RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

The FM has stated in the Parliament that Indian economy has no risk of stagflation or recession, that macroeconomic fundamentals of economy are strong and that despite all odds, Indian economy is going to be the fastest growing economy of the world.

However, according to FICCI estimate, Indian economy is estimated to grow @ 7% in 2022-23 (range 6.5% to 7.3%) lower than the earlier projection of 7.4%, mainly due to current geo-political situation. More so, our economy is not immune to global volatility reflected in inflation and financial markets. Major risks can be  seen in rising commodity prices, slow global growth prospects, supply side disruptions etc. This is based on June, 2022 survey.

The levy of tax on food items has back fired to the extent that opposition parties have even haulted the normal functioning of Parliament. The levy of GST amid already inflation hit economy could have been deferred for the time being.

CBIC recently clarified by way of a press release that gifts of value of more than Rs. 50,000/- made without consideration are subject to GST when made in the course of or furtherance of business. Also, in case of perquisites, supply by the employer to the employee in term of contractual agreement will not attract GST.

FM has also clarified in Lok Sabha by way of reply to a question on plan to reduce GST on educational goods like pen, pencil, eraser, note books etc. that presently there is no recommendation from GST Council to do so. Thus, GST rates will not be reduced for the time being.

GST collection for July, 2022 are out and encouraging. The buoyancy in tax collection continues steadily. The consistency in tax collection of INR one lakh crore plus has now become a new normal, it appears so.  The gross GST revenue collected in the month of July 2022 is Rs.1,48,995 crore of which CGST is Rs. 25,751 crore, SGST is Rs. 32,807 crore, IGST is Rs. 79,518 crore (including Rs. 41,420 crore collected on import of goods) and cess is Rs. 10,920 crore (including Rs. 995 crore collected on import of goods). This is second highest revenue since introduction of GST.

For five months in a row now, the monthly GST revenues have been more than Rs. 1.4 lakh core, showing a steady increase every month. The growth in GST revenue till July 2022 over the same period last year is 35% and displays a very high buoyancy.

The enhanced collection is also looked at as a result of better compliance, better reporting, consistent economic recovery and curbing tax evasion. With no compensation to states in 2022-23, now states are also aggressive on recovery of tax and recovery targets are being set for officers.

Mandatory E-invoice for INR 10 crore turnover

• CBIC has reduced mandatory e-invoicing threshold limit from INR 20 crore to INR10 crore of aggregate turnover w.e.f. 01.10.2022.
• E-invoicing will be mandatory if aggregate turnover exceeds INR 10 crore in any financial year from 2017-18 and onwards.
• The present threshold limit for mandatory e-invoices is INR 20 crore
• Necessary amendment has been made in Notification No. 13/2020-CT dated 21.03.2020 w.e.f. 01.10.2022.

(Source: Notification No. 17/2022-CT dated 01.08.2022)

New Functionality in GSTR-3B

• GSTN has enabled a new functionality in GSTR-3B return for reporting supplies under section 9(5) of CGST Act, 2017 w.e.f. 01.08.2022.
• For this, Table 3.1.1 has been added on 3-B return.
• As per section 9(5), an Electronic Commerce Operator (ECO) is required to pay tax on the supply of certain services notified by the government such as Passenger Transport services, Accommodation services, Housekeeping Services & Restaurant Services, if such services are supplied through ECO.
• For reporting of such supplies, a new Table 3.1.1 has been added in GSTR-3B as per Notification No. 14/2022 – Central Tax dated 05th July 2022 wherein both, ECOs and registered persons can report their supplies made under section 9(5) respectively.
• Accordingly,

1. An ECO is required to report supplies made u/s 9(5) in Table 3.1.1(i) of GSTR-3B and shall not include such supplies in Table 3.1(a) of GSTR-3B. The applicable tax on such supplies shall be paid by ECO in Table 3.1.1(i) of GSTR-3B in cash only and not by ITC.
2. A registered person who is making supplies of such services as specified u/s 9(5) through an ECO, shall report such supplies in Table 3.1.1(ii) and shall not include such supplies in Table 3.1(a) of GSTR-3B. The registered person is not required to pay tax on such supplies as the ECO is liable to pay tax on such supplies.

(Source: GSTN)
 

NIL GSTR-1 Returns

• GSTN has introduced a new options to file a ‘NIL’ GSTR-1  return by way of selecting the check box.
• There will be no need to go through the process of generating the summary.
• It may be noted that one can file NIL GSTR-1 form if:

• No outward supplies (including supplies on which tax is to be charged on reverse charge basis, zero rated supplies and deemed exports) during the month or quarter for which the form is being filed for.
• No amendments to be made to any of the supplies declared in an earlier form
• No credit or debit notes to be declared / amended
• No details of advance received for services is to be declared or adjusted

(Source: GSTN)
 

GST on employee related transactions

CBIC has clarified the following through a Press Release:

• Gifts of value more than Rs 50,000/- made without consideration are subject to GST,
  when made in the course or furtherance of business.
• Gifts cannot be demanded as a matter of right by the employee and the employee cannot move a court of law for obtaining a gift.
• Supply by the employer to the employee in terms of contractual agreement entered into between the employer and the employee, will not be subjected to GST.
• The input tax credit (ITC) scheme under GST does not allow ITC of membership of a club, health and fitness centre [section 17 (5) (b) (ii)].  If such services are provided free of charge to all the employees by the employer then the same will not be subjected to GST, provided appropriate GST was paid when procured by the employer.
• No GST will be payable for free housing to the employees, when the same is provided in terms of the contract between the employer and employee and is part and parcel of the cost-to-company (C2C).

(Source: CBIC Press Release dated 10.07.2022)

GST collection in July, 2022

• Rs.1,48,995 crore gross GST revenue has been collected in the month of July 2022. 
• GST Revenue collection for July, 2022 is second highest ever and 28% higher than the revenues in the same month last year.
• This is second highest revenue since introduction of GST.
• The gross GST revenue collected in the month of July 2022 is
  Rs.1,48,995 crore of which CGST is Rs. 25,751 crore, SGST is Rs. 32,807 crore and IGST is Rs. 79,518 crore. 
• For five months in a row now, the monthly GST revenues have been more than Rs. 1.4 lakh core, showing a steady increase every month. The growth in GST revenue till July 2022 over the same period last year is 35% and displays a very high buoyancy.

• The top states with higher GST Collection growth are smaller states like Ladakh, Pondicherry, Lakshdweep, Goa. The laggards include Daman & Diu, Tripura and Bihar. In bigger states, it ranges from 15-40 percent.

(Source: MoF Press Release ID 1846881 dated 01.08.2022)