The GST Network (GSTN) recently introduced a dedicated form aimed at manufacturers of pan masala and tobacco products. This form, GST SRM-II, enables them to report their inputs and outputs procured, aiding tax authorities in preventing evasion. Interestingly, this follows closely on the heels of GSTN’s launch of form GST SRM-I, designed for registering machines utilized by these manufacturers, marking a proactive effort to streamline compliance within the industry.
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Form GST SRM-II, the second form, is likewise accessible via the portal. In a June 7 update to its taxpayers, GSTN stated that businesses who manufacture Pan Masala & Tobacco products can now record the specifics of the inputs and outputs that they purchase and use for the relevant month.
Rajat Mohan, Executive Director at Moore Singhi, highlighted that the recently launched Form GST SRM-II necessitates comprehensive monthly reporting of both inputs and outputs.
Mohan emphasized that this form is geared towards bolstering transparency and accountability within the manufacturing sphere of Pan Masala and Tobacco products. He stressed the importance for taxpayers to diligently record their input procurement and consumption to mitigate discrepancies and ensure precise tax declarations.
He added that taxpayers should acquaint themselves with the details and instructions outlined in these forms to facilitate smooth compliance and steer clear of any possible penalties.
In January, the Central Board of Indirect Taxes and Customs (CBIC) unveiled a revised registration process and monthly return filing system, aimed at enhancing GST compliance among manufacturers of pan masala and tobacco products, initially set to take effect from April 1. However, the deadline was subsequently extended to May 15.
The initiative to revamp the registration, record-keeping, and monthly filing processes for such enterprises was targeted at enhancing GST compliance specifically within the manufacturing sector of pan masala and tobacco products.
Penalties and Amendments in Finance Bill 2024
With effect from April 1, manufacturers of pan masala, gutkha, and similar tobacco products will be subject to a penalty of up to INR 1 lakh for failing to register their packing apparatus with the GST authorities, according to Finance Bill 2024, which also amends the GST rules.
However, this penalty provision has not been officially announced yet.
The procedure was designed to be applicable to manufacturers of various tobacco-related products, including pan-masala, unmanufactured tobacco (with or without a brand name), ‘Hookah’ or ‘gudaku’ tobacco, smoking mixtures for pipes and cigarettes, chewing tobacco (without lime tube), filter khaini, scented tobacco, snuff, as well as branded or unbranded ‘Gutkha’, among others.
Manufacturers of these tobacco products were mandated to electronically provide details of the packing machines utilized for filling and packaging packages using Form GST SRM-I within 30 days of the notification taking effect, namely April 1, 2024.
The GST SRM-II, detailing input and output statements, was to be filed by the 10th of the following month.
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