Vittakosh is an outcome of a notion – a belief that we can and ethical practices.
The Central Board of Indirect Taxes and Customs (CBIC) – a central body responsible for formulating policy relating to the levy and collecting of indirect taxes has announced two fundamental changes to the taxation systems, which will impact the business owners and individual taxpayers. The rules have been introduced with an aim to make the taxation system more fool-proof and ensure better tax compliance from businesses.
The new CBIC rules, which will be in effect from October 2, 2022, have been introduced for two key segments of taxpayers – businesses that generate GST invoices, and people who pay income taxes. An extension of the existing set of rules for taxpayers, these changes were notified by the CBIC in the month of August. If implemented successfully, these rules can reduce the filtering of tax credits to errant businesses and also streamline the Atal Pension Yojana.
The first change makes it mandatory for businesses with an aggregate turnover of Rs 10 crore and above to file e-invoices. The second key change is applicable to the beneficiaries of the Atal Pension Yojana. People who pay income taxes will no longer be eligible to benefit from this scheme.
The government has been working for quite some time to make e-invoicing mandatory for businesses to tackle revenue leakage and avoid GST tax evasion. It is the fifth phase of a planned GST e-invoicing rule that brings in businesses earning more than Rs 10 crore under its purview, making it mandatory for them to generate GST e-invoices for their business dealings.
The first committee was set up in 2019 to understand the e-invoicing process and its pan-India implementation. A few months later, after several meetings and drafts, the e-invoice schema was introduced in January 2020 and went live in October of the same year.
In the first phase, companies with turnover higher than Rs 500 crore were mandated to issue GST e-invoices. The second phase began in January 2021, wherein companies with revenues of more than Rs 100 crore were bought in the purview of the mandate. The third phase further dipped the threshold for companies making a revenue of more than Rs 50 crores.
The fourth phase included companies with revenues of Rs 20 crore and more, effective from April 2021. The fifth phase will have companies earning Rs 10 crore and more.
To make the process simpler for businesses and ensure better compliance, the CBIC has also developed a system for online monitoring of GST audits initiated by tax officials. The system was created keeping in mind the growing number of businesses seeking advice on issues arising from departmental audits.
These issues were mostly triggered by mismatches between the automatically generated return of purchases of raw materials and services and the tax return filed by a business. This data is essentially a summary of transactions which forms the basis for paying taxes.
Now, with an AI-driven online system of monitoring these audits, a comprehensible system will be created to ensure that such issues don’t arise in the future. It will also pave the way for better tax compliances among businesses by reducing the timeline and increasing the effectiveness of audits.
Atal Pension Yojana scheme, which earlier invited every Indian citizen above the age of 18 to enroll for retirement pension benefits, has now an important addition to its clauses. As per the new tax rules by the CBIC, people who have started paying income tax will no longer be eligible to benefit from this scheme, starting October 1, 2022.
The notification released by the CBIC highlighted, “In case a subscriber, who joined on or after 1st October 2022, is subsequently found to have been an income-tax payer on or before the date of application, the APY account shall be closed and the accumulated pension wealth till date would be given to the subscriber.”
The Atal Pension Yojana is one of the most beneficial social security schemes introduced by the Government in the year 2015-16, essentially for the people working in the unorganised sector. As a part of the scheme, people can make contributions in their APY account till the age of 60 years and get a monthly pension. Along with retirement benefits, the APY scheme also gave death benefits to the contributor. On death of the contributor, the pension automatically vests to the spouse who is the default nominee.
Businesses with annual revenue between Rs 10 crore and Rs 20 crore will be impacted. Also people who were enrolled in the Atal Pension Yojana and have started paying income taxes will be impacted.
Vittakosh is an outcome of a notion – a belief that we can and ethical practices.