Businesses need not deduct GST on advances gotten for goods supplies

The Central Board of Excise and Customs (CBEC) last month said that businesses with turnover up to Rs 1.5 crore are exempt from deducting Goods and Services Tax (GST) on advance payment for supply of goods.

The CBEC, through a notification, has now extended this exemption to all businesses, except for those who have opted for composition scheme under the new indirect tax regime.

The composition scheme can be availed by businesses with turnover up to Rs 1 crore and they can pay taxes at a lower rate of 1 per cent, while for restaurants the rate is 5 per cent.

"This comes as a huge sigh of relief for businesses both in terms of compliance as well as working capital loss," EY India Tax Partner Abhishek Jain said.

Businesses had lobbied hard with the Finance Ministry to exempt them from deducting GST on advances received for supply of goods as this norm was not there in the erstwhile excise duty or VAT regime.

"In a significant relief to the industry, the government, through a notification, has done away with GST on advance received against supply of goods. This meets the long standing demand of the industry, particularly by FMCG and auto," PwC Leader-Indirect Tax Pratik Jain said.

However, service providers will have to continue to deduct GST on any advance received as payment, in line with the provisions under erstwhile service tax laws.

"While the issues in respect of payment of GST on advances for supply of goods, which was leading to significant working capital and other challenges, appears to be resolved for now, similar working capital blockages for service providers continue," Deloitte India Partner GST M S Mani said.

GST, which subsumed over a dozen taxes including excise, service tax and VAT, was rolled out from July 1.

Mumbai: Lower industrial growth and adjustment to the GST regime have pulled down corporate profits by about 1.5 per cent to Rs 1.03 trillion during the second quarter, against a healthy 13.2 per cent rise in the year ago period, says a report.

"Net profit declined by 1.5 per cent year-on-year to Rs 1,03,438 crore in the September quarter from Rs 1,05,021 crore in same period year-ago when the bottomline had grown by 13.2 per cent over the previous year," said a Care Ratings report citing results of 1,241 companies. The overall performance has been driven by large companies that accounted for 71 per cent of total net sales.

"They recorded negative growth in net profit of 7.4 per cent in the second quarter as against a growth of about 10.9 per cent a year ago," it said.

At the same time, the study found that net sales growth slowed down to 7 per cent after registering a growth of 10 per cent in the same period year-ago. The agency noted that while overall performance is skewed due to banks, oil companies, IT and finance which were guided by other exogenous factors, after excluding these sectors, earnings still depict a downward trend as that of the aggregate sample in the reporting period.

Net profit excluding banks, IT, oil & refineries, and finance dropped 4.4 per cent to Rs 45,945 crore in second quarter and the report attributed this to the disruptions arising from the GST rollout in beginning of the quarter. Profits of companies with sales higher than Rs 500 crore and the ones below Rs 100 crore posted year-on-year decline during the quarter.

New Delhi: The government has allowed exporters to manually file before tax officers claims for GST refunds as it looks to fasttrack clearance of dues to ease liquidity stress faced by them.

Now exporters of services who paid IGST and those making zero rated supplies to SEZ units as well as those merchant exporters who want to claim refunds for input credit can approach their jurisdictional commissioner with their refund form.

"Due to the non-availability of the refund module on the common portal, it has been decided by the competent authority ... that the applications/documents/forms pertaining to refund claims on account of zero-rated supplies shall be filed and processed manually till further orders," the CBEC said in a circular.

The CBEC had last month started refunds for exporters of goods who have paid Integrated GST (IGST) and have claimed refund based on shipping bill by filling up Table 6A.

Now businesses making zero rated supplies or those who have paid IGST on exports or want to claim input credit will have to fill Form RFD-01A and print and approach Chief Commissioner of Central Tax and the Commissioner of State Tax for refund claim.

The provisional refund would be sanctioned by the tax officer within 7 days.

EY India Tax Partner Abhishek Jain said till now the refund filing procedure was there only for IGST paid by exporters.