Post GST roll-out, leading FMCG companies such as Britannia and ITC operating in the Rs 35,000-crore biscuit segment have alleged that small and local players are slowly eating into their market share. “Many players are not tax-compliant and have low operating cost which helps give high margins to retailers who push brands mostly in rural areas,” said Mayank Shah, category head, Parle Products. He said they are seeking a tax reduction from 18% for biscuits below Rs 100/kg to 5%. Britannia, Parle and ITC control nearly 69% of the biscuit market in the country.
The GST Council in its meeting on Tuesday allowed real estate developers with unsold housing inventories to choose between the old GST rate of 12% or the new rate of 5% for projects already underway as on March 31. The Council approved a formula for claiming unutilized input balance if a developer opts for the new rate for such uncompleted projects. If the ITC derived from the formula exceeds what is claimed till March 31, the developer would be eligible to claim the difference whereas, if the derived value is less, the developer would need to reverse the excess.
The net direct tax collection figure has crossed the Rs 10 lakh crore mark as on March 16, helped by the fourth and final installment of advance tax payment. The entire advance tax data from across the country has not come yet. The government has targeted direct tax collections of Rs 12 lakh crore for the entire fiscal of 2018-19. The net direct tax collection during April-January of this fiscal stood at Rs 7.89 lakh crore.
The GST Council in its meeting on March 19, 2019, may provide the under construction projects as on 31st March 2019 with the option to choose the old rate of 12% with the input tax credit or switch to new rates without ITC. In case new rate is opted by builders, the unutilized ITC balance may have to be reversed. Buildings that will start construction after March 31, 2019, will have to follow the new tax structure. The government had reduced the rates on under construction property from 12% (with input) to 5% (without input).
The AAR in Tamil Nadu has ruled that a buyer or recipient of supply would have to reverse the input tax credit (ITC) in proportion to the post-purchase discount extended by a supplier even if the buyer has paid full GST on the transaction. Often suppliers issue a commercial credit note without adjustment of GST for discounts after supply. AAR held that even though the buyer pays GST on the full value of supply, proportionate credit (as much pertains to the GST applicable on the value of commercial credit note) would not be available to the recipient of supply.
The GST Council in its 34th meeting to be held on Tuesday is expected to take up various issues including the implementation of lower GST rates for the real estate sector. The meeting is likely to discuss only the transition provision and related issues for the implementation of lower GST rates in the real estate sector. No issues related to tax rates are likely to be discussed as the model code of conduct is in force. In the previous meeting, the GST Council slashed tax rates for under-construction flats to 5% and affordable homes to 1%, effective April 1.
The National Anti-Profiteering Authority (NAA) on Friday said companies are free to pass on GST rate cut benefits in the form of volume benefit or price reduction to consumers. The NAA has decided to look into three yardsticks - proportionate grammage increase (volume) in products, timeline of passing on the benefit, and additional benefits offered by a firm. In case of realty sector, the NAA is awaiting the outcome of the March 19 GST Council meeting which is expected to issue greater clarity about implementing the GST rate cut benefits it announced earlier.
In a setback to several charitable institutions, the Tamil Nadu Authority for Advance Ruling held that conducting marathons by a charitable trust registered under the Income Tax Act does not exempt it from the GST liability as only activities covered under the definition of ‘charitable activities’ under a 2017 notification are exempt. In response to the application filed by Dream Runners Foundation, the AAR ruled that the entity needed to register itself under the applicable GST laws it was making a taxable supply of services and its aggregate turnover in the financial year also exceeded Rs 20 lakh.
The ITAT has quashed an order passed by additional CIT for AY 2003-04 assessing a higher income Rs 759 crore in the hands of Tata Sons due to invalid jurisdiction. Tata Sons claimed that the additional CIT did not have the valid authority to pass the order under section 120(4)(b). The additional CIT can exercise the powers of an assessing office only if he is specifically directed by higher authorities. Further, section 127(1) provides that a proper written order transferring the case needs to be passed by the commissioner, after recording the reasons for doing so.
Finance secretary Subhash Garg on March 14 said the government may fall short of indirect tax collections target this financial year. However, the government is confident of meeting the direct tax collections. As per revised estimates, the government had pegged indirect tax collections at Rs 1.3 lakh crore and direct tax collections at Rs 12 lakh crore. He said the government should also be able to meet its 3.4% fiscal deficit target.
After imposing fines on restaurants, FMCG and pharma companies for not passing benefits of lower GST to consumers, the anti-profit authorities have turned their attention to makers of home appliances. The NAA is examining whether these companies violated anti-profiteering norms and pocketed profits despite a reduction of GST rates on washing machines, TVs and other electronic products. Among the large consumer durable companies under the lens, Kolkata based IFB Appliances, which manufactures high-end washing machines, is the first company to receive notice. IFB, a BSE-listed company, was asked to furnish details of cost and selling prices on its washing machines.
The Election Commission has given approval for holding the upcoming GST Council meeting on March 19. The meeting will be held to discuss only provisions concerning transition and other related issues for the implementation of lower GST rates in the real estate sector. The next meeting will be held through videoconferencing. The approval from the Election Commission was required as the Model Code of Conduct has been enforced since Sunday.
The Income Tax department recovered cash worth over Rs 1.64 crore, Mont Blanc pens of Rs 50 lakh, four luxury SUVs and documents indicating benami assets of Rs 300 crore during the raids on premises linked to NetRam, a retired IAS officer of Uttar Pradesh cadre. Net Ram was secretary to then Uttar Pradesh Chief Minister Mayawati during 2002-03. The search lasted for over 26 hours.
Officials of the Hyderabad Central GST have detected an alleged tax fraud of Rs 224 crore based fake invoices generated worth Rs 1,289 crore by a group of eight companies involved in the trade of iron and steel products. A key suspect involved has been arrested and Rs 19.75 crore was recovered from him. Several documents were recovered during the simultaneous searches conducted at the residential and business premises of these companies on Tuesday night. The companies have been generating fake invoices without actual supply of TMT bars, MS bars, MS flat products, among others.
The GSTN has provided a facility to taxpayers to view and download a report on tax liability as declared in their form GSTR- 1 (final sales return) and as declared and paid in their return filed in form GSTR-3B (summary sales return). The new facility enables the taxpayers to compare these two liabilities in one table for each return period at one place. The GSTN has also provided taxpayers information regarding data of input tax credit (ITC) as claimed in their form GSTR 3B and as reflected in form GSTR 2A, based on the GSRT-1 uploaded by the supplier.
