Medicine supplied to in-patients via hospital pharmacies will not attract GST separately:AAR

Kerala’s Authority for Advance Rulings (AAR) has made it clear that supply of medicine through pharmacy to in-patients will not be levied Goods and Services Tax (GST) separately.

The matter is related to Ernakulam Medical Centre Pvt Ltd (based in Kochi) which approached the AAR seeking a ruling on whether the supply of medicines and allied items through the pharmacy of the hospital run by the applicant attracts liability under GST. The petitioner’s argument was that medicines supplied through the pharmacy to both in-patients and out-patients under the prescription of the doctors are incidental to the healthcare services rendered in the hospital and beyond the ambit of taxation.

It sought for an advance ruling on the liability of hospital under GST Act on the supply of medicines and allied items through the pharmacy.

The Bench observed that healthcare services provided by a clinical establishment, an authorised medical practitioner or para medics, are exempted from the tax. The word ‘clinical establishment’ means a hospital, nursing home, clinic, sanatorium or any other institution that offers services or facilities requiring diagnostics or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases.

The Bench said that it was clarified that food supplied to in-patients as advised by the doctor/nutritionist is a part of composite supply of healthcare and not separately taxable. Other supplies of food by a hospital to patients not admitted are taxable. The same principle is applicable in the case of dispensing of medicines.

Part of treatment

It pointed out that as far as in-patients are concerned, the hospital is expected to provide lodging, care, medicine and food as part of treatment under supervision till their discharge. In-patients receive medical facility as per the scheduled procedure and have strict restriction to ensure quality/quantity of items for consumption. Hence, the medicines or allied goods supplied to inpatients are indispensable items and are a composite supply to facilitate healthcare services and are not taxable, it said. However, the supply of medicines and allied items provided by the hospital through the pharmacy to the out-patients is taxable.

The AAR helps the taxpayer by giving an advance decision in relation to the supply of goods and/or services proposed to be undertaken or being undertaken by the assessees. The decision is binding on the applicant and the jurisdictional tax authority. Though such a decision does not have precedent value like that of a High Court or Supreme Court judgment, it can be used as persuasive tool in future cases. Therefore, the decision mentioned here can be used for persuasion in matters related to supply of medicines in hospitals across the country.

Commenting on the ruling, Abhishek Jain, Tax Partner at EY, said it is quite a welcome ruling for the hospitals as well as for the common man. For the hospitals in terms of the age long ambiguity on the applicability of VAT supply of medicines to in-patients and the legacy continuing under the GST regime. “For the common man, the upholding of exemption on such medicine supplies to in-patients would reduce tax costs on the medicine related expenses,” he said.

Source : Business line

Impositions of Kerala calamity tax with Gst is not advisable: CAIT

Traders' body CAIT Tuesday said levy of any cess or tax with the Goods and Services Tax (GST) is not advisable as it will contradict the principle of one tax, one nation.
The Confederation of All India Traders (CAIT) in a statement said that any move to impose calamity tax with the GST will set a wrong precedent in the country.
The GST Council last week set up a seven-member ministerial panel under Bihar Deputy Chief Minister Sushil Modi to examine the legality of imposing a new tax on certain goods and services to raise resources for natural calamity-hit states like Kerala.
The CAIT said that at a time when the country is moving towards rationalisation of tax structure, any move to impose cess/tax in any form will jeopardise the basic fundamental and spirit of the GST.
"The levy of any cess or tax terming as calamity tax with GST is not advisable as it will run contrary to the principle of One Tax-One Nation," it said.
The move would increase problems of both the government and traders as they would have to make necessary changes in their software system.
It has urged the finance minister, GST Council to consider some other mechanisms to aid Kerala.
Source : Economic Times

Infosys to design new forms for filing gst returns

The Goods and Services Tax Network (GSTN) has directed its software vendor Infosys to design new forms for filing returns by traders, said its Group of Ministers Chairman Sushil Kumar Modi on Saturday.
"We have directed Infosys to design the new forms as suggested by the GST Council to simplify filing returns by traders on the network," Modi told reporters here after the 10th meeting of the GoM, held here to review the working of the network.
"We plan to roll out the new simplified GST returns form in the next 4-6 months for the benefit of dealers or traders paying the indirect tax through the network," said Modi, who is also Bihar Deputy Chief Minister.
The GoM has identified 18 companies across the country to develop a uniform accounting software for the smaller tax payers.
"The new software will be given to all small traders to ensure uniformity in filing GST returns," said Modi.
As decided by the GST Council, e-commerce firms will pay Tax Deduction at Source (TDS) and Tax Collected at Source (TCS) with effect from October 1.
The Union government on September 13 notified October 1 for implementing the TDS and TCS provisions under section 52 of the Central GST (CGST) Act.
The e-commerce companies have to deduct TDS up to 1 per cent state GST and 1 per cent central GST on intra-state supplies of over Rs 2.5 lakh.
In the case of inter-state supplies of over Rs 2.5 lakh, the TDS will be 2 per cent of the integrated (state and central) GST.
The Council had earlier deferred implementing the TDS and TCS after e-commerce players like Amazon, Flipkart and Myntra expressed concerned on compliance burden.
Claiming that GST revenue was improving after the procedures and rules were reformed, Modi said revenue deficit of states had declined to 13 per cent from 17 per cent earlier.
"We are hoping the combined revenue will soon touch Rs 1.3 lakh crore per month with greater compliance by all the stakeholders," reiterated Modi.
The data and business intelligence by the network is helping the Council to track tax evasions and warn dealers filing fake invoices.
Source : Economic Times

Retrospective amendments in Gst provisions have shocked business

When the new indirect tax regime came into effect on July 1 last year, the transition provisions allowed businesses to transition CENVAT credit as an input credit under GST. Many businesses took the position that the balance of total CENVAT credit carried forward in their last return was eligible for being transitioned into the GST regime. This included the remaining CENVAT credit of excise duties paid on inputs/ capital goods, service tax on input services and cesses, such as education cess as well as Krishi Kalyan cess.
However, tax authorities have disagreed with the interpretation that credit of cesses can be transitioned to the GST regime.
A recent amendment in Section 140 of the Central GST Act, with retrospective effect from July 1, 2017, exclude Krishi Kalyan cess and additional duties of excise (related to textiles) from the list of eligible duties and taxes for transition to the GST Input Tax Credit ledger.
“This retrospective amendment may expose billions worth of such credit transitioned across the country to unnecessary demands and litigation,” says Sudipta Bhattacharjee, partner, Advaita Legal.
Tax experts point out that the government probably wanted to restrict such transition of credit of cesses through this retrospective amendment. “The amendment is consequent to tax authorities’ line of thought that credit of such cesses was not utilisable for payment of excise duty or service tax in the earlier regime and therefore, it cannot be transitioned and used for payment of GST,” says V Lakshmikumaran, managing partner, Lakshmikumaran & Sridharan.
However, the way the amendments have been worded, it not only restricts the transition of credit of cesses but also puts a question mark on the entire amount of unutilised credit forming part of the last pre-GST return filed by a business. This includes credit related to service tax on input services, excise duty paid on inputs that were not held in stock as of July 1, 2017, and excise duty paid on capital goods.
Though this retrospective amendments in transition provisions are awaiting notification, many tax heads and CFOs are apprehensive of the outcome.
“I am sure once the notification is issued to give effect to the changes carried out in law, field officers will start harassing the assessees to reverse the credit and pay differential in cash. Interest will also be demanded as all those credits will be termed as wrongly availed,” says head of indirect tax in an Indian-owned multinational conglomerate.
Not surprisingly, many businesses are seeking legal help to deal with the situation. “This amendment is likely to be in various high courts through writ petitions on the ground of taking away vested rights of the assessees,” says Bhattacharjee.
Credits not allowed to be offset for output liability are costs to business. “Product or services are priced factoring input tax credits. Industry cannot retrospectively hike prices. Manufacturers which had substantial education cess balance, the service sector and the textile industry will be impacted,” says Lakshmikumaran.
Legal experts point out that it will not be easy for the government to undo any drafting error in statutory provisions. The retrospective amendment has already been passed by the legislature and received Presidential assent.
Issuing a ‘clarification’ or a ‘notification’ to rectify any drafting error will not be sufficient to deal with this problem, say experts. “It is a settled position that a circular which is contrary to the statutory provisions has really no existence in law,” says Bhattacharjee.
Legal experts say for immediate redressal, the way forward is to convene an emergency meeting of the GST Council to recommend necessary changes to this retrospective amendment. This has to be followed by Ordinances from the central government as well as state governments. The next legislative session of Parliament is still two months away.
Most experts find it disappointing that the government had to resort to retrospective amendments to bolster its interpretation of tax laws.
“The legislature no doubt has the competence and the power to enact a retrospective law, but that should be sustainable on the touchstone of constitutional principles,” says Bhattacharjee.
Laksmikumaran points out that the GST regime is founded on the principle of seamless credit. “The government could have allowed all credits validly earned under earlier laws to be transitioned to the GST regime. Retrospective amendments mean uncertainty for businesses and entering into litigation with attendant cost of interest and penalty. These are avoidable,” he says.
Many in the industry feel that the government should have been mindful of the wider ramifications of retrospective amendments done in haste and without consultation with stakeholders.
Some like Laksmikumaran are not sure if taking legal recourse to challenge these retrospective amendments would be a good idea.  
“In certain cases, courts have held credits accrued as vested rights. But, courts have held in favour of Revenue when cross-utilisation of credits was sought by the industry,” he says. Seeking judicial remedy may not be an option given the judicial precedents, he adds.
Clearly, businesses and the government would have to sit across the table to sort out the irritants.
Source: Business standards

Why Gst on petrol & diesel price may not lower the fuel prices

Over the last few days, there has been a strong body of opinion advocating the case for bringing oil products under the goods and services tax (GST). There is no gainsaying the fact that petrol and diesel are one of the most heavily taxed products in India. For instance, about 45 percent of the price that a consumer pays for a litre of petrol at the pump go as taxes to the Centre and states.
GST, so the argument goes, will help sharply cut taxes in the two transport fuels, making it cheaper for people to tank up their vehicles. The basic assumption in this line of argument is that the GST rate for petrol and diesel will be fixed at the highest slab of 28 percent. Since GST, by definition will be a consolidated single levy, such a move will lower the tax incidence by about 17 percent, pulling down retail prices by several rupees a litre.
Such a deduction, elegant as it may appear, can be misleading.
For one, it disregards the states’, and the Centre’s, fiscal fixation for maintaining “revenue neutrality”. A revenue neutral rate (RNR) is the tax rate that results in similar tax earnings for the government despite changes in design or structure of the levies imposed.
One of the primary reasons why GST’s implementation took more than a decade was lack of consensus on the likely RNRs on many products.
Successive governments, both at the Centre and states, have used petroleum products as milch cows. In 2017-18, the Centre earned Rs 2.29 lakh crore from central excise duty on petroleum products, which is about 11 percent of the Centre’s total gross tax revenues of Rs 19.46 lakh crore earned during the year. Of course, a part of this was shared with states as part of an agreed devolution formula.
Likewise, states earn significant revenues from taxing petroleum products. This is particularly true for the richer or the so-called industrialised states such as Karnataka and Maharashtra.
In 2017-18, Karnataka, which levies a state value-added tax (VAT) of 30.28 percent on petrol and 20.23 percent on diesel, earned Rs 13,307 crore from taxes on petroleum products. This accounted for 14.5 percent of the states’ total tax revenues of Rs 91,718 crore, or for every Rs 100 that the Karnataka government earned in 2017-18, Rs 14.5 came from petroleum products alone.
Similarly, for Maharashtra. The state, which levies close 40 percent as VAT on petrol and about 25 percent on diesel, earned Rs 25,611 crore from taxes on petroleum products in 2017-18, which translated into 15 percent of the state’s total tax revenues of Rs 164,979 crore during the year.
The pattern is more or less similar across most states, illustrating how a disproportionately high amount of tax revenues are coming from just one set of products, both for the Centre and the states.
Given this historical peculiarity, states are unlikely to settle on a GST rate that would be lower than the RNR. What could be the possible revenue neutral GST rate for petrol and diesel? It would probably be in the range of 40-45 percent. Will a GST rate of 40-45 percent on the two fuels bring down their retail prices? Unlikely, because in the final analysis, the tax component on petrol and diesel prices at the fuel station remain the same.
The high tax structure in petroleum pricing is a painful legacy issue in a rather flawed design of India’s energy economics. States are unlikely to let go of their fiscal powers to tax petrol and diesel, and also settle for lower revenues. The Centre could also end up losing substantial earnings and may have look at other sources to reimburse states for their revenue loss.
At 40-45 percent, GST has nothing for the consumer. At best, it will help in tidying up the system by subsuming a welter of local and central levies into a combined tax.
A lower GST on fuel will have to come bundled with higher rates on some other products and services. One possible option could be to significantly hike the tax rates or cess for luxury, demerit and `sin’ goods. It will help offset revenue losses for the states and the Centre, fix a lower GST for petrol and diesel and also lower prices at the fuel station. After all, not many would mind GST at 28 percent for fuel, at the cost of higher tobacco prices. It will make tanking up cheaper, even if smoking becomes dearer.
Article courtesy: Money control

Gst return late fee waived to boost complaince

Businesses and traders have been spared late fee and penalty for any delay so far in filing detailed tax returns regarding the sales they have made in the goods and services tax (GST) regime, a finance ministry statement said here. Detailed sales return to be filed by businesses in GST Return-1 is a vital tool for the authorities in combating tax evasion as it furnishes details about the buyer. 

Businesses have to file a summary of the transactions they have made every month in a form called GST Return-3B and a detailed filing of the sales they have made in Gst returns-1 . The tax authorities have noticed that filings of the detailed sales return are lower than the summary return filings. 

“Non-furnishing of GST Return-1 is liable to late fee and penalty as per law. In order to encourage taxpayers to furnish GST Return-1, a one-time scheme to waive late fee payable for delayed furnishing of GST Return-1 for the period from July 2017 to September 2018 till 31 October 2018 has been launched,” said the ministry statement.

Giving more time to businesses to file details of their sales makes sense as information contained in GST Return-1 is of immense value to tax officials. It enables officials to find out who the buyer is, the quantum of purchase and whether the buyer has filed his return and paid taxes on subsequent transactions. Giving extra time for filing GST Return-1 to businesses will aid in taking strong anti-evasion measures in the future.

“GST Return-1 is intrinsic to the GST overall and an extension of the timelines will accelerate filings, “ said M.S.Mani, Partner, Deloitte India.

The ministry statement said that the due date for businesses with more than Rs 1.5 crore, including for those registered in Kerala, to file GST Return-1 for the period July 2017 to September 2018 has been extended till 31 October 2018. This extension is also applicable to those entities with principal place of business in Kodagu in Karnataka and Mahe in Puducherry. For smaller taxpayers, with annual sales less than Rs 1.5 crore, quarterly filing of GST Return-1 is now possible without fine till the end of October. For small taxpayers in Kerala and those with principal place of business is in Kodagu and Mahe, the deadline will continue to be 15 November as announced last month. The ministry statement also advised taxpayers to file returns on time so that their tax credits do not lapse. 

GSTN Alert: Taxpayers can’t View Return Summary Due to this Change in Portal

A new facility has been enabled in the GST portal as a result of which, the taxpayers may not be able to view summary of the Return already filed for a few days, GSTN said. According to a statement, the facility to file GSTR-4 return has been enabled in the web portal. Presently, the facility to file the same through offline is available

“The facility of online filing of GSTR-4 return has been provided, in addition to the existing facility of offline filing. Due to this change, some taxpayers may not be able to view summary of the Return already filed for a few days,” the GSTN said in a statement. GSTR-4 is a quarterly return that taxpayers opting for Composition Scheme under GST regime need to furnish

Filing Due Dates Reminder for June.2018

Ever since the GST law was implemented on 1st July 2017, business owners repeatedly faced difficulties while filing GST returns.

GST was a huge change where all the indirect taxes were merged into one single law. So, initial hiccups were expected.

So keeping in mind all the problems businesses were facing, the government keeps extending the due dates or keeps on hold some of the return filling (FORM GSTR-2 and 3).

These are current due dates for filling GST returns. The dates given below are changed according to the government notifications. We’ll keep updating this page with changes.

Current due dates (2018)

Form	Month/Quarter	Due date
GSTR 3B	July	20th August 2018
GSTR-6	July  2017 to June 2018	31st July 2018
GSTR-4	April 2018 to June 2018	18th July 2018
GST TRAN-2		30th June 2018
GSTR-1 For Registered Person having aggregate turnover upto Rs.1.50 Cr	April 2018 to June 2018	31st July 2018
GSTR-1 For Registered Person having the aggregate turnover  exceeding  Rs.1.50 Cr	June 2018	10th July 2018
GSTR-2 and GSTR-3 are still on hold. Article courtesy - Profitbooks

Due Dates for Filing GST Returns

Ever since the GST law was implemented on 1^st July 2017, business owners repeatedly faced difficulties while filing GST returns.

GST was a huge change where all the indirect taxes were merged into one single law. So, initial hiccups were expected.

So, keeping in mind all the problems businesses were facing, the government keeps extending the due dates or keeps on hold some of the return filling (FORM GSTR-2 and 3).

These are current due dates for filling GST returns. The dates given below are changed according to the government notifications. We’ll keep updating this page with changes.

Current due dates (2018)

Form	Month/Quarter	Due date
GSTR 3B	July	20th August 2018
GSTR-6	July 2017 to June 2018	31st July 2018
GSTR-4	April 2018 to June 2018	18th July 2018
GST TRAN-2		30th June 2018
GSTR-1 For Registered Person having aggregate turnover up to Rs.1.50 Cr	April 2018 to June 2018	31st July 2018
GSTR-1 For Registered Person having the aggregate turnover exceeding Rs.1.50 Cr	June 2018	10th July 2018
GSTR-2 and GSTR-3 are still on hold.

Actual Due dates as mentioned in GST Law

Form	Particulars	Monthly/ Quarterly	Due date
GSTR-1	Details of outward supplies (sales)	Monthly	10th of succeeding month
GSTR-2A	Auto-populated from form GSTR-1	Monthly	11th to 15th of succeeding month
GSTR-2	Details of inward supplies (Purchases made)	Monthly	15th of succeeding month
GSTR-1A	Auto-populated from form GSTR-2	Monthly	15th to 17th of succeeding month
GSTR-3	Monthly return to be filed by both recipient and supplier	Monthly	20th of succeeding month
GSTR-4	Return for composition scheme dealer	Quarterly	18th day after the quarter ends
GSTR-5	Return for the Non-resident taxable person		Earlier of the two dates- 20th of succeeding month or Within 7 days of the expiry of a period of registration
GSTR-6	Return for Input service distributor	Monthly	13th of succeeding month
GSTR-7	Return for deduction of Tax	Monthly	10th of succeeding month
GSTR-8	Return for E-commerce Operator	Monthly	10th of succeeding month
GSTR-9	Annual return	Yearly	31st December of succeeding month
GSTR-9A	Annual return for Composition scheme dealer	Yearly	31st December of succeeding month
GSTR- 9B	Annual return for E-commerce operator	Yearly	31st December of succeeding month
GSTR-10	Final or Last Return		Return must be filed later of the following dates- Within 3months from date of cancellation or Date or order of cancellation
GSTR-11	Return for the person having UIN(Unique Identification Number)	Monthly	28th of succeeding month

Article courtesy - Profitbooks.net