax (GST) Council in its 27th meeting chaired by Union Finance Minister Arun Jaitley announced new and simplified return filing process. It was approved based on recommendations of Group of Ministers on IT simplification for GST implementation.

Features of simplified return filing process

One monthly return: All taxpayers excluding few exceptions like composition dealer will file one monthly return. Return filing dates will be staggered based on turnover of registered person to manage load on IT system. Composition dealers and dealers having nil transaction will have facility to file quarterly return.

Unidirectional flow of invoices: Seller will upload unidirectional flow of invoices on anytime basis during the month. This will be valid document to avail input tax credit by buyer and allow them to continuously see the uploaded invoices during the month. Invoices for B2B transaction will use HSN at four digit level or more to achieve uniformity in reporting system.

Simple return design and easy IT interface: Taxpayer will be given user-friendly IT interface and offline IT tool to upload the invoices. The B2B dealers will fill invoice-wise details of outward supply made by them, based on which system will automatically calculate his tax liability. The input tax credit will be also calculated automatically by the system based on invoices uploaded by his sellers.

No automatic reversal of credit: There will be no automatic reversal of input tax credit from buyer on non-payment of tax by seller. In case of default in payment of tax by seller, recovery will be made from seller but reversal of credit from buyer will be also option available with revenue authorities to address exceptional situations like missing dealer, closure of business by supplier or supplier not having adequate assets.

Due process for recovery and reversal: Recovery of tax or reversal of input tax credit will be through due process of issuing notice and order. The process will be online and automated to reduce human interface.

Supplier side control: Analytical tools will be used to identify and block unloading of invoices by seller to pass input tax credit who has defaulted in payment of tax above threshold amount to control misuse of input tax credit facility. Similar safeguards will be built with regard to newly registered dealers to prevent loss of revenue.

Transition:  The new simplified return filing process will be implemented in three-stage transition. The stage I is the present system of filing of return GSTR 3B and GSTR 1. GSTR 2 and GSTR 3 will be suspended in Stage I which will continue for maximum period of 6 months by which time new return software is ready. In stage 2, new return will have facility for invoice-wise data upload and also facility for claiming input tax credit on self-declaration basis, as in case of GSTR 3B now.

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