RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

Reserve Bank of India has released its Financial Stability Report (FSR) wherein it has stated that new risks are emerging. The annual FSR analyses the macro financial risks facing Indian economy. RBI has flagged the concerns over challenges to regulators by entry of bigger technology companies in financial services in terms of maintaining adequate stability and governance of the eco system. This may include monopolistic practices, anti-trust issues, data privacy and risks pertaining to cyber security. Also gross NPA’s may rise from 7.8% now to about 9.8% by 2021-22 end. RBI’s stress tests indicate that banking sector may fare well than what was expected earlier. It also states that public sector banks are more stressed them private sector banks. While private sector lending has come down, PSU lending has gone up. Plough back of retained earnings is one of the main reasons.

Recently Moody’s Investor Services has lowered its India’s growth projections for calendar year 2021 from 13.9% to 9.6%. Faster vaccination progress is going to be paramount in restricting economic losses in June quarter. It states in a report that economic shocks from second Covid wave will not be as severe as in 2020. The virus resurgence adds uncertainty to India’s growth forecasts for 2021 but economic damage may be restricted to April- June quarter.

GST in India is now four years old. It was launched in a glittering ceremony in the Parliament on the midnight of 30^th June – 1^st July in 2017. While GST was a much pampered and hyped about tax law, as one of the biggest tax reforms in the history of independent India, all the stakeholders had some good and some bad experiences in this period. Migrating 17 different taxes of centre and states and 13 cesses into one tax law was indeed a good idea.

But the theory of ‘one nation, one market, one tax’ could not do well on the ground. Some distortions in the concept of GST itself, some faulty drafting of law and a lot of bureaucratic tinkering by way of multiple and frequent notifications snatched the simplicity and made GST a ‘not so good and simple tax’.

Government claims that GST reduced the rate at which people have to pay tax. The revenue neutral rate as recommended by RNR Committee was 15.3% whereas weighted GST  rate at present is 11.6% only.

Over these years, there has been a reduction in the tax rates, simplification of procedures and a growing economy has also led to an exponential increase in the tax base. GST revenues have steadily grown and have been above the 1 lakh crore mark for eight consecutive months in a row. On the eve of completion of 4 years of the GST, Government has also decided to honour the tax payers who have been a part of the GST success story.

Dynamic QR Code

• Dynamic QR Code was made applicable on B2C invoices w.e.f. 1^st July, 2021.
• CBIC has waived penalty for non-compliance to GST invoices with QR Code till 30^th September, 2021
• Thus, such provision shall be effectively applicable w.e.f. 1.10.2021 now instead of 1.7.2021

[Source: Notification No. 89/2020-Central Tax dated 27.11.2020 as amended by Notification No. 28/2021-Central Tax dated 30.06.2021]

GST : How to check misuse of PAN on portal

• GSTN has introduced a new functionality to address the complaint relating to misuse of income tax Permanent Account Number (PAN) for obtaining registration under GST law.
•  Any person aggrieved of having his PAN misused, may directly or through an authorized representative, register a complaint at GST Portal. He may search the GSTIN based on PAN and the registration(s) which are not taken by him, may be selected and reported to the jurisdictional officer.
• Once complaint is registered, it will be sent to the concerned jurisdictional authority where the registration is claimed to be fraudulently taken, for necessary enquiry and suitable action. The process of registering complaint has been prescribed.
• The complainant can further track the status of application through track ARN at GST Portal pre-login. 
• It will check the misuses, control the frauds and help officers in enquiry and cancellation of such registration.

[Source:  GSTN dated 29.06.2021]

Advisory on Anti-profiteering provisions post rate reduction

• Section 171 of the CGST Act 2017 envisages that the benefit of tax-rate reduction and/or Input Tax Credit should be mandatorily passed on by the suppliers to recipients of the Goods and/or Services. The suppliers are, therefore, required to commensurately reduce the prices of each of the supplies of Goods and Services made by them so that the benefit of the reduction in tax rates and/ or of input tax credits is passed on to the recipients/ consumers.
• All field formations have been directed to take all possible steps envisaged under the GST Laws to ensure that the legislative intent of Section 171 of the CGST Act is complied with and to issue appropriate directions to your officers to take action as mandated under Section 171 of the CGST Act and wherever required, to utilise the powers conferred vide provisions of Section 67 (12) of the CGST Act for collection of evidence which may be required to take action against errant suppliers of various goods and services.
• Officers have also been advised to take up the complaints filed by common consumers on priority and to forward the same to the Anti-Profiteering apparatus as provide in Rule 123 of the CGST Rules, 2017, i.e. the State-level Screening Committees and the Standing Committee on Anti-Profiteering.

[Source:  NAA Office Memorandum dated 23.06.2021]