GST Reconciliation

GST reconciliation involves data matching as filed by the suppliers & purchase receipts as recorded and filed by the receiver of the supplies or services.

GSTR–2A is populated based on information on purchases as recorded by the buyer of products or services from the supplier.

Suppliers also file their returns and basic GSTR 2A is generated based on suppliers’ data therein. So GSTR 2A is generated from the GSTR1 of the seller.

GSTR 2A is auto-generated for the following components:-

  • Supplier filing GSTR 1 & 5 and enters B2B transaction details
  • ITC distributed by ISD while filing GSTR 6
  • TDS and TCS details based on GSTR 7 & 8 filed by dealers who deducted TDS/ TCS.

Some of the reasons to reconcile Form GSTR-3B and Form GSTR-2A may include:-

  • GST Dept has been sending notices for mismatches of return filed for Purchases under GSTR3B last and the supplier generated GSTR 2A. It is imperative to respond to these notices as stringent actions are planned against the non- compliance.
  • Fake transactions are recorded in a bid to record the wrongful input credit claims

–       Any invoice missed inadvertently or a genuine error/ emissions are also giving rise to the option to course correct in respect of correct input credit claims

2A reconciliation often arise on the back some tech glitches-

  • The credit of IGST claimed on the import of goods and services
  •  GST paid on reverse charge mechanism
  • Transitional credit claimed in TRAN-I and TRAN-II.
  • ITC for goods and services received in FY 2017-18 but availed in FY 2018-19.

Validations:-

  • GSTR-2A is a read-only document and not everyone have access to the same.
  • The corrections should be made in GSTR-2 only.
  • Any late-filed 3B Returns will also have corresponding Late GST 2A and thus may need detailed reconciliation. For e.g., your seller delays in filing his GSTR-1 return of November and files it after the due date on 17th Nov. Meanwhile,  we may file your November GSTR-2 return and submit within 15th December. The information from his GSTR-1 will appear in your GSTR-2A of December.

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TCS on Foreign Tours & Travel:- Income Tax Amendment 1st April 2020

 TCS on Foreign Tours & Travel

As they say, the devil lies in the details, Budget 2020 has got a lot of catches to relate to. One of the important ones is that our FM Nirmala Sitharaman has seemed to have zeroed on folks traveling abroad on foreign tours & travel, their travel plan being booked by travel agents as part of small holiday packages. This is very common now in both Govt & Private Sector employees.

Union finance minister Nirmala Sitharaman has raised alarm bells for those who travel abroad on tour package booked by others, which is a common trend to oblige senior officials in government and private sectors in the country.

Come, April 1, 2020, every foreign traveler will have to pay 5% (PAN holder) and 10% (non-PAN holder) TCS (Tax Collection at Source) on the total amount of tour package. Once the TCS is charged, total income for individuals will automatically be grossed up as liability & thus a large entity will be encircled with the realms of Income-tax department, which often escapes the TAX FILED income as per IT RETURN.

Earlier provision to mention passport number in ITR is now given more teeth to levy a tax on a large number of people, who go abroad on leisure trips several times in a year.

More often than not, there is black money involved as trips are often financed by the business houses in return for undue favors from bureaucrats, govt officials and other business entities in society. Trips can be a form of bribe or enticement in return for the aforesaid work insight.

As it may look, that every foreign visitor whether he is an income taxpayer or not will now be part of the tax gambit. However, there is a relief for people whose annual income is under the threshold limit (under Rs 5 lakh) visits a foreign country. These folks can apply for a refund of TCS from the Dept. of Income-tax.

The move is seen very effective as it will restrain the massive use of unaccounted money into the system via Foreign Tours and large no. of individuals n entities will be added newly to the mainstream Tax System @ GOI.

Industry Impact-

On top of levy of taxes, Govt intends to bank on new-age technology like DATA Analytics, etc. to retrieve information about frequent flyers who often end up spending lavishly on Global tours and travel. 5% TCS is a huge sum on the foreign travel package bill which will increase the burden of this distinctive travel class. Travel Industry is also looking to change and adapt to the new business dynamics. With all this, this can turn to abound to challenging provision for government employees and their family members, doctors, etc. who visit abroad on sponsorship.

Key Changes –
  • Every foreign traveler has to pay 5% and 10% tax collection at sources (TCS) on the total amount of tour package
  • Stop the practice of Concentration of Tour operators with a view of group bookings as an operator  maligning the process with illicit funding via unorganised channels.

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MCA seeks suggestions/comments on proposed Audit curbs

A consultation paper to examine the existing provisions of law and make suitable amendments therein to enhance audit independence and accountability has been placed and need suggestions/comments.

  • Whether to reduce the number of audits per one audit firm/ auditor?
  • Whether to reduce or set the number of partners under one audit firm?
  • How can those Big-4’s burden be reduced? Which other audit firms are in a position to compete with them and reduce the workload of Big4?
  • Whether the auditors in listed companies to be appointed from a separate auditors ‘ panel to be repaired by NFRA?
  • Whether non-audit services can be included in the list u/s 144?
  • Whether the Joint Audit for bigger companies should be made compulsory?
  • What should be the threshold for the bigger companies?

 Economic Concentration of audit [Big 4] – Positive & Negative effects on the economy

Most of the large global corporations use the Big Four accounting companies to audit their financial statements.This audit industry concentration of listed companies is characterized by an oligopoly of “Big Four” audit firms and in large-company audits would result in inadequate levels of competition.

Finding a new auditor would be more complicated because

  • Less competition in many geographic markets where some of these companies do not have a significant presence.
  • The lack of sufficient auditing experience by the remaining companies, in particular industries.
  • Many other businesses are not independent because of the provision of non-audit services

The Companies Act, 2013  provides mandatory audit firm rotation and non-audit services In order to tackle this economic concentration of audit. The main purpose of this provision is to increase the number of audit firms capable of carrying out the most complex audits.

 Non-audit services not to be taken by auditors

It has been noted that some of the audit firms are observing self-regulation and are making decisions not to participate in non-attested work such as consultancy and transaction advisory services from listed companies that they are auditing. Such a move that comes in the midst of auditors who are facing heat in high-profile corporate scandals seems a welcome change. Deloitte announced recently that it will not underatake any non- audit services in public domain.i.e. listed entities with Banks & Insurance Companies in particular.

To know more Click here

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