GST WEEKLY UPDATE :5/2022-23 (01.05.2022) By CA Vipul Khandhar

By Vipul Khandhar

(Author is a well known Chartered Accountant practicing in the field of Direct and Indirect Tax at Ahmedabad)

1. The Goods and Services Tax Network (GSTN) has issued an advisory to the composition taxpayers under the GST regime.:

• Since FY 2019-20, composition taxpayers has to pay the liability through Form GST CMP-08 on quarterly basis while return in Form GSTR-4 is required to be filed on annual basis after end of a financial year.
• The Advisory issued on Saturday stated that the liability of the complete year is required to be declared in GSTR-4 under applicable tax rates. Taxpayers should fill up table 6 of GSTR-4 mandatorily. In case, there is no liability, the said table may be filled up with ‘0’ value. If no liability is declared in table 6, it is presumed that no liability is required to be paid, even though, taxpayer may have paid the liability through Form GST CMP-08.
• In such cases, liability paid through GST CMP-08 becomes excess tax paid and moves to Negative Liability Statement for utilization of same for subsequent tax period’s liability. As per the advisory, the liability paid through Form GST CMP-08 is auto-populated in table 5 of the GSTR-4 for convenience of the taxpayers. Taxpayers who do not fill up table 6 of GSTR-4 i.e. no liability is declared, even though, taxpayer may have paid the liability through Form GST CMP-08; since the ‘Tax payable’ in GSTR-4 is computed after reducing the liability declared in GST CMP-08 which is auto-populated in table 5. Thus, if nothing is declared in table 6, then the negative liability entry appears in GSTR-4.
• “In the past, lot of tickets were received on the Helpdesk for reducing the negative liability from the Negative Liability Statement and the same was being done. For convenience of the taxpayers, the amount available in negative liability statement have been debited for all taxpayers. It has been noticed that some taxpayers had utilised the amount available in negative liability statement for paying the liability to file statement in Form GST CMP-08 or GSTR-4 of subsequent financial year. In such cases, the amount utilised out of negative liability statement has been debited in the cash ledger. Though, such liability should have been paid by depositing the amount through challan but in some cases the amount had not been deposited by the taxpayers.
• The taxpayer who have deposited the amount in cash ledger, the debited amount has been adjusted whereas in case the amount of liability has not been deposited through challan, the balance in cash ledger becomes negative. In such cases, the taxpayers are advised to deposit the past liability through challan of equal amount urgently,” the advisory said.
• The details of the debit so made have been communicated to all such taxpayers through emails available on the portal. In case, the liability had been paid through adding in the next years’ liability, the same can be claimed as refund through application in Form GST RFD-01.               

2. The Goods and Services Tax Network (GSTN) has released the GSTR-1 enhancements & improvements on the GST Portal:

• The statement of outward supplies in FORM GSTR-1 is to be furnished by all normal taxpayers on a monthly or quarterly basis, as applicable. Quarterly GSTR-1 filers have also been provided with an optional Invoice Furnishing Facility (IFF) for reporting their outward supplies to registered persons (B2B supplies) in the first two months of the quarter.
• Continuous enhancements & technology improvements in GSTR-1/IFF have been made from time to time to enhance the performance & user-experience of GSTR-1/IFF, which has led to improvements in Summary Generation process, quicker response time, and enhanced user-experience for the taxpayers.
• The previous phase of GSTR-1/IFF enhancement was deployed on the GST Portal in November 2021. In that phase, new features like the revamped dashboard, enhanced B2B tables, and information regarding table/tile documents count were provided.
• In continuation to the same, the next Phase of the GSTR-1/IFF improvements is now available on the Portal. GSTR-1/IFF can be viewed as usual by navigating in the following manner:

Return Dashboard > Selection of Period > Details of outward supplies of goods or services GSTR-1 > Prepare Online.

The following changes are being done in this phase of the GSTR-1/IFF enhancements:

• Removal of ‘Submit’ button before filing: The present two-step filing of GSTR-1/IFF involving ‘Submit’ and ‘File’ buttons will be replaced with a simpler single-step filing process .
• The upcoming ‘File Statement’ button will replace the present two-step filing process and will provide taxpayers with the flexibility to add or modify records till the filing is completed by pressing the ‘File Statement’ button.
• Consolidated Summary : Taxpayers will now be shown a table-wise consolidated summary before actual filing of GSTR-1/IFF. This consolidated summary will have a detailed & table-wise summary of the records added by the taxpayers. This will provide a complete overview of the records added in GSTR-1/IFF before actual filing.
• Recipient wise summary: The consolidated summary page will also provide recipient-wise summary, containing the total value of the supplies & the total tax involved in such supplies for each recipient.
• The recipient-wise summary will be made available with respect to the following tables of GSTR-1/IFF, which have counter-party recipients: –    Table 4A : B2B supplies –    Table 4B : Supplies attracting reverse charge –    Table 6B : SEZ supplies –    Table 6C : Deemed exports –  Table 9B : Credit/Debit notes It was previously intimated that this enhancement would be made available on the Portal shortly.
• It is to inform that these changes have now been implemented, and are available on the Portal. For detailed advisory & sample screenshots of the GSTR-1/IFF improvements & enhancements, please click here

3. International Financial Services Centres Authority (IFSCA), the Unified Financial Sector Regulator for the IFSCs, issued a detailed Regulatory Framework for FinTech Entity(FE) to provide impetus towards establishing a world class FinTech Hub at GIFT IFSC.

This framework is applicable for

1) #Fin Techs across Banking, Capital Markets, Insurance Verticals and for

2) #Tech Fins in Allied areas with solutions/services for BFSI domain

Illustrative list of permissible #Fin Tech areas/activities linked to financial services regulated by IFSCA is given below:

1. Banking Sector:  a) #Remittance and payments b) #Digital lending c) #BNPL Buy Now Pay Later d) Crowd Lending (e)Digital Bank (#Neo Banking/Challenger bank) (f)#Open banking
2. Capital Markets and Funds Management: (a) Crowd funding (b)Personal finance (c)#Wealth tech (d) #Robo Advisory (e) #Sustainable Finance products (f)Alternate trading platforms

III. Insurance sector: (a)#Insur Tech (b)Innovative technologies for insurance life cycle (underwriting, claims management of life/health products etc.) (c) Digital innovation for global health insurance cover (d)Innovation in commercial insurance (e)Digital platform for settlement of balances between insurance companies (f) #Open insurance (g)Embedded insurance (h) #Cyber insurance

Illustrative list of Allied areas (#TechFin) is given below:

(a)#agritech  Tech  (b)Accelerators  (c)#Climate/Green/Sustainable Tech  (d)Defence Tech (e)#Reg Tech  (f)#Space Tech (g)#Sup Tech (h)Technology solution supporting Digital banking(example – Core Banking etc.) (i)Technology solution aiding Trade Finance (j)Solutions/services for #BFSI domain leveraging #AI Artificial Intelligence/Machine Learning/Big Data, #Biometrics, #Chatbots, #Cybersecurity, #Digital Identity/KYC/AML/CFT, #DLT Distributed Ledger Technology, Fraud detection/prevention, Internet of Things (#IoT), #Longevity Finance, #Metaverse including Augmented Reality and /or Virtual Reality, #Quantum Tech, #Web3.0

“Regulatory Authorization from IFSCA may be provided for mature firms that would be eligible for a direct entry and for Regulatory/Innovation Sandbox entries, a “Limited Use” Authorization from IFSCA may be provided for eligible applicants.

The GIFT-IFSC offers an unique advantage of being a separate financial jurisdiction within India which is treated like an offshore jurisdiction from FEMA angle with no restriction on currency convertibility. It also has a competitive tax regime with 100% Corporate Tax Exemption (for 10 out of 15 years), 0% GST (Goods and Services Tax) among others.

Probably one of the most light-touch, comprehensive and unified (across banking, capital markets, insurance sectors) regulatory framework for FinTechs and TechFins in recent times!

4. AAR & Judicial Decisions:

(i) AAR On GST ITC admissible on Bus hired for Transportation of Employees having capacity of more than 13 passengers:

(Applicant – M/s. Emcure Pharmaceuticals Limited)

The applicant, M/s. Emcure Pharmaceuticals Limited, submitted that it provides a canteen and bus transportation facility to its employees. The canteen and bus transportation facility are part and parcel of the employment arrangement with the employees.

The applicant submitted that it provides the canteen and bus transportation facility to its employees based on the Human Resource (HR) Policy. Based on the agreed terms of the HR Policy, M/s. Emcure was entitled to make recoveries at subsidised rates for facilities provided by them at its factory.

According to the applicant, in order to provide the canteen and bus transportation facilities, it engaged third-party service providers, who in turn provide the said canteen and bus transportation facilities to the employee. Since the services are provided by the third-party service providers, the service providers are raising their invoices with applicable GST to M/s. Emcure. They recover a certain portion (i.e., subsidised amount-fixed amount deducted from salary on a monthly basis) from the employees towards the self-consumption of food provided in the canteen area.

The applicant sought an advance ruling on the issue of whether the recoveries made by the applicant from the employees for providing a canteen facility to its employees are taxable under the GST laws. Yet another issue raised was whether the free-of-cost bus transport facilities provided by the applicant to its employees are taxable under the GST laws.

The AAR ruled that ITC on motor vehicles for transportation of persons having an approved seating capacity of more than 13 persons is not blocked credit vide Section 17(5) CGST Act. As a result, the hiring of buses with a seating capacity of more than 13 people does not fall under blocked credit as defined in Section 17 (5)(b)(i) of the CGST Act.

 The Authority observed that GST, at the hands of M/s Emcure, is not leviable on the amount representing the employees’ portion of canteen charges, which is collected by M/s Emcure and paid to the canteen service provider.

Disclaimer:

This publication contains information for general guidance only. It is not intended to address the circumstances of any particular individual or entity. Although the best of endeavour has been made to provide the provisions in a simpler and accurate form, there is no substitute to detailed research with regard to the specific situation of a particular individual or entity. We do not accept any responsibility for loss incurred by any person for acting or refraining to act as a result of any matter in this publication.