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when to levy GST on gift vouchers and gift cards

The Tamil Nadu appellate authority for advance rulings (AAAR) has cleared the confusion over taxability of vouchers such as Amazon gift cards, Shoppers Stop vouchers, Zara Vouchers etc. under the goods and services tax (GST) system.

It ruled that GST will be levied on the underlying goods and services at the time of redemption of vouchers, Abhishek Jain, partner at EY, said.

As such, GST would be imposed on goods and services bought through vouchers.

Earlier, authority for advance rulings (AAR) of the state had ordered that the supply of voucher itself will be taxable at varied rates depending on whether it paper based or magnetic strip based. The former will attract 12 per cent and the latter 18 per cent GST, it had ruled.

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All important changes related to QRMP Scheme, E-invoicing, ITC availment, e-way bill in GST w.e.f. January 1, 2021

DhanTax is  highlighting of all important changes related to QRMP Scheme, E-invoicing, ITC availment, e-way bill, etc. under Central Goods and Services Tax Act, 2017 (“CGST Act”) and Central Goods and Services Tax Rules, 2017 (“CGST Rules”), effective from January 1, 2021, as below: 

Notification No. Topic/Section/ Rules of CGST Act/ Rules Change effective from January 01,2021
E-invoicing made mandatory if aggregate turnover exceeds Rs. 100 Crores
88/2020–CT dated November 10, 2020 Amended Notification No. 13/2020 – CT dated March 21, 2020 E-invoicing made applicable to Registered Person (other than SEZ unit, Insurance Company, banking company, financial institution including non-banking financial institution, GTA, supplier of passenger transportation service, supplier of services by way of admission to exhibition of cinematograph films in multiplex screens) whose aggregate turnover in any preceding financial year from 2017-18 onwards exceeds Rs. 100 crore in respect of supply of goods or services or both or for exports.
Notified Sections of Finance Act, 2020 shall come into force
92/2020- CT dated December 22, 2020 Section 10(2) (Composition levy) Seeks to harmonise the conditions for eligibility for opting to pay tax under Composition Scheme as sub-section (1) and sub-section (2A) of Section 10 of the CGST Act.
Section 16(4) [Eligibility and conditions for taking Input Tax Credit (“ITC”)] Delinks availment of ITC on debit notes with the date of issuance of the original invoice. Thus, ITC on debit notes issued after 6 months from the end of the financial year to which invoice pertains can be availed post amendment.
Section 29(1)(c) (Cancellation or suspension of registration) Allows cancellation of persons who has taken voluntary registrations under Section 25(3) of the CGST Act.
Proviso to Section 30(1) (Revocation of cancellation of registration) Empowered jurisdictional Additional / Joint Commissioner and Commissioner to extend the period of 30 days to file an application for revocation of cancellation of registration.
Proviso to Section 31(2) (Tax invoice) Empower the Government to prescribe period and manner or exclusion from issuing tax invoice for specified categories of services or any document which may be deemed to be a tax invoice for such services.
Section 51(3) (Tax deduction at source) The requirement for the deductor to issue TDS certificate under Section 51 of the CGST Act has been removed with new rules to be prescribed for issuance of such certificates, and accordingly, the provision for fees (penalty) for the delay in issuance of such certificate has been omitted.
Section 122 (1A) (Penalty for certain offences) Seeks to insert a new sub-section (1A) so as to make the beneficiary who retains benefit or at whose instance a supply has been made without the issuance of an invoice, or invoice has been issued without supply, or excess ITC has been availed/distributed liable for penalty as that of actual supplier/recipient.
Section 132 (Punishment for certain offences) Seeks to amend Section 132 so as to make the offence of fraudulent availment of ITC without invoice or bill, cognizable and non-bailable offence under sub-section (1) of Section 69 and to make any person who retains the benefit of certain transactions and at whose instance such transactions are conducted liable for punishment.
Schedule II, Para 4 (Activities or transactions to be treated as supply of goods or supply of services) Omitted the words “whether or not for consideration” with effect from July 1, 2017, so as to give clarity to the meaning of the entries (a) and (b) of said paragraph 4, while aligning the same with Section 7(1), (1A) and Schedule I (supply without consideration) of the CGST Act. Now Schedule II, Para 4 reads as below:“(a) where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets, such transfer or disposal is a supply of goods by the person;

(b) where, by or under the direction of a person carrying on a business, goods held or used for the purposes of the business are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business, the usage or making available of such goods is a supply of services;…..”

Summary of important changes made vide CGST (Fourteenth Amendment) Rules
94/2020-CT dated December 22, 2020 Reduction in ITC entitlement for invoices not furnished by supplier from 10% to 5%
Rule 36(4) amended (effective from January 1, 2021) Restriction on claiming ITC in respect of invoices/debit notes not furnished by the suppliers has now been reduced from 10% to 5% of eligible credit available in GSTR-2B.
Restricting use of ITC amount for discharging output tax liability in GST
New Rule 86B introduced (effective from January 1, 2021) It is applicable where value of taxable supply other than exempt supply and export, in a month exceeds INR 50 lakh.Taxpayer is not allowed to use ITC in excess of 99% of output tax liability.

Certain exceptions provided to above restrictions are:

  • If the registered person has paid more than INR 1 lakh as income tax under the Income-tax Act, 1961 in each of the last two financial years.
  • If the registered person has received a refund amount of more than INR 1 lakh in the preceding financial year on account of export under LUT/Bond or inverted tax structure.
  • If the registered person has discharged his liability towards output tax through the electronic cash ledger for an amount which is in excess of 1% of the total output tax liability, applied cumulatively, upto the said month in the current financial year
  • If the registered person is the Government Department, Public Sector Undertaking, Local Authority or Statutory Body.
Validity of e-way bill narrowed by increasing distance from 100 km. to 200 km. per day
Rule 138 amended (effective from January 1, 2021) E-way bill will now be valid for 1 day for every 200 km of travel, as against 100 km earlier, in cases other than Over Dimensional Cargo or multimodal shipment in which at least one leg involves transport by ship.For every 200 km. or part thereof thereafter, one additional day will be allowed.
Time limit for filing Form GSTR-1
83/2020– CT dated November 10, 2020 Extends the time limit for furnishing the details of outward supplies in Form GSTR-1 Quarterly GSTR-1:If opted in for/ by default Quarterly Return Filing and Monthly Payment of Taxes:

The 13th day of the next month succeeding such quarter

Monthly GSTR-1:

S. No. Month for which GSTR-1 is to be filed Due date
1 January 2021 11.02.2021
2 February 2021 11.03.2021
3 March 2021 11.04.2021

Scheme of quarterly return filing along with monthly payment of taxes for registered person having aggregate turnover up to Rs. 5 crores
84/2020–CT dated November 10, 2020 Notified class of persons w.r.t. implementation of the Quarterly Return Filing and Monthly Payment of Taxes (“QRMP”) Scheme
  • A registered person who is required to furnish a return in Form GSTR-3B, and who has an aggregate turnover of up to 5 crore rupees in the preceding financial year, is eligible for the QRMP Scheme w.e.f. January 1, 2021, subject to following conditions:

(i) the return for the preceding month, as due on the date of exercising such option, has been furnished:

(ii) where such option has been exercised once, they shall continue to furnish the return as per the selected option for future tax periods, unless they revise the same

  • A registered person whose aggregate turnover crosses five crore rupees during a quarter in a financial year shall not be eligible for furnishing of return on quarterly basis from the first month of the succeeding quarter.

Note: The option to avail QRMP Scheme is GSTIN wise. Therefore, few GSTINs under one PAN can opt for the Scheme and remaining GSTINs may remain out of the Scheme.

Special procedure for making payment of 35% as tax liability in first two months by small taxpayers
85/2020–CT dated November 10, 2020 Special procedure for making payment of 35% as tax liability in first two months by small taxpayers Registered Persons notified under proviso to sub-section (1) of Section 39 of the CGST Act, who have opted to furnish a return for every quarter or part thereof, may pay the tax dues in first month or second month or both months of the quarter under proviso to Section 39(7) of the CGST Act, by way of making a deposit of an amount in the electronic cash ledger equivalent to, –

  • 35% of the tax liability paid by debiting the e-cash ledger in the return for the preceding quarter where the return is furnished quarterly; or
  • The tax liability paid by debiting the electronic cash ledger in the return for the last month of the immediately preceding quarter where the return is furnished monthly:

No amount is required to be deposited:

  • for the 1st month of the quarter, where the balance in the e-cash ledger or e-credit ledger is adequate for the tax liability for the said month or where there is nil tax liability;
  • for the 2nd month of the quarter, where the balance in the e-cash ledger or e-credit ledger is adequate for the cumulative tax liability for the first and the second month of the quarter or where there is nil tax liability.

 

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Government puts off penalty provision for not using QR codes on GST invoices

The provision was to penalise businesses not using QR codes on their invoices from December 1 but now it would come into force from April 1.

However, the penalty waiver is contingent on businesses using QR codes from the start of the next fiscal year.

The move is aimed at promoting digital payment in business to customer (B2C) transactions through QR code and enabling GST payment on UPI — a digital retail payment option.


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Goods and Services Tax Network enables option for opting quarterly filing of GST returns with monthly payment of GST

This form for opting in the scheme shall be made available from the 5th of December 2020. 

The Goods and Service Tax Network (GSTN) has enabled the option for opting for quarterly filing of GST returns under the quarterly return with the monthly payment (QRMP) scheme.

The GSTN announced that for the small taxpayers with annual aggregate turnover up to 5 Cr. will be made available on the common portal from 1st of January 2021.

Once a taxpayer opts-in he may file his FORM GSTR-1 and FORM GSTR-3B returns on a quarterly basis while paying their tax dues monthly through simple challan. 

 


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Extension of due dates for Annual Return (FORM GSTR-9/GSTR-9A) and Reconciliation Statement (FORM GSTR-9C) for 2018-19

The due date for filing Annual Return (FORM GSTR-9/GSTR-9A) and Reconciliation Statement (FORM GSTR-9C)  has been decided to extend for Financial Year 2018-19 from 31st October 2020 to 31st December, 2020

Filing of Annual Return (FORM GSTR-9/ GSTR-9A) for 2018-19 is optional for taxpayers who had aggregate turnover below Rs. 2 crore.

The filing of reconciliation Statement in FORM 9C for 2018-19 is also optional for the taxpayers having aggregate turnover upto Rs. 5 crore.

 

 

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GST registration can be approved within 3 days (Aadhaar authentication)

  • For a person opting for Aadhaar authentication for new GST registration would get it within just three working days, if no notice is issued and would not need to wait for physical verification.
  • While applicants not opting for Aadhaar authentication for GST registration would be granted it only after physical verification of the place of business or documentary verification which may take up to 21 working days or more if notice is issued, sources said.
  • Sources further said that keeping the COVID-19 pandemic in view, it has been provided that the officer may, if the circumstances warrant, opt for asking for additional documents in lieu of the pre-registration for physical verification of the premises.

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41st GST Council meeting outcome : Key highlights

41st GST Council meeting outcome : Key highlights

1. States were given two options by central Govt. to make up for their revenue shortfall amid the Covid-19 pandemic. 

The options will only be available in the current year.

  • To provide a special borrowing window by consulting with the RBI
  • to meet the entire GST compensation gap of Rs 2.35 lakh crore this year itself after consulting with the RBI.

2. States will be given 0.5% FRBM relaxation for market borrowing

3.Finance Minister said the states will be given for seven days to consider both the options to consider.

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GST registration approval after physical verification of Business place if Aadhaar not authenticated: CBIC

As per notification of the Central Board of Indirect Taxes and Customs (CBIC),  when an applicant for GST registration opts for authentication of Aadhaar number, applicant shall authenticate adhar  while submitting an application, with effect from 21.08.2020

Where applicant fails to authenticate of Aadhaar number, the registration shall be approved only after physical verification of the place of business .

Rigorous pre-registration verifications procedures would help arrest the rampant tax evasion by way of limiting the number of new fake entities

This stepm will be helpful for centralised data base available with the government which will facilitate data analytics and help in checking tax evasion by With linkage of Aadhaar with GST and PAN (permanent account number).

 

 

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As per ruling AAR,Coaching classes are not eligible for GST exemption.

Coaching classes do not get any exemption from Goods and Service Tax (GST), this position was reiterated by a ruling given by the Andhra Pradesh bench of the Authority for Advance Rulings (AAR).

A similar stand has been taken earlier, including by the Maharashtra bench of the AAR.
Entry No 66 of the relevant notifications provides exemption to educational services, if these are provided by an educational institution, subject to certain conditions.

These are: the service provided is related to education, the education is provided as a part of a curriculum and the education is provided for obtaining a qualification recognised by any law for the time being in force.

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Central Govt. waives off late fee on late GST return filing (GSTR-3B) – Very good Step.

  • # GST-payers who do not have any GST liability but not filled returns for the period from July 2017 to January 2020  no late fee will be charged as per notification of CBIC.

 

  • # For GST-payers having liability but not having filed GST returns, they can file GST Return with a late fee of maximum Rs 500, if GST returns are filled by July 1, 2020.

 

 

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