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‘Small businesses face huge challenge in preparing GSTR-9’

A 6-digit HSN classification is needed for filing returns, though GST law allows a 4-digit number. gettyimages/istock

Although the government has postponed the deadline for the filing of annual returns under the Goods and Services Tax (GST) for the fourth time, tax analysts say that the problems with the form are so confounding that most filers won’t be able to meet even the new deadline of November 30.

The GST legislation requires the filing of the GST annual returns by specified categories of taxpayers along with a GST audit if the turnover is more than ₹2 crore in a financial year.

As of July 1, 2019, the third year of GST implementation had started and yet, tax filers had not been able to file the returns even for the first year. The government had extended the due date for filing the returns four times, with the latest being the extension from August 31 to November 30.

One of the biggest pain points for tax filers, according to the analysts, is that the annual return form — the GSTR-9 — asks for a lot of information. Such information was not required to be given in the monthly or quarterly return forms — GSTR-1 and GSTR-3B. Tax filers are thus finding it very difficult to provide that information.

“GSTR-9 is nothing but complexity and confusion galore,” said Ritesh Kanodia, partner, Dhruva Advisors.

“The complexity starts with the level of details required, despite the fact that most of these were waived for monthly return filing. For example, the break-up of credit into input, input services and capital goods, or the break-up of reversals type-wise, reporting of ineligible credit, which may not have been captured in the financials.

“The values derived from the system does not always match with the books and a lot of time is wasted in trying to match them, with the only conclusion that it cannot be done,” Mr. Kanodia added.

Another major issue being faced is the complexity of the annual return filing itself, and the fact that it requires information that is often at odds with the GST law itself.

“The manner in which the said information is to be provided is quite complicated,” said Prashanth Agarwal, partner, indirect tax, PwC India. “Although some of the aspects have been clarified by the government on this, still there are open issues which need clarity.

“There is a need to provide HSN classification for services at a six-digit level whereas the GST law allows companies to maintain the same at a four-digit level as well,” Mr. Agarwal added.

“Hence, companies don’t have this six-digit classification available with them. The government should allow companies to report HSN at the four-digit level.”

Onerous requirement

In what is being seen as an extremely onerous requirement, the annual return also requires tax filers to provide details of the transactions on which GST is not payable. Further, in terms of discrepancies, the power lies with the government. Companies cannot claim more input tax credit (ITC) than had already been claimed in the year, but the government can ask for more tax if it feels it is needed.

“The annual return requires the details of all those transactions in respect of which no GST is payable during the relevant period, which make the entire process more complex,” Rahul Dhuparh, deputy general manager, Taxmann said.

“No additional ITC can be claimed in GSTR-9, though additional tax, if found to be payable while reconciling, must be deposited with the government in cash.

“Due to the complex structure of the annual return, taxpayers are afraid to file it as there is no provision in the law to rectify the annual returns,” he added.

“Small taxpayers, who run their business from multiple registrations, but do not maintain separate books of accounts and do not have information split according to GSTIN registrations, are facing a huge challenge in preparing GSTR-9,” said Archit Gupta, founder and CEO, Cleartax.

“Taxpayers with a turnover of less than ₹5 crore must be allowed to report GSTR-9 on an aggregate basis, instead of GSTIN-wise,” said Mr. Gupta.

‘Only a cut in GST to 18% can help’

A further decline in automobile sales in August despite recent liquidity enhancement measures announced by the government has left the sector worried.

The industry has now reiterated its demand for reduction of Goods and Services Tax (GST) from 28% to 18% to create demand in the sluggish market.

The downtrend in the auto industry intensified in August 2019, led by economic slowdown, resulting in weak retail sales and inventory correction by original equipment manufacturers (OEMs) in August 2019, analysts said.

“As per our estimate, passenger vehicles (PV) and two-wheeler industry volumes declined by double digits in August 2019,” analysts at Kotak Institutional Equity said.

‘30% drop in PV sales’

Rajan Wadhera, president, Society of Indian Automobile Manufacturers (SIAM), said that the sales report for the month of August 2019 presented a dismal picture with over 30% erosion in PV sales. Commercial vehicle (CV) and two-wheeler sales were also significantly negative, indicating that the market had still not responded to the various measures initiated by the Finance Minister last month, he said in a statement.

“The series of announcements on credit availability and reducing the cost of credit that were made do not seem to have percolated down to the NBFCs which support the bulk of finance for the automotive industry. Consumer sentiment also continues to be low and there is clearly a trust deficit in lending money to the dealers,” he added.

He said all this while, the industry had pulled out all stops in offering attractive deals and discounts to the consumers.

“However, the ability of the industry to provide large discounts is limited and this only highlights the need for government to consider reducing the GST rates from 28% to 18% which would significantly reduce the cost of vehicles and, in turn, create demand,” he added.

Crisil Ratings has estimated that tractor makers would witness 5-7% sales conraction this fiscal. “Crisil believes weak growth in rural income, moderation in rural infrastructure spending, higher channel inventory, and the effect of a high base will lead to de-growth in tractor sales volume by 5-7% this fiscal, from an all-time high of 8.78 lakh units in fiscal 2019,” it said.

Meanwhile, automobile dealers’ body FADA said on Tuesday that recent measures by the Centre to help the auto industry overcome the ongoing slowdown were yet to take effect at the ground level and uncertainty over GST reduction was making customers postpone purchases.

(With PTI inputs)

Indian Bank, with the lowest NPAs among PSB merger candidates, is the worst hit

Stocks of public sector lenders (anchor banks), with which some of their counterparts will be merged, lost anywhere between 8.5% and 12% on the BSE on Tuesday.

Today is the first trading day after the government announced the merger of ten public sector banks (PSBs) into four, after market hours on Friday. Indian Bank — which has the lowest non-performing assets (NPAs) among the banks chosen for merger — was worst-hit with shares declining almost 12%.

Indian Bank, which is merging with Allahabad Bank, has a net NPA ratio of 3.75% as on March 31 while the Kolkata-based lender’s net NPA is 5.22%. “The asset quality of anchor banks like Indian Bank will suffer due to its merger with Allahabad Bank,” broking firm Motilal Oswal said.

Shares of Punjab National Bank — which is the anchor bank for the merger of PNB, Oriental Bank of Commerce and United Bank of India — tanked 8.5%. Union Bank and Canara Bank — the other two anchor banks — dropped 9.1% and 10.6% respectively.

“Given the limited flexibility on restructuring and rationalisation, meaningful cost synergies from PSU bank mergers are unlikely,” Credit Suisse said in a report. “While the large recap improves the capacity for banks to grow loans, recent experience of SBI and BOB indicates that focus on integration impacts near-term growth,” the report said.

Outlining the merger contours, Finance Minister Nirmala Sitharaman had also announced a capital infusion of ₹55,250 crore in PSBs out of the ₹70,000 crore budgeted for the current fiscal. “Under our swap ratio assumptions (market price), we believe the negative impact would be the highest for Union Bank and Indian Bank,” Kotak Securities said. Among the 10 PSBs, only shares of United Bank and Andhra Bank gained on Tuesday.

Ethanol availability for blended petrol may rise significantly

The Union Cabinet on Tuesday approved a higher procurement price for ethanol purchased by oil marketing companies for the ethanol blended petrol (EBP) programme, which will come into effect from December 1 for a period of one year.

According to the new decision, the price of ethanol from C-heavy molasses will be increased from ₹43.46 per litre to ₹43.75 per litre. The price of ethanol from B-heavy molasses will be increased from ₹52.43 per litre to ₹54.27 per litre. The price of ethanol from sugarcane juice, sugar, and sugar syrup has been set at ₹59.48 per litre. The oil marketing companies will also pay the Goods and Services Tax and transportation tax associated with the ethanol supply — a provision that existed in the previous plan as well.

“OMCs have been advised to fix realistic transportation charges so that long distance transportation of ethanol is not disincentivised,” the government said. “OMCs are advised to continue according priority of ethanol from 1) sugarcane juice/sugar/sugar syrup, 2) B-heavy molasses 3) C-heavy molasses and 4) damaged food grains/other sources, in that order.”

“Ethanol availability for EBP programme is expected to increase significantly due to higher price being offered for procurement of ethanol from all the sugarcane based routes, subsuming ‘partial sugarcane juice route’ and ‘100% sugarcane juice route’ under ‘sugarcane juice route’ and for the first time allowing sugar and sugar syrup for ethanol production,” the government added. 0Increased ethanol blending in petrol has many benefits including reduction in import dependency, support to agricultural sector, more environmental friendly fuel, lesser pollution and additional income to farmers.

Microsoft’s Satya Nadella leads on LinkedIn and Apple’s Tim Cook is ahead on Twitter

Free opinion: Jose Maria Alvarez-Pallete, CEO of Telefonica, Spain, has published over 36,000 tweets since 2010. AFP

Most chief executive officers (CEOs) in India remain relatively inaccessible to consumers on social media as compared to their counterparts in Europe and the United States.

An ECCO International study, that looked at the largest companies by market capitalisation in 21 countries worldwide, showed that 58% of global CEOs were active on LinkedIn, compared to only 20% of Indian CEOs. For Twitter, this was 17% worldwide and just 10% for India.

Leading CEO

Uday Kotak, CEO, Kotak Mahindra Bank, was rated as one the leading CEOs globally on social media with nearly a million followers on Twitter. However, Anand Mahindra, chairman of Mahindra Group and who has 7.2 million followers on Twitter, did not figure in the list. Asked for a reason, a spokesperson for the ECCO network said the study covered the top 25 Indian firms in terms of market capitalisation. Since, M&M did not figure in this list, Mr. Mahindra was not a part of the study, the spokesperson said. CEOs in France were the most active on social media, followed by those in Denmark. Australia and Netherlands shared the third position.

As per a similar study conducted in 2017, CEOs in the U.S. had by far the most followers, despite the country ranking fifth in terms of total presence on social media.

Apple CEO Tim Cook continues to top the chart worldwide with more than 11 million followers on Twitter (an increase of 120% over 2017).

Satya Nadella, CEO, Microsoft, leads the way on LinkedIn, with over six million followers (an increase of 300% over 2017). Jose Maria Alvarez-Pallete, CEO of Telefonica, Spain, is the most active CEO on Twitter and has published over 36,000 tweets since 2010 (an average of 10 tweets per day).

ECCO — a network of independent PR and marketing communications’ agencies across over 40 countries — has analysed social media behaviour of CEOs across 21 nations for the study.

Bhavya Doshi, assistant vice president, ECCO in India, said, “More and more CEOs are active worldwide on the LinkedIn career network and in almost all countries Most CEOs continue to shy away from communication on Twitter, as the language is often more pointed on this platform and hence the risk of backlash from consumers is significantly higher. “With LinkedIn, this risk is lower and [so], more CEOs are recognising opportunities on this channel.’’

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