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Indian Government Considers Extending Support Program for Exporters

editor — Mon, 15 Apr 2024 04:44:59 +0000

The Ministry of Commerce in India is looking to recommend a five-year renewal of a program that helps exporters. This program, known as the interest equalisation scheme, has been well-received by exporters and aims to boost overseas shipments.

Government officials told a news channel that the extension would apply to both short-term and long-term loans for exports in Indian rupees. They also mentioned that the program’s effectiveness is being assessed, and the final decision will depend on the outcome of this evaluation. The current program is set to expire at the end of June 2024.

Since its launch in April 2023, a significant portion of the allocated funds have already been used. This highlights the program’s importance, especially considering the current global economic climate. In order to bridge the gap until June 2024, the government provided additional funding in December 2023.

Initially introduced in 2015, the program has been extended multiple times with additional funding. The scheme offers exporters interest rate reductions on loans for exports in rupees. This benefit is especially helpful for small and medium-sized businesses (MSMEs) in the manufacturing sector.

The program covers specific sectors like leather, textiles, and garments. It’s important to note that the program has a spending limit and a maximum annual benefit per exporter. Additionally, there are eligibility requirements for banks participating in the scheme.

This program is overseen by two government bodies along with the Reserve Bank of India, which is responsible for its implementation through authorized banks.

Source: https://www.cnbctv18.com/economy/interest-equalisation-scheme-five-year-extension-commerce-ministry-considering-sources-exporters-19395964.html

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GSTN Issues Advisory on Automatic HSN-wise Summary Population in GSTR-1 Table 12 from e-Invoices

editor — Wed, 10 Apr 2024 05:22:53 +0000

The GSTN has released an important Advisory No. 630 dated April 09, 2024, regarding the automatic population of HSN-wise summaries from e-Invoices into Table 12 of GSTR-1.

GSTN is pleased to announce the introduction of a new feature that enables the automatic population of HSN-wise summaries from e-Invoices into Table 12 of GSTR-1 on the GST portal. This feature facilitates the direct drafting of HSN data into Table 12 based on e-Invoice data.

It is important to note that the HSN-wise summary data automatically populated into Table 12 is provided for your convenience. However, it is advised to reconcile this data with your records before final submission.

Any discrepancies or errors identified should be manually corrected or added to Table 12 before the final submission.

For further details, please refer to the Advisory accessible at: Link to Advisory

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Collaborative Audits by Central and State GST Authorities Targeting Businesses

editor — Tue, 09 Apr 2024 06:48:00 +0000

Beginning this fiscal year, there will be a collaborative effort between Central and State Goods and Services Tax (GST) authorities to conduct audits within the indirect tax framework.

This joint approach is expected to bring significant advantages to taxpayers by eliminating repetitive notifications and inquiries. Current industry data suggests that around 11,000 cases are either duplicated or entangled in legal disputes due to investigations by both Central and State agencies. Various Central GST zones have issued internal communications instructing officials to collaborate with their state counterparts on audits to ensure better coordination, as per sources.

The concept of conducting audits collaboratively was proposed during a national coordination meeting last month to streamline tax enforcement processes. The directives indicate that Central GST officers should also participate in audits conducted by State GST teams to improve SGST officers’ audit capabilities and facilitate the exchange of crucial compliance information. To support these joint audit efforts, the Central Board of Indirect Taxes and Customs (CBIC) has instructed each zone to devise a specific framework.

The responsibility for implementation, delegated to zonal heads, aims to optimize time and resources. Experts in the industry believe this initiative will enhance the fairness and efficiency of the audit process, providing a more comprehensive examination that benefits both tax authorities and taxpayers. It will help in avoiding redundant procedures and shield taxpayers from undergoing multiple audits for the same issues.

Furthermore, the CBIC has directed its officers to halt investigations into offenses already under scrutiny by state GST officials or for which notifications have been issued.

Source: https://economictimes.indiatimes.com/news/company/corporate-trends/central-state-gst-officials-to-conduct-joint-audits-of-firms/articleshow/109143298.cms?from=mdr

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New GSTR-1 Update: GSTN enables Auto HSN Summary Import from E-Invoices for Efficient Filing

editor — Tue, 09 Apr 2024 05:20:38 +0000

In a recent update to the GSTR-1 filing system, a new functionality has been added to “Table 12 – HSN wise summary of outward supplies” specifically aimed at taxpayers who generate e-invoices. This new feature enables taxpayers to directly transfer HSN (Harmonized System of Nomenclature) data from their e-invoices to their GSTR-1 form. The purpose of this enhancement is to simplify the return filing process by minimizing manual data entry requirements. Taxpayers utilizing e-invoicing can now automatically populate the HSN summary in their GSTR-1 with pertinent information from their electronic invoices. This advancement is particularly advantageous for those engaged in B2B (Business-to-Business) transactions, as it significantly reduces the time needed for HSN data entry, eliminating the necessity for manual data input in transactions where e-invoices were generated.

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RBI defers implementing directions on exchange-traded forex derivatives to May 3

editor — Fri, 05 Apr 2024 05:28:15 +0000

The Reserve Bank of India (RBI) has announced an extension of the deadline for implementing rules regarding exchange-traded forex derivatives to May 3, extending it from the previous deadline of April 5. This decision comes following concerns raised regarding participation in the exchange-traded currency derivatives (ETCD) market in light of the RBI’s currency derivative norms.

The RBI emphasized that the regulatory framework for ETCDs has remained consistent over the years and that there is no change in the RBI’s policy approach. This extension was made after considering feedback and concerns from various stakeholders.

According to a circular issued on January 5, investors must ensure the existence of a valid underlying contracted exposure, which has not been hedged using any other derivative contract. They should also be able to establish the same if required. The term “underlying” in derivatives contracts refers to the order bill or receipt for exporters and importers, or documents supporting the transaction in the case of remittances.

Source: https://www.moneycontrol.com/news/business/rbi-defers-implementing-directions-on-exchange-traded-forex-derivatives-to-may-3-12576811.html

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Investigation of Large Corporations and Multinational Companies under GST Requires ‘Formal Authorization’

editor — Tue, 02 Apr 2024 07:46:09 +0000

The Department of Revenue has issued directives to CGST officials regarding the initiation of investigations into cases involving prominent industrial entities and multinational corporations (MNCs). These guidelines aim to streamline procedures and ensure uniformity in enforcement activities while maintaining the ease of doing business.

These guidelines outline specific scenarios where written approval from the zonal Chief Commissioner is necessary before initiating an investigation or taking action. These include cases involving large corporates, major MNCs, matters already under consideration by the GST Council, or matters seeking to impose taxes or duties on a sector, commodity, or service for the first time under Central excise or GST.

The precise definition of ‘big industrial house’ and major MNCs under these guidelines remains unclear to tax experts. Additionally, the guidelines require CGST field formations to gather details on prevailing trade practices and transaction nature from stakeholders in such cases, ensuring sufficient justification for initiating investigations and actions.

This uniform procedure was introduced following discussions by the Central Board of Indirect Taxes and Customs (CBIC) on the necessity for standardized enforcement procedures by CGST field formations, particularly concerning regular taxpayers and their impact on the ease of doing business.

Furthermore, tax officials are instructed to confirm whether any ongoing inquiries relate to the same subject matter or taxpayer by another investigating office or tax administration. This information must be presented to the authority responsible for approving the investigation’s initiation.

Experts believe that the directive addresses industry concerns, emphasizing the importance of effective implementation to promote tax certainty and stability in the business environment.

Source: https://www.thehindu.com/business/Economy/now-gst-probe-into-big-corporates-major-mncs-needs-a-written-approval/article68013343.ece

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Delhi High Court Alters Retrospective Revocation of GST Registration

editor — Thu, 28 Mar 2024 04:52:32 +0000

In the legal case of Supreme Enterprises versus Principal Commissioner of Goods and Service Tax, North Delhi, the Delhi High Court recently deliberated on the matter of retroactively canceling GST registration.

Facts of the case:

The petitioner contested an order issued on 07.07.2023, which retroactively annulled their GST registration starting from 18.01.2022. This cancellation stemmed from a show cause notice dated 06.06.2023, citing non-compliance with return filing requirements. However, the notice lacked specificity and failed to afford the petitioner adequate opportunity to respond.

The petitioner had previously sought cancellation of their GST registration multiple times due to business closure, but these requests were denied. Subsequently, they received a show cause notice lacking in detailed explanations or justifications.

The order for cancellation lacked clarity and reasoning, casting doubt on its validity. It did not sufficiently explain the grounds for cancellation or the resulting liabilities, nor did it justify the retroactive nature of the cancellation.

Held:

The court stressed that retrospective cancellation of GST registration must be grounded in objective criteria and not solely on non-compliance with return filing obligations. It recognized the significant ramifications of such cancellations for both the taxpayer and their customers, particularly concerning input tax credit.

Taking into account the petitioner’s cessation of business operations, the court amended the contested order to cancel the registration effective from the date of business closure, i.e., 26.07.2022. The petitioner was instructed to adhere to the necessary regulations outlined in Section 29 of the CGST Act, 2017.

Nevertheless, the court clarified that the authorities could still pursue steps for recovering any outstanding dues, including retrospective cancellation, in accordance with the law.

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Madras HC Instructs Revenue Authority to Expedite GST Rectification Process

editor — Thu, 21 Mar 2024 11:24:13 +0000

In the matter of M. Venkataraj versus Assistant Commissioner (ST) [W.P. No. 18949 of 2023 dated November 8, 2023], the Honorable Madras High Court instructed the Revenue Department to address the rectification application submitted by the Petitioner within a timeframe of three months from the issuance of this order.

Facts:

The petitioner, Venkataraj, operates a business registered under the GST with the name M/s. Sri Malleswara Enterprises. The Revenue Department, also known as the Respondent, issued a Show Cause Notice under Section 74(5) of the Central Goods and Services Tax Act, 2017 (CGST Act). The notice alleged that the petitioner was liable to pay taxes under Sections 9(1) and 9(3) of the CGST Act due to the purported failure to disclose the correct turnover concerning the disposal of minerals and seigniorage fee (royalty paid to the government for mineral removal or consumption). Consequently, the Respondent proposed to demand taxes on both forward and reverse charge basis for the alleged suppression of aggregate turnover and seigniorage fees. The Petitioner contested these figures, asserting their accuracy based on the annual returns, and subsequently filed a rectification application on May 30, 2023. However, the Respondent argued that the rectification application was not submitted due to a discrepancy in the dates of receipt and application.

Held:

Upon review, the Honorable Madras High Court in W.P. No. 18949 of 2023 observed that the petitioner’s submission was limited to addressing the rectification application. Consequently, the High Court disposed of the writ petition and instructed the Respondent to address the rectification application filed by the Petitioner within three months from the date of receiving a copy of this order.

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Registration not to be cancelled retrospectively when vague SCN is issued and no reasonable opportunity granted to file reply

editor — Tue, 19 Mar 2024 12:25:25 +0000

The Delhi High Court, in the case of M/s. Friends Media Add Company vs. Principal Commissioner of Goods and Service Tax [W.P.(C) No. 1260 of 2024 dated February 12, 2024], altered the GST cancellation ruling to apply prospectively from the date of the show cause notice (SCN). The court held that GST registration should not be revoked retroactively if the SCN lacks clarity and no opportunity was given to contest the retrospective cancellation.

Facts of the case:

The Revenue Department (referred to as “the Respondent”) issued an SCN on August 25, 2023, to M/s. Friends Media Add Company (referred to as “the Petitioner”), alleging issuance of invoices or bills without actual supply of goods or services, resulting in improper claim of input tax credit or tax refund. Subsequently, the GST registration of the Petitioner was cancelled retroactively via an order dated December 12, 2023 (referred to as “the Impugned Order”).

The Petitioner challenged the Impugned Order through a writ petition before the High Court, arguing that the SCN lacked specificity as it did not cite any instances of invoices or bills issued without actual supply of goods or services, which formed the basis of the SCN issuance.

Issue:

Whether GST registration should be cancelled retrospectively when the SCN issued is vague in nature and no opportunity was granted to file objection against retrospective cancellation?

Held:

The Hon’ble Delhi High Court in Writ Petition (C) No. 1260 of 2024 held as under:

Section 29(2) of the Central Goods and Services Act, 2017, empowers the Proper Officer to cancel GST registration retrospectively, but this should not be done mechanically and must be based on objective criteria.
The mere failure to file returns for a certain period should not automatically lead to retrospective cancellation, especially if returns have been filed and taxes paid for other periods.
The Proper Officer must consider that retrospective cancellation could deny credit to the petitioner's customers for supplies made during the affected period.
The SCN did not adequately notify the petitioner of the possibility of retrospective cancellation.
The petitioner was not given an opportunity to object to the retrospective cancellation of GST registration.
Therefore, the court ordered that the cancellation be modified to operate prospectively from the date of issuance of the SCN.

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Extension of Peer Review Mandate for CA Firms in Phase II & III

editor — Mon, 18 Mar 2024 10:01:54 +0000

Revised Guidelines on ICAI Peer Review Mandate

The Institute of Chartered Accountants of India (ICAI) has extended the applicability of the Peer Review Mandate for Chartered Accountant (CA) firms covered under Phase II & III. This revision aims to ensure adherence to enhanced quality standards within the profession.

Understanding Peer Review:

Peer review involves the assessment of a professional’s work by another professional of similar standing. It encompasses the examination of systems and procedures implemented by the Practice Unit (PU) to ensure quality assurance, as per technical, ethical, and professional standards. However, it does not focus on identifying isolated engagement failures.

Applicability in India:

Since 2017, peer review has been mandatory for all practicing Chartered Accountants and firms in India. Newly constituted firms, operating for less than one year, can undergo peer review voluntarily if the member (proprietor/partner) possesses a minimum of five years of post-qualification experience with a full-time Certificate of Practice (COP).

Revised Applicability (Phase II & III):

In response to requests from Practice Units, ICAI has outlined the following extensions in the applicability of the Peer Review Mandate:

Phase II:

Practice Units intending to conduct statutory audits for unlisted public companies meeting specific criteria, such as high paid-up capital, turnover, or outstanding loans, now require a Peer Review Certificate.
Similarly, Practice Units offering attestation services and employing five or more partners must possess a Peer Review Certificate before undertaking statutory audits.
This mandate is effective from July 1, 2024, with a grace period until June 30, 2024.

Phase III:

Practice Units engaged in statutory audits for entities that raised substantial funds from public sources or financial institutions during the review period must obtain a Peer Review Certificate.
Additionally, Practice Units with four or more partners providing attestation services are required to hold a Peer Review Certificate before accepting statutory audit engagements.
This requirement has been in place since January 1, 2015.

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