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    RATIONALISING THE RESTRICTIONS TO CLAIM REFUND OF IGST PAID ON EXPORTS WHEN GOODS ARE IMPORTED UNDER EOU OR EPCG SCHEME:

    Rule 96 of CGST Rules, 2017 prescribes for refund of IGST paid on export of goods. Sub-rule (10) of the said rule prescribed a condition that the exporter of goods should not have procured the goods from a supplier who is availing deemed export benefit or procuring goods at a concessional rate of 0.1% as applicable to a merchant exporter or importing goods under EOU or EPCG scheme. In such cases, the Exporter must compulsorily export the goods under bond or LUT and can claim refund of accumulated ITC on actual basis to the extent of inputs used for exports under Rule 89(4B). Vide Circular No. 45/19/2018-GST dated 30.05.2018, it has been clarified by CBIC that the said restriction is only applicable to those exporters who are receiving goods from those suppliers availing the above said benefits. The restriction is not applicable to exporters who are directly importing the goods under EOU or EPCG scheme. Notification 39/2018-Central Tax dated 04.09.2018 has been issued to apply the said restriction retrospectively to exporter of goods who are importing the goods directly on their own under EOU or EPCG scheme.

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    Common Credits - GST

    • Contributed by CA Sri Harsha and CA Manindar

    It is not a rocket science to understand why the credit of taxes paid on inputs, input services and capital goods were given to the tax payer and allow him to set off against his output tax liabilities. This is purely to avoid the cascading effect that is to avoid taxes on taxes. In the event of inputs, input services and capital goods were used in generating exempted outputs, then credit of taxes paid on inputs, input services and capital goods will not be given as there was no cascading effect for the reason that no tax is collected on output.

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    What does LEI means?

    A LEI is a 20 digit Unique Identification Number that shall be assigned to all entities who are parties to financial transactions being borrowers, lenders, market participants, financial and market regulators, mutual fund / Alternative Investment Fund (AIF) and its schemes including sub-schemes if any, etc. LEI is global in nature and is administered by GLEIF (Global LEI Foundation, Switzerland). As of India is concerned, Reserve Bank, being the country’s financial regulator, is entrusted with the task of effective implementation of LEI.   

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    CONTENTS

    AUDIT

    • AUDIT COMMITTEE

    INDIRECT TAX

    • GST RATE FOR OUTSOURCED CANTEEN FACILITIES

    DIRECT TAX

    • EXEMPTION UNDER SECTION 11 OF INCOME TAX ACT, 1961

    FEMA

    • SETTING UP OF SEZ
    • FEMA UPDATES FOR THE MONTH OF OCT'18

    COMPANIES ACT, 2013

    • RULES, CIRCULARS, NOTIFICATIONS AND ORDERS ISSUED DURING THE MONTH OF SEPTEMBER, 2018

    GST

    • GST UPDATES FOR SEPTEMBER 2018

     

    GST UPDATES FOR THE MONTH OF OCTOBER 2018— BULLETIN I

    CIRCULARS

    1. CLARIFICATION ON LAPSING OF ITC AS ON 31st JULY 2018 IN CASE OF FABRIC MANUFACTURERS:

    In Fabric manufacturing, inputs like yarn, process chemicals, packing materials and other services are subject to GST at varied rates from 5% to 18%. The finished fabrics are subject to GST at 5% which has resulted into inverted tax structure i.e. tax paid on inputs is more than the tax payable on output. Section 54(3) has provided for refund of such excess input tax in these scenarios. However, Notification No. 5/2017-Central Tax dated 28.06.2017 was issued by Government to deny refund on 10 categories of fabrics. This restriction was taken away through Notification No. 20/2018-Central Tax with effect from 01.08.2018.

    In this regard, it is clarified that Section 54(3) permits refund of ITC availed on inputs alone under inverted tax structure scenario. The excess input tax credit after paying the tax for the month of July, 2018 that is attributable to inputs alone shall be lapsed out. The same shall be determined using the formula prescribed in Rule 89(5) of CGST Rules, 2017. It is also clarified that no refund of ITC availed on input services and capital goods can be claimed and need not be lapsed. It is further clarified that there no restriction with respect to claim of refund of ITC accumulated because of exports i.e. Zero-rated supplies in Notification 5/2017-Central Tax and accordingly ITC on Zero rated supplies shall not lapse.

    {Circular No.56/30/2018-GST dated 24th August 2018}

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