IT Slab FY 2020-21: Know the Difference According to Income

Income Tax Slab Rate FY 2020-21

Currently introduced by FM Nirmala Sitharaman, Union Budget 2020-21 seems to be a set of challenging income tax provisions. There have been no provisions like the provisions of Union Budget 2020. In the said budget, FM has introduced the new tax slabs with reduced slab rate which taxpayers may adopt on a voluntary basis. This means taxpayers have a choice of selecting either of the two options (old or new slabs rate). It is witnessed that the new slabs are not much in favor of the employed individuals and adopting the new income tax slab 2020 might lead them to a huge tax outgo from their accounts.

Government Vision

According to CA Vinod Jain, the administration is now looking forward to having a simplified version of the tax rate structure and also the normal taxpayers who have no investments should get some incentives. Earlier when the corporate sector enjoyed a considerable benefit in tax rates there was an echo seeking incentives for the common taxpayers.

According to him, the new tax rates FY 2020 are not beneficial for the employed individuals who have their investments in the form of PF, insurance, home loans, etc. LTA, house rent, standard deduction, medical such as 80 C, investment of Rs 2 lakh, etc. are non-exempt as per the protocols of the new Union Budget.

Read Also: Current Income Tax Rates for FY 2019-20 (AY 2020-21)

Example: Here if a taxpayer is not having enough investments then it is beneficial for him to go with the new slab and later on if he invests in multiple instruments then he can switch back to the old tax slab.

As declared by Manish Khemka (chairman of Global Taxpayers Association and co-chairman of the PHD Chamber of Commerce and Industry-UP), the amendments in the tax slabs are actually a step towards the future direction. The government is aiming towards an entire simplified new GST system and so the complexities related to various concessions are over.

Next, there will be a system where the tax rates will be less and there will be more incentives on the investments. The step will allure the new professionals with high packages to invest. Such professionals are heavily taxed and therefore FM Nirmala Sitharaman has given them the relief in Budget 2020.


Several employed individuals have already invested in LTA, PF, home loan, life insurance, etc. and every single year a considerable amount from their bank balance goes in such instruments. So clearly such salaried individuals will want to stick to the old tax slabs fy 2019-20 rather than shifting to the new slabs fy 2020-21.

As per Tax Expert Balwant Jain, many incentives in terms of tax payment have been abolished which makes it a less attractive choice of the taxpayers. According to him, a regular taxpayer will have to hire a tax expert to know the profit and loss arising after the deductions and exemptions as per the new policies.

Nobody is ever going to sacrifice the handsome amount earned under the exemption in the old system. There is no one who is not availing the benefits of exemptions under 80C. The old system had the standard deduction up to Rs. 50,000, LTA, interest on a home loan, Rs 50,000 on interest income to senior citizens, which no taxpayer would want to give up for the sake of adopting the new policies.

Below is the study revealing the advantages and disadvantages of both the system under different salaries:

Salary Rs. 10 Lakh Per Annum

Old Tax Slab FY 2019-20

If a professional with an annual package of Rs. 10 Lakhs has no investments, then such a person is compelled to pay the total tax of Rs. 1,12,500 as per the old slabs.

Deduction – From the above-mentioned amount Rs. 50,000 is reduced as the standard deduction, now he is obliged of paying Rs. 1.5 lakhs under 80C, 25,000 under mediclaim and 2 Lakh interest a year for a home loan. So clearly his payable tax is just Rs. 27,500.

New Tax Slabs for FY 2020-21

As per the new tax slab, the overall taxability of the person with an income of Rs. 10 Lakh per annum is Rs. 75,000. If an individual adopts the new tax slab then he/she is in a loss of Rs. 47,500 in a year.

Salary Rs. 12.5 Lakhs Per Annum

Old Tax Slab FY 2019-20

As per the old tax slab if the standard deduction is excluded (that means he/she has not done any investment) his total payable tax is Rs. 1,87,500. If the standard deduction is included then Rs. 50,000 is reduced from the tax-ability of the person. And if he has paid Rs. 1.5 lakh under 80C, Rs. 25,000 under Mediclaim and an interest of Rs. 2 lakh on a home loan in that year. Then his total taxability remains Rs. 77,500 only.

New Tax Slabs for FY 2020-21

As per the new tax slabs rate 2020, an individual with a gross income of Rs. 12.5 lakhs per year is liable to pay Rs. 1,25,000 as tax. So the individual adopting the new tax slab is clearly in the loss of Rs. 47,500.

Important: Section-Based Income Tax-Saving Tips For Salaried Person

Salary Rs. 15 Lakhs Per Annum

Old Tax Slab FY 2019-20

If a salaried individual with an annual income of Rs. 15 Lakhs is not having any investment and the standard deduction is also excluded then his/her total tax liability is Rs. 2,62,500. On the other hand if the standard deduction of Rs. 50,000 is excluded and if he has paid Rs. 1.5 lakh under 80C, Rs. 25,000 under Mediclaim and an interest of Rs. 2 lakh on a home loan in that year then his/her total tax liability falls down to be only Rs. 1,35,000.

New Tax Slabs for FY 2020-21

As per the new income tax slabs 2020, an individual with a gross income of Rs. 15 lakhs per year is liable to pay Rs. 1,87,500 as tax. So the individual adopting the new tax slab is clearly in the loss of Rs. 52,500.

GSTR 9 & 9C Due Date Extended for FY 2017-18 (Latest News)

GSTR 9, 9A & 9c Annual Return Due Date Extended

The government has listened to the pleas of the taxpayers and extended the due dates of Form GSTR 9 (annual return) and Form GSTR-9C (reconciliation statement) for Financial Year 2017-18 in a staggered manner for different groups of States to 3rd February, 5th February and 7th February 2020.


Considering the difficulties being faced by taxpayers in filing GSTR-9 and GSTR-9C for FY 2017-18 it has been decided to extend the due dates in a staggered manner for different groups of States to 3rd, 5th and 7th February 2020 as under. Notifications will follow.3,70010:30 PM – Jan 31, 2020Twitter Ads info and privacy3,226 people are talking about this

CBIC@cbic_india · Jan 31, 2020Replying to @cbic_india

Group 1: Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Puducherry, Telangana, Andhra Pradesh, Other Territory – 3rd February 2020

Group 2: Jammu and Kashmir, Himachal Pradesh, Punjab, Chandigarh, Uttarakhand, Haryana, Delhi, Rajasthan, Gujarat- 5th February 2020


Group 3: Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Andaman & Nicobar Islands, Jharkhand, Odisha, Chhattisgarh, Dadra and Nagar Haveli and Daman and Diu, Lakshadweep, Madhya Pradesh, Uttar Pradesh- 7th February 202080510:30 PM – Jan 31, 2020Twitter Ads info and privacy500 people are talking about this

Along with the extension of the due dates, the government also said that these forms will now be easy to file as there are multiple columns and files which have now been made as an optional.

As per the Central Board of Indirect Taxes & Customs (CBIC) notification, the amendments concerning the simplification of both the annual forms i.e. GSTR 9 and GSTR 9C allowing the taxpayers to not provide the input tax credit availed on inputs, input services and capital goods details.

Also, there is now no need to give the HSN level details of outputs or inputs, etc. for the FY 2017-18 and 2018-19.

This due date extension has given another chance to the taxpayers to file their annual returns on time with clarity and accuracy which is also observed by the government.

Previously, the taxpayers were required to file the GSTR-9 and GSTR-9C for Financial Year 2017-18 by 31st January which is now again asked for to be extended till 31st March 2020, and for the financial year 2018-19, it was 31st March 2020.

In response to the demand of the trade industry and ongoing issues on the portal, the Finance Ministry has decided to extend the last date for filing GST annual returns (FY 2017-18) to 3rd February, 5th February and 7th February 2020. While the general date for annual GST return filing was December 31, 2018.

Now in a further order released by the Central Board of Indirect Taxes and Custom (CBIC) said, “The competent authority has decided to extend the due date for filing FORM GSTR-9, FORM GSTR-9A and FORM GSTR-9C till to 3rd February, 5th February and 7th February 2020.”

  • Group 1: Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Puducherry, Telangana, Andhra Pradesh, Other Territory – 3rd February 2020
  • Group 2: Jammu and Kashmir, Himachal Pradesh, Punjab, Chandigarh, Uttarakhand, Haryana, Delhi, Rajasthan, Gujarat- 5th February 2020
  • Group 3: Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Andaman & Nicobar Islands, Jharkhand, Odisha, Chhattisgarh, Dadra and Nagar Haveli and Daman and Diu, Lakshadweep, Madhya Pradesh, Uttar Pradesh- 7th February 2020

The deadline for annual GST return has been extended owing to the continuous demands of various trade bodies. According to them, the format for annual GST Return along with the filing option is not yet available on the GST portal which makes it difficult to speculate things. GST annual return is kind of important deal as it gives a once-in-a-year opportunity to taxpayers to review and rectify their mistakes in any of the returns filed in that particular year. Therefore, businesses must be given sufficient time and resources to analyze, understand and fill the form.

More than one petition was filed to the Finance Ministry, all of which put the focus on the complexity of the GST returns filing process. According to a petition, more time is spent on correcting the returns rather than filing them. In addition, annual returns require the mention of HSN code for inward supplies as well, which was not a mandate for GSTR-3B returns. This further adds to the hassle of the taxpayers.

Read Also: Comparison B/w GSTR 9 Annual & GSTR 9C Audit Return Forms

Taxpayers need time as they will have to review all their past returns and transactions to fill up details in the annual return form. It is going to be even more arduous and demanding for small businesses and traders who have no expertise in such tasks. Since the the due dates for GSTR-3B filing have been extended multiple times for different months during the year, the calculation of penalty, interest and the late fee is now more time-consuming.

Associations Come Forward to Extend GSTR 9 & 9C Due Date

In the wake of difficulties while filing the GSTR 9 and GSTR 9C on the GSTN portal have requested the extension of the due dates for both the GSTR 9 and 9C. The associations have asked the due dates to be extended to 31st March 2020 for the filing related to the FY 2017-18.

27/01/2020Goods and Services Tax Practitioners’ Association of Maharashtra
27/01/2020Tax Bar Association, Guwahati
27/01/2020Sales Tax Bar Association, New Delhi
27/01/2020Association Of Tax Practitioners, Ernakulam
27/01/2020Haryana Chamber Of Commerce & Industry
22/01/2020Ahilya Chamber of Commerce and Industry
27/01/2020Kerala Tax Practitioners’ Association (KTPA), Kochi
27/01/2020District Tax Bar Association Sonipat.
26/01/2020Central Gujarat Chamber of Commerce and Baroda Tax Bar Association
24/01/2020Jamnagar Chamber Of Commerce & Industry
24/01/2020The Southern Gujarat Commercial Tax Bar Association, Surat
24/01/2020Tax Bar Association, Jammu

The concerned association have also written a formal letter to the union finance minister Nirmala Sitharaman in this regard and therefore the decision is waiting for the approval.

Gen GST Software: Ultimate Solution for All Annual GST Returns

The government had announced revised due dates for the GSTR 9 and GSTR 9C annual return forms for the ease of taxpayers. The Gen GST software has been running successfully for 2 years since the GST was introduced in India and currently holds thousands of clients which are still growing. Here SAG Infotech brings you the most efficient solution to file annual returns i.e. Gen GST software.

The Gen GST software offers you almost all the desired features to file GSTR 9 annual return:

  • GSTR 9 preparation from GSTR 1 3B, 2A & purchase register (ITC register)
  • Reconciliation of complete tax data from all portals
  • Matching of data return wise, invoice wise, month-wise & rate wise
  • Export/Import of data returns, excel and JSON etc

While the GSTR 9C Audit form features:

  • GSTR 9C preparation from GSTR-1, 3B ,Purchase register (ITC register) & filed GSTR-9
  • Auditor’s masters & import facility
  • Import data from returns, excel, JSON etc
  • Export data from excel & JSON file
  • Validate JSON from portal and e-file via EVC/DVC

Try Gen GST software now and get complete features as per the government portal requirement with additional support services from technical staff. Hurry up, Get a demo now –

FICCI Calling For GST Credit Against Excise Duty On Petrol-Goods

GST Credit Against Petrol Goods

It’s been a few days left for the Union Budget 2020 presentation to take place in Parliament and the trade body Federation of Indian Chambers of Commerce & Industry (FICCI) has put forth another proposal.

FICCI is sighing for excise duty benefits for the producers in the petroleum sector on their output against GST payments they made on inputs.

In the pre-budget proposals, the industry body expressed that the producers of petroleum and natural gas should be permitted to negate the ITC for Goods and Services Tax (GST) that these producers pay on inputs against the excise duty impossible on their output.

Under the current scenario, petroleum crude, petrol, natural gas, high-speed diesel and aviation turbine fuel are out of GST ambit. When the GST was implemented in July 2017 with an objective of “one-nation-one-tax”, these five petrol-products – petrol, crude oil, diesel, natural gas and aviation turbine fuel (ATF) were kept out of GST purview.

So, accordingly, the input tax credit of GST liability executed on procurement is not permitted against the output tax liability to the supplier of the respective products and so it becomes an additional cost for the oil and gas companies.

According to the industry body, till the time GST gets implemented on petrol-products, appropriate amendments in the CENVAT (Central Value Added Tax) rules will bring down the production costs for oil and gas corporations.

At present, the government is of the view that petrol and diesel should be brought under the purview of GST. The first Union Budget for the whole year under the governance of Prime Minister Narendra Modi will be presented on 1 February 2020 by the Finance Minister Nirmala Sitharaman in Parliament.

FICCI, in its pre-budget memorandum 2020-21, also urged for clear interpretation and changes in the Taxation Laws (Amendment) Bill, 2019, for the best utilisation of cuts in corporate tax rates by the current as well as upcoming domestic companies and the clearance of higher surcharge by non-corporates on some selected capital market transactions issued via the Bill.

Solved! Major Queries Related to Payroll Software for HR Management

Payroll is the most required management software by the corporate offices and large business houses for the overall maintenance of employees and their designated profiles. The payroll software also helps in generating salaries and arrears for the employees along with the attendance and other statutory compliance required by the government for the companies. Here we will go through all the general and frequently asked questions on payroll software and understand the basic issues under the payroll management.

Q.1 – What is the meaning of payroll software?

Payroll is a part of Human Resource Management system which refers to the list of total employees and total wages paid to them. It also includes the calculation of salary after the addition of bonuses & incentives and subtraction of various deductions such as TDS & various other taxes, etc. These days many Payroll softwares have emerged out that automates the work of HR manager, Gen Payroll software for employees management is one of the leading software that comes with exquisite features.

Q.2 – Who are payroll services providers?

Payroll Services Providers are companies which caters payroll services or to whom payroll responsibilities of an organisation can be outsourced. These are outsiders specialized in payroll service and manages payroll of another company.

Q.3 – Is there any payroll software which is available for free trial?

Trial version of Gen Payroll is available for free download. However, it’s all exclusive benefits can be enjoyed after paying a nominal fee. Gen payroll is available in online as well as offline version of PC & desktop. The demo version remains active for 10 hours time frame.

Q.4 – What are the benefits of payroll?

Payroll auto reads the attendance of employees followed by the auto-calculation of their salaries. It also keeps annual reports and payslips stored in readily accessible yet confidential manner.

Q.5 – Why payroll softwares are gaining popularity these days?

Big or small, employees are one of the best resources of any organisation who craftly use other resources to yield maximum benefits and so is the management of Human resources holds utter importance. Human resource management includes upkeeping of employees’ databases, providing them proper incentives, maintaining their leave records and so on. Manual execution of these tasks is quite arduous and prone to the risk of inaccuracy and mismanagement. However, the invention of HR management or HR payroll software for the management of employees has solved the issue as it effectively & efficiently manages the Human Resources.

Q.6 – Which features determines an ideal and innovative payroll software?

An innovative and ideal payroll software should have the following features:

  • Daily attendance records
  • Few clicks salary calculation
  • Statutory compliances
  • Update leave records
  • Online and offline versions
  • Easy calculation of TDS & reimbursements

Q.7 – How do payroll calculates gross salary of an employee?

Payroll calculates gross salary of an employee by multiplying the total number of hours worked in a pay period with the hourly wage rate.

Q.8 – How can we find the best payroll for our company?

The best payroll for a company can be determined by properly weighing its pros & cons and taking a demo. Smart way to choose the most appropriate software is to download the free trial of some leading payroll software and see which one greece the wheels for you.

Q.9 – Why a company should use payroll software?

Success of an organisation depends on its employees. Improper management of employees, their database and salaries lead to stress and demotivation for them which further results in inefficiency. This not only hamper the growth of an organisation but also divert Human Resource Managers and other supervisors from focusing on their core business activity. Whereas, a duly chosen Payroll software automates the work of HR managers and let their skills be invested in other activities such as formation of new employees policies, handling their queries & grievances, conducting activities for employees, etc which acts as motivational tools for employees.

Q.10 – Which is the easiest software to use?

Gen Payroll is the easiest payroll software which is highly recommendable for small businesses as it includes complete HR & Payroll management along with tax support. Gen Payroll, invented by SAG Infotech, is also one of the customer-friendly and low cost payroll software. SAG Infotech provides all day long customer care services to its customers which further ease the tasks for you.

Q.11 – What are payroll entries?

Payroll journal entries refers to the record of compensation given to employees. These journal entries are then recorded into the financial statements of the entity via general ledger.

Q.12 – Which are the top rated software of 2019?

Gen Payroll is the top rated software of 2020. Gen Payroll is widely used and appreciated Payroll software. More than 1000 clients from India calls it a best software that is compliant with statutory norms.

Finally, we have come through all the frequently asked questions based on payroll software for management companies and big organizations. The Gen payroll is one such solution for all the management companies to tackle all their payroll related issues and to further manage the complete process of employees via the sophisticated payroll management software as offered by the Gen Payroll.

GST Audit Era Begins; Govt Sent Notices to Businesses Across Country

Notices to Businesses Regarding GST Audit

The department under GST is finally extending notices to on business whose accounts are required to get audited as per the norms. Cordial notices are being sent by the government to businesses for the first year of GST (2017-18).

There are three basic kinds of audits under GST, the first one focuses on the business where the annual turnover is more than Rs. 2 Crore, such businessmen are required to get their accounts audited by a Chartered Accountant or a Cost Accountant and furnish the reports in GSTR 9C (Audit Form) respectively. The second audit signifies a special process under which the Chartered Accountants or Cost Accountants designated by the Tax Commissioner conducts the audit on the commands of the Deputy/Assistant Commissioner, any minor default in the reports the second audit is subject to tension on a big level.

The third kind is the general audit where the local tax authorities process audits for individual taxpayers. As declared by some influentials in the field, the period of continual audits has arrived in which the taxpayers (either entities or individuals) have to prove the authenticity of the tax paid and the credit claimed by them on the inputs by furnishing the accounts of their sales, profit, and purchase to legal authorities.

Being the first audit session after the implementation of GST (Goods and Services Tax), the official involved in the process are expected to pay extra attention to examine all the documents depicting the financial architecture of a business or income of an individual. Such documents include financial statements, directors’ reports, GST filings, income tax filings, tax audit reports, cost audit reports, internal audit reports, agreements, purchase orders and many more, they said.

Time Limit for Furnishing the Audit Reports

Held under the surveillance of Section 65 of the GST Act, the general audit is supervised by the group of GST officials either from their offices or the site of business. As per the norms, the concerned assessees are likely to receive an intimation of audit 15 days prior to its conduct. The deadline for completing the audit is 3 months starting from its commencement, in special cases, if the audit is extended then the very edge is six months from the date of its actual commencement.

While conducting the audit, the concerned official may ask for the set of facilities required to verify the books of accounts providing which is the sole responsibility of the assessee. Providing all the relevant documents required to audit the accounts is the prime duty of the assessee so that the process takes no more than the designated time limit and there is no inconvenience caused to the participants in the audit.

Following the conclusion of the audit, the concerned audit officer will extend a legal intimation to the taxpayer regarding the outcomes of the audit and further obligations (if any) from his (taxpayer) side along with proper reasoning. The assessee is subject to further investigations if the audit team finds any of the incidences when the tax is not paid or the less amount is paid or ITC is wrongly claimed by the assessee.

Following the arrival of audit notice by the legal department, the taxpayer should start preparing for the major event dates by accumulating all the related documents and records of the said financial year (various return forms of the year GSTR1, GSTR 2A, GSTR 3B, GSTR 9 and GSTR 9C), registration certificates, balance sheets, directors/self-audit reports, returns furnished to banks / financial institutions (if any), cost audit, tax audit & internal audit reports, electronic credit/cash ledger, abstract of output services invoices & input services, work order/purchase order/agreements, filed the forms as prescribed by GST Audit manual and copy of last general audit report.

Govt has been Crosses 1 Trillion Rupees Mark in GST Collection of December 2019

The government has been crossed 1 lakh crore mark of GST revenue finally, from a long time in December 2019 with the INR 1, 03,184 of gross GST revenue. 

As per the category, if we divide the GST revenue, then the CGST stands at INR 19,962 crore while that of the SGST, which accumulated at 26,792 crores. The collection of IGST stood at 48099 crore, which includes the INR 21,295 crore as imports. 

The cess which was collected with the total amount coming at INR 8331 crore, which also includes INR 847 crore as an import revenue of the country. So, if we check out the number of total GSTR 3B return filers, then the name comes at 81.21 lakh in November up to 31st Dec 2019. 

We have seen upward of GST revenue by 16% as compared to the last years of December 2018 collections though the settlement is stood at INR 21,814 crore to CGST and INR 15,366 crore to SGST. 

  STATE   Dec 18 Dec 19 Growth
1 Jammu & Kashmir 293 409 40%
2 Himachal Pradesh 595 699 18%
3 Punjab 1162 1290 11%
4 Chandigarh 143 168 18%
5 Uttarakhand 1055 1213 15%
6 Haryana 4648 5365 15%
7 Delhi 3146 3698 18%
8 Rajasthan 2456 2713 10%
9 Uttar Pradesh 4957 5489 11%
10 Bihar 909 1016 12%
11 Sikkin 150 214 43%
12 Arunanchal Pradesh 26 58 124%
13 Nagaland 17 31 88%
14 Manipur 27 44 64%
15 Mizoram 13 21 60%
16 Tripura 48 59 24%
17 Meghalaya 108 123 14%
18 Assam 743 991 33%
19 West Bengal 3230 3748 16%
20 Jharkhand 1995 1943 -3%
21 Odisha 2347 2383 2%
22 Chhattisgarh 1852 2136 15%
23 Madhya Pradesh 2094 2434 16%
24 Gujarat 5619 6621 18%
25 Daman and Diu 77 94 22%
26 Dadra and Nagar Haveli 129 154 20%
27 Maharashtra 13524 16530 22%
28 Karnataka 6209 6886 11%
29 Goa 342 363 6%
30 Lakshadweep 4 1 -78%
32 Kerala 1416 1651 17%
33 Tamil Nadu 5415 6422 19%
34 Pondicherry 152 165 9%
35 Andaman and Nicobar 22 30 36%
36 Telangana 3014 3420 13%
37 Andhra Pradesh 2049 2265 11%
  Grand total 69983 80849 16%

Replace Current Rates With 3 New GST Slabs: GST Revamp Panel

Bring 3 New GST Slabs

A panel of officers aimed to improve the current condition of the good and Service tax (GST) has received a suggestion to replace the current slab scheme with a new slab scheme by putting two slabs of 10% and 20% and an additional third slab for sin and luxury goods.

Currently, the committee has not taken any decision they are just listing them before GST council meeting, which includes Union and state finance ministers. In the meeting which was held last week, the council and members did not talk on this matter and also asked the officials to conduct a fresh/ assessment of the scope and impact as ministers believe that the research and analysis were not complete. On the other hand, Several State finance ministers, even from BJP-ruled states, said that they did not support any move of increment in GST rates.

The committee is getting suggestions from stakeholders, and the suggestions did not stop at only reworking the GST slabs. From withdrawing tax benefits on some items, to increase the tax on education and health, they are getting all types of recommendation. Apart from making goods, they also get suggestions to raising taxes of phones from the current level of 12% and reversing the previous changes done on several items by changing taxation from 28% to 18%, which also includes perfumes and refrigerators.

There is also a suggestion to increase the levy on precious metal, such as increasing gold from 3% to 5%.

However, the committee was established to bring a road map for the restructuring of GST to improve its efficiency, increase benefits, and also generate more resources at a tensed time when collections have decreased significantly and threaten to impact central and state finances. There are various other proposals and suggestions to repair the administration to improve compliance, including widening the scope of tax deducted on source and e-invoices, some of them are already under implementation.

Delhi HC Overruled Rejection of ITC Under GST Due Technical Flaws

HC Overruled Rejection of ITC

The Delhi High Court underlined that the Goods & Services Tax (GST) regime intents to facilitate the assesses and not to make them suffer due to technical failures & faults so the software system should be maintained & regularly updated with the amendments in rules & regulations.

Delhi HC said that the rights of individuals registered under GST ‘cannot be subjugated’ to the incompetent and inadequate software systems taken up by the tax authorities. The court’s ruling is anticipated to be beneficial for the GST registered assesses who are facing hardship due to technical problems.

The court ruled, “The software systems adopted by the respondents have to be in tune with the law, and not vice-versa. The system limitations cannot be a justification to deny the relief, to which the petitioner is legally entitled,” in an issue associated with the repudiation of the use of unutilized Input Tax Credit (ITC).

Harpreet Singh, Partner at KPMG, appreciated this ruling and said that the order seems to give long-term positive domino results under GST. As the people’s dependence on technology is increasing, it is quite obvious that technical insufficiencies and outdated software would adversely affect the statutory filings or the ideal balances at the portal.

He said, “Post this order, dealers should be able to claim their rightful benefits/ dues without worrying about technological handicaps, so long as other statutory conditions are satisfied.”

The rollout of the Goods & Services Tax regime was followed by the introduction of a special provision that allows the transition of credit amassed under VAT, service tax or excise duty to GST. This opportunity to claim transitional credit is available for all the assessees other than the registered dealer who opted for the GST Composition Scheme.

However, transitional credit was subject to some conditions. The first condition limit the availability of the credit to the condition when the returns for the last six months, i.e., from January 2017 to June 2017 were filed under the VAT regime.

The second condition mandates the filing of Form TRAN 1 by registered individuals under GST (who may or may not be registered under VAT regime) by December 27, 2017, to carry forward the ITC.
The third condition restricts the rectification of Form TRAN 1 to only one chance.

Respondents’ Stagnation

The petitioner appealed HC to file the grievance of the inactivity of the respondents i.e. the GST authority at the state level and their inability to allow the flawless transfer of the credit available by dint of unutilized input tax.

The petitioner filed the petition as he was unable to use and employ the ITC while exporting in the months of July and August 2017. As a result of which, the petitioner had to give away INR1.37 crore which could have been saved or invested if he had been allowed to use ITC that had accumulated even before the introduction of the GST regime.

The court, after taking hearing both sides, concluded that the petitioner cannot be made at disadvantage due to incompetencies of the respondents in designing glitch-free transition from pre-GST regime to GST mechanism w.e.f. July 1, 2017.

“The business activity in the country cannot be expected to come to a standstill, only to await the respondents making the GST system workable,” it said.

“Unfortunately, even after the passage of over two years, the respondents have not remedied their omissions and failures by taking corrective steps. They continue to take shelter in the limitations in, and the inability of their software systems to grant a refund, despite the same being justified,” the court stated.

Govt. Planning to Provide GST Relief to Companies Under IBC Process

Insolvency and Bankruptcy Code

As per the recent update, the government is planning a beneficial step for companies undergoing resolution process under the IBC. IBC is an acronym for Insolvency and Bankruptcy Code.

There is some talk going on between the Ministry of Corporate Affairs and Department of Revenue (DoR) and a framework is expected to be revealed soon. A senior officer said that “The issue is under discussion… a procedure will be worked out,” The other person said that to finalise the contours, a meeting between officials is gonna organized this week.

As per updates, They are planning to allow companies undergoing resolution process to pay current levies of GST without the mandatory payment of past dues. This step will eliminate the obstacle in the bankruptcy resolution process.

At present, a firm is not allowed to file current tax dues if it has some past dues under the GST framework. Penal action has also been initiated for noncompliance in such cases where the GST registration has been cancelled or insolvency resolution process has been initiated.

Thus it comes in the way of efforts to revive a company under the IBC process and also delaying the resolution process. Many Industry organisations have lobbied the government and this step, asking it to accept current GST without the mandatory payment of past dues.

Many experts also stated that GST and IBC need to be aligned which is now initiated indirect taxes leader, PwC. Pratik Jain also said that “It is important that the period during which the corporate insolvency resolution process (CIRP) takes place is insulated from the past GST compliance of the company.”

MS Mani, partner, Deloitte India said on the same issue that “There is a need to recognise the fact that there could be several cases of default in GST filings/payments due to genuine reasons, Such defaults should be condoned, possibly with a small penalty and the focus should be to avoid business disruptions.”

GST Council Passes Further Restrictions On Granting ITC Market Cash Flow

Restrictions On Granting ITC Market Cash Flow

The decision of the panel has caused fear for various industries as this will further block the cash flow of businesses amid their existing struggle with finances in times of economic slowdown in India.

The proposed clause goes on like if taxpayer has paid Rs. 1,000 as taxes to the supplier in lieu of the inputs purchased the amount will then be mentioned under ITC claimed by the taxpayer in his form GSTR 3B. Now it is the responsibility of the taxpayer to note that the concerned supplier is also uploading the invoices of relevant transactions in his supply returns i.e. GSTR 2A form. In case if the invoices worth 20% of the Input Tax Credit claimed is not uploaded by the supplier, then the taxpayer becomes eligible for only Rs. 800 (1000 – 200 (20% of 1000).

Adding on to this, the ITC worth Rs. 80 more (10% of Rs. 800) can be claimed by the taxpayer once the 38th GST Council decision is formally noted. Earlier the ITC Claimed could be Rs. 160 (20% of Rs. 800).

As per the provisions earlier, the complete amount of ITC claimed was released by tax authorities in the accounts of the taxpayers. In October the amended clause restricted the flow of ITC to only 20% of the ITC claimed and now the eligible ITC would be only 10% of the total credit claimed by the taxpayer.

Experts revelations on the newly proposed Clause

  • The clause will be a challenge for businesses in India said Archit Gupta (CEO, Fintech Service Platform, Cleartax). He further added that the provisions regarding the reduction in ITC could be considered later. In the recent norms there is a policy of invoice matching without which ITC cannot be claimed. These returns would come into effect from April 1.
  • Rule 36 (4) under the CGST Act, enabling such restrictions on ITC, is challenged at the Delhi high court. “Businesses are waiting for the elimination of such restrictions which are not in harmony with key GST principles that allow effortless credits across the value chain,” said M.S Mani (partner at consultants Deloitte India).
  • Provisions regarding the restrictions on ITC owing to the faults of the vendors will go through constitutional proceedings. Further the percentage either 10% or 20% on the ITC claimed has no logic said Abhishek Rastogi (partner at Khaitan & Co).
  • Multinational Firms have multinational companies have completely forgone the 20 per cent or 10 per cent credit, on account of the hassle of month-on-month reconciling credit said Harpreet Singh, (partner at consultancy KPMG).
  • Government is adamant in restricting the grant of ITC due to the falling tax collection and as a measure to bring in foreground the ITC fraudulent said Abhishek Jain, (tax partner at consultancy EY). Businesses have to ensure timely reconciliation, taking follow-up from the suppliers and keeping updated records of the said compliances, he further added. If the mechanism lacks accuracy this may lead to cash flow issues for the particular business.