GST Dept Notices Are Demanding Interest as Low as Rs2 on Late Payments
After directions from the Central Board of Indirect Taxes and Customs (CBIC) to recover goods and services tax (GST) interest, totalling Rs46,000 crore, field officials are busy sending notices for recoveries which, sometimes, are in single digits. One such client in equity information services has been asked to deposit Rs5, after rounding off the liability as interest, another Rs2, says a report from Business Standard.
 
No wonder, Bharatiya Janata Party (BJP) leader Dr Subramanian Swamy had described GST as the 'biggest madness' of 21st century. Delivering a talk on "India: An Economic Superpower by 2030", organised by the Pragna Bharati in Hyderabad, Dr Swamy says "This GST is so complicated that nobody understands which form to fill or where they want it to be uploaded. Somebody came from Barmer in Rajasthan. He said we don't have electricity, how can we upload. I said upload it on your head and go to the Prime Minister and tell him."
 
The government has discovered a new revenue stream to make up for the shortfall in GST collection and is looking to collect Rs46,000 crore as interest on late payment of tax. (Read: Centre to raise Rs 46Kcrore as interest on late filing of GST)
 
In a letter, AK Pandey, special secretary and member CBITC, has told all principal chief commissioners and central tax commissioners that the law cast liability on the taxpayers to assess and pay the interest on delayed payment of tax.
 
 
"Further, interest payable on such delayed payment of tax can be recovered under the provisions of section 79 of the CGST Act read with section 75 (12) which provides for various methods by which the proper officer shall proceed to recover any amount which is payable to the government," Mr Pandey said in his letter seen by IANS.
 
A senior state GST officer told the news agency that the letter had been received but expressed reservations over the way the amount of interest on late payment of tax has been arrived.
 
The notices sent to taxpayers read: "It has come to the notice of the department that you have failed to discharge interest liability on account of late filing of GSTR-3B returns. In this regard, I would like to draw your attention towards Sub-section (1) of Section 50 and Sub-section (12) of Section 75 of the CGST Act, 2017 which cast liability on the taxpayer to assess and pay the interest on delayed payment of tax."
 
Coming back to the newspaper report, it says, a company received notice for paying Rs0, which is the approximate figure for its interest liabilities. 
 
Quoting from one such notice, the newspaper report says, “Records indicate that you have filed your GSTR 3B return for the period … after due dates in which you have not calculated and paid interest liability under section 50 of CGST Act 2017 … you are advised to deposit interest amount of Rs5 ... (else) appropriate legal action for recovery of interest due to delayed filing of return shall be initiated.”
 
As per the notice, the taxpayers are required to share details of interest payment on GST within seven days to the signing authority, failing to which recovery proceeding under section 79 of CGST Act can be initiated. 
 
According to well-known chartered accountant (CA) Nikhil Vadia, it is very difficult to even rectify typo errors in GSTR 3B. 
 
 
However, the issues is not limited to rectification in GSTR 3B. The GST department is sending notices to a taxpayers who had already filed all returns before the due date. Check the tweet by CA Ankit Gada...
 
 
 
Last month, the Central GST authorities started summoning businesses with a set of 12 key documents pertaining to FY17-18, the GST roll-out year, for closer scrutiny suggesting an aggressive approach against suspected tax evasion. Records called by the Central GST authorities include various GST returns (GSTRs), GST registration certificate, copies of annual report, income-tax returns, reports of cost, tax and internal audits, cash ledger and work orders, among others. Many tax experts pointed out that several records called by the department are already with them and, hence, such a demand is unreasonable. (Read: GST authorities summon firms with 12 key docs for scrutiny, industry wary)
 
Businesses registered under GST (other than under the composition scheme) are required to file GSTR-1 for outward supplies for a month by the 11th day of the following month, and GSTR-3B, which is a summary return for sales and input tax credit (ITC), by the 20th.
 
Besides a late payment fee of Rs100 a day for Central GST and a matching amount for state GST, the law provides for a levy of 18% penal interest. The CBITC has clarified that taxpayers can pay part of their liabilities in cash and the rest through adjustments in input tax credit.
 
Central GST collection grew by 10.4% in the April-January period and has to grow by 21% in the last two months of the current fiscal year to meet the revised estimate which was scaled down by Rs1 trillion from the budget estimates of 2019-20 in the recent Budget for 2020-21.
  • Like this story? Get our top stories by email.

    User 

    COMMENTS

    Kumar123

    1 month ago

    Frankly it is not a surprise, though could have been avoided. Working in a bank, I recall how work happens. Suppose it is decided to send notice to all who have Locker fee outstanding. The concerned guy will just generate the excel and and auto plug the figures in word file. It sometimes even went to people who had given ADVANCE to cover future fees! The question is how much you want to interfere when it comes to outstanding - is 5 / 500 /5000 / 50000 - to be the minimum. This are part and parcel of work - not to be made hue and cry about. Any amount they pick - you would have made a ruckus!

    REPLY

    Newme

    In Reply to Kumar123 1 month ago

    How difficult it is to set a filter on the Excel sheet, say, greater than 100rs?

    Meenal Mamdani

    In Reply to Kumar123 1 month ago

    So true.
    The scenario you describe of some person just feeding the data in and generating these letters is common wherever bureaucracy rules as mindless obedience is rewarded, initiative frowned upon.

    What you point out about the ruckus resulting no matter the minimum is also so true. Have you ever heard Indians saying that the railways charge a ridiculously low price for a monthly pass on suburban trains? If these prices could be more realistic, railways could charge less for freight, thus helping lower the cost of goods for all.

    But that is what we Indians are good at, pointing out deficiencies and faults? How many of the comments contain suggestions for improvement?

    I have one in this case. The computer should omit those names from printing when the due is 0, thus sparing the poor clerk from having to make a decision about whether or not to send out such a superfluous letter and sparing the department from ridicule.

    suketu

    1 month ago

    For a long time people were blaming the late Arun Jaitly for GST.The root cause of gst etc is Namo himself.Everything starts and ends with him.

    US IRS sues Facebook for $9 bn in unpaid taxes
    The US Internal Revenue Service (IRS) has sued Facebook for $9 billion in unpaid taxes, alleging that the social networking giant undervalued the intellectual property it sold to the subsidiary, thereby dodging billions in taxes.
     
    The IRS lawsuit, filed in a San Francisco court, claimed that Facebook "undervalued the royalty amount between 2010 and 2016, which cut the company's domestic tax bill as the royalties are ultimately reported as income".
     
    Several tech giants save billions from taxes by keeping their money in Ireland because of the country's low corporate tax rates.
     
    In a statement given to The Verge, Facebook's Berti Thomson said the company "stand[s] behind" the 2010 transaction.
     
    Facebook told the court that it valued only $6.5 billion in 2010 but the IRS begged to differ, saying the social media giant "knowingly undervalued itself while selling off its intellectual property to a new company based in Ireland to avoid paying US corporation tax".
     
    Facebook claimed the IRS' valuation was based on a "2020 perspective and not a 2010 perspective".
     
    The company allegedly "sold" the rights to its software and trademarks to a subsidiary based in Ireland and that company pays Facebook in the US "royalties.a
     
    This allowed Facebook to pay an Irish tax rate of 12.5 per cent rather than 35 per cent corporate tax rate in the US (since reduced to 21 per cent), reports The Registrar.
     
    Facebook is not alone that dodges US corporate tax.
     
    In 2016, the European Union (EU) ordered Apple to pay $15.4 billion in back taxes to Ireland.
     
    In September, Google said it would pay more than $1 billion after a French investigation into its tax practices.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  • User 

    Taxing Retirement Income of Employees a Retrograde Step
    The Union Budget for 2020 contains direct tax proposals in the Finance Bill to tax the retirement fund of an employee, which has been called a retrograde step by experts.
     
    The Budget proposals seek to limit the exemption of contribution of employer to retirement funds to the retirement fund kitty of an employee, which would be tax-exempt to an arbitrary figure of Rs7.50 lakh.
     
    To date, contribution of employer to retirement funds of employee was tax exempt all through till withdrawal. The amendment in Income tax provisions seeking to levy tax on contributions to retirement funds, in excess of Rs7.50 lakh per annum, is a retrograde measure, according to experts.
     
    There is a demand now to roll back this proposal as the post retirement, period, constitutes 25% to 30% of life-time. Private sector employees are deprived of any social security and they have no choice but to "earn to retire" so that post-retirement he is free from want, with decency, independence and self-respect.
     
    They also must provide adequately to take care of old-age related health problems and well-being. Taking into account the pathetic conditions prevailing in the contemporary society with deteriorating human relations between parents and children, even a single pie of pension amount will provide a valuable support to the pensioner.
     
    Experts point out that Right to Life is guaranteed under Article 21 of the Constitution. The provision for retirement has been statutorily recognised under the Provident Fund Act, 1952. While working a person need to make adequate provision post-retirement for a decent living and self-respect, and it is a well-recognised financial principle that a person should save more than 10% of earnings to sustain post-retirement.
     
    Provident fund by statue have laid down 12% of earnings as contribution to retirement fund. A person's retirement needs are always expressed as a percentage of his earnings so that post-retirement he can maintain a decent life of self-respect.
     
    In addition, an employee contributing to Provident Fund has a little access to the amounts of fund and accumulations for the simple reason that the fund is a provision for retirement.
     
    With no social security from government post-retirement, the only reasonable expectation from the government is that the present exempt status of retirement fund should be retained as a private sector employee does not have any government funded social security.
     
    At most, the exemption may be allowed for only one retirement fund up to 12% of salary, experts said. Contribution of 12% of salary is a statutorily recognised parameter of retirement fund under Provident Fund Act. To put a value cap on exemption would be very harsh on the private sector employees, as retirement fund is necessity and not a luxury, for people from all walks of life and from all economic background.
     
    It is also true that retirement fund can be accessed only post retirement and not earlier. The government has already levied heavy tax with surcharge (10% to 37%) on higher incomes. However, contribution to retirement fund is not a current earning, but it is an "Earning for retirement" as there is no government funded social security benefits post-retirement.
     
    The contribution do not accrue to the benefit of an employee during his prime period of life. It is a fund to secure his post-retirement life. Experts have said that 12% of salary is a sound financial principle to contribute to retirement funds, and hence measure to cap the exemption at Rs7.50 lakh is an extremely harsh measure. More so when on current incomes an employee is already paying high taxes. At the most, exemption may be restricted to only one retirement fund up to a contribution of 12% of salary.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  • Like this story? Get our top stories by email.

    User 

    COMMENTS

    nadeemajshaikh

    1 month ago

    Unnecessary tax... !

    Ramesh Popat

    2 months ago

    OMG!

    We are listening!

    Solve the equation and enter in the Captcha field.
      Loading...
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email

    BUY NOW

    online financial advisory
    Pathbreakers
    Pathbreakers 1 & Pathbreakers 2 contain deep insights, unknown facts and captivating events in the life of 51 top achievers, in their own words.
    online financia advisory
    The Scam
    24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
    Moneylife Online Magazine
    Fiercely independent and pro-consumer information on personal finance
    financial magazines online
    Stockletters in 3 Flavours
    Outstanding research that beats mutual funds year after year
    financial magazines in india
    MAS: Complete Online Financial Advisory
    (Includes Moneylife Online Magazine)
    FREE: Your Complete Family Record Book
    Keep all the Personal and Financial Details of You & Your Family. In One Place So That`s Its Easy for Anyone to Find Anytime
    We promise not to share your email id with anyone