The Finance Ministry on Monday further lowered the threshold for mandatory e-invoicing to ₹50 crore, from ₹100 crore. The new rule will come into effect from April 1, according to a Central Board of Indirect Taxes and Customs (CBIC) notification.
e-invoicing essentially involves reporting details of specified GST documents to a government-notified portal and obtaining a reference number. GSTN (the IT systems provider for GST) claims that there is not much difference between the present system and new one. Registered persons continue to create GST invoices on their own accounting/billing/ERP systems.
These invoices are now reported to the Invoice Registration Portal (IRP). On reporting, the IRP returns the e-invoice with a unique Invoice Reference Number (IRN) after digitally signing the e-invoice and adding a QR Code. Then, the invoice can be issued to the receiver, along with QR Code. A GST invoice will be valid only with a valid IRN.
The Government claims that huge advancements in technology, increased penetration of the Internet, along with availability of computer systems at reasonable cost has made ‘e-invoice’, a popular choice worldwide. It hopes that this system will help in enhancing ease of doing business.
The GST Council, at its 37th meeting on September 20, 2019, recommended introduction of electronic invoice (‘e-invoice’) in GST in a phased manner. It started with businesses having annual turnover of ₹500 crore from October 1. Then the limit was brought down to ₹100 from January 1. Ultimately, the Government intends to cover each of the GST assesses.
The government has extended the deadline for filing annual goods and service tax (GST) return and reconciliation statements for FY20 till March-end, from existing date of February 28.
"In view of the difficulties expressed by the taxpayers in meeting this time limit, government has decided to further extend the due date for furnishing of GSTR-9 and GSTR-9C for the financial year 2019-20 to 31.03.2021 with the approval of Election Commission of India," the Central Board of Indirect Taxes and Customs (CBIC) said.
Take a look at the top 5 income tax changes that every taxpayer should know:
1. TDS at Higher rate: Budget 2021 introduced a new provision — Section 206AB in Income Tax Act, providing for higher rate for tax deducted at source (TDS) for the non-filers of income tax return. Under the proposed TDS, rate in this section is higher of the followings rates: Twice the rate specified in the relevant provision of the Act; or twice the rate or rates in force; or the rate of 5%.
2. EPF contribution: Interest on employee contributions to the provident fund (PF) above Rs 2.5 lakh per annum would be taxed from April 1, 2021. “In order to rationalize tax exemption for the income earned by high-income employees, it is proposed to restrict tax exemption for the interest income earned on the employees’ contribution to various provident funds to the annual contribution of Rs 2.5 lakh,” Sitharaman said in her Budget 2021-22 speech.
3. Pre-filled ITR Forms: In a bid to ease the filing of returns, pre-filled Income Tax Returns (ITR) will be been given to individual taxpayers.
4. LTC Scheme notified: In Budget 2021, the Modi government has notified the Leave Travel Concession (LTC) cash Voucher scheme. Centre had announced the scheme last year for individuals who were not able to claim their LTC tax benefit due to COVID-19 induced restrictions on travelling.
5. No ITR filing for senior citizens: Senior citizens of 75 years and above having pension income and interest from fixed deposit in the same bank would not be required to file income tax returns for the financial year beginning April 1.
TO strengthen the ecosystem of Goods and Service Tax and curb the menace of fake / bogus invoicing, various amendments are proposed in the GST law. The amendments in CGST and IGST Act span out from section 99 to section 114 of Finance Bill, 2021.
The amendments will be effective from a date to be notified unless otherwise specified (refer Section 1(2)(b) of Finance Bill, 2021). Few amendments will be effective retrospectively from 1st July 2017 (such as amendment in section 7(1)(aa) and Section 50).
1. Supply includes transaction between persons and its members
Section 7 of the CGST Act deals with 'Scope of Supply'.
Now, Section 7(1)(aa) have been inserted via retrospective amendment w.e.f. 01st July 2017, to broaden the scope of 'Supply' and it shall now include transactions between a person (other than an individual) and its members for cash, deferred payment or other valuable consideration.
This amendment is brought in view of the Apex Court judgement in the case of CALCUTTA CLUB LTD - 2019-TIOL-449-SC-ST-LB. After the Apex Court judgment there was always a debate whether this judgment, which was given in the context of Service Tax, will apply to GST. Now this debate is set to rest although other debates such as whether retrospective amendment etc can may be subject to challenge.
[refer clause 99 of Finance Bill, 2021]
2. ITC can be now claimed only if vendors have filed their GSTR-1
Section 16 of the CGST Act deals with the Eligibility and conditions for claiming ITC.
Now, Section 16(2)(aa) have been inserted, adding one more layer for claiming ITC i.e. details of such Invoices should also be furnished by the suppliers in their return under section 37 (in their GSTR-1).
Such condition has already been imposed vide GSTR-2B which has details of invoices only if the suppliers have filed their GSTR-1 before the due date.
[refer clause 100 of Finance Bill, 2021]
3. No requirement of getting books audited under GST
Section 35 of the CGST Act deals with maintenance of Accounts and Records under GST and sub-section 5 dealt with getting the books audited by a CA or CMA if the turnover exceeds a certain threshold.
Now, Section 35(5) have been omitted which means that there would be no compulsory Audit from GST perspective (i.e. GSTR-9C).
[refer clause 101 of Finance Bill, 2021]
4. Self-Certified reconciliation of Annual Return with Audited Financial Statements
Section 44 of the CGST Act deals with Annual Return to be filed by the taxpayers.
Now, Section 44 is being amended to provide for filing of the annual return, inter-alia, on 'self-certification' basis along with reconciliation of such Annual Return with the Audited Financial Statements. It further provides for the Commissioner to exempt a class of taxpayers from the requirement of filing the annual return.
[refer clause 102 of Finance Bill, 2021]
5. Interest on Net Output liability
Section 50 of the CGST Act deals with interest payment in case of short payment of output liability.
Now, Section 50 have been retrospectively amended w.e.f. 01st July 2017 which is in line with 39th GST Council meeting and as a result of which, Interest would be levied on the cash component of GST liability.
[refer clause 103 of Finance Bill, 2021]
6. Seizure and Confiscation of Goods is different from Recovery of Tax
Section 74 of the CGST Act deals with cases where is tax is not paid or short paid on account of fraud or suppression of facts.
Now, clause (ii), in Explanation 1 of Section 74 have been amended to remove Section 129 and 130 which deals with seizure and confiscation of goods.
It signifies that if goods are moving without payment of tax and post seizure, necessary penalty have been made, still the registered person who caused the movement of goods would be liable for recovery of tax under section 74.
[refer clause 104 of Finance Bill, 2021]
7. Self-assessed tax shall include invoices declared in GSTR-1
Section 75 of the CGST Act deals with determination of tax payable.
Now, an explanation have been inserted vide amendment to broaden the definition of Self-assessed tax and include the invoices declared in GSTR-1 but tax on such invoices not paid in GSTR-3B.
[refer clause 105 of Finance Bill, 2021]
8. Property including Bank Account can be attached in several instances
Section 83 of the CGST Act deals with provisional attachment of property to protect the interest of revenue up to one year of passing the order.
Now, Section 83(1) has been amended to include other instances where the Commissioner can provisionally attach the property including bank account like provisional assessment, scrutiny of returns, inspection of goods in movement, tax collected but not paid to Government, etc.
[refer clause 106 of Finance Bill, 2021]
9. Payment of 25% of the penalty to file appeal against seizure of goods
Section 107 of the CGST Act deals with filling of appeal to the Appellate Authority against an order.
Now, proviso has been added in Section 107(6) which means that no appeal can be filed against order passed on seizure of goods unless penalty of 25% is paid.
[refer clause 107 of Finance Bill, 2021]
10. Power to Call for Information
Section 151 and 152 of CGST Act, dealt with collect of statistics and use of such information.
Now, it has been amended to authorize the Commissioner to call for any information from any person relating to any matter dealt with in connection with this Act. However, such information shall not be used for the purposes of any proceedings under the Act without giving an opportunity of being heard to the person concerned.
[refer clause 110 and 111 of Finance Bill, 2021]
11. Not all supplies to SEZ would qualify as Export
Section 16(1)(b) of the IGST Act deals with zero-rating of supply of goods/ services/ both to SEZ developer or SEZ unit.
Now, vide amendment in 16(1)(b), only those supplies which are for "Authorised Operations" would qualify as zero-rated supplies and all other supplies would be subject to GST at the appropriate rates.
[refer clause 114 of Finance Bill, 2021]
16. Consideration must be received within time limit for Export of Goods
Section 16(3)(a) of the IGST Act, deals with refund of unutilized ITC in case of Export of Goods without payment of tax under LUT.
Now, it has been substituted to recover the refund from the taxpayer along with interest in case of non-realisation of sale proceeds within time limit under Foreign Exchange Management Act, 1999.
[refer clause 114 of Finance Bill, 2021]
13. Refund in case Export with payment of tax allowed in certain cases only
Section 16(3)(b) of the IGST Act, dealt with refund IGST paid in case of Export of Goods with payment of tax.
Now, it has been substituted to allow only notified class of taxpayers and notified supplies of goods or services which can claim such refund.
[refer clause 114 of Finance Bill, 2021]
1. First digital Budget in the history of India
2. Vehicle Scrapping Policy. Vehicle Fitness Test after 20 years in case of Personal vehicle and 15 years in case of commercial vehicles
3. 64,180 crores allocated for New Health Schemes
4. 35,000 crores allocated for Covid Vaccine
5. 7 Mega Textile Investment parks will be launched in 3 years
6. 5.54 lakh crore provided for Capital Expenditure
7. 1.18 lakh crore for Ministry of Roads
8. 1.10 lakh crore allocated to Railways
9. Proposal to amend Insurance Act. Proposal to increase FDI from 49% to 74 %.
10. Deposit Insurance cover (DICGC Act 1961 to be amended). Easy and time bound access of deposits to help depositors of stress banks.
11. Proposal to revive definition of ‘Small Companies’ under Companies Act 2013. Capital less than 2 Cr. and Turnover Less than 20 Cr.
12. Disinvestment: IPO of LIC, Announced Disinvestment of Companies will be completed in FY 2021-22
Direct and Indirect tax
1. Senior Citizens: Reduced Compliance burden. 75 years and above. Proposal not to file ITR if only pension income and interest income.
2. Reduction in time for IT Proceedings: Reopening of Assessments period reduced from 6 years to 3 years except in cases of serious tax evasion cases
3. Proposal to constitute ‘Dispute Resolution Committee’. (Taxable income 50 lakhs and disputed income 10 lakh).
4. National Faceless Income Tax Appellate Tribunal Centre
5. Relaxations to NRI: Propose to notify rules for removing hardship for double taxation.
6. Tax Audit Limit: Proposal of tax audit increased from 5 Cr. to 10 cr. (Only for 95% digitized payments business)
7. Propose to provide relief on advance tax liability on dividend income.
8. Propose to include tax holidays for Aircraft leasing companies
9. Prefiling of returns (Salary, Tax payments, TDS etc.) Details of Capital gains from listed Securities, dividend income, etc. will be prefilled
10. Small Charitable Trusts. Increased from 1 crore to 5 crores (Compliance limit)
11. Late deposit of employee’s contribution by employer will not be allowed as deduction
12. Incentive to startup: Tax holiday exemption for one more year
13. Duties reduced on various textile, chemicals and other products
14. Gold and Silver (BCD reduced)
15. Agriculture Products: Custom duty increased on cottons, silks, alcohol etc.