INDIA: COVID-19 VAT IMPLICATIONS

Apr 9, 2020 | COVID-19

INDIA – Update 27th May

Firms may get input tax credit for masks, PPEs

The government could allow companies to claim input tax credit for personal protective equipment (PPE) kits, sanitisers, masks and other such goods distributed free for battling Covid-19. Officials in Central Board of Indirect Taxes and Customs (CBIC) aware of the development said the issue was being examined and a decision is expected shortly.

One of the officials quoted above said the government had received several representations seeking relaxation in Sec 17(5)(h) of CGST Act 2017, which does not permit credit on goods given for free or as a gift, or lost, stolen, destroyed or written off.

One of the ways being considered is to allow the relaxation through corporate social responsibility (CSR) rules, which have already allowed for companies’ spend on Covidrelated activities to be counted as CSR expenditure, including services being offered free of charge, for instance providing free lodging for Covid frontline workers in hotels.

“If services are given by the company as part of CSR then there is no need of such reversal of input tax credit… If such restriction is not there for services, then for goods also such restriction could be considered for removal,” a second official said, asking not to be named.

 

Source Credit – A2ZTaxcorp

 

INDIA – Update 26th May

India rules out GST waiver for businesses to fight virus woes

In discussions within the ministry, it has been said that Goods and Sales Tax (GST) exemption or deferral is not required as it would not give any benefit to industry but seriously impact the revenues of both the states and the Centre.

 

Source Credit – A2ZTaxcorp

 

INDIA – Update 26th May

Tamil Nadu extends various GST Returns Due Dates

In view of the difficulties faced due to the COVID-19 outbreak, the Tamil Nadu State Government has notified amendment to the Tamil Nadu Goods and Services Tax Act, 2017 (Tamil Nadu Act 19 of 2017) extending various due dates for returns under GST regime. According to the ordinance promulgated by Governor Banwarilal Purohit, extended the due dates for filing the returns including statements of outward supplies, filing refund claims, filing appeals, etc. specified, prescribed, or notified under Tamil Nadu Act 19 of 2017 which cannot be completed or complied with due to force majeure, according to a release from Commercial and Registration department.

 Another ordinance, Tamil Nadu Taxation Laws (Relaxation of Certain Provisions) Ordinance, 2020, was promulgated on Friday relaxing the time limit specified in, or prescribed or notified under the erstwhile Acts, such as the Tamil Nadu Value Added Tax Act, 2006, Tamil Nadu Betting Tax Act, 1935, the Tamil Nadu Entertainments Tax Act, 1939, the Tamil Nadu Tax on Luxuries Act, 1981, etc. The proceedings under this ordinance include the issuance of notices, notifications, completion

of proceedings, passing of orders by authorities or tribunals, filing of appeals, replies or applications or furnishing of reports or returns or statements or documents wherever necessary, which cannot be completed or complied within the prescribed time due to force majeure.

 

Source Credit – Taxscan

 

INDIA – Update 12th May

Postponed filing deadline for GST return, GST actions (COVID-19)

India’s Central Board of Indirect Taxes and Customs issued guidance providing relief and/or clarifying actions by taxpayers encountering challenges with regard to goods and services tax (GST) compliance requirements because of the coronavirus (COVID-19) pandemic.

The deadline for filing the GST annual return for FY 2018-2019 has been extended to 30 September 2020. Other relief is provided with regard to certain GST-related actions.

A separate circular provides postponed deadlines for certain other GST-related actions.

 

Source Credit – KPMG

 

INDIA – Update 12th May

Effective use of Technology enables Goa Central GST Commissionerate to Administer Taxation Remotely

COVID19 Pandemic saw businesses transitioning to remote work and building efficient strategies thereof. Goa Central GST Commissionerate swiftly adopted technologies of remote work so that businesses are kept buoyant and Taxpayers are at ease. The Systems Directorate of Central Board of Excise and Customs (CBIC) gave remote access to CBIC-GST application to all officers through Virtual Private Network so that work is not hampered.

During the lockdown, Goa Commissionerate processed and disposed of 54 GST refund claims. Four refund claims pertaining to erstwhile central excise and service tax were also disposed of .10360 returns pertaining to both central excise and service tax were also reviewed.

255 cancellation requests sent by taxpayers were processed and 311 cancellations were done suo-motu by officers of CGST. Earlier an Ordinance was issued to provide relaxation in the provisions of certain acts.

The time limit for filing of the appeal, furnishing of return, or any other compliance under the GST Act has been extended as per the Ordinance. CBIC has also issued several circulars as part of the Trade Facilitation Measures during an outbreak of COVID-19.

 

Source Credit – Taxscan

 

INDIA – Update 16th April

CBIC launches e-delivery of pdf Gate pass and Final Bill of Entry to Custom Brokers and Importers

The Central Board of Indirect Taxes and Customs (CBIC) has launched e-delivery of pdf Gate pass and Final Bill of Entry to Custom Brokers and Importers. To mitigate the unprecedented situation due to the COVID-19 pandemic, CBIC has taken several measures to facilitate & expedite Customs clearance process making it more and more contact-less i.e. automated and online as well as paper-less.

These measures include the facility to clear goods based on an undertaking (not bond), acceptance of electronic Country of Origin certificate etc. These steps complement the earlier reforms unrolled as a part of Truant Customs such as online query module, eSanchit, web-based goods registration, electronic processing of DGFT issued licenses, machine release of imported goods based on Customs Compliance Verification and electronic transmission of PDF’-based First copy of Bill of Entry (BoE) to Customs Brokers and registered importers.

In a Circular issued by the CBIC said that, “the aforementioned reforms combine to expedite Customs clearances and reduce the transaction cost. At the same time, Board notes that the specific measures that reduce interface between the Customs authorities and the importers/exporters/Customs Brokers are especially relevant in these challenging times, to tackle the scourge of COVID-19 pandemic. In this direction, the Board has now decided to enable electronic communication of pdf based Final eOoC (electronic Out of Charge) copy of BoE and eGatepass to the importers/Customs Brokers”.

The electronic communication would reduce interface between the Customs authorities and the importers/Customs Brokers and also do away with the requirement of taking bulky printouts from the Service Centre or maintenance of voluminous physical dockets in the Customs Houses.The Final eOoC copy of BoE and eGatepass copy will be emailed to the concerned Customs Broker and/or importer, if registered, once the Out of Charge is granted. The eGatepass copy will be used by the Gate Officer or the Custodian to allow the physical exit of the imported goods from the Customs area.

Salient features of the secure electronic communication of the Final eOoC copy of BoE and the eGatepass are as follows:

Final Out of Charge (eOoC) Copy of Bill of Entry:

As of now, the physical signing of the Final OoC copy of BoE is insisted upon at many Customs locations. This necessitates the importer/Customs Broker to take a paper printout from the Service Centre to be produced before the Customs officer. It has now been decided to do away with the paper printout of the Final OoC copy of BoE. Instead, DG Systems will enable a functionality to immediately email the PDF version of the Final eOoC copy of BoE generated after OoC to the Customs Broker and/or the importer, if registered. This Final eOoC copy of BoE will have the following features-

  • The PDF version will bear a digitally signed and encrypted QR code which can be scanned to verify the authenticity of the document using Mobile App ICETRAK. The QR code is tamper-proof, which is digitally signed by CBIC to ensure authenticity. Key details like BoE No., BoE Date, Duty, Package Details are available in the secured QR Code.
  • A version number is also embedded in the QR code which can be used to ascertain whether the document is indeed the latest version (in case of reassessment etc.). The same would be verifiable at ICEGATE Enquiry

eGatepass

Currently, the physically signed Final OoC copy of BoE is being verified both by the Gate officer (Customs) as well as the Custodian before allowing the actual movement of the imported goods out of the Customs premises. This physical printout is now being replaced by the PDF eGatepass generated and electronically communicated to the importer/Customs Brokers with the following salient features:

  • eGatepass shall contain only the details referred to by the Custodian or the Gate officer to allow actual movement of goods – like details of IGM/Bill of Lading, Containers, packages etc.
  • There will be two types of QR codes (i) for entire eGatepass document, and (ii) for each container/package covered under the Gatepass. This will ensure that only those containers/packages move out which are covered under the Gatepass document.
  • EDI OoC message shall continue to be sent to the Custodians who are registered on ICEGATE. Since all the Custodians are not connected to ICEGATE, therefore, EDI OoC message is not being transmitted electronically to such Custodians. Field formations are requested to ensure registration of all such custodians in ICEGATE as per the advisory of DG Systems so that the potential benefits of the new measures could be reaped across the entire Customs ecosystem.

The CBIC also said that the electronic communication of the Final eOoC copy of BoE and eGatepass copy is expected to bring immense benefits in terms of time and cost of compliance and reduction in the interface for the trade, while providing enhanced security features for verification of authenticity and validity of the electronic documents. This measure would be made effective from 15 to April, 2020.

 

Source Credit – Taxscan

 

INDIA – Update 16th April

Businesses can claim GST refund for services, goods contract cancellations

With aviation and hospitality sectors seeing mass cancellation of bookings following the coronavirus outbreak, the Central Board of Indirect Taxes and Customs (CBIC) has allowed businesses to claim a refund of GST in cases where the invoice was generated , but was subsequently cancelled, PTI reported.

The CBIC issued a set of clarifications in view of certain challenges being faced by taxpayers in adhering to the compliance requirements following the coronavirus outbreak.

Clarifying on the issue of advance received by a supplier and the invoice generated for a service contract which got cancelled, the CBIC said, “in cases where there is no output liability against which a credit note can be adjusted, registered persons may proceed to file a claim under Excess payment of tax, if any through Form GST RFD-01”.

The CBIC said in cases where there is no output liability against which a credit note can be adjusted, supplier of goods can file a refund claim through Form GST RFD-01.

The CBIC clarification comes at a time when sectors like aviation and hospitality are grappling with mass cancellation of bookings in view of the lockdown due to the pandemic.

“This clarification would help worst-hit sectors of the business fraternity to claim a tax refund from the government, which would also have a ripple effect in the entire supply chain”, PTI quoted Rajat Mohan, Senior Partner at AMRG & Associates as saying. Further, the CBIC has also clarified that exporters can now file letters of undertaking (LUT) till June 30 for full fiscal 2020-21, as against the earlier requirement of filing it by March end.

Under Goods and Services Tax (GST), exporters are allowed to ship consignments overseas by just furnishing LUT, without paying integrated tax (iGST).

 

Source Credit – Business Standard

 

INDIA – Update 15th April

In the midst of COVID-19 pandemic Indian Government relaxes Input Tax Credit limits temporarily

In continuation with the several relief measures announced by Smt. Niramla Sitharaman [Union Finance & Corporate Affairs Minister] in view of COVID-19 outbreak. Now, the Central Board of Indirect Taxes and Customs vide Notification No. 30/2020 has temporarily lifted the restriction of availing the input tax credit up to 10 % (Feb to August period) as imposed on the assesses.

 

Source Credit – Lexport

 

INDIA – Update 15th April

CBIC instruct field officers to expedite the pending refund claims by April 30, 2020

 The CBIC vide Instruction No. 2/1/2020 – GST dated April 09, 2020, which states that all pending GST refunds including IGST refunds shall be expeditiously processed. The decision to process the pending refund claims has been taken with a view to provide immediate relief to the taxpayers in these difficult times even though the GST Law provides 15 days for issuing acknowledgment or deficiency memo and total 60 days for disposing of the refund claims without any liability to pay interest, all pending refund applications must be taken up for processing immediately.

However, before granting the refunds on merits, considering all the relevant legal provisions and circulars, all communication must be done using official email IDs. It may please be noted that the prescribed process doesn’t warrant any physical submission of documents and any such practice must be avoided. As far as the IGST Refunds of the exporters in whose case the / scrolls have been suspended based on instructions from DGARM, the extant procedure prescribed vide letter dated 23.01.2020 shall continue to be followed.

Further, it is requested that daily monitoring of disposal of pending refund claims should be done by the Zonal Pr. Chief Commissioner/Chief Commissioners and efforts should be made to dispose of all the pending refund claims by April 30, 2020.

 

Source credit – A2Z Taxcorp

 

INDIA – Update 15th April

Simplification of the GST regime

GST update relief in continuation to relax the compliance burden and simplify the tax regime, the CBIC has issued Circular No. 137/07/2020-GST dated April 13, 2020, to provide clarification on certain aspects. The details are summarised as under:
General extension of due dates for all compliances up to June 30, 2020 – Reinforcing this aspect, it has been specifically clarified that the due date of the following compliances falling due between March 20, 2020 to June 29, 2020, are covered in this extension:

  1. Furnishing of letter of undertaking (“LUT”) for FY 2020-21. Further, LUT number of the previous year may be quoted in the relevant documents till then.1. Furnishing of letter of undertaking (“LUT”) for FY 2020-21. Further, LUT number of the previous year may be quoted in the relevant documents till then.
  2. Filing of refund claim application
  3. Payment of GST TDS and filing of returns thereof Further provided with process for adjustment/ refund of GST paid in specified instance
    • Advance is received and contract is cancelled before provision of services — Invoice issued and GST paid thereon — Receipt voucher issued and GST paid thereon
    • Goods returned by the recipient Copy of the Circular is attached herewith for your ready reference

 

Source Credit – GOVERNMENT OF INDIA MINISTRY OF FINANCE

 

INDIA – Update 14th April

Exempted on import of ventilators, facemasks, etc and inputs for manufacture of these items

 

Source Credit – GOVERNMENT OF INDIA MINISTRY OF FINANCE

INDIA – Update 14th April

India’s indirect tax numbers set to go haywire

The COVID-19 outbreak is set to disrupt India’s indirect tax mathematics. The Goods and Services Tax collections for March slipped to Rs 97,597 crore against a collection of Rs 1.05 lakh crore in February. India was going through a period of slowdown before the pandemic broke out.

According to government data released in February, India’s GDP grew 4.7 percent in the October-December quarter of 2019-20. GDP growth in the previous quarter had been revised to 5.1 percent.

India’s GDP grew 4.5 percent in July-September 2019, the lowest since the fourth quarter of 2012-13. The economic slowdown came at the back of 5 percent GDP growth recorded in April-June and 7.1 percent in July-September last year.

 

Source Credit – AtoZ Taxcorp

 

INDIA – Update 10th April

Customs, GST Refunds to be released immediately

The Ministry of Finance said that, IT Department to release all pending income tax refunds up to Rs 5 lakhs immediately. Around 14 lakh taxpayers to benefit.

All GST & CUSTOM refunds also to be released to provide benefit to around 1 lakh business entities including MSMEs. Rs 18,000 crore of total refund granted immediately. In the context of the COVID-19 situation and with a view to providing immediate relief to the business entities and individuals, it has been decided to issue all the pending income-tax refunds up to Rs. 5 lakh, immediately. This would benefit around 14 lakh taxpayers.

It has also been decided to issue all pending GST and Custom refunds which would provide benefit to around 1 lakh business entities, including MSME. Thus, the total refund granted will be approximately Rs. 18,000 crore.

Source Credit – Tax Scan

INDIA – Update 8th April

CBIC allows traders to import, export goods without furnishing bonds

The Central Board of Indirect Taxes and Customs (CBIC) has allowed traders to submit an undertaking instead of furnishing bonds – required by customs for assessment and clearing of goods – in order to prevent delays or disruption in exports or imports caused by Covid 19 pandemic. The decision was taken after field formations flagged the unavailability of notarised stamp papers for furnishing the bonds that was being faced by importers, exporters and their authorised custom brokers, during the lockdown period.

The Board will review the order after April 14, when the nationwide lockdown ends. “In light of unprecedented situation caused due to Covid 19 pandemic, Board has decided to take certain measures for a temporary period, with a view to expedite customs clearance of goods and for maintaining balance between customs control and facilitation of legitimate trade,” CBIC said in a notice Friday, giving relaxation of furnishing bonds till April 30.

“In the period up to April 30, customs field formations may accept requests for submission of an undertaking from the importer/ exporter in lieu of a bond,” it added. The relaxation applies to central and state PSUs, manufacturers or actual users, importers, authorised economic operators, status holders and all importers availing warehousing facilities.

There will be certain conditions, including one that the trader gives a commitment to furnish the bonds, latest by July 5, 2020. Traders will have to submit the undertaking, the contents of which will have to be the same as the bond. The relaxation may also be given to traders who ask for it, on a case to case basis, the Board added.

 

Source Credit – A2Z Taxcorp

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