The Goods and Services Tax (GST) Council on Friday extended the tenure of the anti-profiteering authority by two years to November 2021, in what went against its past assertions that the body will have only a transient existence and a non-intrusive character.
The Goods and Services Tax (GST) Council on Friday extended the tenure of the anti-profiteering authority by two years to November 2021, in what went against its past assertions that the body will have only a transient existence and a non-intrusive character. The council also decided that in cases of profiteering, firms will have to pay a penalty of 10% of the amount cornered by not passing on benefits of GST rate cuts to consumers. It, however, deferred a plan to reduce tax reliefs for vehicles (EVs) and sent the proposals in this regard to its fitment committee.
Also, the council extended by two months the last date for filing annual returns and audit forms (GSTR-9, 9A and 9C) for 2017-18 to August 31, 2019. The proposed simplified return-filing mechanism would be mandatory for businesses with turnover above Rs 5 crore from October, while it would be rolled out for all by January 1, 2020.
In its 35th session, the first chaired by the new finance minister Nirmala Sitharaman, the council also introduced the process of GST registration via Aadhaar verification. This would do away with the need of multiple documents for the purpose.
“While the extension of term of NAA by 2 years was expected, one would hope that the government would come up with detailed guidelines and seek to restrict the same only in case of consumer complaints,” said Pratik Jain, partner & leader-indirect tax at PwC India.
While a firm has to cough up a penalty of Rs 20,000 for profiteering at present, the fine would now be 10% of profiteered amount if the entity fails to deposit the same within 30 days of the NAA order. Of course, the profiteered amount has be deposited with the consumer welfare fund of the government.
Revenue secretary Ajay Bhushan Pandey said that the council also approved the implementation of electronic invoicing for B2B transactions. The mechanism is designed to allow taxpayers to generate invoice at the central portal, which will eventually act as e-way bill too. Further, collection of invoices on the portal would also act as tax returns. “ E-invoicing is a rapidly expanding technology which would help taxpayers in backward integration and automation of tax relevant processes. It would also help tax authorities in combating the menace of tax evasion. The Phase 1 is proposed to be voluntary and it shall be rolled-out from January 2020,” the government said in a statement later.
According to the original plan, the NAA was to cease functioning after November this year. However, the anti-profiteering watchdog, which has delivered orders on 68 matters so far, continues to receive complaints.
Pandey said that the tax officials made presentation on mechanisms to curb circulation fake invoices. He added that the revenue department would use data from income tax returns, Customs department to ‘electronically triangulate’ suspicious transactions and firms that indulge in tax evasion using fake invoices.
On the issue of taxing lottery, the council recommended that certain issues relating to taxation (rates and destination principle) would require legal opinion of attorney-general. After Friday’s meeting, registered multiplexes would be required to issue a tax invoice electronically, which will be deemed by the GST system as tax invoice.
In the case of EVs, the proposal was to reduce the GST rate to 5% from 12%, while the rate for chargers was to be cut to 12% from 18%. Mehta, CEO, Co-Founder, EVstartup Ather Energy said there is an inherent inverted duty structure as the GST input on raw material and other overheads are on average of 18 % wherein the output is pegged at 12%. “The proposed reduction of the GST on EVs to 5% will increase this delta,” he added.