The deduction of tax at source (TDS), collection of tax at source (TCS) and reverse charge mechanism have been deferred until June 30.
The GST Council headed by Finance Minister Arun Jaitley approved the rollout of inter-state e-Way bill from April 1, deferred the liability to pay tax on reverse charge mechanism until June 30 and extended tax exemption benefits to exporters for another six months. While there was no decision on a new and simpler return filing system, businesses will have to continue with the present system of the summary form GSTR3B as well as GSTR1.
The deduction of tax at source (TDS) and collection of tax at source (TCS) has also been deferred by another 3 months until June 30.
E-Way or electronic-Way Bill for intra-state movement of goods will be introduced in a phased manner.
“States have been divided into four categories. State-wise implementation of e-way bill will be done on a weekly basis (after April 7). Will try to implement it in all the states by end of April,” Jaitley said.
Goods and Services Tax’s (GST) e-Way bill system is a crucial measure against tax evasion and it also promises to enable faster movement of goods through a seamless portal-driven payment system.
The GST Council - the key indirect tax policy decision making body comprising members from the Centre and states - also relaxed certain rules related to e-Way Bill, which will essentially reduce the load on the portal. Technical glitches had aborted the mandatory full-fledged rollout of the system on February 1. Last month, the portal collapsed as it didn't have the bandwidth to handle the large volumes of inter as well as intra-state bills being generated on the site.
“As GST return filing is taking time to stabilise, eway bill can help detect and reduce tax evasion. The staggered implementation is also good development as hopefully the portal will be able to iron out teething issues,” Archit Gupta, Founder and CEO of Clear Tax said.
While the Council discussed two alternate models for simplification of filing returns, no decision was taken regarding the same. The Group of Ministers (GoM) headed by Bihar Finance Minister Sushil Modi will be interacting with IT experts on how the tax return filing system under GST can be simplified.
“Tax bureaucracy felt that simplification should not provide room for evasion..No conclusive decision on return filing was taken. Current system (of filing GSTR3B and GSTR1) will continue for another three months,” Jaitley said.
The Council extended support to exporters by extending the available tax exemptions on imported goods for another six months.
“Thus, exporters presently availing various export promotion schemes can now continue to avail such exemptions on their imports up to October 1, by which time e-wallet scheme is expected to be in place to continue the benefits in future,” the government said in a release.
In the pre-GST era, exporters would get ab initio exemptions from duties, as per various schemes under the foreign trade policy. With the implementation of the new indirect tax system from July 1, exporters had to pay the duties first, while importing the raw material and seek refund after the finished good is exported.
However, in October, the Council approved IGST exemption until March 31, 2018 as exporters were grappling with locked tax refunds that were hurting their working capital availability.
“Exporters would be able to plan their operations better as they now have clarity on the incentives that they will enjoy till September 18 . This will enable them to plan their imports and subsequent activities without any fear on losing export incentives,” MS Mani, Senior Director at Deloitte India said.
The Council also reviewed the progress in the grant of IGST and input tax credit refunds to exporters and has directed the technology backbone Goods and Services Tax Network (GSTN) to expeditiously forwards the balance refund claims to Centre and the states for immediate sanction of payments.
Central Board of Excise and Customs (CBEC), the apex indirect tax policy making body under finance ministry and GSTN have started detailed data analytics across a number of data sets available with them.The government would also take action against businesses as it has emerged that there is a variance between the amount of IGST paid and compensation cess paid by importers at customs ports and tax credit claimed in the GSTR3B form.
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