Published on: 6 September, 2023
GST e-way Bill System to Mandate 6-digit or 4-digit HSN Codes Starting 1st October 2023
The Goods and Services Tax (GST) e-Way bill system has announced a crucial update that will impact GST taxpayers across India. Effective from October 1, 2023, using either a 6-digit or 4-digit HSN Code (Harmonized System of Nomenclature) in e-Invoices and e-Way Bills will be mandatory.
The update follows Notification No. 78/2020, dated October 15, 2020, which stated, “Taxpayers with Aggregate Annual Turnover (AATO) above Rs 5 Crore must incorporate a 6-digit HSN code in their e-Invoices and e-Way Bills. Other taxpayers are required to include at least a 4-digit HSN code.”
While many taxpayers have already adopted this practice, those who have not are strongly encouraged to align themselves with the new requirement by the specified deadline.
The impending change aims to streamline the invoicing and e-Way billing process, ensuring greater accuracy and transparency in the GST system. With this update, the GST authorities seek to enhance the efficiency of tax compliance and reporting mechanisms.
As the deadline approaches, GST taxpayers must stay informed about these changes and modify their invoicing and e-Way billing processes. Adhering to the new HSN code requirements will ensure that businesses remain compliant with GST regulations and continue to operate smoothly within the evolving tax landscape.
Published on: 28 August, 2023
GST Credit Note Not Required for Pre-Delivery Returns: Madras High Court
In a significant ruling, the Madras High Court has provided clarity on the requirement of a GST credit note for goods returned before being received by the recipient. The case involved Luminous Power Technologies Private Limited against the State Tax Office, and the verdict sheds light on the applicability of credit notes under specific circumstances.
The petitioner, Luminous Power Technologies Private Limited, had dispatched various solar power generating systems and panels to a buyer in Tiruppur through multiple invoices. The consignment faced an unexpected setback due to heavy rainfall during transportation, resulting in wet solar panels. Consequently, the buyer declined to accept the delivery.
In response, the petitioner generated new e-way bills and transported the goods back to their factory for assessment. However, during this return journey, the GST Department intercepted the consignment, alleging non-compliance with GST regulations pertaining to credit and debit notes.
GST Department’s Standpoint
The GST Department invoked Section 129 of the GST Act, claiming that the petitioner’s failure to issue credit or debit notes for the unaccepted goods violated the provisions outlined in Section 34 of the Act. The Department asserted that any goods returned due to unfulfilled sales must be accompanied by appropriate documents. According to their interpretation, failure to provide prescribed documentation resulted in penalties under Section 129.
The petitioner’s legal counsel argued that credit or debit notes are issued when goods are returned after delivery. In this case, since the consignee refused to accept the goods, a situation of delivery and subsequent return did not materialise. Therefore, the petitioner argued that the application of Section 129(3) was unwarranted.
Furthermore, it was emphasised that the goods were at risk of deterioration due to their wet condition, compelling the petitioner to pay the penalty in an attempt to safeguard the damaged goods.
The ruling clarified that goods being returned do not necessarily require a credit note, as per Section 34(1) of the CGST Act. This section outlines instances where a credit note is applicable, including scenarios where the taxable value or tax charged in the tax invoice exceeds the actual payable amount or where goods supplied are returned by the recipient. The court interpreted that credit notes are meant for adjusting tax liabilities that result from situations where excess tax was charged in a tax invoice.
The Madras High Court’s ruling provides a subtle viewpoint on the necessity of GST credit notes in cases of pre-delivery returns. This clarity offers insights into the circumstances that trigger the requirement for credit notes under the GST framework. The judgment reaffirms the importance of interpreting GST regulations in alignment with their intended scope and purpose.
Published on: 26 August, 2023
CBDT Launches Revamped Website for Income Tax Department with User-Friendly Features
In a significant stride towards enhancing user experience and accessibility, the Central Board of Direct Taxes (CBDT) has unveiled the revamped national website of the Income Tax Department, accessible at www.incometaxindia.gov.in. The updated website features a user-friendly interface, transparency, and ease of navigation features. It now has a mobile-responsive layout and an aesthetic overhaul. The website also contains a ‘Mega Menu’ for content with fresh features and capabilities. All of these new enhancements are explained via a virtual tour and new button indications for the convenience of website users.
This website acts as a thorough database for tax and associated information. It offers cross-referenced and hyperlinked access to the Direct Tax statutes and several other allied acts, rules, income tax circulars, and notifications. Additionally, the website provides a “Taxpayer Services Module” with several tax tools to help taxpayers file their income tax forms. Additionally, the functionality of dynamic due date alerts offers tooltips, reverse countdowns, and links to relevant portals to make it easier for taxpayers to comply.
Published on: 22 August, 2023
Government’s Innovative Move: “Mera Bill Mera Adhikar” Scheme to Reward GST Invoice Uploads
The government is expected to launch the long-awaited “Mera Bill Mera Adhikar” scheme; individuals may soon receive rewards for posting GST invoices on a mobile app, PTI reported.
According to the official announcement, the invoice incentivisation program may offer cash prizes ranging from Rs.10 lakh to Rs.1 crore monthly or quarterly to people who upload invoices they get from retailers or wholesalers to Mera Bill Mera Adhikar app.
iOS and Android will support the “Mera Bill Mera Adhikar” mobile app. The seller’s GSTIN, the invoice number, the amount paid, and the tax amount should all be included in the uploaded invoice.
According to an official, the software will allow users to upload up to 25 legitimate invoices per month, and each invoice must have a minimum purchase value of Rs 200.
Every month, more than 500 computerised lucky draws would be held, with prizes totalling thousands of rupees. According to organisers, there will be two lucky draws each quarter with prizes totalling Rs 1 crore.
The plan was being finalised and might be introduced this month.
The “Mera Bill Mera Adhikar” program would ensure that electronic invoices were generated even for B2C customers so that the buyer would be qualified to participate in the lucky draw.
The plan is designed to encourage citizens and consumers to demand accurate invoices from the supplier. The program is designed to promote tax-compliant behaviour among Indian consumers and businesses during the B2C stage of transactions.
The GST Network (GSTN) has created the technology infrastructure that will allow users of a user-friendly mobile application and web to register themselves and upload invoices.
This program is anticipated to accomplish several goals, including encouraging and rewarding consumer compliance, supporting tax-compliant firms, increasing consumer spending, and preventing tax evasion.
Published on: 31 July, 2023
GSTN Rolls Out e-Invoice Exemption Declaration Functionality
The Goods and Services Tax Network (GSTN) issued an advisory on the Functionality of the e-Invoice Exemption Declaration dated 24 July 2023. This advisory aims to provide clarity and guidance to businesses utilising the e-Invoice system. The new feature is available on the e-invoicing portal.
“GSTN is pleased to inform you that the e-Invoice Exemption Declaration functionality is now live on the e-Invoice portal. This functionality is specifically designed for taxpayers who are by default enabled for e-invoicing but are exempted from implementing it under the CGST (Central Goods and Services Tax) Rules”, as per GSTN advisory.
- E-Invoice Exemption Declaration functionality is optional and available only on the e-Invoice portal.
- Taxpayers who are exempt from e-Invoicing under CGST Rules can use the functionality.
- It should be noted that using this facility to make a declaration would not change the taxpayer’s ability to use e-Invoices.
- The individual is responsible for deciding on exemptions per Government Notifications and reporting them on the portal.
The reporting of exemption declarations solely serves the purpose of facilitating businesses.
Published on: 19 July, 2023
2-Factor Authentication Registration Mandatory for Taxpayers with AATO Above Rs 100 Crore: Deadline Extended till 31st July
The e-Way Bill portal has extended the deadline for taxpayers with an Annual Aggregate Turnover (AATO) above Rs 100 crore to register for 2-Factor Authentication (2FA) for both the e-invoicing and e-way bill system. The new deadline, now set for July 31, 2023, comes after the earlier announcement by the National Informatics Centre (NIC), in which it mentioned the mandatory implementation of 2FA for taxpayers with turnover above Rs 100 crore for both the e-invoicing and e-way bill system.
2-Factor Authentication adds an extra layer of security to the login process of the e-Way Bill/e-Invoice System, ensuring only authorised individuals can access it. Alongside their regular username and password, users must now provide a one-time password (OTP) received via SMS or generated through the Sandes/NIC-GST-Shield App.
The purpose of implementing 2FA is to bolster the security of the e-Way Bill system, safeguarding sensitive data and transactions from potential cyber threats. By adopting this additional security measure, the authorities aim to mitigate the risks associated with unauthorised access and strengthen taxpayer data protection.
Taxpayers with an AATO above Rs 100 crore are urged to take prompt action and register for 2FA before the revised deadline of July 31, 2023, to avoid any disruptions in their e-Way Bill and e-Invoice operations.
Setting up 2FA is straightforward, requiring businesses to activate the feature and link it to their registered mobile numbers or the Sandes/NIC-GST-Shield App.
Published on: 13 July, 2023
Changes in GST Rates on Goods & Services: Latest Recommendations of GST Council
GST Rate Changes on Services
- The GST rate of uncooked/unfried snack pellets was reduced to 5%.
- IGST is exempted on Dinutuximab (Quarziba), a drug used to treat high-risk neuroblastoma in children, when imported for personal use.
- IGST exempted on rare disease medicines and Food for Special Medical Purposes (FSMP) for personal use, including those recommended by the Centers of Excellence.
- Supply of raw cotton, including kala cotton, by agriculturists to cooperatives is taxable under the reverse charge mechanism.
- GST on imitation zari thread was reduced from 12% to 5%.
- Revised compensation cess notification to include utility vehicles meeting specified parameters.
- The GST rate on LD slag was reduced from 18% to 5% for better utilisation and environmental protection.
- The GST rate on fish-soluble paste was reduced from 18% to 5%.
- Levy of Compensation Cess as per ad valorem rate applicable on 31st March 2023 for pan masala and tobacco products.
- Inclusion of RBL Bank and ICBC Bank for IGST exemption on gold, silver, or platinum imports as per updated bank list.
- Casino, Horse Racing and Online gaming are to be taxed at the uniform rate of 28%.
GST Rate Changes on Services
- To promote start-ups, the GST exemption on satellite launch services provided by ISRO, Antrix Corporation Limited, and New Space India Limited (NSIL) will be extended to similar services offered by private sector organisations.
- GTAs are no longer obligated to file annual declarations for GST payment under the forward charge. The deadline for GTAs to opt for paying GST under the forward charge has been moved to 31st March of the preceding financial year, starting from 1st January of that year as the commencement date for exercising the option.
- Services provided by a director to a company in their private capacity, such as renting immovable property, are clarified as not taxable under RCM. Only services provided by a director in their capacity as a director of the company or corporate body will be subject to RCM taxation.
- Food and beverage supply in cinema halls is taxable under the restaurant service category, provided that they are supplied as part of a service and separately from the cinema exhibition. If the sale of cinema tickets and food/beverage supply are combined and qualify as a composite supply, the entire supply will be subject to GST at the rate applicable to the cinema exhibition service, which is considered the principal supply.
Measures to Facilitate Business or Trade
- The relaxations provided in FY 2021-22 for various tables of Form GSTR-9 and FORM GSTR-9C be continued for FY 2022-23. Further, to ease the compliance burden on smaller taxpayers, taxpayers having aggregate annual turnover up to Rs.2 crore rupees are exempted from filing annual returns (in Form GSTR-9/GSTR-9A).
- The Input Services Distributor (ISD) mechanism is not compulsory for the distribution of input tax credits on common input services obtained from third parties to distinct persons. An amendment may be made in GST law to make the ISD mechanism mandatory prospectively for the distribution of input tax credit of such common input services procured from third parties.
- A circular will be issued to provide clear guidance on multiple aspects related to GST liability and the reversal of input tax credit in situations involving warranty replacement of parts and repair services within the warranty period, where no consideration is received from the customers. The circular will clarify, among other things, that manufacturers are not required to charge GST on such replacements or repair services and that there is no need for them to reverse input tax credit.
Measures to Streamline GST Compliance
- Mandatory E-way bill generation for the movement of gold and precious stones for intra-state movement.
Published on: 14 July, 2023
GSTN Brought Under the Prevention of Money Laundering Act
The Central Government has decided to bring the Goods and Services Tax Network (GSTN) under the ambit of the Prevention of Money Laundering Act (PMLA) and has released an amendment notification accordingly on 8th July 2023.
Bringing the GSTN under PMLA makes it mandatory for the tax network to share information with the Enforcement Directorate (ED) and the Financial Intelligence Unit (FIU) as per the PMLA Act. This means the ED and FIU have complete access to the entire information stored on GSTN. Further, the intelligence authorities will also share information with the GSTN if they find any suspicious forex transactions done by GST-registered individuals. The PMLA also covers GST offences such as taking fake input tax credits, generating fake invoices, etc.
The new inclusion will allow authorities to trace any GST-related frauds instantaneously. It also facilitates smoother investigations into money laundering cases associated with GST. This step will also discourage individuals from engaging in such illicit activities.
Impact on GST-Registered Businesses
While these changes do not directly impact GST-registered businesses, it is crucial to continue complying with all applicable laws and regulations to ensure smooth operations and avoid any legal consequences.
Published on: 06 July, 2023
GSTR 9 and GSTR 9C Filing Not Required for Businesses With Turnover Rs.2 Crore and Rs.5 Crore, Respectively
Marking six successful years of introducing GST, the Central Board of Indirect Taxes & Customs (CBIC) has made two announcements to ease the tax compliance burden on small businesses.
- No need to file GSTR 9 if the business turnover is up to Rs.2 Crore. This applies to all the eligible businesses registered as normal taxpayers, including SEZ units and SEZ developers.
- No need to file GSTR 9C if the business turnover is up to Rs.5 Crore. This applies to all the eligible businesses registered as normal taxpayers, including SEZ units and SEZ developers.
The complete details of the waiver are yet to be released by CBIC.
GSTR 9 and Its Applicability
GSTR-9 is an annual return that needs to be submitted once every financial year by registered taxpayers, including regular taxpayers, as well as SEZ units and SEZ developers. Taxpayers who have withdrawn from the composition scheme to normal taxpayers at any time during the financial year should also file the GSTR 9 return. In the GSTR-9 return, information regarding business purchases, sales, input tax credit, refund claims, and any outstanding demands must be submitted.
GSTR 9C and Its Applicability
GSTR-9C is a reconciliation statement that needs to be submitted along with GSTR-9. The GSTR-9C must be duly verified and digitally signed by the Chartered Accountant. All normal taxpayers, including SEZ units and SEZ developers, whose business turnover is above a certain threshold need to submit GSTR 9C.
Published on: 23 June, 2023
Deloitte’s Insight into the 6th Year of GST Reveals Positive Impact on the MSME Sector
An Insight into the Sixth Year of GST: A recent study by India Inc. captures the responses of 612 senior leaders across six industries and various categories of companies. The survey captures the views of the respondents on the integration of Goods and Services Tax (GST) against the ease of doing business in India, tax technology, investment-centric growth, taxpayer profiling, and recommendations. The study also focused on the impact of GST across sectors such as Consumer, Technology, Media and Telecommunications, Energy Resources, Financial Services, Life Sciences, and Government and Public Services.
According to the survey, GST has had a significant impact on the country’s economy. It revealed that 94% of respondents expressed a positive outlook towards GST, in contrast to 59% agreeing on the same last year. Further, 88% of Micro, Small, and Medium Enterprises (MSMEs) reported a reduction in goods and services costs and improved supply chains due to the GST reforms. The MSMEs attributed the cost reduction to the improved uniformity brought about by the GST regime.
The survey highlighted specific measures introduced under GST that benefited MSMEs.
- For instance, 74% of MSME respondents noted that increasing the threshold limit for GST registration from Rs.20 lakh to Rs.40 lakh was advantageous.
- Additionally, 73% mentioned that the relaxation of the threshold and reducing restrictions for availing the composition scheme was beneficial.
- Invoice financing solutions based on GST-reported invoices were considered beneficial by 55% of the MSMEs
- 46% appreciated the provision of an offline option for raising e-invoices without incurring any technology costs.
The positive impact of the GST reforms extended beyond MSMEs. The survey indicated that businesses of all sizes experienced the benefits of the simplified tax regime. Mahesh Jaising, Partner and Leader of Indirect Tax at Deloitte India, expressed optimism about the changes facilitated by the GST regime and the improvements in supply-chain efficiencies. He emphasised the importance of continuing to promote ease of doing business reforms, rationalising working capital, and reducing input tax restrictions.
The survey also revealed other noteworthy findings specific to MSMEs.
- 16% of the MSMEs noted that the introduction of GSTR-2B, an auto-generated input tax credit statement, improved vendor account management and enhanced credit flow.
- 88% of MSMEs reported that transferring CGST/IGST cash ledger balance between ‘distinct persons’ reduced working capital blockage.
- The majority of MSMEs expressed a preference for changes such as allowing input tax credit refunds on capital goods, eliminating taxable deemed supplies, and providing growth impetus through eligibility for input tax credit based on invoice receipt and relaxed matching requirements.
- MSMEs highlighted the need for export rule liberalisation and measures to unlock working capital, such as cross-distinct person utilisation of CGST credit balances.
- More than 50% of MSMEs also sought the removal of input tax credit restrictions related to employees and establishing commercial infrastructure, along with rationalising GST rates for the entire supply chain.
Overall, the survey demonstrated the positive impact of the GST reforms on businesses in India, particularly MSMEs. The simplified tax regime and various measures introduced under GST have resulted in cost reductions, improved supply chains, and increased efficiency. The findings reinforce the importance of continuing to promote reforms and address the specific needs of businesses across different sectors.
Published on: 8 June 2023
GSTN Launches the E-Invoice Verifier App – Currently Available on Google Play Store
Verifying e-Invoices is a lot easier now with the new E-Invoice Verifier App, developed and launched by Goods & Service Tax Network (GSTN) in June 2023. The newly launched app allows users to check the authenticity of an e-Invoice by scanning the QR code present on it. As per GST norms, all eligible invoices must contain a signed QR code. The E-Invoice Verifier App simplifies the invoice verification process.
GSTN further announced that it is working towards launching the 2nd version of the app with the Search IRN functionality. This version will further streamline the e-Invoice verification process.
Key Features & Benefits of E-Invoice Verifier App
- Easy QR Code Verification: The app allows easy scanning of the QR code and makes e-Invoice verification simple and easy.
- Easy-to-Use Interface: The newly launched app provides a user-friendly interface with intuitive navigation making it easy for people of all sorts to access the app’s features and functionalities efficiently.
- No User Login Required: The app provides non-login-based access to all users. This makes it easy and convenient for the users to access the app.
- Supports All 6 IRPs: The app can verify e-Invoices reported on all six IRPs, which offers comprehensive coverage and convenience for users.
Steps to Download & Use the e-Invoice Verifier App
- Visit Google Play Store and download the “E-Invoice QR Code Verifier” app.
- Once the app is installed, open the app, click on the QR code scanner, and scan the QR code on any of the e-invoices.
- The app will display the invoice information encoded in the code. Compare it with the information on the invoice.
Published on: 5 June 2023
e-invoicing Enabled for Taxpayers with 5 to 10 Crore Turn Over
The e-invoicing portal now allows taxpayers with an annual aggregate turnover between Rs.5 Crore to Rs.10 Crore to use e-invoicing. Starting August 1, 2023, mandatory e-invoicing will be applicable for business-to-business (B2B) transactions for taxpayers with an annual turnover exceeding Rs.5 Crore in any of the previous financial years. Taxpayers can now generate e-invoices on the e-Portal.