Page 12 - Banking Finance December 2019

GST UPDATE

Government set to clarify Panic spread among fin companies as small-town tax
no GST on Execs’ salaries officials send GST notices
Small town based tax officers have started sending notices to many financial
services companies seeking information regard-
ing these firms' organisational structures, rev-
enues and Goods and Services Tax (GST) paid.
Companies under the GST structure are required
to have a registration in every state. In case of
any queries, the tax officials based in the city where a firm is registered send
the notice.
The government is planning to clarify
However, small-town tax officers are hiding behind a specific section in the GST
GST should not be applicable on sala- structure they have interpreted to understand that any indirect officer can send
ries of chief executives who sit sitting query notice to any transaction by any company from any part of the country.
in head offices. The move comes at
the backdrop as after the tax de- "Provide brief note of organisational structure, details of turnover whether tax-
partment started raising queries on able, exempt, nil rated or non-GST turnover…details of place of supply," stated
how companies have dealt with this a written query sent to a financial services company in Mumbai.
issue. Meanwhile, the industry trackers said that in many instances companies are
According to sources, Central Board complying and furnishing details to tax officials based in the capital of the same
of Excise and Customs (CBEC) is set state, the report said.
to clarify that common function like "The compliance requirements in GST for service providers are significantly higher
Human Resources should be out of than the erstwhile service tax regime and the need to respond to inquiries from
the GST gamut. various parts of the country leads to additional pressures on businesses. A single
“The intention of the GST law was authority should be empowered to enquire/investigate all GST issues of a ser-
never to tax salary and any other in- vice provider instead of multiple authorities, which will lead to efficiencies on
terpretation should be avoided as both sides," said MS Mani, partner, Deloitte India told the news daily.
this would lead to prolonged litiga-
tion. Salary cannot be under the GST GST filing soars by 50% on last day: CBIC
net and there is an urgent need for Central Board of Indirect Taxes & Customs (CBIC) reports that the number of
a clarification around this,” said people filing GST returns soar by 50% to 18.27 lakh
Rohit Jain, partner, ELP, a law firm. on the last day for tax period of October compared
to the last month. "A total of 18.27 lakh GSTR3B
The tax department as began prob-
were filed on 20 November alone in comparison to
ing top companies and banks if they
12.20 lakh returns that were filed on 20 October,
were passing on some of the common
costs like salaries of chief executives the last due date of filing returns for the tax pe-
riod of September," in a press release said CBIC.
to their branch offices, as it wants
companies to proportionately distrib- In accordance with the agency, there has been 8.2% increase in return filing at
ute common costs from head office to 64.83 lakh for the month of October compared to last month's total filing of
branch offices and treat this as a sup- 59.90 lakh. On the yearly basis, the figure jumped 9.4% as compared to 59.28
ply. Once this is treated as a supply, lakh GSTR-3B which were filed till 20 November 2018 (for the tax period of
10% of it has to be added to the cost October 2018).
and 18% GST could be levied on the "The return filing data shows that there is a fair improvement in compliance by
total amount. Industry trackers say the taxpayers. It, also, shows that the GSTN return filing system was working
that ideally this would be a revenue smoothly within its expected limits," CBIC said. CBIC also requested the taxpay-
neutral transaction but still impact ers that they should not wait till the last three days to file their returns as nor-
the cash flows of the company. mally there may be huge rush of return filing on these days.

12 | 2019 | DECEMBER | BANKING FINANCE