In a bid to provide relief to businesses hit by the Covis-19 pandemic, the Government on Wednesday said it will release all GST & Customs refunds to provide benefit to around 1 lakh business entities including MSMEs

“It has been decided to issue all pending GST and Custom refunds which would provide benefit to around 1 lakh business entities, including MSME. Thus, the total refund granted will be approximately Rs. 18,000 crore,” said a statement.

The Government also said it would provide immediate relief to the business entities and individuals by releasing all the pending income-tax refunds up to Rs. 5 lakh, immediately. This would benefit around 14 lakh taxpayers.

“Speedy online IT, GST and Customs refunds without human intervention, even upto Rs 5 lakh, should assuage the situation of MSMEs, who would be under extreme cash crunch,” said Harpreet Singh, Partner.

To provide relief to businesses grappling with the economic impact of Covid 19, the Government on March 24 had extended the filing of Return for the month of March, April and May 2020 and composition returns under GST June 30. The Finance Minister also said companies which have less than Rs 5 crore turnover will not have to pay interest, late fee or penalty. For bigger companies late fee and penalty will not apply and only interest at a reduced rate of 9% will be charged.

However, taxpayers have been demanding more and a significant wish was the refund of stuck GST. “As a next step Government could look at, expediting issuance of benefits under Foreign Trade Policy i.e. Service Exports India Scheme (SEIS) and duty drawbacks. This could provide relief to lot of small service and goods exporters,” adds Singh.

According to MS Mani, Partner, India, “In a situation where businesses are making plans of dealing with cash crunch situations on resumption of operations, enabling GST refunds on a war footing would be assist businesses and energise them. Businesses which have borne the brunt of the lockdown would be greatly enthused at the prospect of getting GST refunds enabling quicker resumption of operations.”

The finance ministry is set to release Rs 20,000 crore in pending goods and service tax (GST) compensation to states soon, Business Standard has learnt. This will not be from the compensation cess, but from the Consolidated Fund of India, and comes days after the Centre disbursed Rs 17,287 crore to states as devolution and disaster funds.

The finance ministry and the Prime Minister’s Office are also working on another stimulus package, which is expected to be announced soon. There is no definitive number yet on the quantum of the package, which will again be aimed at the urban and rural poor, micro, small and medium enterprises and the sectors most affected by the coronavirus disease (Covid-19) pandemic and the subsequent 21-day nationwide lockdown.

Officials working on the stimulus package say that a lot of ever-changing factors are still under consideration. These include active cases of Covid-19, hotspots, and the status of the lockdown after April 14.

“The revenue department has been authorised to clear Rs 20,000 crore in GST compensation dues to states,” said a top government official.

“We can only disburse compensation to states from the compensation cess fund. Since it is not available, approval has been given for releasing it from the Consolidated Fund,” said a second official.

Even with the Rs 20,000 crore distributed among states, it will still be a fraction of what they have been demanding in financial support and clearance of pending dues. Central government officials say there is a resource crunch, but more will be given. States have also been allowed to borrow 50 per cent of their total 2020-21 limit in April itself.

Maharashtra had sought a special package worth Rs 25,000 crore from the central government and asked it to release pending dues worth Rs 16,654 crore under various heads by March 31, to fight the economic crisis. Tamil Nadu has sought a special assistance of Rs 4,000 crore and a slew of other financial support measures. West Bengal has sought a package of Rs 25,000 crore and clearance of dues worth Rs 36,000 crore. Additionally, all states have sought relaxation of their borrowing limits.

With only 65 per cent of compensation due for October and November at Rs 19,950 released last month, the total disbursal has been Rs 1.2 trillion as against full-year collection of just Rs 95,000 crore. It is, in fact, Rs 3,000 crore short of the revised estimate of Rs 98,327 crore.

Compensation cess, to be released on a bi-monthly basis, has been pending for about five months. With compensation of over Rs 60,000 crore still pending, some states are even planning to drag the Centre to the Supreme Court.

“Never in the history of India has there been such a callous attitude of the Centre towards the states. There is no option other than the states approaching the Supreme Court,” Kerala Finance Minister Thomas Isaac told Business Standard.

The central government was of the view that it would only release compensation out of collections through levy of cess on luxury and sin items like automobiles, tobacco, and aerated drinks.

In her Budget speech, Finance Minister Nirmala Sitharaman said it was decided to transfer to the GST Compensation Fund balances due out of collection in 2016-17 and 2018-19 in two instalments.

GST Network on Sunday said tax officers have processed over 10,000 new registrations and about 8,000 refund applications in the first 10 days of lockdown till April 3, working through Virtual Private Network (VPN).

In a statement, the Goods and Services Tax Network (GSTN) said it has enabled tax officers of different states and union territories (UTs) to access their office during the lockdown period, and is providing secured access to the office network on request.

Till March 31, 2020, GSTN had enabled 1,748 tax officers from 18 states/UTs to access office through VPN, a secure way to access office network.
This is in addition to the three hill states which already connect to the GST System using VPN.

“A total number of 20,273 registration-related cases were processed during the first 10 days of lockdown, i.e. from March 25 to April 3, 2020. This includes 10,077 cases of new registration, 3,377 cases of core amendment, 3,784 cases of cancellation by application, 1,966 cases of cancellation by suo moto and 1,069 cases of revocation,” GSTN said.

“Similarly, 7,876 cases of refund were also processed during the period,” it added.
The government announced a 21-day nationwide lockdown, beginning March 25, to contain the spread of coronavirus.

Apart from 1.23 crore taxpayers, GSTN provides technology services to 29 states/UTs for implementation of GST.

For these states and UTs, GSTN provides back-office applications like processing of registration application, processing of refund applications, audit, assessment, appeal, among others, for all their tax officers, which is different from the front-end interface used by the taxpayer — GST portal.

Soon after the lockdown was announced, GSTN offered secured access to all these states to enable their officers to work remotely.

“VPN is helping officers to avoid the backlog which could have happened if the cases were not processed during the lockdown. With the provision of auto-approval of applications, if not processed by the tax officer in a time-bound manner, the officers want them to do it manually to avoid any future complication,” GSTN said.

The GST Council in its 31st meeting had decided that a new GST return system will be introduced for taxpayers.

The government has unveiled a transition plan for taxpayers under the goods and services tax to switch to new simpler return forms. In order to ease the transition process, between July-September the new form would be available on trial basis for familiarisation.

The GST Council in its 31st meeting had decided that a new GST return system will be introduced for taxpayers.

The Goods and Services Tax Network had shared a prototype of the offline tool in May, 2019, an official statement said on Tuesday. The look and feel of the offline tool would be same as that of the online portal.

There are three main components to the new return – one main return (FORM GST RET-1)and two annexures (FORM GST ANX-1 and FORM GST ANX-2).

From July, 2019, users would be able to upload invoices using the FORM GST ANX-1 offline tool on trial basis for familiarisation. They would also be able to view and download, the inward supply of invoices using the FORM GST ANX-2 offline tool under the trial program.

The summary of inward supply invoices would also be available for view on the common portal online. They would also be able to import their purchase register in the offline tool and match it with the downloaded inward supply invoices to find mismatches from August 2019.

Between July to September, 2019 for three months, the new return system (ANX-1 & ANX-2 only) would be available for trial for taxpayers to make themselves familiar, the statement said.

This trial would have no impact at the back end on the tax liability or input tax credit of the taxpayer, the statement added.

In this period, taxpayers shall continue to fulfil their compliances by filing FORM GSTR-1 and FORM GSTR-3B i.e. taxpayers would continue to file their outward supply details in FORM GSTR-1 on monthly or quarterly basis and return in FORM GSTR-3B on monthly basis. Non-filing of these returns shall attract penal provisions under the GST Act, it said.

From October, 2019 onwards, FORM GST ANX-1 shall be compulsory and FORM GSTR-1would be replaced by FORM GST ANX-1.

Large taxpayers, with aggregate annual turnover over Rs 5 crore in the previous financial year, would upload their monthly FORM GST ANX-1 from October, 2019 onwards.

FORM GST ANX-2may be viewed simultaneously during this period but no action shall be allowed on such FORM GST ANX-2, the statement said.

For October and November, 2019, large taxpayers would continue to file FORM GSTR-3B on monthly basis. They would file their first FORM GST RET-01 for the month of December, 2019 by 20th January, 2020.

The small taxpayers would stop filing FORM GSTR-3B and would start filing FORM GST PMT-08 from October, 2019 onwards. They would file their first FORM GST-RET-01 for the quarter October, 2019 to December, 2019 from 20th January, 2020. From January, 2020 onwards, all taxpayers shall be filing FORM GST RET-01 and FORM GSTR-3B shall be completely phased out, the statement said. The government will issue separate instructions for filing and processing of refund applications between October to December, 2019.