31/12/2023
The use of data analytics and advanced technology has helped the income tax department recover rs 36,000 crore from outstanding tax demand in the current fiscal, ET has learnt. This includes recovery of rs 27,000 crore from corporate tax and rs 9,000 crore from personal income tax till December 20. With one more quarter to go, the department expects the number to go up further by the end of this fiscal year to at least rs 50,000 crore. Till December 20, the total recovery from outstanding demand was rs 36,000 crore,” a senior official told ET. India’s direct tax collection, net of refunds, stood at rs13.70 lakh crore till December 17, up 20.66% year-on-year. This included corporate tax of rs 6.94 lakh crore and personal income tax, including securities transaction tax, of rs 6.72 lakh crore. The Centre has budgeted direct tax collection of rs18.20 lakh crore for the current fiscal.
INDIA to ban 9 crypto exchanges URLs:-
• Binance
• Kraken
• Huobi
• Kucoin
• Bittrex
• Gate.io
• Bitstamp
• Bitfinex
• MEXC Global
FIU-Ind has written to MeitY to block links of 9 entities that are operating illegally without complying with the provision of the PMLA.
Restriction of Delayed Payment Provisions for Retail and Wholesale Trade MSMEs as per MSMED Act, 2006: The MSMED Act, 2006 provides various benefits to Micro, Small, and Medium Enterprises (MSMEs) in India. These benefits include provisions for delayed payments, which are aimed at protecting MSMEs from financial difficulties caused by delayed payments from buyers. However, a recent Office Memorandum (OM) dated 2.7.2021 has clarified that the benefits of delayed payments under the MSMED Act, 2006 are not available to Retail and Wholesale trade MSMEs. The OM states that Retail and Wholesale Trades have been included as MSMEs and are eligible to be registered on the Udyam Registration Portal. However, the benefits available to them are restricted to Priority Sector Lending only. This means that Retail and Wholesale trade MSMEs can avail loans under the priority sector lending scheme but are not entitled to the provisions of delayed payments as provided by the MSMED Act, 2006.
Therefore, it is important for Traders, who are MSMEs, to understand that they are not eligible for the benefits of delayed payments under the MSMED Act, 2006. The benefits available to them are limited to priority sector lending. It is advisable for Traders to consult with the relevant authorities or MSEFCs (Micro and Small Enterprise Facilitation Councils) for further clarification on the benefits available to them.
Supreme court of India dismissed SLP (appeal) filed by GST department against Kolkata HC verdict, which quashed demand of ITC against recipient. Basic issue is the mismatch of ITC between 2A vs 3B where 3B ITC is more than 2A. Department issues notices to reverse ITC because supplier not filed their returns and hence not appearing in 2A. Recipient filed case in Kolkata HC for quashing the notice. Kolkata HC quashed the notice and directed GST department to recover from Supplier instead of demanding from Recipient. Against this order, GST department appealed in SC. SC also dismissed the appeal and upheld the verdict of Kolkata HC. Assessees need not to reverse excess ITC claimed in 3B (compared with 2A) and refer this judgement to ask Department to recover from the Supplier.
Guidelines under sub-section (4) of section 194-O of the Income-tax Act 1961 for Tds deduction by E Commerce Operators
Read More
https://incometaxindia.gov.in/communications/circular/ciruclar-20-2023.pdf
30/12/2023
The government is considering allowing filing of updated or revised returns under the goods and services tax (GST), a move expected to benefit taxpayers and also bring down litigation under the indirect tax regime. As per the proposal, taxpayers will be able to rectify their returns including computation of tax, ET has learnt. “We are looking at allowing updated returns under GST,” a senior official told ET. At present, there is no provision for filing revised returns under GST, barring minor corrections in the invoice details uploaded on the portal. Industry has been demanding this facility and a petition in this regard is before the Supreme Court.
S- ET
CBIC extended the time limit for issuance of GST notice for the F.Y. 2018-19 and 2019-20. - 56/2023-Central Tax.
The following grounds can be relied on while moving an appeal/ petition against Section 73 demand orders that are issued invoking the extended period of limitation as per various extension Notifications:
1. No Force Majeure in existence, at the time of issuance of notification to extend the time limit.
2. GST Council Meetings or Press Releases give no reference to recommending such an extension.
3. Perpetual extension is possible, citing “Force Majeure”, giving a wide range of power to the government to act against honest GST taxpayers.
4. Retrospective applicability of insertion of Section 168A can also be questioned, being detrimental to the assessee and oddly in favor of the revenue.
For the above stated reasons, the notification extending the deadline is both ultra vires of the Goods and Services Tax Act, 2017 and unconstitutional for grave deprivation of rights of GST Taxpayers.
The following case laws are also in favour of the assessee, even though only interim orders have been issued in the favour of the petitioners —
1. M/s SRSS AGRO PVT. LTD. Versus UNION OF INDIA CITATION: 2023 TAXSCAN (HC) 1718
Extension once made to Period of Limitation to issue order u/s 73 of GST cannot be further extended: Gujarat HC
2. M/s NEW INDIA ACID BARODA PVT. LTD. vs UNION OF INDIA
Second Extension of GST Notice Time Limit in 2023 under Challenge for violation of S. 168A, Gujarat HC issues Notice. Considering the above submissions, issue Notice returnable on 8th February, 2024. By way of ad-interim relief, no final order shall be passed by the respondent authority.
3. GAJANAND MULTISHOP THROUGH PANKAJKUMAR ROSHANLAL GANDHI [R/SPECIAL CIVIL APPLICATION NO. 20227 of 2023, Gujarat HC].
Considering the above submissions, issue Notice returnable on 8th February, 2024. By way of ad-interim relief, no final order shall be passed by the respondent authority.
In summary, the recent notifications extending the time limits for issuing Goods and Services Tax demand orders under Section 73(9) raise significant concerns regarding their constitutionality and adherence to the statutory framework.
29/12/2023
Being aggrieved by the denial of refund of unutilised ITC accumulated in respect of the GST paid on inputs in respect of the zero-rated supplies. There is no dispute that the petitioner had attempted to file an application for refund on the GST portal twice but its application could not be uploaded on account of technical glitches. It is not disputed that the petitioner had also made a complaint and a ticket for the same was also raised. This court direct the proper officer to examine the petitioner’s claim for refund and process the same, if it is found that the petitioner is entitled to the same Delhi HC- Sethi Sons).
The petitioner has filed the present petition impugning the order cancelling the petitioner’s GST registration with effect from 23.05.2022. It is noticed that the petitioner’s registration has been cancelled with retrospective effect from 23.05.2022. Neither the SCN nor the impugned order provides any reasons for doing so. The respondent is directed to forthwith restore the petitioner’s GST registration (Delhi HC- SK enterprises).
The challenge in the present writ petition is to Show Cause Notice in Form DRC-01issued under Section 73 of the CGST Act, 2017. The Show Cause Notice, from the plain reading, seems to be one which has been issued in a mechanical manner without application of mind and without any cogent sufficient materials available. This Court also finds sufficient force in the submissions made by the learned counsel for the petitioner when they say that since the proceeding has been initiated under Section 73 of the Act, the very provision of Section 73 of the Act starts with the words where it appears to be for the authority concerned which by itself means that at the time where the authority appears to found it necessary for initiating the proceedings, there ought to had been some material, information or even sort of a complaint available with them as regards the suspicious transactions or the alleged evasion of tax made by the petitioner. Show Cause Notice would not be sustainable as they are bereft of facts and materials and the same deserves to be and is accordingly set aside/quashed (Telangana HC- Glaxosmithkline Consumer Health Care Limited).
Madras HC coming to the rescue of taxpayers on serving of notices -
It was HELD that all the notices and the assessment order have been uploaded in the web portal in the "View Additional Notices and Orders" column and the same were not physically served to the petitioner, due to which, the petitioner was unaware about the said notice. The reasons provided by the petitioner for being unaware of the notice, which was uploaded in the web portal, appear to be genuine. Therefore, no order can be passed without providing sufficient opportunities to the assessee, in the instant case, no reply was filed by the petitioner and no opportunity of personal hearing was provided to the petitioner. Hence, the impugned order is set aside and the matter is remanded back to respondent with direction to dispose of the matter after providing sufficient opportunities to the petitioner. The writ petition is disposed of.
28/12/2023
Section 37 of the CGST Act, 2017- Amendment/Rectification of GSTR-1- The respondents are directed to permit the petitioner to amend / rectify the Form GSTR-1 for the period July 2021, November 2021 and January 2022, either through Online or manual means within a period of four weeks from today. - Star Engineers (I) Pvt. Ltd. [2023] (Bombay).
M/s Jaipur Smart City Limited is covered under Governmental Authority as defined in the explanation to clause (16) of Section 2 of the IGST Act, 2017. - Lakhlan and Qureshi Construction Co. [2023] (AAAR-Rajasthan).
Hon’ble Supreme Court of India dismissed the special leave petition of the department filed against the order of Calcutta High Court wherein order of assessing authority was set aside denying input tax credit to the petitioner on the ground that supplier of goods/services failed to deposit the tax on that. The assessing authority without resorting to any action against the selling dealer has ignored the tax invoices produced by the appellant as well as the bank statement to substantiate that they have paid the price for the goods and services rendered as well as the tax payable there on, the action of the assessing authority has to be branded as arbitrarily. This is now a land mark judgement in cases where supplier failed to show the supply in his GSTR-1. - The Assistant Commissioner of State Tax, Ballygunjge Charge Versus Suncraft Energy Private Limited [2023] (SC).
The present writ petition is disposed of with a direction to the respondent to permit the petitioner to rectify the mistake in Form GSTR-3B by accounting input tax credit as IGST instead of SGST and CGST credit. - Chukkath Krishnan Praveen Versus State of Kerala & Ors. [2023] (Kerala).
27/12/2023
Some references have come to the notice of the Income Tax Department regarding recent communication sent to taxpayers pertaining to transaction(s) made by them. Taxpayers may pl note that such communication is to facilitate the taxpayers & make them aware of the information available with the ITD regarding the transactions reported by the Reporting Entities during the year. It is not a notice sent to all taxpayers, but is an advisory sent in only those cases where there is an apparent mismatch between disclosures in the ITR & information as received from the Reporting Entity. The objective of the communication is to provide an opportunity to taxpayers & facilitate them to provide their feedback online on the Compliance Portal of ITD &, if necessary, revise their Returns already filed OR to file the Return if not filed, so far.
The last date for revising or filing belated return for AY 2023-24 is 31st December, 2023. Taxpayers are requested to respond to the communication on priority.
CBDT amends Safe Harbour norms for Intra-Group Loans. CBDT has notified the Income-tax (Twenty-Ninth Amendment) Rules, 2023, to amend Rules 10TA and 10TD. Rules have been amended to revise the definition of intra-group loans and circumstances in which they are treated as Safe Harbour. Earlier, only the loans issued in Indian currency and issued to wholly-owned subsidiary were included in the definition of intra-group loans. After this amendment, loans issued in currency other than the Indian rupee or loans provided to associated enterprise other than wholly-owned subsidiary will also be included in the definition of intra-group loans. The rules also redefine operating expenses and operating income. The changes introduced will be effective from April 01, 2024.
25/12/2023
Notification No. FEMA 14(R)/2023-RB., Dated 20.12.2023
The Reserve Bank of India vide Notification No. FEMA 14(R)/2023-RB. Dated 20.12.2023 has introduced Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023.
A. The newly introduced regulations will replace the existing Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016.
B. As per regulation 3 of newly introduced regulations, unless permitted by RBI or allowed by the Act, Rules or Directions under the FEMA, no person in India can make payment or receive payment from a person resident outside India.
C. The regulation further provides that all the receipts and payments between a person resident in India and a person resident outside India shall be made through an Authorised Bank or Authorised Person.
D. Regulation 3 of the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023, has bifurcated the transactions for receipt and payment into two categories:
(a) Trade Transactions
(b) Transactions other than Trade Transactions
1. Manner of receipt and Payment in case of Trade Transactions:
The receipt and payment for export to or import from the following countries in respect of eligible goods and services shall be as under:
1.1. Receipt and Payment from Nepal and Bhutan:
The receipt/payment for export to or import from Nepal and Bhutan of eligible goods and services shall be in Indian Rupees however, in case of exports from India receipts towards the amount of the export may be in foreign currency where the importer in Nepal has been permitted by the Nepal Rashtra Bank to make payment in foreign currency.
1.2. Receipt and payment from member Countries of ACU, other than Nepal and Bhutan:
The receipt/payment for export to or import from Member Countries of ACU, other than Nepal and Bhutan of eligible goods and services shall be made through ACU mechanism or as per the directions issued by the Reserve Bank to authorised dealer from time to time.
However, in case of imports where the goods are shipped to India from a member country of the ACU (other than Nepal and Bhutan) but the supplier is a resident of a country other than a member country of the ACU, the payment may be made in INR or in any foreign currency.
Explanation: The expression ‘ACU’ (Asian Clearing Union) shall have the same meaning assigned to it under Article I of the ACU agreement and the ACU mechanism shall be construed accordingly
1.3. Receipt and Payment from countries other than members of ACU:
The receipt/payment for export to or import from countries other than member countries of ACU of eligible goods and services shall be made In Indian Rupees or in any foreign currency.
2. Transactions other than trade transactions:
2.1 For transactions outside of trade activities, all receipts and payments from Nepal and Bhutan are to be conducted in Indian Rupees. However, in the case of overseas investments in Bhutan, payments may also be made in foreign currency.
2.2 Whereas, for transactions involving countries other than Nepal and Bhutan, payments can be made in either Indian Rupees or any foreign currency.
Further, for any current account transaction, excluding trade transactions, between a resident in India and a person visiting from outside India, payments and receipts in India must be made solely in Indian Rupees.
S- TaM
Pursuant to the announcement made in the Statement on Developmental and Regulatory Policies dated December 08, 2023, RBI has now decided to increase the limit from ?15,000/- to ?1,00,000/- per transaction for the following categories: (a) subscription to mutual funds, (b) payment of insurance premiums, and (c) credit card bill payments.
Contravention of Provisions under FEMA, 1999
A. ODI- types of contraventions
1. Non submission of form ODI after investment & UIN not allotted
2. Not a permitted method of Funding
3. Not obtaining Share certificate within stipulated time period from the date of Remittance
4. Non Submission of Annual Performance Reports (APR) every year
B. ECB- types of contraventions
1. Not an eligible borrower
2. Lender not a recognized lender
3. Minimum Maturity period not adhere to
4. Breach of all in cost ceiling
5. End use not a permitted one
6. LRN not obtained
C. FDI- types of contraventions
1. Non reporting of Inward remittance within 30 days
2. Not allotting equity instrument or refunding the amount within 180 days
3. Not submitting Form FCGPR within 30 days from the date of allotment
4. Non Submission of Form FCTRS on transfer of shares
5. Issue of instrument other than equity shares, fully or CCPS as prescribed
D. Sensitive Contraventions
Cases involving serious contravention suspected of money laundering, terror financing or affecting sovereignty and integrity of the nation are categorized as sensitive contraventions.
E. Pre-requisite for Compounding Process
The company must not make similar contraventions within a 3 year period of compounding. Compoundable contraventions requiring approvals from any authorities must obtain necessary permissions before applying for compounding. Any suspected serious contraventions such as money laundering, terror financing, or compromising national sovereignty trigger referral to the Directorate of Enforcement for further investigation if the contravener fails to pay the compounding penalty within the stipulated period. Contraventions that have undergone adjudication by the Directorate of Enforcement and are under appeal according to sections 17 or 19 of FEMA, 1999, are non compoundable.
F. Compounding Process
Submission of application to RBI and not AD bank in the prescribed format.
G. Payment of fees – of Rs. 5,000/- by way of DD in favour of RBI
H. Examination by RBI
1. Calling for additional documents, if required
2. Opportunity for personal hearing
3. Passing compounding order
4. Payment of penalty
5. Issuance of certificate of payment of a penalty
6. Separate formats are provided in Annex II for FDI, ECB, ODI & Branch Office/Liaison Office, Format for FDI.
I. Late Submission Fees (LSF)
The Late Submission Fee (LSF) was introduced for reporting delays in Foreign Investment (FI), External Commercial Borrowings (ECBs) and Overseas Investment related transactions with effect from November 07, 2017, January 16, 2019 and August 22, 2022 respectively. It has now been decided to bring uniformity in imposition of LSF across functions.
S- TaM
HC Directed Assessee to Demarcate Property Within One Week of Issue of GST Number If Not Demarcated. Case Details: Bio Med Ingredients (P.) Ltd. v. Assistant Commissioner (ST)/Commercial Tax Officer - [2023] 157 taxmann.com 501 (Madras). The Honorable High Court noted that the property referred to by assessee, where, assessee-company was going to run its business had been demarcated and assessee was ready to submit records. Therefore, the Court directed SGT department to issue GST registration number to assessee. In case, if there was no demarcation of property, assessee-company was directed to demarcate property within a period of one (1) week time from date of issue of GST registration number.
24/12/2023
Changes in the ITR form 1 and 4 for Asstt year 2024-25 as notified on 22.12.2023:
1. No change in the applicability of ITR forms: The CBDT has not amended Rule 12 of the Income-Tax Rules, 1962, which outlines the criteria for the applicability of ITR forms to different classes of taxpayers andmethod of furnishing returns.
2. New tax regime is now the default tax regime. The new ITR Forms 1 and 4 have been amended to incorporate this change. Taxpayers must choose to opt-out to prefer old regime. The Finance Act 2023 has amended the provisions of section 115BAC to make it the default tax regime for the assessee being an Individual, HUF, AOP, BOI and AJP. If an assessee does not want to pay tax according to the new tax regime, he will have to explicitly opt out of it and choose to be taxed under the old tax regime. Section 115BAC(6) allows the eligible assessee to opt out of the new tax scheme. To exercise this option, the assessee having income (other than income from a businessor profession) must indicate his choice of tax regime in the return of income to be furnished for the relevant assessment year under Section 139(1). An assessee having income from a business or profession can also opt out of the new tax regime and switch to the old tax regime for a relevant year. However, he has to exercise this option in Form No. 10-IEA on or before the due date for filing the return of income under Section 139(1). An assessee filing ITR 4 will be required to file Form10-IEA to opt out of the new tax regime.
3. New column added to claim deduction under section 80CCH:
The Finance Act 2023 added a new Section 80CCH, which states that individuals enrolled in the Agnipath Scheme and subscribing to the Agniveer Corpus Fund on or after 01-11-2022 will be eligible for a tax deduction for the total amount depositedin the Agniveer Corpus Fund.
4. Receipts in Cash’ column added to ITR-4 to claim enhanced turnover limit:
The Finance Act, 2023 has enhanced the turnover threshold limit from Rs 2 crore to Rs 3 crore for opting for the presumptive taxation scheme under Section 44AD if the receipts in cash do not exceed 5% of the total turnover or gross receipts for the previous year. It is also provided that the meaning of cash would include the chequeor a bank draft, which is not an account payee.
Similarly, Section 44ADA was amended to enhance the threshold limit of gross receipts from Rs 50 lakh to Rs 75 lakh, if the receipts in cash do not exceed 5% of the total gross receipts for the previous year.
The provisional direct tax collections for the financial year 2023-24 (as of December 17) reveal a net amount of Rs 13,70,388 crore.
The Goods and Services Tax Network (GSTN) has introduced a new feature on the GST Portal, empowering users to address grievances related to payments through the Grievance against Payment (GST PMT-07) system. To access this functionality, users can log in to the GST Portal and navigate to the “Services” section. From there, they should proceed to the “Payments” category, where they can find the option to file a “Grievance against Payment (GST PMT-07).”
THE CENTRE on Friday released an extra instalment of tax devolution of 772,961.21 crore to 28 states in December citing forthcoming festivities and the New Year. This is the second extra in-stalment after the first additional instalment was made in June to ease the funding flow for states. The instalment is in addition to the usual monthly devolution instalment of 772,961.21 made earlier on December 11 and also in addition to the tax devolution instalment due to states on January 10. With this instalment, the Centre has transferred $1.46 lakh crore to states in December. As per the norm, tax devolution is made through 14 instalments to states in a year, with at least one instalment in each month and two extra instalments released in the last two months of the year. With the two instalments by December, the Centre's tax devolution has reached 27.47 lakh crore or 73 per cent of its FY24 budget estimate of 710.21 lakh crore compared with 63 per cent in the year-ago period. S-IE
23/12/2023
TCS on NRI
1. NRIs are allowed to remit upto $1 million in a financial year from the balance held in their NRO (non-resident ordinary) account or from the sale proceeds of a property held in India.
2. These sales proceeds must first be credited to their NRO account in India. Any tax due on such sale should have been duly paid by the NRI in India. In case of an NRI, TCS is not applicable for money remitted to foreign accounts from an NRO account.
3. Section 206c(1g) of the Income Tax Act stipulates three conditions for the applicability of TCS on repatriation:
I) The person must be a resident individual.
Ii) The individual purchases foreign currency from an Authorized Dealer (AD) Bank.
Iii) The resident individual repatriates the purchased foreign currency to a person or country outside India under the Liberalized Remittance Scheme (LRS).
If these conditions are met, TCS would apply under this provision
4. Note : TCS does not apply when NRIs repatriate funds as they do not use the LRS for repatriation; they use a different scheme, namely the "one million dollar scheme.
Important note on gst fcm/rcm on freight services for exporters:
1. After deletion of Proviso to Section 12(8) of IGST Act 2017 w.e.f. 1st Oct 2023 place of supply for transportation services is now location of recipient. Hence, freight paid by the exporter located in India to service provider located in India is now taxable under FCM/RCM.
2. After deletion of Section 13(9) of IGST Act 2017 w.e.f. 1.10.2023, place of supply for transportation services will now be location of the recipient.
So, freight paid by the exporter to foreign service provider is now taxable under RCM.
Liability to pay tax under RCM on Ocean Freight by the importer located in taxable territory has been withdrawn w.e.f. 1st Oct 2023. Demand for the prior period has to be argued on the basis of Honble Supreme Court decision in the case of Mohit Minerals Pvt. Ltd.
FM Sitharaman gives nod to setting up of GST Appellate Tribunal in Indore. Union Finance Minister Nirmala Sitharaman has approved the opening of an appellate tribunal for cases related to the Goods and Services Tax (GST) in Indore, the Madhya Pradesh government's Public Relations Department said. Indore MP Shankar Lalwani had demanded an appellate tribunal for GST in Indore during discussions in the Lok Sabha, which was approved by Sitharaman, it said in a release. In a statement, Lalwani said Indore has the highest number of taxpayers in Madhya Pradesh and the opening of the GST appellate tribunal will greatly benefit hundreds of tax professionals and thousands of businessmen in the city.
22/12/2023
Late fees for the Form GSTR-9 for F. Y. 2022-23 after 31st Dec 2023 will be :
1. Aggregate Turnover (Rs.) Upto 5 Crore-
Late Fees (Rs.) 50 per day- Maximum Late Fees 0.04%
2. Aggregate Turnover (Rs.) Above 5 Crore upto 20 Crore- Late Fees (Rs.) 100 per day- Maximum
Late Fees 0.04 %
3. Aggregate Turnover (Rs.) Above 20 Crore-
Late Fees (Rs.) 200 per day- Maximum Late Fees 0.50 %
Late fees is = CGST Act + SGST Act
GSTR 9/9C for fY 2022-23 to be filed on or before 31.12.2023.
1. Tables of Gstr 9
Table 4 and 5 is for disclosure of outward supply made during the year. Books of accounts to be referred for this.
2. Table 6 is disclosure of ITC taken during the year. Table 4A of 3B to be referred for this.
3. Table 7 is ITC reversed during the year. Table 4B of 3B to be referred for this.
4. Table 8 is disclosure of ITC taken on B2B net of Credit /Debit note thru 3B and its comparison with 2A.
5. Table 9 is disclosure of tax payable and paid.
payable as per books and paid as per 3B to be shown
6. Table 10 & 11
supplies of FY 2022-23 which are reported/ amended in the returns filed for the period April 2023 to Nov 2023 to be shown here.
7. Table 12
Input credit of 22-23 reversed in Form GSTR 3B filed during the period April 2023 to 30th Nov 2023 to be shown here.
8. Table 13. it is optional table
9. Table 14 is the differential tax paid on account of declarations made under Tables 10 and 11.
10. Table 15 is optional table
11. Table 16 is optional table
12. Table 17 is HSN summary of outward supply. Hsn of supplies shown in table 4 and 5 to be shown here.
13. Table 18 is optional table.
14. Table 19 is late fee payable and paid.
E-way bill limit for movement of goods originating and terminating within the state of West Bengal (Intra State) has been restored to Rs. 1,00,000/-(consignment value) w.e.f. 1st Dec 2023.
[Notification 03/2023-C.T./GST dt 18.12.2023]
Earlier, E-way bill limit will be reduced for the movement of goods originating and terminating (both) within the state of West Bengal (Intra State) from Rs. 1,00,000 to Rs. 50,000 (consignment value) with effect from 1.12.2023.
[Notification 02/2023-C.T./GST dt 10.11.2023]
E-way bill exemption for movement of goods to/from job worker has been restored in the state of West Bengal (Intra State) w.e.f. 1st Dec 2023.
[Notification 03/2023-C.T./GST dt 18.12.2023].
Earlier, E-way bill exemption for the movement of goods to/from Job Worker will be withdrawn in the state of West Bengal (Intra
State) w.e.f. 1.12.2023.
Hence, it will be applicable for consignment value > Rs.50,000/-[Notification 02/2023-C.T./GST dt 10.11.2023]
21/12/2023
Madras High Court allowed ITC after Sec 16(4) date and in favour of the registered taxpayer. W.M.P.(MD)Nos.6764 and 6765 of 2023 Date: 24.11.2023
KAVIN HP GAS GRAMIN VITRAK
Vs
1. THE COMMISSIONER OF COMMERCIAL TAXES,
OFFICE OF THE PRINCIPAL AND SPECIAL COMMISSIONER OF COMMERCIAL TAXES, CHENNAI
2. THE DEPUTY STATE TAX OFFICER-1,
OFFICE OF STATE TAX OFFICER, MELUR ASSESSMENT CIRCLE, MADURAI
It is held by Court that ITC is allowed to taxpayer even after Sept of Next Year 16(4) time limit.
As per Section 38 of the CGST Act, 2017 read with Rule 60 of the CGST Rules, 2017, ITC shall be claimed through GSTR-2 but the GSTN had not provided the facility of GSTR-2 till now. When the GSTR-2 Form itself is not available and electronical filing is not possible, then taxable person cannot be expected to file the Form electronically. Therefore, the entire basis of initiation of the proceedings itself is not sustainable.
It is submitted that Section 16(4) restriction apply only for the take/availment of the ITC after the Sept of next financial year and as per the above discussion, there is no facility of availment of ITC in GSTR 3B which is summary return itself, when there is no take/availment of ITC in the GSTR 3B, then the time limit of Section 16(4) is not apply as per the Act, Hence your SCN is illegal and beyond the provision of the Act, infect, still there is no facility for take/avail ITC in the GSTR 3B.
Reliance is placed on the Hon'ble Jharkhand High Court in case of Shri Kumaran Construction Co., a proprietorship Firm, District-East Singhbhum W. P. (T) No. 2582 of 2020, the Section 16(4) constitutional validity is challenged before the high court in this case, the interim order is issued as below on Dated 13-10-2020.
While the GST regime envisaged the filing process and recording of ITC and payment of taxes as above, admittedly, due to system issues and under preparedness with regard to the extent of data to be processed, Form GSTR-2, and 3 were not made operational; and have been now completely done away with. Form GSTR-2A was made operational only in September 2018 by the Government.
It is first decision of any court in favour of taxpayer on 16(4) issue.
20/12/2023
The present writ petition is disposed of with a direction to the respondent to permit the petitioner to rectify the mistake in Form GSTR-3B by accounting input tax credit as IGST instead of SGST and CGST credit. - Chukkath Krishnan Praveen Versus State of Kerala & Ors. (Kerala).
New Instructions no- 05/2023- Judgment of the Hon’ble Supreme Court in the case of Northern Operating Systems Private Limited (NOS).
Supreme Court Stays Order of Patna HC denying use of Electronic Credit Ledger for purposes of paying pre-deposit. Issue notice to the respondents. - Flipkart Internet Pvt. Ltd. Versus The State of Bihar & Ors.
Benefit of Notification No. 12/2017 dated 28.06.2017 read with Notification No. 02/2018 dated 25.01.2018 which provide for exempting from tax, the value of supply up to an amount of Rs. 7,500/- per month per member is not available when the maintenance charges exceed Rs. 7,500/- per month per member. Where the charges exceed Rs. 7500/- per month per member, the entire amount is taxable. - Prinsep Association of Apartment Owners [2023] (AAR-WB).
MR. BHANU MOHAN KAILA Vs. UOI, 29/11/2023 (Delhi High Court) (Favour of Assessee)
The issue was - Employer had not deposited the tax deducted at source, outstanding dues can't be recovered from employees
Held - The petitioner having accepted the salary after deduction of income tax at source had no further control over it in the sense that thereafter it was the duty of his employer acting as tax collecting agent of the revenue under Chapter XVII of the Act to pay the deducted tax amount to the Central Government in accordance with law. The employer of the petitioner having failed to perform his duty to deposit the deducted tax with the revenue, petitioner cannot be penalized. It would always be open for revenue to proceed against the employer of the petitioner for recovery of the deducted tax. The petition is allowed, thereby setting aside the intimations/communications issued by respondent no. 3 u/s 143 of the Act raising a demand of tax to the tune.
19/12/2023
In income tax proceefings, recording of statement is a vital proceeding. Statement is recorded during different proceedings and under different sections such as section 133 A, me and setime 13 are recorded under oath and some without oath. Statement once recorded may be used in any proceeding by the assessing officer or by the assessee. Various queries are raised during recording of statement. The assessee must reply the queries raised in the statement very properly , correctly and carefully. Statement once recorded may be retracted. However, the AO hardly admits retraction statement during assessment proceeding. The witness must have some strong and valid grounds for retraction of statement. The recording and retraction of statement and cross examination of witness is an art. If a statement of a witness is recorded at the back of the assessee and it is used against him in any income tax proceeding, the assessee must ask the AO to provide him a copy of such statement and thereafter, may request him to allow him an opportunity to cross examine the witness. Retraction of statement is valid but should be made in time and also it should be supported by some direct or indirect evidences.
Due importance is given to statement a5 1f that 1f statement is recorded and proper reply is not given, the whole case will be spoiled. Admittedly statement plays a vital role but it is not so that it spoils the whole case.
At the same time if the I O does not record proper statement due to his ignorance , lot of benefit can be availed by the assessee during income tax proceedings. There are number of Supreme Court and high court cases in support of opportunity of cross examination.
Anybody failed to file an appeal before Appellate Authority or Whose appeal was rejected solely on the grounds of time period Against any order under section 73/74 of CGST Act, 2017 passed on or before 31.3.2023, may now file appeal till 31.1.2024.
Appeal under amnesty scheme can be filed only after the appellant has deposited as below:
(a) in full the amount admitted by him (tax + interest + penalty) and
(b) a sum equal to 12.5% of tax in dispute (minimum 2.5% in cash)
[ Notification 53/2023-CGST ]
18/12/2023
The Directorate of Investigations of the income tax (I-T) department in Surat, in searches carried out on the premises of two real estate firms, has unearthed unaccounted business transactions worth Rs 700 crore. Taking help of the CCTV camera network of the police, the Surat Municipal Corporation (SMC) as well as private properties, I-T officers went through the footage of around 250 surveillance cameras to track documents allegedly shifted by the employees of one of the companies from one place to another, officers said. The matter came to light when the DI was investigating a real estate firm’s alleged involvement in selling buildings but not entering them in its account books to evade taxes. During a search of the firm’s premises, the DI found that the group has made business dealings with another real estate company. Between December 8 and 13, DI Additional Director Vibhor Badoni and Assistant Director Devn Keshwala, along with their teams of over 60 staffers, searched the premises of the two companies in 25 areas of Surat.
Penalty Imposed for Non-Consecutive Page Numbering in Minutes Book by M/s Bestow Finishing School Private Limited Introduction: The Registrar of Companies, Punjab and Chandigarh, has imposed a penalty on M/s Bestow Finishing School Private Limited and its directors for violating Section 118(1) of the Companies Act, 2013. The violation pertains to the non-consecutive numbering of pages in the minutes book, as mandated by the Companies Act. This order serves as a reminder to companies about the importance of meticulous record-keeping, even in cases where the company is non-operational. The penalty underscores the significance of compliance with statutory provisions to maintain the integrity and transparency of corporate records. Companies and directors are encouraged to adhere to the prescribed guidelines to avoid legal repercussions.
The new revamped National Website, www.incometaxindia.gov.in was launched at Chintan Shivir, Udaipur, Rajasthan, by Nitin Gupta, Chairman, Central Board of Direct Taxes at Ministry of Finance, Govt. of India. The new functionalities in the AIS Module are:
1. AIS utility with modify feedback functionality enabled – To facilitate taxpayers to modify earlier feedback through the utility.
2. AIS homepage on Compliance portal provides a bird’s eye view of all the functionalities available on the Compliance portal – increased convenience for users.
3. New attributes for the “Tax Payments” section in AIS – Certain attributes like BSR code, Challan serial number etc were added to facilitate the taxpayer in filing ITRs.
4. PAN- Aadhaar linking status display on AIS portal. Status is displayed in the information’ icon provided besides PAN number – ease of compliance.
5. Information Confirmation Functionality – To share taxpayers feedback on information gathered with information source and to take confirmation on taxpayers feedback/response.
17/12/2023
Income tax department is planning to introduce a crucial functionality on its website allowing taxpayers to discard their previously filed but unverified Income Tax Returns (ITR). Earlier, taxpayers were allowed to revise the ITR only in case of error or omission.
Government is likely to make it mandatory for businesses to issue electronic or e-invoice for B2C transactions in the next 2-3 years. Currently, businesses with a turnover of Rs 5 crore and above are required to generate e-invoice for their Business to Business (B2B) sales and purchases.
Goods and Services Tax Network has issued an advisory:
a) regarding Comprehensive Guide and Instructions for Direct API Integration with Any of the 6 IRPs for E-Invoice Reporting.
b) regarding Online Compliance Pertaining to ITC mismatch -GST DRC-01C.
16/12/2023
The RBI governor said that the central bank has proposed to enhance the limit of UPI transactions in hospitals and educational institutions to Rs 5 lakh from Rs 1 lakh. He also said that the RBI has proposed to enhance limits of e-mandates for recurring online transactions to Rs 1 lakh per transaction from Rs 15,000 per transaction for mutual fund subscriptions, insurance premium subscriptions, and credit card repayments.
CBIC Clarified that supply of pure services and composite supplies by way of horticulture / horticulture works where the value of goods constitutes = 25% of the total value of supply made to CPWD are eligible for exemption.
[Circular No. 206/18/2023-GST]
CBIC Clarified that job work services in relation to manufacture of malt are covered by the entry "Job Work in relation to all food and food products."
Irrespective of the end use as food item/preparation or for manufacture of beer and alcoholic liquor and attracts 5% GST.
[Circular No. 206/18/2023-GST]
Order of attachment of any property will be removed by written instruction of the commissioner or Automatically on expiry of one year from the date of issuance of order.
[Newly amended Rule 159(2) of CGST Rules 2017]
Value of services to a related person, by way of providing corporate guarantee to any banking company or financial institution, shall be deemed to be 1% of guarantee amount or actual, whichever is higher.
[Newly inserted Rule 28(2) of CGST Rules 2017 ]
CBIC has clarified that no GST is payable on Gangajal, which is used in pooja by households across the country, considering it pooja samagri. Pooja samagri is exempt since the introduction of GST.
15/12/2023
Babasaheb Keda Shetkari Sahakari Soot Girni Ltd. v. State of Maharashtra [2023] 156 taxmann.com 705 (Bombay)(25-09-2023)
Section 54- Amended to the definition of relevant date from “end of financial year” to “due date for furnishing return” would
be applicable to refund filed post 01/02/2019 to claim for refund in respect of returns filed consequent to that date and not to returns filed prior to the date of amendment.
The petitioner contended that for refund under Inverted Duty Structure, amendment to the definition of relevant date which was
made effective from 01/02/2019 would be applicable prospectively and not prior to 01/02/2019.
The Court held that the amendment is always prospective in nature, unless so specified, which is not the case and therefore, the
amended Section 54(1) would be applicable to the application for refund filed post 01/02/2019 to claim for refund in respect of returns filed consequent to that date. It would therefore, be apparent that the application for refund of the input tax to be filed by the petitioner
would be covered by the earlier definition of 'relevant date' which defined the same as end of financial year and not the amended
definition of 'relevant date' which defines it as due date for furnishing return. Thus, application filed by the petitioner for refund of input tax for the month of December, 2017 ought to have been entertained.
A S E India v. Union of India [2023] 156 taxmann.com 706 (TELANGANA)(06-11-2023)
Rule 86A-Impugned letter allegedly issued for blocking of the Credit ledger, since called upon the petitioner to submit his explanation was held neither an order of attachment of ITC and nor notice U/Sec 74 as there was no mention of proceedings drawn U/Sec 74.
The Court considered the contents of letter dated 2-12-2022 whereby at one point, it intimated blocking of the electronic credit ledger of the petitioner under section 86A of the CGST Act and at the same time, it also intimated fraudulent availment of ITC from
various dealers to the petitioner for explaining reasons for availment of such invalid ITC. However, there was also no mention of the same being an intimation in respect of proceedings drawn under section 74. The fact that the impugned notice dated 2-12-2022
called upon the petitioner to submit his explanation as would be evident from the same and it also goes to establish that it was not
an order of attachment of ITC account of the petitioner. If the letter dated 2-12-2022 was neither an order under section 86A, nor an
order under section 74 of the Act, in these factual circumstances, it was difficult to sustain the said letter dated 2-12-2022. If at all the same was the notice or the order of blocking the ITC account of the petitioner, the same was clearly in contravention to the
statutory provisions governing the field of blocking of availment of ITC. The letter was set aside.
Sun Flag Iron and Steel Co. Ltd. v. State of U.P. [2023] 156 taxmann.com 554 (Allahabad) (09-11-2023)
Section 129- Although E-way Bill was expired, but since goods were accompanied with E-tax invoice & E-way bill and
neither of them were cancelled, thus movement and genuineness cannot be disputed without proving intent to evade.
The goods in question were accompanying with e-tax invoice, G.R. and e-way bill but the goods and vehicle were detained due
to expiry of E-way Bill and authorities rejected contention of petitioner that e-way bill expired as there was a breakdown of vehicle.
The Court observed that all the details were available on the GST portal as e-tax invoice was raised and e-way bill was generated.
The petitioner also has not exercised its right either to withdraw the tax invoice or e-way bill in question, thus it was well within the
knowledge of the department that movement of the goods in question has been undertaken by the petitioner. The purpose of e-way bill is that the department should know movement of goods. Once the e-way bill has been generated and same has not been
cancelled by the petitioner within the time prescribed under the Act, the movement of goods as well as genuineness of transaction
in question cannot be disputed. Merely on the technical ground that e-way bill accompanying with the goods in question was expired
on 1-6-2023 whereas the vehicle had been intercepted in the intervening night of 2/3-6-2023. The authorities below have not
recorded a finding that there was any intention of the petitioner to evade the payment of tax, the penalty is not justified. Court relied upon Shyam Sel & Power Ltd. v. State of U.P. [2023] 155 taxmann.com 145 (All); Bhawani Traders v. State of U.P. [2023]
153 taxmann.com 86 (All) and Raghav Metals v. State of Haryana [2022] 141 taxmann.com 179 (P & H).
SCM Silks (P.) Ltd. v. Assistant Commissioner (ST) [2023] 156 taxmann.com 449 (Madras)(12-10-2023)
Section 74-Failure to consider reply filed deprives petitioner with the opportunity to have two occasions of matter to be
adjudicated and avail two well considered opinion by two Authorities, viz., Assessing Officer and Appellate Authority.
The Court observed that in the personal hearing, entire reply filed by the petitioner was recorded by the Assessing Officer but while passing the impugned order, unfortunately, authority did not deal with stand taken by petitioner in their reply. The Court held that the Assessing Officer shall provide sufficient time to file reply, minimum of 21 days, unless and otherwise any
specific time limit is fixed under the Act. Thereafter, he shall be afforded an opportunity of personal hearing; in case, if the assessee is in need of Relied Upon documents, the same shall also be furnished to the assessee, and after conducting a full-fledged enquiry,
shall conclude the assessment proceedings, in which, the Assessing Officer has to deal with contention which assessee would
raise/putforth in the form of reply/objections) in detail along with reasons for rejection of the reply, if any and thereafter, shall pass final assessment order. If any cryptic order is passed without doing so, ultimately, it would be fatal to the assessee and cause huge revenue loss. Therefore, orders should always be speaking, safeguarding both the interest of assessee and Revenue. Petitioner
entitled to have two occasions of matter to be adjudicated by Authorities, viz., Assessing Officer and Appellate Authority and
thereby, can avail two well considered opinion. In the present case, due to the failure on the part of the respondent/Assessing
Officer to consider the reply filed by the petitioner and deal with the same while passing the impugned order, by which, petitioner
will be deprived of their right to defend before the Assessing Authority if the matter is remanded to the Appellate Authority.
13/12/2023
Advance Tax Due date: 15 Dec 2023 is the last date to deposit the 3rd instalment of advance tax for FY 23-24 i.e. assessment year 2024-25. Deposit your advance tax wherever applicable to avoid penal interest.
The Income-tax Appellate Tribunal (ITAT) in Delhi has overturned a revisionary order by the Principal Commissioner of Income-tax, stating that the non-deposit of long-term capital gains into a designated bank account cannot be used as a reason to deny deductions under section 54. This decision is expected to benefit many taxpayers facing similar situations. Section 54 of the Income-tax Act exempts long-term capital gains from the sale of residential property if they are invested in a new residential house within a specified period. The finding of the ITAT that when the basic conditions of section 54(1) are satisfied, the taxpayer remain entitled to claim the deduction, unequivocally shows that the courts are inclined to take a beneficial view, even if the amount is not deposited in the ‘capital gains account’ during the interim period. However, it is essential that the investment is made in the new residential house within the prescribed two-three year time frame. It should be noted that the ITAT bench while quashing the revisionary order observed that the Principal Commissioner had adopted a hyper-technical approach.
Small delay in depositing PF & ESI can result into irreparable income tax loss
1. After the decision of Hon. Apex court in Check mate Services Pvt. Ltd. vs. CIT (Civil Appeal No. 2833 of 2016) order dated 12.10.22, the legal position is now settled that the delayed deposit of employees contribution shall be held as deemed income u/s. 2(24) of the income tax act.
2. Relevant provisions of the Income Tax Act:
2(24)(x): any sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set up under the provisions of the Employees’ State Insurance Act, 1948 (34 of 1948), or any other fund for the welfare of such employees;]”
36(1): The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28—
(va) any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employee’s account in the relevant fund or funds on or before the due date.”
3. Thus, Section 36(1)(va) does not operate in isolation , it is the deeming provision of section 2(24)(x) by virtue of which delayed payment of employees contribution to PF and ESI is held as income of the Assessee Therefore once there is a delay in deposit of Employees Contribution to PF/ESI, it shall be held as deemed income.
4. Therefore, during the relevant assessment year, if the employer did not deposit the entire amount towards employees' contribution with the PF authorities on or before the due date under the EPF/ESI Act, to the extent there was shortfall in deposit of the employees' contribution/ESI contribution, the assessee is not entitled to the deduction.
5. The provision of Section 43B ensures timely payment before the returns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interest payment and other statutory liability. In the case of these liabilities, what constitutes the due date is defined by the statute. Nevertheless, the assessees are given some leeway in that as long as deposits are made beyond the due date, but before the date of filing the return, the deduction is allowed.
6. That, however, cannot apply in the case of amounts which are held in trust, as it is in the case of employees' contributions- which are deducted from their income. They are not part of the assessee employer's income, nor are they heads of deduction per se in the form of statutory pay out. They are others' income, monies, only deemed to be income, with the object of ensuring that they are paid within the due date specified in the particular law.
12/12/2023
TDS deductors receiving notices for not deducting TDS at 20% in case of payee not linking PAN with Aadhar:
1. Of late, assessees have received notices from Income Tax (TDS) department for not deducting TDS of payee having inoperative PANs at the rate of 20%. This is because the payee has missed linking PAN with his Aadhar.
2. As per Section 139AA of the Income-tax Act,1961 (‘the Act’) that every person who has been allotted a Permanent Account Number (‘PAN’) shall also be required to link the same with his Aadhaar.
3. If the PAN is not linked with Aadhaar by 30th June 2023, it shall become inoperative immediately.
4. Rule 114AAA of the Income-tax Rules (‘the Rules’) provides that in case of a person whose PAN has become inoperative, it shall be deemed that he has not furnished, intimated or quoted the PAN at all, and he shall be liable for all the consequences under the Act for not furnishing, intimating or quoting the PAN.
5. However, the person can make his PAN operative again by linking his Aadhaar and the PAN shall be operative from the date of intimation of Aadhaar.
6. As per the provisions of Section 206AA of the Act, where a payee fails to furnish his PAN to the deductor, tax shall be deducted at a higher rate of:
· rate specified in the relevant provision of the Act or
· at the rates in force or
· at the rate of 20%
7. Now, strictly going by the provisions of Rule 114AAA, TDS will indeed have to be deducted at 20% even if the payee later on links his PAN with Aadhar to make it operative.
11/12/2023
What does Domestic Transfer Pricing mean?
A. Sec 92BA of the Income Tax Act: Section 92BA defines specified domestic transactions that are governed by the Transfer Pricing provisions, which include the domestic transactions related to any of the following activities in the case of an assessor:
1. Some expense incurred or incurred in conjunction with a payments made or to be made to an individual referred to in point (b) of section 40A(2).
2. Transactions related to in Section 80A.
Some transaction related to business between the assessee and another individual referred to in Section 8 of Section 80 IA.
3. Every activity referred to in section VI-A or section 10AA, or an individual to whom the requirements of subsection 8 or subsection 10 of section 80 IA relate.
4. And where the total of such payments entered into by the assessee in the intervening year reaches 20 crores.
5. Any other transactions that may be recommended
B. What is the Threshold Limit has been prescribed in the law?
1. The provisions referred to above shall apply only if the aggregate value of the turnover of the transactions referred to above exceeds Rs. 20 crore A.Y. 2017-18 onwards.
2. If the threshold has been reached, the consumer will be expected to conform with the Transfer Pricing provisions for all purchases, despite the fact that the volume of transactions under any head may be low. There is therefore no criterion for each head of the description.
C. Applicability of Domestic Transfer Pricing?
1. Monetary threshold limit of 20 crores is to be calculated on the basis of the aggregate of payments and receipts to which these provisions apply.
2. Definition of Related party includes expenses disallowed to cover the entities which have common beneficial ownership
3. Transfer pricing is mostly applicable to international transactions and specified domestic transactions and specifically excludes Advance Pricing Agreement provisions.
D. Concept of Arm's Length Price(ALP)
The concept of ALP has also been extended to Specified Domestic Transactions. ALP is defined as the price which is applied to proposed to be applied in a transaction the assessed and any other unrelated person in uncontrollable condition
E. Methods of Computing ALP
1. Comparable uncontrolled price method
2. Resale price method
3. Cost plus method
4. Profit Split method
5. Transactional net margin method
6. Such other method as may be notified by the Board
10/12/2023
The value of the unaccounted cash seized by the Income Tax Department from the premises linked to Congress Rajya Sabha MP Dheeraj Sahu in Odisha and Jharkhand is likely to amount to Rs 300 crore figure, official sources said on Saturday. With this, the cash seizure in the raids which began on Wednesday, will make it the "highest-ever" black money haul by any agency in a single operation, reported news agency PTI, citing official sources.
Cash haul in Odisha I-T raids goes past Rs 300 crore.
1. As the income-tax department’s searches against an Odisha-based Boudh distillery company entered its fifth day, over Rs 300 crore cash has been seized (PTI sources) so far after additional machines, staff and security personnel have been reportedly deployed to accelerate the counting of the seized currency notes.
2. This has become the “highest-ever" such haul in a single action conducted by any probe agency in the country.
3. According to the latest updates, CISF personnel have been deployed outside the premises of Boudh Distilleries Private Limited at Odisha’s Balangir.
4. The tax department has deployed about 40 large and small machines to count the currency notes and brought in more department and bank staffers to finish the process, which began on December 6 following raids against Boudh Distillery Private Limited and others.
5. The department believes that the entire cache of currency is "unaccounted" money earned from cash sales of country liquor by the business group, distributors and others.
6. The department is also recording the statements of the executives and other staff who were present at the searched locations and will soon issue summonses to the main promoters of the company for recording their statements.
Source:PTI
Few Facts about Form GST DRC-01C
1. It’s an intimation form issued by the GSTN to taxpayers regarding any discrepancies between the ITC available in GSTR-2B statement and the ITC claimed in the GSTR-3B return.
2. Purpose of Form GST DRC-01C- To identify and reconcile any discrepancies in ITC claims made by taxpayers. This helps to ensure that taxpayers are correctly utilizing their ITC benefits and adhering to GST compliance requirements.
3. Who Receives Form GST DRC-01C- Form GST DRC-01C is issued to registered taxpayers who have filed their GSTR-3B return and there is a difference between the ITC available in GSTR-2B and the ITC claimed in GSTR-3B beyond the prescribed threshold.
4. Key Components of Form GST DRC-01C
Part A: Issued by GSTN, it provides details of the discrepancies in ITC claims.
Part B: Response section for the taxpayer to provide explanations or reasons for the discrepancies.
5. Actions Required Upon Receiving Form GST DRC-01C
Review the discrepancies: Carefully examine the details provided in Part A to understand the nature of the ITC mismatches.
Provide explanations: If the discrepancies are due to genuine reasons, such as delayed receipt of invoices or errors in data entry, provide clear explanations and supporting documentation in Part B.
Pay any outstanding ITC: If the discrepancies are due to excess ITC claims, make the necessary payment along with applicable interest through Form GST DRC-03.
Submit Part B: File Part B electronically within the specified timeframe, even if there are no discrepancies to be explained.
6. Consequences of Non-Compliance- Non-availability of ITC: The taxpayer may be restricted from utilizing the disputed ITC until the discrepancies are resolved.
Blocking of GSTR-1/IFF filing: The taxpayer may not be able to file their GSTR-1/IFF return for the subsequent tax period until they address the Form GST DRC-01C intimation.
09/12/2023
Saudi Arabia offers tax breaks for companies moving regional HQs to their Kingdom:
1. Saudi Arabia said on Tuesday it will offer tax incentives for foreign companies that locate their regional headquarters in the kingdom, including a 30-year exemption for corporate income tax.
2. The world's top oil exporter announced in February 2021 plans to cease awarding government contracts to companies whose regional headquarters are not located in the kingdom by Jan. 1, 2024.
3. The ultimatum, part of efforts by Crown Prince Mohammed bin Salman to wean the economy off oil by creating new industries that would generate jobs for Saudis, has escalated the kingdom's competition with regional business hub the United Arab Emirates.
4. The tax exemption package for regional headquarters includes a zero percent rate for the income tax of the regional entity and for the withholding tax on approved activities of those entities for 30 years, state news agency SPA reported.
Source: Reuters
Assessment Orders solely based on AIR information is unsustainable: ITAT Mumbai: Bona Sera Hospitality Pvt. Ltd Vs DCIT (ITAT Mumbai) (ITA No.1750/Mum/2023)
Facts:
1. The assessee company is in the business of providing services of developing, installing and maintenance of software to the hospitality, food service and various other general industry segments and also carry out trading in hardware and software. It had more than 300 clients (mainly restaurant & hotel) and according to assessee, in the course of business by its clients more than 2000 invoices were raised during the year under consideration.
2. The AO, relying on the AIR information and finding discrepancies in the 26AS statement, directed the assessee to reconcile the income. Despite reconciling a significant portion, a mismatch of Rs.8,42,331/- remained, leading to an addition of Rs.10,34,287/- by the AO.
3. According to assessee, it is evident from the AIR information itself that revenue as per the 26AS was only to the tune of Rs.5,88,84,001/- and the assessee has been unable to reconcile only Rs.3,67,773/- and has shown revenue to the tune of Rs.10,89,33,540/-. In this regard, it is found that the revenue shown by assessee in its P & L account far exceeds the amount shown in the AIR information.
4. The CIT(A) partially allowed the appeal, directing the deletion of Rs.6,66,514/-. The assessee argued that reconciling 1100 out of approximately 1200 items was a substantial effort, and the remaining discrepancy was due to unintentional mistakes, urging against additional tax. The appellant highlighted its substantial revenue, the nature of its business, and the difficulty in reconciling all entries
ITAT Mumbai held as below:
1. An assessment order based only on the strength of the AIR information would not be sustainable in case, the assessee disputes the receipt of income from a particular source. In such an event the AO need to prove that the assessee has received income because the assessee cannot be expected to prove the negative.
2. Therefore, considering the peculiar facts of the case, we direct deletion of the addition. In the result, appeal filed by the assessee is allowed.
08/12/2023
Women can be Karta of an HUF: Delhi HC: MANU GUPTA Vs SUJATA SHARMA & ORS (Case No.: RFA(OS) 13/2016 & CM APPL. 6041/2016)
Order of the division bench of Justice Suresh Kumar Kait and Justice Neena Bansal Krishna while holding that women can be Karta of HUF:
1. Men and women historically were born equal.
2. The unwavering certitude in the marginalisation of women, so deeply entrenched in society, is perceived to be imperilled by the prospect of a woman taking
3. The explicit language of Section 6 of the 2005 Amendment Act, clarifies that “same” rights conferred includes a woman’s entitlement to serve as a Karta. To say that a woman can be a coparcener but not a Karta would be giving an interpretation which would not only be anomalous but also against the stated Object of the introduction.
4. If there arises any scepticism about the skills, efficiency, sincerity, or ability of female Coparceners to act as the Karta or being influenced by her n-laws, the other Coparceners have adequate remedies to seek for a partition or impeach any wrongful alienation of property made by the Karta.
07/12/2023
SC clarifies that there is no deadline for selection of mode of computing depreciation: CIT Vs Jindal Steel & Power Limited (Supreme Court of India) (Civil Appeal No.13771 of 2015)
The moot question before the Hon SC was whether Income Tax Appellate Tribunal (ITAT) could ignore compliance to statutory provision relating to exercise of option to adopt Written Down Value (WDV) method in place of straight line method while computing depreciation on the assets used for power generation.
Hon SC held that:
1. There is no requirement under the second proviso to sub-rule (1A) of Rule 5 of the Rules that any particular mode of computing the claim of depreciation has to be opted for before the due date of filing of the return.
2. All that is required is that the assessee has to opt before filing of the return or at the time of filing the return that it seeks to avail the depreciation provided in Section 32 (1) under sub- rule (1) of Rule 5 read with Appendix-I instead of the depreciation specified in Appendix-1A in terms of sub-rule (1A) of Rule 5 which the assessee has done.
3. If that be the position, we find no merit in the question proposed by the revenue. The same is therefore answered in favour of the assessee and against the revenue.
Explanation 6 and 7 to Sec 9(1)(i) have to be given a retrospective effect: Delhi HC: CIT Versus Augustus Capital Pte. Ltd. (ITA 405/2022)
Facts:
1. Assessee is a company incorporated under the laws of Singapore. Between January 2013 and March 2014, the assessee invested in equity and preference shares of Accelyst Pte. Ltd. (APL), a company incorporated in and resident of Singapore. The total value of the investments the assessee made in APL was Rs. 4,91,20,00.
2. The assessee sold its investment in APL to an Indian company, Jasper Infotech Pvt. Ltd., for Rs.41,24,35,969. The assessee declared its income as “nil” and claimed a refund.
3. Queries were raised during the assessment proceedings, which led to the assessee filing written replies. The sum and substance of the content of these replies was that the assessee had acquired only 0.05% of the ordinary share capital and 2.93% of the preference share capital of APL and had no right of management and control concerning the affairs of APL. Hence the capital gains arising on account of transfer of shares was not taxable in India.
4. The AO did not accept the explanation, and accordingly, he passed a draft Assessment Order proposing an addition towards long-term capital gains (LTGCs).
5. The department contended that even where an amendment to the law is described as clarificatory, it is not always given a retrospective effect if it results in a substantial amendment. Explanations 6 and 7 appended to Section 9(1)(i) of the Income Tax Act are thus not merely declaratory or clarificatory but introduce a new set of exemptions for small taxpayers. Therefore, it is like substantive amendments, which can only apply prospectively.
Note: The judgment of the Supreme Court rendered in the case of Vodafone International Holdings BV v. Union of India excluded from the scope and ambit of section 9(1)(i) gain or income arising from the transfer of shares of a company located outside India. However, the value of the shares was dependent on assets situated in India. Explanations 4 and 5 were introduced via the Finance Act 2012, which was effected from 1-4-1962 to cure this gap in the legislation.
Hon Delhi HC held as below:
1. Explanations 4 and 5 presented difficulties in that the expressions 'share and interest' and 'substantially' found in the explanations were vague. Explanations 6 and 7 alone would have no meaning if they were not read along with Explanation 5. Therefore, if Explanations 6 and 7 have to be read along with Explanation 5, which concededly operates from 1.4.1962, they would have to be construed as clarificatory and curative.
2. Explanations 6 and 7 appended to section 9(1)(i) Of the Income Tax Act, 1961 to be given retrospective effect.
06/12/2023
TDS liability on LG India for notional profit attributable to LG Korea PE is not tenable: ITAT Delhi: LG Electronics India Ltd (ITA Nos.7926 to 7930/Del/2018)
Facts:
1. A survey operation under section 133A of the Income Tax Act was conducted in the business premises of the assessee. Based on statements recorded from certain expatriate employees and documents found, the Assessing Officer formed a belief that the parent company in Korea i.e. LG Korea and other associated companies had a business connection and Permanent Establishment (PE) in India.
2. Hence, it was observed that, the income derived by the parent company and other group entities is taxable as business income in India. Therefore, the assessee was liable to deduct tax at source in terms of section 195(1) of the Act while making payments to them.
3. Since, the assessee had not deducted tax at source on such payments, the AO initiated proceedings under section 201 of the Income Tax Act, and thereafter, holding the assessee as an assessee in default.
4. The assessee maintained that since, the no payment has been made to the parent company in respect of salary of expatriate employees, the provisions of section 195 cannot be attracted. Thus, the assessee cannot be deemed to be an assessee in default in absence of any payment made to the parent company. The attribution of profit to the PE as computed by the Assessing Officer is purely on notional basis, based on the directions of DRP in case of the parent company, to whom the payment has been made.
ITAT Delhi held as below:
1. When the assessee has not made any direct payment to the LG Korea towards the salary cost of expatriate employees, in our view, there was no liability on the assessee to deduct tax on such notional payment.
2. The assessee has already deducted tax under section 192 of the Act in respect of salary cost of expatriate employees.
3. Thus, when the basis of attribution of profit to the PE is a notional income, that too, based on a methodology adopted by DRP in case of payee, the assessee cannot be expected to perform an impossible act of computing TDS on a notional payment, a part of which, is to be attributed towards profit of PE of LG Korea.
4. Thus, in our view, in the peculiar facts and circumstances of the present appeals, the assessee cannot be treated as an assessee in default.
04/12/2023
The Delhi High Court noted the balance of convenience rules in favour of Make My Trip and granted a temporary injunction against Dial My Trip for trademark infringement. The Court noted that the marks 'MakeMyTrip' and 'Dialmytrip' are confusingly similar, especially in the online travel business. The Court also emphasized Plaintiff is a well-known company in the travel industry with established goodwill and reputation over the years. Failure to grant an injunction in the case is deemed likely to result in irreparable loss to the Plaintiff, the Court added. Therefore, the Court, at the prima facie stage, granted an injunction restraining the Defendant from using the mark 'Dialmytrip' for tour, travel, hospitality, and other services. Accordingly, the Court listed the matter for March 22, 2024.
The Punjab and Haryana High Court observed that the wife cannot be held liable under Section 138 of the Negotiable Instruments Act for a cheque drawn by her husband from their joint account. The Court, while quashing criminal proceedings against the Wife, noted that the provision only applies to the drawer of a cheque who fails to make payment after the cheque is dishonoured. “In view of the above discussion, it would be safe to observe that the petitioner is not liable for the cheque drawn by her husband from the joint account relating to both of them”, the Bench of Justice NS Shekhawat observed.
03/12/2023
Gst Section/Rule: Section 67: Authority: Delhi High Court: Case Name: Gunjan Bindal And Anr. VS Commissioner Of CGST, Delhi West And Ors.
Dated 17th November, 2023
Brief Facts: The petitioners are brothers residing in separate floors of a building at New Delhi. On 18.01.2020, a search was conducted at the residential premises of the petitioners under Section 67 of CGST Act, 2017. Amongst other articles, cash amounting to ?14,50,000/- was found in the bedroom of petitioner no.1 located on the second floor of the premises, and cash amounting to ?1,00,50,000/- was found from the bedroom of petitioner no.2 located on the fourth floor. Since the petitioners were unable to provide any satisfactory explanation or any documentary evidence to support the source of the cash, the officers resumed the cash on the belief that it had resulted from unlawful activity or was sale proceeds of goods without proper accounting.
Contention of Petitioners:
The petitioners repeatedly requested the Department for release of the said amount but the said cash has not been released. The concerned officers had no power to seize cash under Section 67 of the CGST Act on the ground that the same was not satisfactorily explained.
Findings & Order:
This issue is covered by the earlier decisions of this Court in Deepak Khandelwal Proprietor M/s Shri Shyam Metal v. Commissioner of CGST, Delhi West & Anr. and Rajeev Chhatwal v. Commissioner of Goods and Services Tax (East) . Accordingly, the Department is liable to refund the money seized. The Department stated that the amounts
so seized has been kept in a fixed deposit bearing interest. Thus, Department was directed to remit the amount of ?14,50,000/- along with accrued interest to the bank account of petitioner no.1, and remit ?1,00,50,000/- along with accrued interest to the bank account of petitioner no.2.
Case No. W.P (C) 2164/2022 & CM APPL. 6192/2022; Case Title: Chitan Bindra Vs DCIT; Order Dt. 29.11.2023: Delhi High Court Order Dt. 29 November 2023: Employee Cannot be Held Liable for Failure of Employer in Depositing the Deducted Taxes. Employee Not Liable for Employer’s TDS Failure: In a significant ruling on November 29, 2023, the Delhi High Court delivered a judgment in the case of Chintan Bindra vs Dy Commissioner of Income Tax, highlighting that employee should not bear the brunt of their employer’s failure to deposit deducted taxes. This article provides an in-depth analysis of the case, outlining key facts, the court’s judgment, and the implications for the petitioner.
Background of the Case:
Chintan Bindra, a Captain employed with Kingfisher Airlines Limited since April 16, 2008, faced challenges related to Tax Deducted at Source (TDS) for the Assessment Years (AY) 2009-10, 2011-12, and 2012-13. Despite TDS being deducted by his employer, it was not reflected correctly in his Form 26AS. This discrepancy led to a series of demands from the Income Tax Department, creating a complex legal battle.
The Delhi High Court’s ruling in the Chintan Bindra case sets a precedent by protecting employees from the consequences of their employer’s failure to deposit deducted taxes. This judgment underscores the importance of holding employers accountable for fulfilling their role as tax-collecting agents.
02/12/2023
IN THE COURT OF High Court of Allahabad
PETITIONER/RESPONDENT: M/s.Shiv Trading : State of U.P
1. GROUNDS OF APPEAL
The Petitioner, aggrieved by the dismissal of Appeal, has filed the Writ Petition. The Petitioner contends that he has purchased the goods from a genuine existing dealer and, in support of his claim, has produced copies of the tax invoice, e-waybills, bilty and weighment slips. The Petitioner claims that his transactions were genuine, and in support of his claim, the Petitioner has placed reliance on judgements passed by various high courts.
2. The Court has dismissed the Writ, and the Court has observed that the records ndicate that the Petitioner didn't provide enough evidence to clearly prove the rea transactions, the actual movement of goods, and the authenticity of the transactions & existence of the dealer.
3. Consequently, the proceedings under section 74 of the Central Goods and Services Tax Act 2017 have been rightfully initiated against the petitioner.
Group Inslovency:
The Adjudicating Authorities have dealt with these issues in the following manner:
1. Bikram Chatterji v. Union of India
Homebuyers in projects built by various companies of Amrapali group filed a writ petition before the Supreme Court to safeguard their interests following the insolvency of various Amrapali group companies. In these proceedings, the Supreme Court addressed the group as a whole. The Court also mandated that the assets of all forty group firms in the Amrapali group be attached and that all bank accounts belonging to the companies and their directors be frozen due to the nature of the transactions between the group companies.
2. Venugopal N. Dhoot v. State Bank of India
In order to treat “the corporate insolvency resolution process as one in respect of all of the companies”, the parties in this case requested that the same Adjudicating Authority handle all issues pertaining to the insolvency resolution of multiple Videocon companies and that the separate proceedings of Videocon companies be consolidated. In order to “avoid conflicting orders and facilitate the hearing” of these proceedings, the Principal Bench of the NCLT ordered that all matters pertaining to the insolvency resolution processes of these several entities be handled by the same bench of the NCLT.
3. Edelweiss Asset Reconstruction Company Limited v. Sachet Infrastructure Private Limited
In this case, NCLAT held that “group insolvency proceedings were required to be initiated” against five companies that had been working as joint consortium to develop a residential colony. Taking into consideration the facts of the case and enabling successful development of the colony, the NCLAT ordered “continuation of simultaneous corporate insolvency resolution processes against them under the guidance of the same Resolution Professional. The Resolution Professional was also ordered to initiate a consolidated ‘Resolution Plan(s)’ for total development”.
It thus can be seen that even in the absence of any express provisions in the Code, the Adjudicating Authorities have taken decisions relating to group insolvency. Though these orders offer their value as judicial precedents, they do not deal with group insolvency comprehensively. Instead, these orders deal with insolvency on a case-to-case basis, making them unsuitable as a substitute for a comprehensive legal framework.
01/12/2023
Gstn Advisory Dated 01.12.2023
1. GSTN is introducing two-factor authentication (2FA) for taxpayers to strengthen the login security in GST portal. The pilot rollout has been done for a state of Haryana and working seamlessly. Currently, 2FA will be rolled out for Punjab, Chandigarh, Uttarakhand, Rajasthan and Delhi in 1st phase. In 2nd phase, it is planned to be rolled out all states across India.
2. Taxpayers would need to provide one-time password (OTP) post entering user id and password, the OTP will be delivered to their Primary Authorized Signatory “Mobile number and E-mail id”.
3. Tax-payers are requested to keep their email and mobile number of authorized signatory updated on the GST Portal for receiving the OTP communication. This OTP would only be asked, in case the tax-payer changes the system (desktop or laptop or browser) and location.
4. The solution would be rolled out from 1st of December’2023.
Gstn Advisory Dated 01.12.2023
This is to inform taxpayers about recent developments concerning the application process for GST registration. It is advised to keep the following key points in mind during the registration process.
1. Rule 8 of the CGST Rules, 2017 has been amended to provide that an applicant can be identified on the common portal, based on data analysis and risk parameters for Biometric-based Aadhaar Authentication and taking photograph of the applicant along with the verification of the original copy of the documents uploaded with the application.
2. The above-said functionality has been developed by GSTN. It will be rolled out in Andhra Pradesh on 4th December, 2023.
30/11/2023
Recent Patna High Court’s Ruling on CGST Act Section 16(4) – Analysis
Analysis of recent Patna High Court Judgment on Sec.16(4) of CGST Act, 2017
This article delves into the recent landmark judgment delivered by the Patna High Judgment in the case of Gobinda Construction vs Union of India through the Secretary. The case revolves around the interpretation and constitutional validity of Section 16(4) of the Central Goods and Services Tax (CGST) Act, 2017, and its implications on Input Tax Credit (ITC). The judgment, dated 8th September 2023, addressed crucial legal questions and has far-reaching consequences for taxpayers and businesses.
Facts of the Case:
• The Registered Person was regular in filing monthly returns in Form GSTR-1 during the financial year 2018-19.
• The Summary return, GSTR-3B of February 2019 was filed on 23.10.2019 & March 2019 on 11.2019.
• The Department served Show Cause Notice on 20.02.2020, u/s 73 disallowing ITC of Feb'19 & March'19 on the grounds of late filing of GSTR 3B.
• The last date for availing ITC of FY 2018-19, as stipulated u/s 16 (4) being the due date of filing GSTR 3B of September'19 return., i.e 20.10.2019
• The SCN had demand of tax with interest & penalty amounting to Rs. 1,34,12,983.
• Order u/s 73 of CGST Act, 2017 was passed on the ground that ITC availed in breach of conditions specified u/s 16(4) of CGST Act,2017.
• Aggrieved by the order of the Assistant Commissioner, the Registered Person preferred an appeal before the Additional Commissioner of State Tax (Appeal) Patna.
• filed a Writ Petition in the Hon'ble High court of Patna.
• The appeal was dismissed on the grounds that ITC availed for the period in question is inadmissible in view of Sec.16(4) dt.19.03.2020.
• The petitioner challenged the Appellate order whereby the ITC availed by the petitioner has been disallowed due to belated filing of form GSTR 3B, that is not in line with the provisions of Sec.16(4) of CGST Act,2017.
Issues:
1. Whether Sec.16(4) of CGST Act, 2017 is constitutionally valid, that restricts the valid ITC relating to previous Financial year being claimed beyond the due date specified therein. Sec.16(4) is violative of Art.14 and Art.300A of the Constitution of India.
2. The Sec.16(4) is procedural in nature and cannot override 16(2) of CGST Act.2017
3. The Sec.16(4) to be read down and declare the ITC restrictions specified therein are applicable only for invoices or debit note received after end of the financial year beyond, September of the preceding financial year.
4. The GSTR 3B is not a return seeking declaration that the Rule 61(5) of CGST Rules, 2017 as amended retrospectively prescribing GSTR3B as return is ultra vires of Sec.39(1) of CGST Act.2017.
Legal Provision: Sec.16 (4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier.
"[Provided that the registered person shall be entitled to take input tax credit after the due date of furnishing of the return under section 39 for the month of September, 2018 till the due date of furnishing of the return under the said section for the month of March,2019 in respect of any invoice or invoice relating to such debit note for supply of goods or services or both made during the financial year 2017-18, the details of which have been uploaded by the supplier under subsection (1) of section 37 till the due date for furnishing the details under sub-section (1) of said section for the month of March, 2019]"
Sec.16 (4) has since been amended by the Finance Act, 2022 with effect from 01.10.2022 whereby the words and figures "due date of furnishing of the return under Section 39 for the month of September" stand substituted by "30th day of November
Key Arguments of the Petitioner:
• Denial of ITC under Sec.16(4) of CGST Act, 2017is confiscatory in nature. In as much as, denial of ITC is implied confiscation of property in the shape of financial benefit belonging to a registered person.
• ITC is a vested right under Article 300A of the constitution. Such protected right cannot be taken away on the ground of belated filing of return.
• Alternatively, Sec.16(4) may be read down. The court may be held that the embargo in the said provision would apply only to restrict claim of ITC in respect of only such invoices or debit notes received after the end of the financial year beyond September of the preceding financial year and not such claims in a belated return filed after such date.
• 16(4) is merely procedural in nature and cannot override the substantive conditions as mandated in Section 16(2)of CGST Act,2017.
• The Sec.16(4) violation of Art.14 of the constitution in the sense, the rational nexus with the objective of the GST Act, with respect to Input Tax Credit, is failed.
• imposes unreasonable and disproportionate restriction on right to freedom of trade and profession guaranteed under Article 19(1)(g) therefore, violates Article 300A of the Constitution and is in teeth of Article 13 of the Constitution of India.
• By disallowing ITC and invoking Sec.16(4) amounts to double taxation thus violates the principle of taxation on value addition.
• The denial of ITC results in withholding an amount paid as input tax by a purchaser and constitutes a source of tax once again, which is violative of Article 265 of the Constitution of India.
• Relied on the judgment, denial of credit on technical or procedural grounds is invalid, laid down by the Punjab & Haryana High Court in case of Apfert Technologies Pvt. Ltd. vs. Union of India and others, which has been affirmed by the Supreme Court.
Key Arguments of the Respondent:
• ITC is in the nature of benefit/ concession extended to a registered person under the CGST Act, which can be availed only as per the scheme of the Act.
• The ITC can be availed only as per conditions prescribed u/s 16 cannot be held to be arbitrary or violative of any right guaranteed under Art.19(1)(g) of the constitution.
• 16(4) is the condition precedent of availing the benefit of ITC as specified in Sec.16 of CGST.
• 300A –Right to property-The term property has a most extensive significance, and, according to its legal definition, consists in free use, enjoyment, and disposition by a person of all his acquisitions, without any control or diminution.
• Doctrine of reading down applies only when general words used in a statute or regulation should be construed in a particular manner so as to save its constitutionality. where the words are clear, there is no obscurity, there is no ambiguity and the intention of the Legislature is clearly conveyed, there is no scope for the Court to innovate or take upon itself the task of amending or altering the statutory provisions.
• The right of a registered person to take ITC under sub-section (1) of Section 16 of the Act becomes a vested right only if the conditions to take it are fulfilled, free of restrictions prescribed under sub-section (2) thereof.
• In order to invoke Article 300-A of the Constitution by a person, two circumstances must jointly exist:- (i) Deprivation of property of a person (ii) Without sanction of law. Sec.16(4) doesn't fall within the two circumstances.
• Fiscal legislation having uniform application to all registered persons, in our considered opinion, cannot be said to be violative of Article 19(1)(g) of the Constitution and the question of such statutory provision being violative of Article 302 of the Constitution and in teeth of Article 13 of the Constitution of India does not arise at all.
Judgment:
• The provisions under Sec.16(4) are constitutionally valid and are not violative of Articles 19(1)(g) and Article 300-A of the Constitution of India.
• The provisions under Sec.16(4) of CGST Act, 2017 is not inconsistent with or in derogation of any of the fundamental right guaranteed under the Constitution of India.
• The writ applications, are accordingly dismissed
Conclusion: The denial of ITC and levying tax, interest and penalty for non-complying with the provisions of Sec.16(4) of the CGST Act, can lead to significant financial setbacks for the registered business owners. Further, this results in double taxation in the form of collecting tax from the purchaser and supplier on the same goods or service due to procedural error. It is well acknowledged that, Sec.16(4) of CGST Act, doesn't permit to avail ITC relating to preceding financial year in case of delayed filing of subsequent year's September month GSTR 3B. In the matters concerning taxation statutes, strict interpretation is commonly followed. However, considering the intricacies, complexity associated with return filing during the initial years of GST, Technical glitches, frequent amendments, the careful process followed in ascertaining eligible ITC, knowledge level of the taxpayer in understanding the flow of credit through a dynamic return GSTR 2A, and other related factors,
This case has not explored other facets of legal principles and interpretation including but not restricted to
• the application of "Doctrine of legitimate expectation" that the Sec.16(4) must allow certain special circumstances where the equity of allowing ITC overweighs the strict application of Sec.16(4).
• The harmonious interpretation of Sec.16(4) read with Sec.39(11), as proposed in Finance Act 2023.
• The harmonisation of Sec.16(4) with the Statement of objects and reasons of the legislature in bringing about the mechanism of ITC to obviate cascading effect and seamless flow of credit.
• A settled view of whether ITC is a property as per Art.300A of the Constitution of India.
• A final view of whether the legal right that is vested upon satisfying provisions of Sec.16(1), and Sec.16(2) can be taken away by the legislature.
• A final settled view of whether ITC is a legal right to which the Registered Person is entitled, to claim as per the text of Sec.16(1) or a concession / benefit allowed by the State as per view held by various courts, as carried over into GST from the previous state VAT laws.
Source: Case Name : Gobinda Construction Vs Union of India through the Secretary (Patna High Court), Appeal Number : Civil Writ Jurisdiction Case No. 9108 of 2021, Date of Judgement/Order : 08/09/2023
29/11/2023
S&P has upped its GDP forecast for India
1. The latest forecast for India’s economic growth by Standard & Poor’s is out. The global rating agency now sees India’s gross domestic product expanding 6.4% in 2023-24, up from the 6% it had pencilled in earlier.
2. S&P attributes the jump to the robust momentum in the domestic economy, which seems to have offset headwinds on the export front and lived down high food inflation.
3. To be sure, this merely brings its forecast closer to the Reserve Bank of India’s 6.5% estimate.
4. Next year, however, could be tougher. Weighed by the full effect of monetary tightening, global weaknesses amid intense geopolitical turmoil and a high base, S&P now forecasts India’s growth in 2024-25 at 6.4%, a good half-a-percentage-point lower than its previous estimate of 6.9%.
The government is actively exploring the implementation of a minimum time requirement for transactions exceeding a specific amount, particularly for initial interactions between two individuals. This initiative aims to combat the escalating incidents of online payment fraud. According to sources cited by The Indian Express, government officials are considering a potential four-hour window for the processing of the first digital payment transactions, specifically those exceeding Rs 2,000.
28/11/2023
1. What is a "Vanilla Demerger"?
A Vanilla Demerger is a corporate strategy where a company divides itself into multiple entities, each focusing on a specific business segment.
2. Benefits of a Vanilla Demerger:
A. Enhanced Focus: Each entity can specialize and excel in its core area.
B. Unlocking Value: Shareholders benefit as the sum of parts can be greater than the whole.
C. Strategic Agility: Better adapt to changing market dynamics.
2. The Process:
A. Evaluation
B. Legal & Regulatory Compliance
C. Asset Distribution
D. Communication
3. Success Stories:
A. Think of Mondelez International's demerger of its coffee business into JDE Peet's.
B. Or Verizon Communications separating its media assets into Verizon Media Group.
4. Key Takeaway:
Vanilla demergers can be a powerful strategic tool, unlocking hidden potential and fueling growth.
5. Some key examples of this type of Demerger are-
A. Hewlett-Packard (HP): In 2015, HP underwent a significant demerger. The company split into two separate entities: Hewlett Packard Enterprise (HPE), which focuses on enterprise-level technology solutions, and HP Inc., which deals with personal computing and printing.
B. eBay and PayPal: eBay, the e-commerce giant, spun off PayPal, its payments subsidiary, in 2015. This move allowed both companies to operate independently and pursue their individual growth strategies.
C. Kraft Foods Group and Mondelez International: In 2012, Kraft Foods split into two companies: Kraft Foods Group, which focused on grocery products, and Mondelez International, which concentrated on global snacks and confectionery.
D. Viacom and CBS Corporation: Viacom and CBS Corporation, both major media conglomerates, announced a demerger in 2005. They were later re-merged in 2019. The separation allowed each company to focus on its core media businesses.
E. Altria and Philip Morris International: Altria Group, the parent company of Philip Morris USA, spun off Philip Morris International in 2008. This demerger separated the U.S. and international tobacco businesses, enabling them to cater to their specific markets more effectively.
F. And the latest Indian examples being the Reliance-Jio Demerger and the very recent Vedanta Demerger.
6. These examples illustrate how demergers can be used in various industries to unlock value, streamline operations, and allow each entity to focus on its strengths and unique strategic goals.
RERA NCT Order No.F.1 (128)/Directions/RERA/2023/3709 - 14: Dated 28.11.2023: Considering the various facts on record, the Authority has decided to withdraw its order of even number dated 11.09.2023 with immediate effect.
RERA NCT Order dated 11.9.2023- The Authority further directs all Sub-Registrars to:
i. Not ot register more than the number of dweling units as indicated in para 2 above on the sizes of the plots given. 1. Not to register any Sale Deed for any dwelling unit without the Dwelling Unit number given by the civic body ni the sanctioned building plan.
Any violation of these instructions shall be viewed seriously and make the concerned officer liable for appropriate disciplinary action. As per UBBL, 2016, al DUs should have a kitchen. It has come to the notice of the Authority that various civic Authorities like MCD, DDA, NDMC and Delhi Cantonment Board are sanctioning building plans with dweling units having kitchen as above with additional dweling units without kitchen built with pantry or store. The builders after sanction of building plans, convert pantries and stores into kitchens and sel units as separate dwelling units, circumventing orders of the Hon'ble Supreme Court. nI order to ensure that the Hon'ble Supreme Court's order is followed and implemented in letter and spirit and not more than the number of dwelling units specified (mentioned in para 1 above) are allowed to be constructed on various plot sizes and ot protect the interest of allottees, the Authority gives following directions ot MCD, NDMC, DDA, Delhi Cantonment Board and all other civic bodies.
RBI regulations on sale of immovable properties by Non Residents: FEMA, 1999 and FEM (Non-Debt Instrument), 2019 lay down the procedure and guidelines for transfer of commercial or residential property in India by NRIs/OCIs.
1. Transferor who can sell an immovable property: A person resident outside India can transfer any immoveable property acquired or owned him when he was resident in India or inherited from a person resident in India.
2. Transferee who can buy an immovable property: A person resident in India or another NRI or OCI can be a transferee. A non-resident can sell agricultural land/plantation property/farm house only to resident citizen of India.
3. Repatriation of sales proceeds: Conditions for repatriation are as follows:
I) The property must have been acquired as per foreign exchange law in India.
II) Amount to be repatriated does not exceed the foreign exchange paid for acquisition or amount paid out of FCNR Account or out of NRE Account for acquisition of the property.
III) Sale proceeds of not more than 2 residential properties.
There is general permission for repatriation of sale proceeds of inherited immovable property. However, the following conditions are need to be complied:
a) Upper limit of repatriation amount is USD 1 million per year
b) Documentary evidence of inheritance along with a CA certificate
c) Deed of settlement along with NOC from Income Tax Department
d) Part remittances upto the upper limit to be processed through same bank.
e) Foreign national needs prior approval of RBI along with CA Certificate and inheritance documents.
4. Transfer by Gift: An NRI/PIO may gift residential/commercial property to Person resident in India or An NRI or a PIO
5. General prohibition: There is general prohibition of transfer of immovable property in India by citizens of neighbouring countries, without prior approval of RBI.
27/11/2023
When a resident buys property from an NRI, she/he must deduct TDS at 20% if the property has been held for more than two years and at 30% if the property is being sold within two years. The deduction must include TDS plus surcharge, health and education cess:: Ready reckoner for LTCG TDS rates
• Properties valued less than IN 50 lakh: Total tax 20.8% (including surcharge and cess)
• Properties valued between IN 50 lakh and INR 1 crore: Total tax 22.88%
• Properties valued above INR 1 crore: Total tax 23.92%
W.e.f. FY 2018-19, the finance ministry has announced a higher surcharge on properties valued above INR 2 crore. The applicable LTCG TDS rates are 25% and 37% for properties valued above INR 2 crore and INR 5 crore respectively.
India votes in favour of the UN resolution to shift global tax control from OECD:
1. India has joined 125 countries to vote in favour of a resolution calling for a 'UN tax convention' that would transform the global tax stratosphere.
2. The resolution calls for creation of an ad-hoc inter-governmental committee of no more than 20 member states (taking into cognizance gender and regional balance).
3. Currently, OECD, a 38-member grouping dominated by rich nations, makes these decisions.
4. Prominent OECD members like the US, UK, Netherlands, Switzerland, Japan, France, Germany voted against this resolution.
5. Unlike the OECD's Inclusive Forum, which is not an inter-governmental body, this committee aims to bring together OECD and non-OECD members for collaborative efforts.
6. The initial step, to be completed within a year, involves reaching an agreement on the terms of reference. Subsequently, the second step entails the development of a UN Framework Convention on international tax cooperation.
7. In practical terms, the new arrangement seeks to achieve a fair distribution of taxes to source jurisdictions, benefiting countries like India and the developing world through the establishment of global consensus on fair and equitable international tax rules.
8. The terms of reference for the committee could cover various issues, including aggressive tax avoidance, evasion, illicit financial flows, recovery of stolen assets, and taxation of the digital economy, taking into account the views of source countries.
9. While the OECD-led forums have explored the 'Two-Pillar solution,' some countries, including India, have raised concerns about the allocation of profits to source countries under Pillar One.
TRC not submitted at the assessment stage admitted as additional evidence by ITAT: Amol Annaso Teradale (ITA No. 335/Hyd/2023)
Facts:
1. The appellant contested the confirmation of total income at Rs 24,51,111 by the lower authorities, especially the denial of benefits under Double Taxation Avoidance Agreement (DTAA) between India and USA. and insistence on Tax Residency Certificate (TRC) for claiming the same.
2. The ITO and DRP contended that TRC is mandatory as per Sec 90(4) of the Income Tax Act for claiming DTAA benefits. The appellant challenged this, presenting judicial precedents and alternative documents such as passport and U.S. tax returns as proof of residential status.
3. The assessee has also filed an application for admission of additional documents before the Tribunal namely the Tax Residency Certificates for Calendar Year 2019 and 2020 issued by the U.S.A. Treasury.
ITAT Hyderabad held as below:
1. The documents now produced before us are required to be admitted as additional evidence as the same goes to the root of the matter and hence, we admit the same.
2. The documents filed by the assessee which are in the nature of additional documents show that the assessee was tax resident in USA during the relevant assessment year.
3. Accordingly, we remand back the matter to the file of Assessing Officer with a direction to consider the Tax Residence Certificate and decide the issue afresh and pass a reasoned speaking order after affording of opportunities of hearing to the assessee in accordance with law.
26/11/2023
Agreement to sale is also ‘transfer’ as per Sec 2(47) of the Income Tax Act: SC :Sanjeev Lal etc (CA No 5899, 5900 of 2014)
Facts:
1. A residential property was a self acquired property of Shri Amrit Lal, who had executed a will whereby life interest in the aforestated house had been given to his wife and upon death of his wife, the house was to be given in favour of two sons of his pre-deceased son - late Shri Moti Lal and his widow.
2. One of the above stated grand children and the daughter-in-law of Shri Amrit Lal are the appellants in these appeals. Upon death of Shri Amrit Lal and his wife, the ownership in respect of the house in question came to be vested in the present appellants and another grandchild of late Shri Amrit Lal.
3. The appellants had decided to sell the house and with that intention they had entered into an agreement to sell the house with Shri Sandeep Talwar on 27th December, 2002 for a consideration of Rs. 1.32 crores.
4. Out of the said amount, a sum of Rs.15 lakhs had been received by the appellants by way of earnest money. As the appellants had decided to sell the house in question, they had also decided to purchase another residential house in Chandigarh so that the sale proceeds, including capital gain, can be used for purchase of the aforestated House. The said house was purchased on 30th April, 2003 i.e. well within one year from the date on which the agreement to sell had been entered into by the appellants.
5. The validity of the Will had been questioned by Shri Ranjeet Lal, who was another son of the deceased testator Shri Amrit Lal, by filing a civil suit, wherein the trial court, by an interim order had restrained the appellants from dealing with the house property.
6. During the pendency of the suit, Shri Ranjeet Lal expired on 2nd December, 2000 leaving behind him no legal heirs. The suit filed by him had been dismissed in May, 2004 as there was no representation on his behalf in the suit.
7. Due to the interim relief granted in the above stated suit, the appellants could not execute the sale deed till the suit came to be dismissed and the validity of the Will was upheld. Thus, the appellants executed the sale deed in 2004 and the same was registered on 24th September, 2004.
8. The Assessing Officer was of the view that the appellants were not entitled to any benefit under Section 54 of the Act for the reason that the transfer of the original asset, i.e. the residential house, had been effected on 24th September, 2004 whereas the appellants had purchased another residential house on 30th April.
Hon SC held as below:
1. The question to be considered by this Court is whether the agreement to sell which had been executed on 27th December, 2002 can be considered as a date on which the property i.e. the residential house had been transferred.
2. A a right in respect of the capital asset, viz. the property in question had been transferred by the appellants in favour of the vendee/transferee on 27th December, 2002. The sale deed could not be executed for the reason that the appellants had been prevented from dealing with the residential house by an order of a competent court, which they could not have violated.
3. In view of the aforestated peculiar facts of the case and looking at the definition of the term ‘transfer” as defined under Section 2(47) of the Act, we are of the view that the appellants were entitled to relief under Section 54 of the Act in respect of the long term capital gain which they had earned in pursuance of transfer of their residential property being House No. 267, Sector 9-C, situated in Chandigarh and used for purchase of a new asset/residential house.
Income Tax benefits to startups (Sec 80-IAC)
1. Section 80-IAC provides for a deduction of 100 percent of profits from eligible business activities. This deduction spans a block of three consecutive financial years, allowing startups flexibility in choosing this period within their first five years from the year of incorporation.
2. The eligibility criteria include an annual turnover not exceeding Rs. 100 crores in the previous year, and possession of a certificate of eligible business from the Inter-Ministerial Board of Certification.
3. An eligible business involves innovation, development, or improvement of products, processes, or services. Additionally, a scalable business model with high potential for employment generation or wealth creation aligns with the criteria. This nuanced definition ensures that startups engaged in transformative work are the primary beneficiaries of this tax incentive.
4. The certification is available for private limited companies or LLPs, with the entity’s existence and operations not exceeding ten years from incorporation. The annual turnover must not exceed Rs. 100 crores, and the entity should not have been formed by splitting up an existing business. Furthermore, the entity should actively work towards the development or improvement of a product, process, or service, demonstrating a commitment to innovation.
5. Startups looking to avail tax exemption under Section 80-IAC should register on the Startup India portal. Entities certified by DPIIT are not automatically eligible for Section 80-IAC deduction
25/11/2023
Assessee was exploring review petition in good faith, delay in filing appeals could be condoned: Delhi HC: Resorts Consortium India Limited Versus ITAT
(ITA 425/2023 & CM APPL. 45878/2023)
Facts:
1. An appeal was filed under Section 260A of the Income Tax Act, challenging the order dated 20.06.2016/21.06.2016 passed by the Income Tax Appellate Tribunal (ITAT) in ITA 1725/del/2012. The appellant sought condonation of a 79-day delay in filing the appeal.
2. The delay is explained by the appellant on the grounds that, after the arguments on 20.06.2016, no further date was fixed by the Tribunal, and the appellant was informed about the outcome only on 19.06.2019. Subsequently, the appellant applied for a certified copy of the order dated 21.06.2016, filed a review application on 09.10.2019, and learned about the review application's disposal on 02.05.2023.
3. The appellant argued that due to the resignation of the director who presented the case and the senior age of other directors, combined with issues with the Tribunal's portal, the delay occurred. The delay was also attributed to the appellant becoming aware of the appeal only in May 2019 during a meeting with auditors.
Hon Delhi HC held as below:
1. The appellant applied for certified copies of the impugned order and promptly filed review application. Similarly, on coming to know about dismissal of the review application also the applicant promptly applied for certified copies and soon thereafter filed the present appeal.
2. These circumstances clearly show that there were no lack of bona fides on the part of the applicant. Besides, the applicant had nothing to gain by not challenging the impugned order. The applicant in such circumstances cannot be denied the benefit of time spent by it in pursuing the review application as it was a sufficient cause which sought to explain the delay.
3. Besides, the time spent by the applicant while pursuing the review proceedings deserves to be excluded even under principles analogous to Section 14 of the Limitation Act because the applicant in good faith was prosecuting the challenge to the impugned order before the Tribunal with due diligence but the Tribunal was unable to entertain the review on account of defect of jurisdiction.
4. We find the case set up by the applicant to be an “explanation” and not an “excuse”. Most importantly, we would prefer in the facts and circumstances of this case to be guided by cardinal principle of justice that disputes should be decided on merits and not defaults, so the applicant having brought before us a cause with sufficient explanation concerning the delay, cannot be shown door.
ICAI seeks Rs. 1 Cr Compensation for unauthorized and illegal use of CA Logo on Shoes. The Institute of Chartered Accountants of India (ICAI) has issued a legal notice seeking compensation of Rs. 1 crore for unauthorized and illegal use of the CA logo on shoes. The ICAI stated in the legal notice, “It is brought to our notice that you the above-referred notice, are illegally and unauthorizedly using the ‘CA’ Logo in connection with the manufacturing and trading of the Shoes manufactured by your establishment. A copy of the Manufactured Article wherein illegally and unauthorizedly used ‘CA’ Logo is enclosed for your ready reference”. It is informed that the CA Logo containing the letters ‘CA‘ is the registered Trade Mark of this Institute (Registration no. 2147610) and any unauthorized use of the same or its constituent letters amounts to the infringement of Trade Marks of the Institute which is a punishable offense under the Trade Marks Act, 1999.
The top 10 richest chartered accountants in India:
1) Kumar Mangalam Birla stands out among the Richest Chartered Accountants in India, not just as the Chairman of the formidable Aditya Birla Group but also as a billionaire industrialist and philanthropist.
2) Deepak Parekh stands tall among the Richest Chartered Accountants in India, serving as the Chairman of HDFC Group, a leading housing finance company.
3) Rakesh Jhunjhunwala, often hailed as the “Indian Warren Buffett,” has brought honour to the CA profession. This Indian billionaire, renowned as a stock trader and investor, actively managed his portfolio and served as a partner in Rare Enterprises, his asset management firm.
4) Motilal Oswal, a Chartered Accountant turned Founder and Managing Director of Motilal Oswal Financial Services Ltd.
5) Naina Lal Kidwai, an Indian banker, Chartered Accountant, and business executive, holds the prestigious position of Country Head and Group General Manager at HSBC India.
6) Nirmal Jain, an Indian billionaire businessman, holds the impressive title of Founder and Chairman of India Infoline Group (IIFL – India Infoline Finance Ltd), a financial powerhouse.
7) Radhe Shyam Agrawal, renowned as one of the country’s most prominent entrepreneurs, serves as the Co-founder and Executive Chairman of the diverse Emami Group.
8) V. Mohandas Pai, hailed as the “Best CFO in India” by Finance Asia, stands as a source of pride and inspiration for the CA profession. With a remarkable career that includes serving as a former Director of Infosys and heading various crucial functions at the Infosys Leadership Institute.
9) T N. Manoharan, a successful Chartered Accountant, boasts a strong and influential personality. Not only has he served as the former president of the Institute of Chartered Accountants of India, but he also held the position of Ex-chairman of Canara Bank.
10) Aroon Purie, the founding Chairman and former Editor-in-chief of India Today Group leads one of India’s major media conglomerates. He serves as the Managing Director of Thomson Press Limited and holds the positions of Chairman and Managing Director at TV Today.
24/11/2023
Adopted Son vs. Daughter’s Son: Will Validity & Adoption Principles – Supreme Court: The court asserted a critical point – the mere act of registering a will does not confer automatic validity.
The significance of this ruling extends to the evaluation of both the validity of adoptions and wills, making it a potential landmark decision in this legal domain…
Read more
https://taxguru.in/income-tax/adopted-son-vs-daughters-son-will-validity-adoption-principles-sc.html
Cause Title: M/S. Global Plasto Wares v Assistant State Tax Officer (2023:KER:64562)
The Kerala High Court held that the provisions of Section 73(8) of the GST Act, 2017, would not be applicable if a person who is liable to pay tax fails to deposit the tax collected by him within 30 days from the due date of payment. The Court dismissed a Writ Petition challenging the order of the Tax Assessing Authority under whereby a penalty was imposed due to non-payment of tax after the lapse of thirty days. “Considering the provisions of Sub-sections 6, 8 and 9 of Section 73 of the GST Act, 2017 it is provided that if a person chargeable to tax fails to deposit the tax collected by him within a period of thirty days from the due date of the payment of the such tax, Sub-section 8 will not have any effect and such a person is liable to pay penalty”, Justice Dinesh Kumar Singh observed.
The Hon’ble Kerala High Court, in the case of M/s. Goparaj Gopalkrishnan Pillai v. State Tax Officer, Thripunithura & Ors. [WP(C) 29855 of 2023 dated October 5, 2023] allowed the writ petition and held that the Input Tax Credit (“ITC”) should not be denied on the ground that GST paid is not reflected in Form GSTR-2A due to non-remittance by Supplier.
Judgement on Tax Paid by the Non-Existent Dealer 2023-VIL-767-ALH
M/s RAMA BRICK FIELD Vs ADDITIONAL COMMISSIONER GRADE-2 AND 2 OTHERS
Date of Order – 06-11-2023:: HIGH COURT OF ALLAHBAD
1. The order was passed of tax and penalty Rs.200235.00 on the ground that the Supplier was not found in existent. The department’s pleas were that the purchases were bogus; tax was not deposited by the supplier against the supply and the petitioner (recipient) has failed to discharge the burden with regard to deposit of tax on the alleged purchases.
HELD
1. The petitioner submitted such as tax invoice, e-way bill, G.R., payment receipts etc. to show that the purchases have been made from the registered dealer.
2. At the time of transaction in question, the seller was registered firm under the G.S.T. Act.
3. The Returns GSTR-1 and GSTR-3B had been filed by the supplier.
4. The GSTR-1 and GSTR-3B returns cannot be filed without payment of tax.
5. The GSTR-2A can be viewed for the purpose of transaction and filing status of GST returns by the supplier.
Order’s Observations
1. Once the said form was generated and the said fact has not been disputed by the authorities below while passing of the impugned order, which goes without saying that at the time of transaction, purchaser and supplier both were registered. However, at the subsequent time if the seller i.e. Rohit Coal Trader was found non- existence, the proceeding can be initiated but the authorities has failed to consider the fact that GSTR returns as prescribed under the Act was filed by the seller to which not a single word has been whispered while passing the impugned order. On the contrary an observation has been made that the petitioner has failed to bring on record any cogent material to show that Rohit Coal Traders has deposited the tax and therefore proceedings were held to be justified.
2. Under the GST regime all details are available in the portal of GST department. The authorities could have very well verified as to whether after filing of GSTR-1 and GSTR 3 B how much tax has been deposited by the selling dealer i.e. Rohit Coal Traders but the authorities have failed to do so. Thus, looking to the said facts, the impugned orders cannot be sustained in the eyes of law.
23/11/2023
Petitioner challenged Section 74 of the CGST Act proceedings over Input Tax Credit (ITC) differences in GSTR-3B and GSTR-2A, High Court quashed the order based on Circular 183
1. The petitioner challenged proceedings initiated under section 74 of the UP GST Act related to the determination of tax not paid or short paid. The challenge was based on discrepancies between Input Tax Credit (ITC) in Form GSTR-3B and Form GSTR-2A.
2. The petitioner relied on a circular dated January 2, 2023, specifically paragraph 3(d), to argue that discrepancies arising from the supplier declaring the wrong GSTIN of the recipient in Form GSTR-1 should be addressed according to the procedure outlined in paragraph 4 of the circular.
3. According to the circular, the proper officer of the actual recipient should inform the jurisdictional tax authority of the registered person with the wrongly mentioned GSTIN. The circular emphasized that the allowance of ITC to the actual recipient should not depend on the completion of actions by the tax authority of the registered person with the incorrect GSTIN.
4. The petitioner contended that although the impugned order referenced the circular, the benefit outlined in the circular had not been extended to the petitioner. As a result, the petitioner sought the quashing of the order and the remittance of the matter to the concerned authority for a fresh decision.
5. The court held that, in light of the statement made by the revenue, the impugned order was to be quashed under Section 74 of the Central Goods and Services Tax Act, 2017/Uttar Pradesh Goods and Services Tax Act, 2017. The matter was to be remitted to the authority concerned for a fresh decision, and the revenue had no objection to this course of action.
6. Allahabad HC - Shree Krishna Traders v. State of U.P. [WRIT TAX NO. 1106 OF 2023]
Income Tax liability on owner giving his property for joint development
Case:
1. Mr. A has an old residential structure in Mumbai . A builder approached Mr. A and proposes to construct a multistoried building in its place.
2. The builder made an offer for 10 flats of 2BHK in the proposed building alongwith an upfront lump sum payment of Rs. 5 Crore in lieu of giving the development rights to the builder.
3. Mr. A accepted the proposal and accordingly, Mr. A received the consideration of Rs. 5 Crore and a Joint Development Agreement (JDA) was executed between Mr. A and the Builder in the month of September, 2021 incorporating all the terms and conditions alongwith description of 10 flats of 2BHK in the proposed multistoried building.
4. The JDA was registered with the Sub-Registrar and the residential structure was handed over for redevelopment. So the year of transfer is F.Y. 2021-22.
5. The construction was completed and the completion certificate was issued in October 2023. Mr A was duly given possession of the newly constructed 10 flats in October 2023.
6. The question arises that when would Mr A be liable to pay Income Tax?
Reply:
1. As per Section 45(5A) of the Income-tax Act, 1961: If any Individual or HUF has transferred any land or building or both being a capital asset under a Registered Joint Development Agreement, the capital gains shall be chargeable to income-tax as income in the year in which the full or part completion certificate is issued by the Local authorities to the newly constructed project developed under the joint development agreement.
2. The full value of consideration shall be the stamp duty value of the share of the original owner in the project alongwith cash consideration received, if any and the capital gains shall be worked out as per section 48 accordingly.
3. Although Mr. A has received the cash consideration of Rs. 5 Crore during F.Y. 2021-22, no taxes would be payable on the said receipt, even though it is the year of transfer.
4. The entire taxation will be done now (FY22-23), ie the year in which the multistoried building will be constructed and the Municipal/Local/Development Authority issues the part of full occupation/completion certificate to the building as per the provisions of Sec 45(5A).
5. However an important point to note is that the builder shall deduct TDS in FY 21-22 on Rs 5 Crores.
22/11/2023
VAT subsidy before the introduction of Sec 2(24)(viii) is a capital subsidy: ITAT Kolkata M/s. Britannia Industries (ITA No. 2644/Kol/2018)
Facts:
1. During the year (AY 2014-15), the assessee received incentive amount from State Governments of Bihar and Odisha, towards subsidy.
2. As per the Industrial policy of Government of Bihar and Government of Odisha, assessee was granted incentive in the form of reimbursement of VAT/sales tax.
3. Assessing Officer denied the claim of capital receipt of VAT subsidy at Rs.23,88,62,511/- observing that these are revenue receipts as there is a direct nexus of the VAT subsidy with the revenue generated and, thus made the addition thereto.
4. The ld. CIT(A) dealt with this issue referring to the various judicial pronouncements and held in favour of assessee by placing reliance on the judgment of the Hon’ble Supreme Court in the case of CIT v/s. Chaphalkar Brothers Pune [2018] 400 ITR 279 as well as that of the Hon’ble Jurisdictional High Court in the case of CIT vs Rasoi Limited [2011] 335 ITR 438 (Cal) (HC).
Note: As per Sec 2(24)(xviii) of the Income Tax Act, any assistance in the form of a subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement is an income w.e.f. 1/4/16.
ITAT Kolkata held as below:
1. On going through the above, and judicial precedents referred in the impugned order and after perusal of the Industrial policies of the Governments of Bihar and Odisha, we find that firstly introduction of amendment in Section 2(24)(xviii) of the Act is prospective in nature and applicable from Assessment Year 2016-17 and onward.
2. Secondly, so far as the nature of the subsidy is concerned, the alleged incentive was assured under the Industrial policy for the purpose of encouraging the assessee to set up new industries in the State.
3. We find that the objective contained in the Industrial policy was not to reduce operation costs of the company or facilitate working of existing undertaking.
4. The entrepreneurs with the attraction of such subsidy (VAT Subsidy) plan to establish and commence business operations in such areas and for establishing such business has to make capital expenditure in the form of land, building, plant and machinery and such investments are partly reimbursed by the subsidies granted by the State Governments.
5. Therefore, in our view, the subsidy received in form of VAT reimbursement from the State Governments was towards industrialisation in the State and to generate employment
6. Therefore, the alleged subsidy has been rightly held to be capital receipt by the ld. CIT(A) which thus calls for no interference.
Reason to suspect is not reason to believe and cannot be a basis for reassessment proceedings: Delhi HC:: Saraswati Petrochem Pvt Ltd (WP (C) 10802/2018)
Facts:
1. The petitioner/assessee had received cumulative amounts of Rs. 1,95,00,000/- and 15,20,000/- in the two bank accounts maintained with HDFC Bank from Para Impex Chem.
2. AO made a comparison of the amounts shown against share capital, security premium, share application money, and long-term unsecured loans for AY 2010-11 and 2011-12 and concluded that a cumulative increase in the source of funds had taken place to the extent of Rs. 61,87,061/-.
3. Amongst others, the petitioner/assessee was asked to explain and provide details of financial transactions and as the petitioner/assessee did not respond to the communication dated 20.03.2018, the AO trigger reassessment proceedings against the petitioner/assessee by issuing the notice U/S 148 of the Income Tax Act.
4. The petitioner/assessee maintained that the information based on which the AO formed 'reason to believe' had not been furnished by him to the petitioner/assessee. The AO needed to independently verify the information and the material that had reached him. The sine qua non for triggering the assessment proceedings is not a „reason to suspect? but a „reason to believe? that income chargeable to tax has escaped assessment.
5. The petitioner further stated that AO realized that the information received by him from ITO (Nahan) via letter dated 12.03.2018 concerned the preceding period and so he attempted to commence reassessment proceedings under Section 147/148 of the Act by simply comparing the „source of funds? reflected under various heads in the balance sheets for the preceding AY and the AY in issue
Hon Delhi HC held as below:
1. The first and foremost principle of law, to which the AO must be wedded, is the obligation cast on him to furnish material and information that helped him to form a belief that income, otherwise chargeable to tax, had escaped assessment.
2. The petitioner/assessee was entitled to receive copies or relevant extracts from the letter dated 12.03.2018 and the intimation of the ADIT (Inv)/Unit-4(2).
3. The phraseology used by the AO reveals that he suspected that income chargeable to tax had escaped assessment. Therefore, according to us, this approach of the AO breached the other well established principle of law that suspicion and conjecture cannot form the basis for triggering reassessment proceedings qua an assessee.
4. The AO did not carry forward the enquiry process once he had received communication from ITO (Nahan). The AO did not have the tangible material on record that could have persuaded him to form a belief that income, otherwise chargeable to tax, had escaped assessment.
5. We are inclined to quash the impugned notice issued to the petitioner/assessee under Section 148.
21/11/2023
Expenses and revenues of the Cricket Control Board of the host nation (BCCI in this World Cup) and effect of the World Cup on the Indian Economy:
Now that the Cricket World Cup is over, it would be worthwhile examining the economics of BCCI and impact of world cup on Indian economy.
Expenses incurred by the BCCI for the ICC World Cup 2023 include:
1. Host fee to ICC: BCCI is required to pay a host fee (approximately INR 200 crore) to host the tournament in India.
2. Contribution for upgrading stadiums: BCCI contributes INR 50 crore for the renovation of each of the 10 stadiums where matches are played, totaling INR 500 crore.
3. Remuneration to Indian players: BCCI covers the salaries and other remunerations of players representing the Indian team.
4. Travel and accommodation expenses for foreign players: BCCI bears the expenses for the travel and accommodation of foreign players during their stay in India.
Revenues for the BCCI are sourced from:
1. Sponsorship for the Host Team: BCCI secures sponsorship deals for the Indian team, with sponsors such as Dream11, Adidas, and IDFC First Bank.
2. A Share from ICC revenue: ICC shares revenue with the cricket board of the host nation.
Contribution to Indian Economy:
Bank of Baroda has made an astounding prediction, estimating that the ICC Cricket World Cup 2023 will inject a staggering $2.6 billion (approximately Rs 22,000 crore) into India’s economy.
1. Television Rights: One of the primary revenue streams for the ICC ODI World Cup 2023 is the sale of television rights. Bank of Baroda’s prediction indicates that this segment alone is expected to accumulate an impressive Rs 12,000 crore.
2. Screenings & Food Deliveries: Bank of Baroda estimates that this segment will contribute a substantial Rs 5,000 crore, reflecting the immense passion and engagement of cricket fans across the nation.
3. Ticket Sales: Bank of Baroda’s prediction suggests that ticket sales will contribute around Rs 2,000 crore to the overall earnings of the tournament.
4. Travel, Merchandise & Event Management – A Rs 3,000 Crore Industry
The World Cup also triggers substantial economic activity related to travel, merchandise, and event management. Cricket enthusiasts flock to host cities, generating substantial demand for travel services and merchandise. According to Bank of Baroda’s estimates, this segment is projected to contribute Rs 3,000 crore to the overall revenue.
PS: The BCCI is set to receive about 40% of the ICC’s annual net earnings from 2024 to 2027. This translates to a substantial $230 million per year for four years, capturing a remarkable 38.5% share of the ICC’s projected annual earnings of $600 million.
Source: The Cricket Lounge and Online Manipal
19/11/2023
Even if the shares are sold to the initial promoters through a third party, the transaction cannot be denied as genuine: ITAT Delhi: Paramjit Gandhi (ITA No. 413/Del/2016)
Facts:
1. The assessee held 822,500 equity shares of M/s. Flexpack Technology Pvt. Ltd (FPTPL), purchased for Rs. 82,25,000/- at a face value of Rs. 10 per share.
2. These shares were sold by the assessee during the year for Rs. 24,67,500/-, resulting in a declared long-term capital loss of Rs. 92,50,512/- after claiming the benefit of indexation.
3. The AO noticed that the assessee had sold the shares to Smt Sunita Jain and Smt Jain had in turn sold shares back to the original promoter of the company from whom assessee had originally purchased shares.
4. The AO concluded that the assessee sold the shares to the initial promoters of FPTPL at a loss through a third party, Smt. Sunita Jain.
5. The AO disallowed the long-term capital loss, asserting that the sale of shares at a lesser price than the cost price was not genuine.
Delhi ITAT held as below:
1. FPTPL was continuously incurring losses, and the shares were allotted to the assessee at par due to his friendship with one of the initial promoters.
2. This is not an arranged transaction. The assessee, faced with a loss-making company has legitimately found a buyer in Smt. Sunita Jain.
3. All relevant documentation and consideration were duly received by the assessee through banking channels.
4. The AO should have examined Smt. Sunita Jain to verify the transaction's veracity.
5. Once the assessee has discharged its initial burden and no proper steps have been taken by the AO to counter the claim, the transaction cannot be denied as genuine.
6. The long-term capital loss of Rs. 92,50,512/- is genuine and the AO is directed to allow set-off and carry forward as per the law.
17/11/2023
Online filing of Form 10F without PAN for a non resident not required to obtain a PAN:
1. Form 10F is a cover document for Tax residency certificate required to be filed by non-residents in order to claim benefit of any Tax Treaty with Government of India.
2. CBDT vide notification dated 16 July 2022, had mandated the electronic filing of Form 10F. Due to this requirement, the non-residents transacting with residents in India and relying on any provision of the tax treaty for exemption/beneficial tax rates had to obtain PAN in India.
3. In order to ease out the above challenges, the CBDT came up with certain relaxations. An exemption was provided whereby non-residents not having PAN and not required to obtain PAN in India can furnish self-certified Form 10F manually till 30th September 2023.
4. As this exemption has expired, the income tax department released a whole new category for registration on the income tax portal – ‘non-residents not having PAN and not required to obtain PAN’. This will allow non-residents to file Form 10F without PAN.
5. PROCEDURE FOR REGISTRATION AS NON RESIDENT WITHOUT PAN:
The non-resident can click on the ‘Register‘ option on the e-filing portal, i.e., https://www.incometax.gov.in/iec/foportal.
Under the ‘others’ category, there is an option to choose ‘non-residents not having a PAN and not required to have a PAN‘.
Basic details will need to be entered, like name, date of incorporation, tax identification number, status, and country of residence.
The non-resident will then have to provide the details of the key person, i.e., name, date of birth, designation, and Tax Identification Number.
The next step is to provide contact details, i.e., email address and mobile number, which will be verified through an OTP.
The non-resident will need to upload certain documents like its TRC, address proof, identification proof, and any other document if required.
Lastly, the non-resident will have to set password for the e filling account and thereafter a User ID will be generated.
6. PROCEDURE FOR FILING FORM 10F: Visit https://www.incometax.gov.in/iec/foportal and log into your income-tax portal account using the user ID password obtained during registration.
Go to the ‘e-file’ tab, choose ‘Income Tax Forms,’ then click ‘File Income Tax Forms.’
Select Form 10F from the list of available forms.
Pick the relevant Assessment Year (AY) in the tab and click ‘Continue.’
Provide the necessary details while form 10F online filing, and attach a copy of the TRC as a mandatory requirement.
Save the draft and then click on preview. In the next step, verify the Form, using an electronic verification code, received on the registered mobile no. and Email ID.
Once the form has been verified, click on the ‘Submit’ tab.
Save the acknowledgement.
16/11/2023
Notices/ orders cannot be issued to an amalgamated entity even though PAN is still active: Bombay HC
Diversey India Hygiene Private Limited v The Assistant Commissioner of Income Tax Circle and Ors (WP Nos: 3034 and 3505 of 2022)
Facts:
1. The Petitioner had filed two Writ Petitions, challenging the validity of notices issued under Section 148 (reassessment) and Section 142(1) (inquiry) of the Income Tax Act, 1961 (IT Act).
2. The basis of the Petitioner's challenge was the assertion that the notices were flawed since Diversey India Private Limited (DIPL), having been amalgamated with the Petitioner on April 1, 2015, ceased to exist.
3. The petitioner contended that issuing a notice and assessment order in the name of a company that no longer exists post-amalgamation is without jurisdiction and legally flawed, therefore warranting annulment.
4. The Respondent Income Tax Authorities acknowledged the amalgamation, communicated to the Income Tax Department (Department) on May 12, 2016.
5. However, the respondents contended that the Petitioner, or the amalgamated entity, actively participated in the reassessment proceedings for the assessment years 2012-13 and 2013-14 without raising objections to the notices initially issued to DIPL. The Respondents also asserted that the PAN of DIPL remained active.
Hon Bombay HC held as below:
1. The fact that the PAN was not deactivated does not enhance the Revenue's position. The mere presence of a PAN does not grant the Department the authority to issue notices to an entity that no longer exists, particularly when they were cognizant of the entity's non-existence.
2. During existence, it is possible that the PAN numbers are picked up for scrutiny or for issuance of refund. That in our view, will not be a sanction for Department to issue notices to a nonexisting entity, particularly, when they were aware that the entity was not in existence.
3. The principle that the tax department cannot pursue proceedings against entities that have undergone amalgamation and lost their legal existence, has to be upheld.
15/11/2023
E-way bill limit will be reduced for the movement of goods originating and terminating (both) within the state of West Bengal (Intra State) from Rs. 1,00,000 to Rs. 50,000 (consignment value) with effect from 1.12.2023. E-way bill exemption for the movement of goods to/from Job Worker will be withdrawn in the state of West Bengal (Intra State) w.e.f. 1.12.2023. Hence, it will be applicable for consignment value greater than Rs.50,000/-
[Notification 02/2023-C.T./GST dt 10.11.2023]
Gst SCNs challenged- M/S. SRSS AGRO PVT. LTD versus UNION OF INDIA: IN THE HIGH COURT OF GUJARAT AT AHMEDABAD: R/SPECIAL CIVIL APPLICATION NO. 19720 of 2023 ORDER DATED: 10/11/2023
1. It is the case of the petitioner that the notification dated 31.03.2023 extending the time limit specified under Section 73 of the Act by virtue of the powers under Section 168A of the Act is unjustified as extension has to be for special circumstances. Having once extended the period by virtue of notification dated 05.07.2022, no subsequent extension could be made.
2. Essentially, the notifications are of the Union of India and by virtue of such power the respondent No. 5 - State has issued a show-cause notice dated 29.09.2023.
3. Issue Notice to the respondents returnable on 30.11.2023.
4. In the event, the petitioner asks for time to reply to the show-cause notice, the same shall be granted.
Action in respect of non-issuance of e-invoices by notified class of taxpayers- Gst E invoicing sixth phase has been introduced, vide notification No. 10/2023-Central Tax dated 10-05-2023, wherein, with effect from 01st August, 2023 e-invoicing has been made mandatory for taxpayers having aggregate turnover of more than Rupees Five Crore in any financial year from 2017-18 onward.
A. Intent - The intent behind e-invoicing is not only to automate tax relevant processes thereby reducing compliance burden on tax payers but also to ensure better management of taxes and significant reduction of tax evasion and siphoning or public funds by addressing various frauds like carousel fraud, no invoicing or invoicing with no goods supplied, fraudulent export ITC refunds, etc.
B. Accordingly through the above notifications, steps have been initiated to introduce ‘e-invoicing’ for reporting of Business to Business (B2B) and export supply transactions, barring certain classes of registered persons which have been exempted from issuing e-invoices.
C. It is also brought to notice that with the insertion of Clause (s) in Rule 46 of the CGST Rules, the taxpayers [having Annual Aggregate Turn Over of more than the threshold notified under sub-rule (4) of Rule 48 of the CGST Rules but have been exempted from the issuance of e-invoices under relevant legal provisions] are required to declare on their invoices that they are not required to issue invoice in the manner specified in sub-rule (4) of Rule 48 of the CGST Rules.
D. Further, the taxpayers, who have exceeded the prescribed threshold of aggregate turnover but are exempted from issuance of e-invoice, can file the declaration on the recently introduced functionality on the portal to make a self-declaration regarding category under which they are exempted from issuance of e-invoices.
E. However, analysis of key statistics (relating to e-invoice) released for the month of August, 2023 shows that there is a huge gap between the number of eligible taxpayers based on their turnover and the number of e-invoices shown generated against these taxpayers indicating less generation or non-generation of e-invoice on their part. This defeats the very intent behind the implementation of e-invoice. Thus, it is imperative that non-compliance of the above said provisions by the eligible tax payers needs to be examined by the field formations so as to ensure compliance on the part of the said taxpayers and if required, enforce penal provisions against them for continuous non-compliance on their part despite being nudged by the tax authorities.
F. In this regard, a list of such taxpayers who are mandatorily required to issue e-invoices through electronic invoicing under sub-rule (4) of Rule 48 of the CGST Rules but are not issuing the same will be shared by the GSTN. G. Accordingly, the field formations are advised to take the following action on the list provided by GSTN:
i. The tax authorities may find the reasons for non-issuance of B2B and export invoices through e-invoicing by such taxpayers. If it is reported by the taxpayers that they have not exceeded the prescribed threshold limit under sub-rule (4) of Rule 48 of the CGST Rules or are exempted from issuance of e-invoice under relevant legal provisions/notifications, they may be advised to declare their exempted category on the functionality on the portal by using the functionality recently provided by GSTN. If the reasons are not in accordance with the provisions of the Rules and the relevant notifications, the taxpayers may be nudged and advised to immediately start issuing invoices through e-invoicing.
ii. The tax authorities may also inform the taxpayers (who have exceeded annual aggregate turnover and are mandatorily required to issue invoices through e-invoicing) about the provisions of sub-rule (5) of Rule 48 of CGST Rules providing that any invoice issued by such taxpayers, in the manner other than the manner prescribed under sub-rule (4) of Rule 48 of the CGST Rules, i.e. other than e-invoicing, shall not be treated as valid invoice. They may also be informed that they will be liable to penalty under Clause (c) of sub-section (3) of Section 122 of CGST Act, in case of their failure to issue invoices through e-invoicing system.
iii. In case of continuous non-compliance of the provisions of Rule 48(4) of CGST Rules by the taxpayers, who are otherwise required to issue invoices for B2B and export transactions through e-invoicing, appropriate penal action, as mentioned in sub-para (ii) above, may be initiated under the CGST Act and Rules made thereunder. To begin with, emphasis should be laid on the taxpayers who have exceeded aggregate turnover of more than Rupees Fifty Crore, as sufficient time has elapsed since e-invoicing has been made mandatory for these taxpayers from April, 2021.
An important Gst rule 37A affecting the itc availment : Reversal of ITC in GST:
1. The registered person can avail ITC in respect of supplies - the details of which have been furnished by the supplier(s) in their GSTR-1/IFF but in respect of which supplier has not paid tax / not filed GSTR -3B.
2. Nevertheless, the registered person will be required to reverse such ITC if the supplier has not filed GSTR – 3B by September 30 of the fiscal year following the fiscal year in which the ITC was claimed.
3. The recipient registered person must reverse the ITC by 30 November of the year following the year in which the ITC was claimed, or else interest under section 50 will be charged.
4. Once the supplier has filed GSTR-3B to discharge tax liability on such supplies, the registered person will be eligible to reclaim ITC on such supplies.
5. The Time Deadlines:
I) Supplier’s GSTR-3B Filing Deadline: By the 30th of September following the end of the financial year.
ii) Buyer’s ITC Reversal Deadline in GSTR-3B: By the 30th of November following the end of the financial year.
iii) Re-availment of ITC: In the GSTR-3B of a tax period after the supplier files their pending returns.
6. Action to be taken:
The recipient need to check for non filing of suppliers 3B and need to reverse by 30th November and ask the supplier to pay tax and file 3B for subsequent availment in next year.
Rental income from let out property without any additional services is income from house property: ITAT Delhi DCIT, Circle-27(1), New Delhi Vs. U & I Business Services Pvt. (ITA No. 5912/Del/2019)
Facts:
1. The assessee is a resident corporate entity engaged in leasing property. The return of income was filed, declaring income of Rs.3,95,29,220.
2. The Assessing Officer observed rental income from a property leased to Reliance Retail Ltd. and treated it as business income. The property was let out without any additional/associated services.
3. The Assessing Officer issued a show cause notice and examined the Memorandum of Association, concluding that the rental income should be treated as business income.
4. The learned Commissioner (Appeals) accepted the assessee's claim, assessing the rental income as income from house property.
5. So the main issue was regarding the disallowance of Rs.1,17,26,787 under Section 24(a).
ITAT Delhi held as below:
1. The property let out to Reliance Retail Ltd is without any additional benefits unlike other properties let out by the assessee which have been assessed as income from business.
2. In the last years too the property was offered to tax as income from house property.
3. So we are inclined to uphold the decision of learned First Appellate Authority in treating the rental income as income from house property and allow deduction under Section 24(a) of the Act.
Income Tax adjudication proceedings and prosecution proceedings are independent of each other: Madras HC:: R.Revathy Vs. The Assistant Commissioner of Income Tax (Crl.O.P.No.18477 of 2021 and Crl.M.P.No.10136 of 2021)
Facts:
1. A search and seizure operation took place on 18.08.2011, revealing gold ornaments and jewelry at the petitioner's residence.
2. The petitioner was issued a notice under Section 153C of the Income Tax Act for the assessment years 2006-07 to 2011-12. The petitioner filed a return of income for the assessment year 2012-13, admitting a total income of Rs.24,09,170/-.
3. During assessment proceedings, the petitioner revised the memo of taxable income, admitting Rs.48,39,044/- as an investment made in gold. An order was passed on 25.03.2014 determined the total income at Rs.72,75,218/- towards undisclosed investment, with a penalty imposed under Section 271(1)(c) of the Income Tax Act.
4. Prosecution proceedings were also launched under Sections 276C(1) & 277 of the Income Tax Act for the assessment year 2012-2013.
5. The penalty was challenged and eventually deleted on 15.11.2019 by the High Court, citing reconciliation of the quantum of jewelry.
6. The Principal Commissioner of Income Tax has however reopened the proceedings, and the petitioner challenged it in W.P.No.15854 of 2021, which was rejected.
7. The petitioner argues that the entire prosecution case cannot be sustained since the penalty was set aside by the High Court.
8. The department has contended that the prosecution proceedings have to be continued since re-assessment proceedings are pending with the Assessment Officer.
Hon Madras HC held as below:
1. The proceedings have not attained finality. The pendency of proceedings under Section 263 of the Income Tax Act indicates that the reconciliation of jewelry has not concluded.
2. The adjudication proceedings and criminal prosecution are independent. The findings in adjudication are not binding on criminal prosecution.
3. The petition is dismissed.
14/11/2023
Gst ruling on Tax Paid by the Non-Existent Dealer 2023-VIL-767-ALH:: M/s RAMA BRICK FIELD Vs ADDITIONAL COMMISSIONER GRADE-2 AND 2 OTHERS
Date of Order- 06-11-2023:: HIGH COURT OF ALLAHBAD
The order was passed of tax and penalty Rs.200235.00 on the ground that the Supplier was not found in existent. The department’s pleas were that the purchases were bogus; tax was not deposited by the supplier against the supply and the petitioner (recipient) has failed to discharge the burden with regard to deposit of tax on the alleged purchases.
HELD
1. The petitioner submitted such as tax invoice, e-way bill, G.R., payment receipts etc. to show that the purchases have been made from the registered dealer.
2. At the time of transaction in question, the seller was registered firm under the G.S.T. Act.
3. The Returns GSTR-1 and GSTR-3B had been filed by the supplier.
4. The GSTR-1 and GSTR-3B returns cannot be filed without payment of tax.
5. The GSTR-2A can be viewed for the purpose of transaction and filing status of GST returns by the supplier.
Order’s Observations:
1. Once the said form was generated and the said fact has not been disputed by the authorities below while passing of the impugned order, which goes without saying that at the time of transaction, purchaser and supplier both were registered. However, at the subsequent time if the seller i.e. Rohit Coal Trader was found non- existence, the proceeding can be initiated but the authorities has failed to consider the fact that GSTR returns as prescribed under the Act was filed by the seller to which not a single word has been whispered while passing the impugned order. On the contrary an observation has been made that the petitioner has failed to bring on record any cogent material to show that Rohit Coal Traders has deposited the tax and therefore proceedings were held to be justified.
2. Under the GST regime all details are available in the portal of GST department. The authorities could have very well verified as to whether after filing of GSTR-1 and GSTR 3 B how much tax has been deposited by the selling dealer i.e. Rohit Coal Traders but the authorities have failed to do so. Thus, looking to the said facts, the impugned orders cannot be sustained in the eyes of law.
Gst Judgement of E-way bill. Appellate Court passed the lengthy order but failed to prove whether there was any willful intention on the part of the appellant to evade payment of duty:: Rumki Biswas. Vs. Senior Joint Commissioner, Commercial Taxes, Budge Budge Charge & anr.
Date of Order – 01-12-2022:: HIGH COURT OF CALCUTTA
Facts of the Case-
1. The case of the appellant is that they had generated part A of the e-way bill on 22nd March, 2022 and part – B was generated on 24th March, 2022. However, since the goods could not be loaded into the vehicle, the appellant appears to have cancelled part A e-way bill dated 22nd March, 2022 and generated new part A e-way bill on 24th March, 2022. When the vehicle was intercepted, the driver was carrying part B of e-way bill in respect of which part A has been cancelled.
2. The appellant generated a fresh part B within two hours of detention.
Issue before the court and observation of the court- 1. The question would be whether this would tantamount to intention to evade payment of duty or with a view to clandestinely move certain goods. In our prima facie view, it does not appear so and could be considered to be a bona fide error.
HELD
1. As pointed out earlier, the order passed by the appellate authority is a lengthy order and certain decisions of the High Courts have also been referred to. Partly, the appellant has contributed to such an exercise by the appellate authority by placing reliance on the decisions of the various High Courts, which in our view, may not have been required to have been done as the short point, which was required to be canvassed before the appellate authority was to establish the bona fides of the appellant and to prove that there was no intention to evade payment of duty.
2. Since this aspect has not been adequately dealt with by the appellate authority and taking note of the peculiar facts and circumstances arising in the case on hand, we are inclined to remand the matter back to the appellate authority for a fresh consideration bearing in mind the conduct of the appellant, which we have culled out in the preceding paragraphs.
13/11/2023
The Indian government has lost $420 million in what could have been a substantial revenue stream as a result of its taxation, forcing traders to move their transactions outside the country. Experts are now suggesting that the Indian government should take a more relaxed approach to its controversial stance on crypto taxation. According to a recent study by Delhi-based think tank Esya Centre, the highly debated crypto policy in India, involving a 1% transaction tax deducted at the source (TDS), should be reduced to 0.01%. This adjustment is recommended to align with the government’s objectives of increasing revenue and enhancing transparency.
Taxing Times for Indian Crypto Traders:
The TDS – which is considered a form of income tax – has led to approximately five million crypto traders shifting their transactions offshore. The study estimates that since its introduction in July 2022, this tax has resulted in a potential revenue loss of $420 million for the government. Contrary to its intended purpose of taxing profitable transactions, the findings in the “Impact Assessment of Tax Deducted at Source on the Indian Virtual Digital Asset Market” indicate a significant shortfall in achieving this goal. This study builds on the Esya Centre’s previous report, revealing that Indians redirected over $3.8 billion in trading volume from local to international crypto exchanges following the announcement of the controversial rules. After the implementation of TDS, millions of Indian users transitioned to offshore platforms, and within a month, a single offshore platform noted over 450,000 new user registrations. Subsequently, the think tank observed a surge in web traffic, active users, and downloads from Indians on offshore platforms post-July 2022, accompanied by a decline in Indian VDA exchanges during the same period. S- CryptoPotato
MCA / ROC MAJOR AMENDMENTS FOR COMPANIES & LLP
1. Relief: No cost shall be levied in case of shifting of registered office to another state.
2. Concept of Designated Person
a. Every company shall designate a person who shall be responsible for furnishing & extending co-operation for providing, information to the Registrar with respect to beneficial interest in shares of company which may be CS in employment or KMP or Director.
b. Details of such designated person shall be informed in Annual return by every Company.
c. The company shall file GNL-2 in case of change of designated person.
https://www.mca.gov.in/bin/dms/getdocument?mds=lVo7Nz8E9SMEBo5r07okJw%253D%253D&type=open
3. Shares of all Private Limited (except Small Companies) to get dematerialised on or before 30.09.2024
If not done then :
a. Companies shall not be able to allot any shares
b. Any holder shall not be able to transfer his holding.
https://www.mca.gov.in/bin/dms/getdocument?mds=ZvNqoKdfvPrRcqeoGzGdDg%253D%253D&type=open
4. Amendments for LLP
a. Every LLP from the date of its incorporation shall maintain a register of its partners in Form 4A.
b. SBO Declaration rules (Significant Beneficial Ownership) shall apply to LLP also now onwards so all LLP need to check their details of partners and submit returns to ROC in form 4B, 4C and 4D.
https://www.mca.gov.in/bin/dms/getdocument?mds=VYVpE7YcJovnhBqcW9gtsw%253D%253D&type=open
Cause Title: M/S. Global Plasto Wares v Assistant State Tax Officer (2023:KER:64562): The Kerala High Court held that the provisions of Section 73(8) of the GST Act, 2017, would not be applicable if a person who is liable to pay tax fails to deposit the tax collected by him within 30 days from the due date of payment. The Court dismissed a Writ Petition challenging the order of the Tax Assessing Authority under whereby a penalty was imposed due to non-payment of tax after the lapse of thirty days. “Considering the provisions of Sub-sections 6, 8 and 9 of Section 73 of the GST Act, 2017 it is provided that if a person chargeable to tax fails to deposit the tax collected by him within a period of thirty days from the due date of the payment of the such tax, Sub-section 8 will not have any effect and such a person is liable to pay penalty”, Justice Dinesh Kumar Singh observed.
12/11/2023
Gst Statutory Changes
1. No GST on services provided to a Governmental Authority by way of water supply, public health etc
2. Supply of services by Indian Railways to be taxable under Forward Charge Mechanism: Notification
3. Refund of accumulated ITC to be allowed on construction of civil structures, bridges, roads, etc. not intended for sale to a buyer: Notification
4. Bus-operator Companies providing services through ECOs shall pay tax under FCM: Notification
5. CBIC restricts refund on metallised polyester film/plastic film under inverted duty structure: Notification
6. GSTN issued advisory on registration & returns for persons supplying Online Money Gaming or OIDAR services
7. 5% GST shall be levied on Molasses and branded millet flour in powder form: Notification
Gst important Case Laws:
1. HC directed department to utilize penalty amount deposited in electronic cash ledger towards pre-deposit & hear appeal
2. HC allowed accused of fake ITC to travel abroad after obtaining necessary permission from Chief Metropolitan Magistrate
3. HC directed dept. to exclude time taken in filing revocation application for limitation period of appeal » Refund of ITC can't be denied on ground that one of suppliers had erroneously mentioned HS in its invoices: HC
4. HC directs refund of amount recovered directly from bank account of petitioner subject to final outcome of proceedings
Income Tax Statutory Changes
1. CBDT issues clarification regarding assessment of Startup companies subsequent to FA 2023 amendments
2. CBDT exempts IFSC units from Form 15CA for non-taxable remittances and introduces Form 15CD for quarterly reporting
3. Tax Deptt. conducts Search and Seizure operations in Karnataka and AP&TS region
4. CBDT notifies Form No. 56F to be furnished by assessee claiming deduction u/s 10AA
5. CBDT extends due date for filing of Form 56F for AY 2023-24 to December 31, 2023
6. Time limit for processing of all validly filed returns up to AY 2017-18 with refund claims extended to 31-01-2024
Income tax important Case Laws
1. No Section 40A(2) disallowance without examining qualification, experience, and work profile of related parties: HC
2. Annual licence fee paid by Airtel to DoT is a capital expenditure amortizable under section 35ABB: SC
3. Section 269S does not apply to a cash loan obtained by a company from its director: ITAT
4. Assessee can adopt provisions of Act for one source of Income and apply DTAA provisions for another source: ITAT
5. HC allows assessee to produce register and other doc. manually as voluminous details can't be submitted online
FEMA AND BANKING REGULATIONS Statutory Changes
1. Mof designates Patna's District and Sessions Court & Addl. District and Sessions Court as a Special Court under PMLA
2. Reverse Repo transactions with non-banks for all tenors shall be reported under Loans, cash credits under Bank Credit: RBI
3. Govt. requires REs to immediately obtain 'client due diligence' records from third parties under PMLA norms
4. RBI issues master direction on NBFCs
5. RBI amends Master Directions on Know Your Customer (KYC) norms Case Law
6. HC quashes writ plea against CMM's order as petitioner-borrowers had statutory remedy available u/s 17 of SARFAESI Act
11/11/2023
Reversal of ITC in GST: A Deep Dive on newly inserted Rule 37A.
1. The registered person can avail ITC in respect of supplies in respect of which supplier has not paid tax / not filed GSTR -3B.
2. Nevertheless, the registered person will be required to reverse such ITC if the supplier has not filed GSTR – 3B by September 30 of the fiscal year following the fiscal year in which the ITC was claimed.
3. The registered person must reverse the ITC by 30 November of the year following the year in which the ITC was claimed, or else interest under section 50 will be charged.
4. Once the supplier has filed GSTR-3B to discharge tax liability on such supplies, the registered person will be eligible to reclaim ITC on such supplies.
The Time Deadlines:
1. Supplier’s GSTR-3B Filing Deadline: By the 30th of September following the end of the financial year.
2. Buyer’s ITC Reversal Deadline in GSTR-3B: By the 30th of November following the end of the financial year.
3. Re-availment of ITC: In the GSTR-3B of a tax period after the supplier files their pending returns.
AO needs to physically issue notices, in case, the address of assessee is not available: Bombay HC
Muffadal Contractor vs. National Faceless Assessment & Ors. - [2023] 156 taxmann 168 (Bombay)
Facts:
1. AO passed reassessment order under section 147, read with sections 144B and made huge additions. Against such an order, the assessee filed a writ petition before the Bombay High Court.
2. Assessee contended that no notice was issued to her before passing the assessment order.
3. AO stated that no e-mail was registered in the PAN Database of the assessee. Further, it cannot be ascertained whether the assessee had registered her e-mail ID before or during the reassessment proceedings.
Hon Bombay HC held as below:
1. The assessment order made an addition of a large sum. The assessee should be allowed to explain her case by serving the notice. If the e-mail ID was unavailable in the portal, notice should have been served physically upon the assessee, at least by courier or speed post.
2. There have been SOPs in place; the last one in force before the assessment order was passed was dated 23-11-2020. After the assessment order was passed, a revised SOP was released on 03-08-2022 for assessment units under the Faceless Assessment provisions of Section 144B.
3. Clause G.3 of the SOP dated 03-08-2022 states explicitly the procedure to improve compliance with the notices served, including sending notices to the latest addresses through speed post and sending SMS about the non-responsiveness on the latest mobile number of the assessee.
4. Accordingly, the AO is directed to strictly comply with the SOPs and not just be restricted to Faceless Assessment Proceedings under Section 144B. Thus, the matter is remanded for denovo consideration.
10/11/2023
AO cannot decide on the commercial expediency of sponsorship fees for promoting business: ITAT Chennai :AGNI ESTATES & FOUNDATION PVT.LTD (ITA 355 / CHNY / 2023)
Facts:
1. M/s Vels Srinivasa College of Engineering and Technology had proposed for rebranding of its name. The college had accepted the proposal of renaming it as AGNI College of Technology. The brand AGNI was being promoted by the assessee in this way.
2. The assessee produced sponsorship agreement and also the copies of invoices to support its submissions during the assessment proceedings.
3. The AO, upon perusal of agreement, observed that as per contractual terms, Agni College of Technology (ACT) was to use the logo of the assessee company in all its promotional campaigns in any form of advertisement and the cost of such sponsorship would be Rs.250 Lacs for every financial year starting from financial year 2012-13 for 5 years.
4. The Ld. AO observed that the amount was spent by the college on functions / celebration expenses, advertisement expenses, promotional expenses, record note and other stationery items. The Ld. AO further observed that the said expenditure, being regular nature of expenditure for a college, could not be termed as sponsorship expense for printing logo on its books. With respect to the other items also, it could not be properly adduced that the entire amount was spent towards promoting the assessee company, which has a distinctly different business line with that of the college.
ITAT Chennai held as below:
1. As per the terms of the agreement, Sri Balaji Charitable and Educational Trust was to carry out various sponsorship activities in assessee’s name as sponsor against yearly payment of Rs.2.50 Crores.
2. The payment is backed by the agreement and invoices and the revenue has no material to doubt the same.
3. The assessee has also furnished the details of actual expenditure incurred on business promotion activities.
4. In such a case, it was not open for Ld. AO to question the commercial wisdom of the assessee as to how the business was to be promoted.
5. So sponsorship expenses can be allowed as a deduction u/s 37 of the Income Tax Act.
SC order on carrier liability for delayed delivery of goods. It is a trite law that a party is not entitled to seek relief which he has not prayed for.
Read More
https://taxguru.in/income-tax/sc-order-carrier-liability-delayed-delivery-goods.html
09/11/2023
Assessment Order not passed within 30 days of DRP directions in time barred, Vodafone entitled for a refund of Rs 1128 Crores: Bombay HC: Vodafone Idea Limited Versus CPC (Writ Petition (L) No. 15398 Of 2023)
Facts:
1. A Return of Income (ROI) was filed by the petitioner, Vodafone Idea for AY 2016–2017. The ROI disclosed a loss. It was a claim for a refund of prepaid taxes of Rs. 1128.47 crore, comprising tax deducted at source and advance tax.
2. The assessment was selected for scrutiny, and notice under Section 143(2) of the Income Tax Act was issued. Since the transactions of the petitioner involved international and specified domestic transactions with its associated enterprises, a reference was made under Section 92CA(1) to the Transfer Pricing Officer (TPO) for the determination of the arm's length price for the relevant AY.
3. In the meantime, the TPO passed an order proposing an adjustment to the value of the international transaction for the petitioner. The AO passed a draft order and proposed various additions and disallowances.
4. The petitioner filed objections before the Dispute Resolution Panel (DRP) on January 27, 2020. A notice was issued by the DRP, and the petitioner responded by filing relevant documents and evidence in support of the objections raised by it. Finally, the DRP issued directions dated March 25, 2021, under Section 144C(5).
5. The directions for DRP were uploaded on the Income Tax Business Application (ITBA) portal on the same date, and the said directions were served to the petitioner via email dated April 6, 2021.
6. The Faceless Assessing Officer (FAO) passed the order two years after the Dispute Resolution Panel (DRP) directions.
7. The grievance of the petitioner was that the AO failed to pass the final order in terms of the directions of DRP within 30 days, the period of limitation prescribed by Section 144C(13), and consequently the ROI as originally filed has to be accepted and excess tax paid be refunded with interest.
Hon Bombay HC held as below:
1. The assessment order passed by the department in August this year against the beleaguered telecom operator was time barred and hence cannot be sustained.
2. The petitioner is entitled to receive the refund together with interest, in accordance with the law. The procedure is to be completed within 30 days of this order being unloaded.
3. This would, however, not preclude revenue, should the need arise, from reopening the assessment by following due process and in accordance with the law.
4. A detailed inquiry be initiated on the failure on the part of the Faceless AO concerned to act in accordance with the provisions of the Income Tax Act and the lack of diligence on the part of officials concerned and the system itself insofar as it relates to the present assessment.
5. Strict action should be taken against persons responsible for the laxity and lethargy displayed, which have caused a huge loss to the exchequer and, in turn, to the citizens of this country.
Taxability of gifts during Diwali and marriage:
Taxation of Diwali gifts:
1. If the value of gifts received from non-relatives during Diwali exceeds Rs. 50,000, these gifts fall under the category of “Income from other sources” and become subject to taxation as per Sec 56 of the Income Tax Act.
2. The term “relative” in taxation terms includes a comprehensive list of relationships that are considered close family connections. These relationships encompass various individuals who are closely related to the taxpayer.
3. As per Sec 56(2) the term relative includes:
In case of an individual
1. Spouse of the individual
2. Brother or sister of the individual
3. Brother or sister of the spouse of the individual
4. Brother or sister of either of the parents of the individual
5. Any lineal ascendant or descendant of the individual
6. Any lineal ascendant or descendant of the spouse of the individual
7. Spouse of the person referred to in above points
In case of HUF – Any member of the HUF
Taxation on wedding gifts:
1. The gifts newlywed couples receive on the occasion of their marriage from individuals are not taxable.
2. These gifts can be in any form, such as a house, property, cash, jewelry or stock, etc., and are not taxable.
3. So in case you have shown some amounts or assets as having been received at the occasion of your marriage, you may have to furnish the details of all the persons from whom you have received the gifts. Moreover, the tax official may call the person to appear before him and may try to find about genuineness of the gift.
4. Though gifts received by bride and groom are fully tax free in their hands on the occasion of their marriage but some clubbing provisions will come into play if these gifts are received from certain specified relatives. For example, income arising from the gift received by a daughter in law from her father in law or mother in law is required to be added to the income of the in-law who had given the gift.
SC refuses relief to the personal guarantor under bankruptcy code: Anil Dhirajlal Ambani (WP(c) 519/22)
Facts:
1. The Supreme Court upheld the constitutionality of the Centre’s Notification No. S.O. 4126(E) of 15 November 2019, that had allowed financial institutions to pursue proceedings against personal guarantors, commonly promoters, of stressed companies facing insolvency.
2. A Division Bench of the Supreme Court comprising of Justices Ravindra Bhat and L. Nageswara Rao delivered the ruling, which will enable banks to file personal bankruptcies against personal guarantors, even though the insolvency of companies is yet to be settled.
3. The petitioners had contended that the IBC does not adhere to the principles of natural justice and straightaway a resolution profession is appointed and given unfettered powers to seek information including personal information of the guarantors.
Hon SC held as below:
1. The applicability of principles such as natural justice, depends on the situation and cannot be applied in a one-size-fits-all manner.
2. The Insolvency and Bankruptcy Code (IBC) cannot be held to be operating in a retroactive manner in order to hold it violative of the Constitution. Thus, we hold that the statute does not suffer from the vices of manifest arbitrariness.
3. Sanction of a resolution plan and finality imparted to it by Section 31 does not per se operate as a discharge of the guarantor’s liability. As to the nature and extent of the liability, much would depend on the terms of the guarantee itself. However, an involuntary act of the principal debtor leading to loss of security, would not absolve a guarantor of its liability.
4. Thus, initiation of an insolvency resolution process for a company does not absolve corporate guarantees given by individuals from paying up their dues to financial institutions.
08/11/2023
PMGKAY extension may cause fiscal stress:
1. The government’s decision to extend its flagship food subsidy scheme, the Pradhan Mantri Gareeb Kalyan Ann Yojana (PMGKAY), by five years is expected to put pressure on it finances, which have had a good run in the first half of the fiscal, with growth in both tax and non-tax revenues.
2. PMGKAY which endeavours to provide free foodgrains to 80 crore poor Indians, is expected to build fiscal pressure in the coming years, when the procurement cost or minimum support price (MSP) of grains rises, causing the subsidy bill to balloon.
3. The subsidy has been included in the overall food subsidy of around ?197,350 crore provided in the 2023-24 budget, of which ?95,149 crore or 48% has been used as of September, as per CGA data. With the scheme now being extended, the food-subsidy bill is expected to rise sharply as the MSPs for foodgrains rise.
4. PMGKAY was introduced during the covid pandemic in 2020. Under it, 5 kilos of foodgrains were supplied for free to individuals under the National Food Security Act (NFSA) quota. The government has now amalgamated PMGKAY with NFSA.
5. As per CareEdge ratings, overall, there is a hope that the government would meet its fiscal deficit target of 5.9% of GDP, we need to be watchful of the trajectory of revenue spending ahead of the election season, along with the possibility of lower-than-expected nominal GDP growth.
Source: Livemint
Shree Sai Baba Sansthan Trust is entitled to IT exemption on anonymous donations: Shree Sai Baba Sansthan Trust (Shridi) Versus DCIT (Exemptions) (I.T.A. No.3049/Mum/2022)
Facts:
1. The assessee/respondent is a public trust that was constituted in 1953 under the name and style of ‘ShirdiSansthan of Shri Sai Baba’, registered under the Bombay Public Trust Act. The assessee is also registered under Sections 12A and 80G of the Income-tax Act, 1961.
2. The AO was of the view that the assessee was a charitable trust, and since the anonymous donations exceeded 5% of the total donations, they were taxable under Section 115BBC(1) of the Income Tax Act.
3. The assessee argued that its holding of a certificate under Section 80G was valid, and at the same time, since it existed both for charitable and religious purposes, it was also entitled to the benefit of exclusion set out in Section 115BBC(2)(b). As per Sec 115BBC(2) anonymous donation received by any trust or institution created or established wholly for religious and charitable purposes is not taxable.
4. The department contended that AO had rightly held that the assessee was only a charitable organization and not both a charitable and religious organization and therefore not entitled to avail the benefit of exclusion set out in Section 115BBC(2)(b) to the assessee. The assessee trust, whose primary object was to propagate the teachings of Shri Sai Baba, did not have any religious purposes whatsoever.
ITAT Mumbai held as below:
1. The exclusion set out in Section 115BBC(2)(b) can co-exist with Section 80G. Hence, the proposition put forth by the department placing reliance on 80G registration to ipso facto deny the exclusion set out in Section 115BBC(2)(b) is held to be untenable.
2. Thus Shree Sai Baba Sansthan Trust is eligible for income tax exemption on anonymous donations.
Sec 79 invocation when the beneficial ownership remains the same:
Introduction:
1. Section 79 of the Income Tax Act disallows a closely held company from carrying forward and setting off its tax losses if there is a change in the beneficial ownership of shares carrying more than 49% of the voting power of the company as compared to the year in which the loss was incurred (subject to certain exceptions).
2. This provision is an anti abuse provision introduced to bring an end to the practice of buying loss making entities for the sole purpose of setting off losses.
Issue:
1. Various courts are besieged with the question whether beneficial ownership can be said to have remained unchanged merely because registered owner of shares, holding more than 49% of the voting power, has changed.
2. Hon’ble Karnataka High Court in the case of Commissioner of Income-tax v. AMCO Power Systems Ltd.,[[2015] 62 taxmann 350 (Karnataka)] held that a holding company would naturally exercise control over its wholly-owned subsidiary and thus, it would also be considered to have voting power over the shares of its step-down subsidiary.
3. However, the Hon’ble Delhi High Court in Yum Restaurants (India) (P.) Ltd. v. Income-tax Officer,[[2016] 66 taxmann 47 (Delhi)] held that simply because the ultimate holding company remained unchanged, this would not automatically imply that the beneficial ownership also remained unchanged. The onus was on the taxpayer to show that there was a separate beneficial shareholder, distinct from the registered shareholder, who was entitled to the benefits flowing from the shares (i.e., voting rights, dividend, etc.).
4. Similarly, the Hon’ble Delhi ITAT in ACIT v. WSP Consultants India (P.) Ltd.,[[2022] 140 taxmann 65 (Delhi – Trib.)] noted there was nothing on record to show that the ultimate holding company was the beneficial owner of shares of the company having 51% or more voting right. In the absence of such evidence, the registered shareholder would be presumed to be the beneficial shareholder.
5. In a very recent judgement of the ITAT Mumbai in the case of Hiranandani Healthcare Pvt Ltd Vs CIT (ITAT Mumbai) (I.T.A. No. 1142/Mum/2023), ITAT highlighted that the key factor in Section 79 is the maintenance of beneficial ownership by the same group of shareholders. As there was no change in the group’s beneficial ownership, the ITAT ruled in favor of the Assessee.
Conclusion:
The taxpayers would be required to present evidence to substantiate the fact that in a given case, the beneficial owner is distinct from the registered owner.
07/11/2023
Insurance business is not a banking activity: ITAT
Indur Intideepam Producers MA Cooperative Societies Federation Limited (ITA 339 / Hyd / 2023)
Facts:
1. Assessee is a cooperative society providing credit facilities to members.
2. The AO noted that the assessee was mainly in the business of lending services for guarantee payments ie security investment policies, life insurance, pension and earning commission.
3. AO disallowed the deduction claimed U/S 80P of the Income Tax Act, as he opined that the services provided by the assessee do not fall U/S 80P.
ITAT Hyderabad held as below:
1. Insurance activities do not fall under the category of banking activities. So deduction in respect of the same cannot be claimed by the assessee.
2. However disallowance can be made o LT to the extent of the deduction claimed U/S 80P.
3. The file is remanded back to the file of the AO for the limited purpose of verifying the deduction claimed by the assessee and pass a fresh order after according a due opportunity to the assessee to be heard.
06/11/2023
System default is the standard excuse while delaying refunds: Bombay HC: Matrix Publicities and Media India Pvt. Ltd. Versus Deputy Commissioner of Income Tax Circle- 16(1), Mumbai & Ors. (Writ Petition (L) No.16764 Of 2023)
Facts:
1. The petition seeks a refund amount of Rs. 19,69,46,789 for Assessment Year 2020–21. The jurisdictional officer has sent a letter or email to Central Processing Centre (CPC) for early capture or update of the refund details as determined in the ITBA portal so that the final manual order can be passed by the respondent.
2. The system (under the control of CPC, Bangalore) has to capture the refund already approved via the web service rectification order passed on July 29, 2023. Until the issue is resolved, proceedings in the case cannot be completed and refund cannot be granted.
Hon. Bombay HC held as below:
1. The excuse used is that the system under the control of the Centralized Processing Center (CPC), Bangalore, has some issues and, therefore, amounts are not being released to assessees. Interest is payable by law until the date of refund, and the Department does not realize that it is public money that is used to pay interest. That is a waste and a burden on the exchequer.
2. We would only hope that the Finance Ministry looks into it with seriousness and tries to put an end to the problem faced by all assessees and the Income Tax Officers. A copy of this order should be sent to the PMO, the Hon’ble Finance Minister GOI, the Hon’ble Law Minister GOI, the Central Board of Direct Taxes, and the Attorney General for India for information and necessary action. We only hope this problem gets resolved at the earliest.
3. The system default is the standard excuse of the department when it comes to giving refunds. Had the department sorted out its technical issues, totally unrelated to any substantial legal issue, nevertheless contravening the fundamental right of the petitioner to receive an undisputed amount of refund, the present proceedings would not have crept into the litigation arena.
4. The department, either by itself or through CPC, should ensure that the amount is credited to the petitioner's account on or before November 4, 2023, with interest up to the date of payment in accordance with the law.
05/11/2023
66% of total income of the 7 national parties came from unknown sources:
1. More than 66 % of the total income of the seven national parties in 2021-22 came from electoral bonds and unknown sources, as per a report by Association for Democratic Reforms (ADR).
2. The income of seven parties - BJP, Congress, TMC, NCP, CPI, CPI(M) and the National People's Party - from unknown sources was 66.04 per cent.
3. ADR, an NGO working for electoral reforms, citing official data, said seven national parties collected Rs 2,172 crore from unknown sources in 2021-22. 83.41 per cent of the income (Rs 1,811.94 crore) from unknown sources came through electoral bonds.
4. As parties are not obliged to declare the details of donors who contribute less than Rs 20,000 in a single tranche, the income from this source is termed unknown. After electoral bonds were introduced in 2018, contributions received through these bonds too were bracketed as unknown sources of income.
5. Political parties need to declare donations that exceed Rs. 20,000. Such a declaration is made by making a report and submitting the same to the EC. Failure to do so on time disentitles a party from tax relief under the Income Tax Act, 1961.
Cause Title: M/S. Global Plasto Wares v Assistant State Tax Officer (2023:KER:64562)
The Kerala High Court held that the provisions of Section 73(8) of the GST Act, 2017, would not be applicable if a person who is liable to pay tax fails to deposit the tax collected by him within 30 days from the due date of payment. The Court dismissed a Writ Petition challenging the order of the Tax Assessing Authority under whereby a penalty was imposed due to non-payment of tax after the lapse of thirty days. “Considering the provisions of Sub-sections 6, 8 and 9 of Section 73 of the GST Act, 2017 it is provided that if a person chargeable to tax fails to deposit the tax collected by him within a period of thirty days from the due date of the payment of the such tax, Sub-section 8 will not have any effect and such a person is liable to pay penalty”, Justice Dinesh Kumar Singh observed.
04/11/2023
The Goods and Services Tax (GST) department will install a registration system on November 7 that will be rolled out from Vapi in a formal event. The department will now collect biometric data of an applicant at the time of registration for new GST number. Gujarat will be the first state in the country to roll-out the system of biometric data based registration. Union minister for finance and corporate affairs Nirmala Sitharaman is likely to remain present at the event and launch the project virtually at 10 centres across the state “The Union minister will launch the project from Vapi and Gujarat is the first state in the country to launch this project. After the pilot project, the GST registration with biometric data will be rolled out in other states too,” said Kanu Desai, cabinet minister for finance. “Gujarat was the first state to launch ‘Mera Bill Mera Adhikar’ successfully. Now, we are launching this project. Vapi was chosen for being the country’s leading chemical hub,” added Desai. In the new registration method, an applicant has to give a thumb impression along with various identification documents. “This will help ensure that the applicant is genuine. The GST applicant can be called for verification in future if required,” said a senior GST official. S-TOI
The Enforcement Directorate (ED) has alleged that Jet Airways founder Naresh Goyal never adhered to corporate governance, continued with the “ redundant concept” of global servicing agents for “siphoning of funds” and was adamant against diluting shareholding even when the airline was in dire straits, and thwarted every attempt for its revival. The ED, in its prosecution complaint against Goyal and other, on Wednesday said it has provisionally attached properties worth ?538.05 crore in the case, including residential and commercial properties in the name of several companies and people such as Jetair Pvt Ltd, Jet Enterprises Pvt Ltd, Goyal, his wife Anita and son Nivaan, in London, Dubai and various parts of India. The ED said it is treating the loans of ?5,718.34 crore availed of by Jet as proceeds of crime. An audit by EY revealed that bogus consultancy fees, including GST, were billed to the airline by a firm between 2016 and 2018, even though GST was introduced only from July 2017.Also, payments were made to a firm manufacturing products like mosquito coils and chemicals. It was paid ?40.40 crore for expenses pertaining to payroll processing from April 2018, though the firm was incorporated only in June 2018, the ED said.
Taxability of Deemed Dividend (Section 2(22)(e)) Limited to Shareholders. Case Name : ACIT Vs Kiran Ship Breaking Company (ITAT Ahmedabad)
03/11/2023
Ministry of Finance had issued a Press release regarding gross GST revenue.collected in the month of October, 2023 is ? 1,72,003 crore out of which ? 30,062 crore is CGST,? 38,171 crore is SGST, ? 91,315 crore (including ? 42,127 crore collected on import of goods) is IGST and ? 12,456 crore (including ? 1,294 crore collected on import of goods) is cess.
India-made iPhones are projected to make up 12 per cent to 14 percent of Apple's worldwide iPhone shipments in 2023, Apple could increase its iPhone shipments from India to represent 20% to 25% of its global total next year.
Second Wife Not Entitled to Death Benefit Without Government Approval. Case Name : Shaik Khateeja Begum alias Mohammed Khateeja Begum Vs Mohammed Masthan Bee (Telangana High Court)
The annual EdelGive Hurun India Philanthropy List 2023 was released on November 2, which shows that HCL co-founder Shiv Nadar, one of India’s wealthiest people retained his top spot as India’s most generous man. Nadar is a self-made billionaire with a net worth of $29.2B. He has donated Rs 2,042 crore in FY23, which is roughly Rs 5.6 crore every day. He is followed by Azim Premji, Wipro’s founder-chairman, who donated Rs 1,774 crore.
With an annual donation of ?376 crore, Reliance Industries Chairman and richest individual in India, Mukesh Ambani, ranks third on the list. Gautam Adani stands in 5th position. He donated ?285 crore, which is 50% more than the previous year. Ratan Tata is not among the top 10 philanthropist list this year.
02/11/2023
Reassessment-Borrowed satisfaction
Section 147 come into action if their is a find of income escaping assessment. And to initiate such action it is desirable for the AO to pass an inquiry order under clause (d) of section 148A to the effect that it is a fit case to issue a notice under section 148 for proceeding with such action.
In a nutshell therefore the AO has to form an independent opinion of a fit case for rescrutinising a case.
1. The Bombay High Court in (2023] 458 ITR 157 (Bom) dealt with a case of reassessment on the basis of information from the Insight Portal and held that that the AO in the absence of any independent verification of the information available on the Insight Portal has proceeded to reopen the completed assessment without indicating the basis for having a reason to believe that the income in the hands of the petitioner had escaped assessment. 2. Even if the words ‘reasons to belief’ are a foregone thing but independent verification and independent satisfaction remain paramount to the operation and implementation of section 147 which begins with the 24 Carat word ‘IF’.
3. First stage notice issued u/s148A (b) on the basis of some suspicious information in hand without independent verification should call for questioning by the assessee.
Investing in the stock market can be a highly rewarding experience, with the potential to generate significant returns. However, as with all investments. Whether you're a seasoned investor or just starting out, these insights will help you maximize your returns and minimize your risks:
1. Understand the market:
Before investing in the stock market, it's crucial to familiarize yourself with the industry and the companies you plan to invest in. Research their histories, financials, and any ongoing issues that might impact their performance.
2. Set clear goals:
Define the goals you want to achieve with your investment, such as capital gains, dividends, or long-term growth. This will help you select the right type of stocks and determine your investment strategy.
3. Diversify your portfolio:
Don't put all your eggs in one basket. Spread your investments across different industries, geographical regions, and companies to minimize risk. Diversification is key to a successful long-term investment strategy.
4. Monitor your investments:
Keep track of your portfolio performance regularly. Adjust your investments as needed to ensure they remain aligned with your goals and risk tolerance.
5. Use technology to your advantage:
Take advantage of online trading platforms, research tools, and investment apps to streamline your investment process, stay informed about market trends, and manage your portfolio more effectively.
6. Stay strategic:
Long-term investing is the key to success. Focus on buying stocks with solid growth potential and holding onto them for an extended period. Avoid short-term reactions to market fluctuations or economic news.
7. Consider professional advice:
If you're new to investing or unsure about your strategy, consult with a financial advisor or wealth management professional. They can provide valuable guidance and help you make informed decisions.
8. Adjust your approach as needed:
The stock market is constantly evolving, and your investment strategy should adapt as well. Stay flexible and be willing to make adjustments based on market conditions and changes in your financial situation.
Conclusion:
With these tips and tricks, you'll be well-equipped to navigate the stock market and make smart investment decisions. Remember that investing always carries risk, but by understanding the market, setting clear goals, diversifying your portfolio, and staying strategic, you can maximize your returns and minimize your risks.
01/11/2023
Financial Action Task Force (FATF), an inter-governmental body that sets anti-money laundering standards, has removed offshore tax haven Cayman Islands from its 'grey list'. Besides Cayman, Panama, Jordan, and Albania have been removed from the list, which requires jurisdictions to be placed under increased monitoring until the identified deficiencies are resolved in their framework.
Incentive earned by the assessee for achieving the sales target as per franchise agreement is part of business turnover of the assessee and therefore the same is includible in turnover for the purpose of determination of income u/s 44AD and not chargeable under the head income from other sources. Euro Homes Vs. DCIT, 31/03/2023 (ITAT Chennai) (Favour of Assessee)
Central Board of Indirect taxes and Customs had issued Notification No. 05/2023-Integrated Tax dated October 26, 2023 regarding Seeks to notify supplies and class of registered persons eligible for refund under IGST Route.
Goods and Services Tax Network has issued an advisory regarding changes in GSTR-5A. Notification 51/2023 dated 29.09.2023 has introduced Table 5B in GSTR 5A w.e.f. 01.10.2023. In this notification, Table 5B has been introduced to report supplies made to registered GSTINs (B2B supplies). This would be implemented shortly at GSTN, and until such time, OIDARs are advised to file the return in the existing GSTR 5A itself.
31/10/2023
Clarification on Place of supply of service by way of transportation of goods (other than by mail or courier) where either supplier or recipient of service is outside India.
The clarification is associated to the omission of sub-section (9) of Section 13 of the IGST Act, w.e.f. 01.10.2023.: Where either the location of supplier or recipient is outside India and the services were that of transportation of goods (other than mail or courier), the place of supply used to be the destination of goods as per Section 13(9) of the IGST Act 2017.
Upon omission of this sub-section, the place of supply would be governed by Section 13(2) of the IGST Act, i.e., the general provision. The place of supply would be the location of the recipient if the same is available. If the said location is not available, it would be the location of supplier of service.
The amendment brings the foreign shipping lines/airlines at par with domestic service providers. W.e.f. 01.10.2022, the exemption on export air freight and export sea-freight was withdrawn. As a result, the India service providers are charging GST from the India exporter w.e.f. 01.10.2022. However, if the same exporter availed services of foreign shipping line/airline, the tax was not leviable as the service did not qualify as import of service, POS being outside India (destination) in terms of erstwhile 13(9).
Decoding the 52nd GST Council Meeting decisions: Compilation & Analysis of New Amendments and Clarifications
By omitting 13(9), w.e.f. 01.10.2023, the POS is governed by 13(2), as a result of which, the service by foreign service providers qualify as import of service (POS – location of recipient) and the recipient is liable to discharge GST under RCM on export freight.
The place of supply in case of mail or courier was not governed by 13(9) and accordingly shall continue to be governed by 13(2).
Source: Circular no. 203/15/2023 – GST dated 27.10.2023
MCA via notification, made amendments in Companies Act and Rules made thereunder to dematerialization of security by the Private Company other than small companies as on 31st March 2023. All Fresh issued the shares in the dematerialized form mandatory after 30th September 2024 by the private companies.
SEBI barred Mohammad Nasiruddin Ansari and two other entities linked to him from the market and ordered them to refund Rs 17.2 crore ($2.1 million) taken from followers. Financial influencers are once again under the spotlight as the country's market regulator ramps up action against unregistered advisors dishing out investment tips on social media.
GST portal requires users to register their devices for each specific login ID. This means that if a user attempts to log in from a different system, an OTP will be necessary to access the GST portal. This step aims to enhance security and ensure that only authorized users can access the portal from registered devices.
30/10/2023
MCA vide notification dated 27.10.2023 has required all LLPs: 1) to maintain the register of partners since incorporation. 2) report to Registrar (RoC) beneficial owners on the lines of a company. 3) identify and report a designated partner responsible for furnishing beneficial owners details.
Ministry of Corporate Affairs has announced on October 27, 2023 that the Private companies are now required to dematerialize their securities, private companies (other than small company) must complete this process within eighteen months of closure of the financial year March 2023, comply with the provisions of this rule.
DGFT has introduced automated system for issuing the Status Holder Certificate. Exporters are now not required to submit application separately. The certificate is auto generated based on shipment details and e-BRCs etc. This will reduce cost and processing time, enhance automation and transparency in the sector. Eligible exporters will be benefited by getting real time recognition ranging from 1 Star to 5 Star.
Gujarat high court ruled that a chartered accountancy (CA) firm cannot be considered a shop or commercial establishment but is a professional establishment and its employees are thus not covered under the Employees' State Insurance (ESI) benefit scheme.
29/10/2023
If make available clause as per DTAA between India and Singapore is not satisfied, managerial charges cannot be FTS: Delhi HC. The Commissioner Of Income Tax (International Taxation)-1, Delhi Versus M/S Bio-Rad Laboratories (Singapore) Pte. Ltd (ITA 564/2023)
Facts:
1. The assessee, a Singapore entity provides professional advice to its Indian subsidiary through studies, evaluation, review of reports, liaison work, advice on key policy issues and business operations, HR management, and financial management.
2. The Assessing Officer (AO), concluded that the services provided by the respondent or assessee to the Indian subsidiary were in the nature of “management support services” and hence taxable at the rate of 10% plus surcharge and education cess under the Indo-Singapore Double Taxation Avoidance Agreement (DTAA).
Hon Delhi HC held as below:
1. The services offered by the respondent or assessee to its Indian affiliates did not come within the purview of Fees for technical services (FTS), as reflected in Article 12(4)(b) of the Indo-Singapore DTAA, since that they did not fulfil the criteria of the “make available” principle as necessitated by the Article.
2. If, as contended by the appellant/revenue, technical knowledge, experience, skill, and other processes had been made available to the Indian affiliate, the agreement would not have run its course for such a long period (since 2010).
MCA notifies mandatory dematerialisation for securities of private companies
1. Sub-section (1A) was inserted under Section 29 of the Companies Act 2013 facilitating the Central Government to prescribe such class or classes of unlisted companies for which the securities shall be held and/ or transferred in dematerialised form only.
2. In exercise of the powers conferred under the said section, Rule 9B has been inserted vide the Companies (Prospectus and Allotment of securities) Second Amendment Rules, 2023 specifying the requirement of mandatory dematerialisation of securities issued by private companies.
3. The mandatory dematerialisation requirement is applicable on all securities of every private company, excluding small companies and government companies. The provisions are applicable with immediate effect, and a timeline upto 30th September, 2024 (18 months from 31st Mar 2023) is provided for the compliance with the mandatory dematerialisation requirements.
4. In case a company ceases to be a small company after 31st March, 2023, the timeline of 18 months triggers from the close of the financial year in which it ceases to be a small company.
5. Private companies shall Issue all securities in dematerialised form only and facilitate dematerialisation of all existing securities.
6. Private companies should make an application with depository for dematerialisation of all existing securities and securing ISIN for each type of security.
7. A small company means a company, other than a public company, having
(A)paid up share capital not exceeding Rs. 4 crores and
(B)turnover not exceeding Rs. 40 crores.
Further, the following cannot be a small company –
(A) A holding company or a subsidiary company.
(B) A company registered under section 8.
(C) A company or body corporate governed by any special Act.
MCA notified Companies MGT amendment Rules.
1) Every Co is required to designate a person (DP) under SBO.
2) CS/MD/KMP/Director can be DP
3) Company shall inform the details of same in Annual Return
4) Changes to be intimated in GNL2
MCA amended PAS Rules
1) Details of non converted Share Warrant to be submitted in PAS 7
2) Private Companies except small companies are required to have shares in DEMAT within 18 months from closure of FY 23.
Pvt Co to issue shares etc in demat: MCA has notified amendments to PAS Rules
1. MCA has mandated private cos. (which are not Small Cos.) to issue securities (not just ‘shares’) only in demat form and facilitate demat process for all its securities.
2. Presently, said provisions are applicable to unlisted public companies.
3. Now, the said provision is applicable to cos. other than Small Cos., which includes: Foreign subsidiary Co., Domestic subsidiary Co., Section 8 Cos., domestic holding Co., Cos. governed by any special Act
4. The said applicable Private Cos. shall comply with the said provisions by September 30, 2024 (18 months from March 31, 2023).
5. The said Cos. shall ensure that entire holding of securities of its promoters, directors, Key Managerial Personnel have been dematerialised before making any offer for issue of any securities or buyback of securities or issue of bonus shares or rights offer.
6. The provisions ought to have been applicable from the date of notification, as 7 months out of 18 months are already over. Section 8 Companies and wholly-owned subsidiary companies ought to have been exempted from this amendment.
7. Now, the stamp duty on issue and transfer of securities for such companies shall be in accordance with June 2020 notification, which provides for payment and collection of stamp duty. One-time and on-going cost of compliance would be another factor for this amendment.
28/10/2023
Few Important provisions of Companies Act,2013:
As per the provisions of Section 125 of the Companies Act, 2013, if a shareholder or an investor has not claimed dividend, share application money due for refund, matured deposits with Non- Banking Companies, matured debentures, unpaid redemption amount of preference shares and a period of 7 years has lapsed from the date of the amounts being due to be paid, then such unclaimed amount shall be transferred to Investor Education and Protection Fund (IEPF) within 30 days and a statement of details of share holders shall be filed with Ministry of Corporate Affairs (MCA) within such 30 days.
Form No. IEPF – 2 - a statement containing following information about the unclaimed amounts shall be filed by the Company within 60 days from the date of Annual General Meeting and every year thereafter till the completion of the seven years with MCA and also uploaded on the website of the Company:
accounts of Companies; and
a)Amounts in the unpaid dividend accounts of Companies;
b)No. of Underlying Shares for the Amount in the unpaid dividend
c)Amount refunded by the Company from the unpaid dividend account during the year.
• Also change in the Nodal Officer or his details shall be communicated to the Authority through Form No. IEPF-2 within seven days of such change along with Board Resolution thereof.
Where there is a specific order of Court or Tribunal or Statutory Authority restraining any transfer of such shares and dividend or where such shares are pledged or hypothecated under the provisions of the Depositories Act, 1996, the company shall not transfer such shares to IEPF.
• The Company shall furnish details of such shares and unpaid dividend to the MCA in Form No. IEPF - 3 within 30 days from the end of each financial year until such shares are transferred to IEPF.
If a shareholder has not claimed his dividend for a continuous period of 7 years, then shares of such shareholders shall be transferred to IEPF Authority within 30 days of expiry of 7 years.
• Within 30 days of transfer of shares to IEPF, the Company shall file Form IEPF-4 with MCA containing details of shares transferred to IEPF.
• Further all benefits accruing on such shares like bonus shares, split, consolidation, fraction shares and the like except right issue shall also be credited to DEMAT account of the Authority by the Company. The Company shall also file Form No. IEPF-4 with MCA within thirty days of the corporate action containing details of such transfer.
A person, whose shares, unclaimed dividend, matured deposits, matured debentures, application money due for refund, or interest thereon, sale proceeds of fractional shares, redemption proceeds of preference shares, etc., are transferred to the IEPF, can make an application by filing Form IEPF-5 with the IEPF authority for claiming the shares, dividend and the benefits which are transferred to IEPF. e- verification report by Company / Nodal officer:
• After the shareholder files the form, the Company receives a notification
mail along with SRN of the form.
• The Company needs to download the form with the SRN mentioned in the mail.
• The Company shall co-ordinate with the shareholder and get the physical documents and upon being satisfied that all the documents are in order, the Company shall file an e-verification report with MCA approving the claim.
• If the Company is not satisfied with the documents provided by the shareholder, the Company will reject the claim in the e-verification report.
• The Company shall within thirty days from the date of receipt of claim, file an online verification report with IEPF Authority.
• The Company shall send an e-mail containing the verification report along with the acknowledgment of filing to the shareholder for his/her records.
Whenever Company pays dividend and such other entitlements like bonus shares, etc., to the shareholders, the Company shall file Form IEPF-7 within thirty days from the date of remittance providing the details of shareholders whose shares are transferred to IEPF and whose dividend or other entitlements are credited to IEPF Authorities.
Section 135
Corporate Social Responsibility provisions are applicable to all Companies satisfying the following conditions:
i) Net worth of Rs. 500 crore or more; or
ii) Turnover of Rs.1000 crore or more;or
iii) Net profit of Rs. 5 crore or more in the immediately preceding Financial Year.
Once CSR provisions are applicable, the Company shall comply with the following:
i. Constitute a CSR Committee with 3 or more Directors with at least 1 Independent Director;
ii. AdoptaCSRPolicy;
iii. Spend at least 2% of the average net profit of 3 previous years.
Section 149(4)
Every Listed Company shall have at least one third of total number of Directors as Independent Directors.
• Following class or classes of Companies shall have at least two directors as Independent Directors:
• Public Companies having paid up share capital of Rs.10 crore or more or turnover of Rs.100 crore or more or having in aggregate, outstanding loans, debentures and deposits exceeding Rs.50 crore.
• The following classes of unlisted public companies are exempted to appoint Independent Director:
• a joint venture;
• a wholly owned subsidiary; and
• a dormant company as defined under section 455 of the Act.
Section 138
Following Companies are required to appoint Internal Auditor: i.Listed Companies;
ii.Unlisted Public Companies which fulfills the following conditions:
a.paid up share capital of Rs. 50 crore or more; or
b.turnover of Rs. 200 crore or more; or
c.outstanding loans /borrowings exceeding Rs. 100 crore or more from banks or public financial institutions; or
d.outstanding deposits of Rs. 25 crore or more;
iii.Private Company which fulfills the following conditions:
a.turnover of Rs. 200 crore or more; or
b.Outstanding loans /borrowings exceeding Rs. 100 crore or more from Banks or Public Financial Institutions.
Section 137
The following class of Companies shall file their financial statements and other documents under Section 137 of the Companies Act, with the Registrar of Companies in e-form AOC-4 XBRL:
i. Listed Companies and their Indian subsidiaries; or
ii. Companies having paid up capital of Rs.5 crore or above; or iii.Companies having turnover of Rs.100 crore or above; or
iv.Companies which are required to prepare their financial statements in accordance with Companies (Indian Accounting Standards) Rules, 2015.
The Companies in banking, insurance, power sector, non-banking financial companies and housing finance companies need not file financial statements under XBRL Mode.
Once a Company files financial statements in XBRL mode in a particular financial year, then such Company shall compulsorily file all its future financial statements in XBRL mode.
27/10/2023
Uber not an assessee in default for non deduction and payment of TDS: ITAT Mumbai: Dy. CIT (OSD) v/s Uber India Systems Pvt Ltd (ITA no. 126/Mum. /2023, A.Y. 2019-20)
Facts:
1. Uber India is running the business of Uber BV (an entity incorporated in the Netherlands and is the legal owner of the software application called Uber App).
2. Uber India activities related to drivers, business development, taking care of legal and statutory responsibilities and so on.
3. Uber India is also involved in the task of collecting money from the passengers for the ride, collecting the commission, and making payment to the drivers for the ride. It is also involved in food delivery services.
4. A TDS verification survey was conducted by the Assessing Officer (AO) and assessee was treated as assessee-in-default for non-deduction tax at source (TDS) under section 194C of the Income Tax Act while making payment to drivers, restaurant partners and courier partners.
5. On appeal, the CIT(A) reversed the AO’s order, and the matter reached the Mumbai Tribunal.
ITAT Mumbai held as below:
1. In the year under consideration, the assessee provided taxi and food delivery services in India through its mobile application. Uber EATS is a food delivery App that on a similar pattern as Uber App. Uber EATS is a Restaurant Aggregator platform akin to Uber App being a ride-sharing platform.
2. When cash is directly paid by the rider to the Driver, then Uber India isn’t treated as person responsible for payment. Therefore, how the very same Uber India could be treated as a person responsible for payment when the rider decides to make payments through digital means.
3. The assessee is only a ‘payment and collection service provider’ and acts as a remitter of money. But a person who is mere a remitter of money cannot be held person responsible for making payment. Further, an intermediary is not required to deduct TDS.
4. So the assessee is not an assessee in default.
Note: As per the amendment to Sec 204(v) inserted by Finance Act, 2020, the person authorized to make the payment on behalf of the non-resident is liable for withholding tax.
EU Think Tank Proposes Global Minimum Tax on Billionaires:
1. A global minimum tax on billionaires, equal to 2% of their wealth, could raise nearly $250 billion a year, according to a think tank co-funded by the European Union.
2. The EU Tax Observatory proposed such a tax in a report released Sunday and said it would affect fewer than 3,000 billionaires. Billionaires have effective tax rates equivalent to zero to 0.5% of their wealth because they use shell companies to dodge income taxation, said the think tank, which is located at the Paris School of Economics.
3. The developing countries need $500 billion annually in additional public revenue to address the challenges of climate change - needs that could be fully addressed by the tax reforms.
4. The other recommendations include reforming the international agreement on minimum corporate taxation to implement a rate of 25% and remove the loophole that foster tax competition, setting up a mechanism to tax wealthy people, who have been long-term residents in a country and choose to move to a low-tax country, implement unilateral measures to collect some of the tax deficits of multinational companies and billionaires in case global agreements on these issues fail.
5. It also backed the creation of a global asset registry to better fight tax evasion and strengthening the application of economic substance and anti-abuse rules.
6. Before 2013, households owned the equivalent of 10% of world GDP in financial wealth in tax havens globally, the bulk of which was undeclared to tax authorities and belonged to high-net-worth individuals. Today there is still the equivalent of 10% of world GDP in offshore household financial wealth, but in our central scenario only about 25% of it evades taxation, according to the report.
7. It argued that unilateral action, or multilateral action by a leading group of countries, could “pave the way for eventually nearly global agreements”, which would “accelerate rather than impede global cooperation”.
Gist of Gst circulars dated 27.10.2023
1. Circular no 14: Clarification relating to export of services – sub-clause (iv) of the Section 2 (6) of the IGST Act 2017
2. Circular no 15: Clarification regarding determination of place of supply in various cases
3. Circular no 16: Clarification on issues pertaining to taxability of personal guarantee and corporate guarantee in GST.
26/10/2023
Whether stewardship services by overseas company constitute a PE in India?
Issue:
1. ABC company is engaged in providing financial advisory, corporate lending and securities underwriting services. It has a subsidiary in India, which provides services such as information technology, account reconciliation, etc to the group companies.
2. ABC also sends some personnel to its Indian subsidiary to undertake stewardship activities to ensure quality control standards.
3. Will ABC deemed to have a Permanent Establishment (PE) in India on account of provision of these stewardship services to Indian subsidiary?
Reply:
This issue is similar to the Hon Supreme Court judgement in the case of Morgan Stanley & Co (DIT (International Taxation) v. Morgan Stanley & Co. [2007] 162 Taxman 165/292 ITR 416 (SC)
The Hon SC held as below:
1. Under Article 5(1) of the Double Taxation Avoidance Agreement (DTAA) between India and US, PE would come into existence only if there is a fixed place of business through which business of the multinational enterprise is fully or partially carried on.
2. Morgan Stanley, which is a global company is entitled to insist on quality control and confidentiality from its Indian subsidiary. These stewardship services are merely provided to protect its interest in the competitive world. So stewards were not engaged in day to day management.
3. So stewardship services do not constitute a service PE.
Probable reasons as Why Indian stock market is falling:
1. US Treasury yields: 10-year US Treasury yield drop prompts profit-taking in India, causing market downturn after initial rise.
2. ISRAEL-HAMAS WAR: Middle East tension has stirred uncertainty, causing confusion among global stock market investors, including those on Dalal Street.
3. PARTICIPATORY SELLING: Broad market too witnessed a heavy sell-off, due to a drop in the 10-year US treasury yield, which fell below 5% after reaching a 16-year high.
4. RISING US DOLLAR: The US dollar rebounded, surpassing the key 106 level against the Indian rupee, prompting profit-taking in the Indian stock market.
5. FIS' SELLING: Rising US dollar prompts foreign investors to sell Indian stocks, potentially reallocating funds to gold, bonds and currencies.
6. RISING INFLATION: High crude oil prices due to Middle East tension could raise inflation in India, worrying the stock market.
25/10/2023
A remarkable shift has unfolded in the world of banking over the past decade in India, and it's not what you might expect. This time, it's not the mega loans to corporate giants that are making bankers nervous. The latest cause for concern is much smaller in scale: Consumer loans, each less than 750,000. These loans have reshaped the risk landscape, leaving lenders and investors on the edge. Although corporate non-performing assets (NPAs) have shrunk over the years as chunky bad loans have been resolved, the attention of both lenders and investors has shifted to concerns surrounding small-ticket loans. To be sure, this bucket of small-ticket personal loans comprises 2% of all personal loans, according to TransUnion Cibil. Total personal loans or "other personal loans" as classified by the Reserve Bank of India (RBI) stood at 712.2 trillion as of August, up 26% from a year ago. These unsecured loans include credit for domestic consumption, medical expenses, travel, marriage and other social ceremonies and loans to repay debt, among other things. "To the extent that people are borrowing to finance consumption, there will definitely be a case to say it will be impacted once people stop getting these loans. However, if stopped, people will look for other avenues, some much costlier than bank credit," said Madan Sabnavis, chief economist of Bank of Baroda. While retail credit has led to a rise in consumption, Sabnavis said, it is also because people are keener to borrow to spend than they were a couple of decades earlier. "It is not just the supply of personal loans that has gone up. It is also the demand," Rajeev Jain, managing director of Bajaj Finance, told analysts on 17 October that personal loan disbursements surged from 45 million in 2029-20 to 70 million in 2021-22 and further to 107 million in 2022-23. Steeper growth was seen in two categories: less than 750,000 and 78 lakh-plus, even as the share of regularly repaid personal loans shrunk between 2019-20 and 2022-23. S-Mint
Germany may become the world’s third-largest economy in 2023, dislodging Japan, helped by a slide in the yen against the dollar and the euro. The IMF’s latest projections estimate Germany’s nominal GDP at $4.43 trillion this year, compared with $4.23 trillion for Japan, lagging behind only the US and China.
S&P Global Market Intelligence said that India is likely to become the world's third-largest economy, with a GDP of $7.3 trillion by 2030. After witnessing rapid economic growth in 2021 and 2022, the Indian economy has continued to show sustained strong growth during the 2023 calendar year. India's GDP is expected to grow 6.2-6.3% in the fiscal year ending in March 2024, being the fastest-growing major economy this fiscal year, S&P Global added.
Paytm Founder Vijay Shekhar Sharma has launched a Rs 30 crore fund to invest in India-incubated startups that predominantly focus on serving Indian consumers and businesses. The VSS Investments Fund will focus on new startups in the EV and AI space, as well as expand Sharma's stakes in current holdings. The fund has an initial size of Rs 20 crore, with an additional Rs 10 crore available through a green shoe option. VSS Investco, a company owned and controlled by Sharma, is the main sponsor of the new fund. The Paytm founder currently has stakes in 21 companies, including Ola Electric, Mesa School of Business, GOQii, Daalchini Technologies, Treebo, UNNATI, etc.
Ajay Goel, CFO of the edtech major for about six months, has quit to join his previous employer, Vedanta.
BYJU'S has now named Nitin Golani, who was the president of the company's financial operations and the chief strategy officer at Aakash Education, as its new India CFO. The development comes days after BYJU’S said it would soon release its financial results for FY 21-22 after a delay of more than 19 months.
Challenging the show cause notices (SC) issued by GST Dept. to the tune of Rs. 1700 cr, casino co. Delta Pleasure Pvt. Ltd. files writ petition before Bombay HC (at Goa) assailing the SCN on various grounds; Terming the very levy of GST on 'Betting' and 'Gambling as unconstitutional, the petition submits that the Amendment Act replaced Entry 62 of List Il of the Seventh Schedule to the Constitution (w.e.f. September 2016) and thereafter no Entry has been inserted in any of the three lists in the Seventh Schedule to authorise either Parliament or State Legislature to tax either 'betting/gambling' activity; Delta further pleads that amendments to Art. 366 of Constitution that inserted the definition of 'goods and services tax', does not contain any special definition of 'services', thereby limiting the legislative competence of States; Petition strongly contends that the activity of 'gambling' is in no way a
"service', irrespective of whether two individuals gamble with each other or the casino gambles with its customers: Petitioner argues that "the assumption that every activity is binary, i.e. either a supply of goods or services.. is plainly wrong. There are many activities which do not result in either a supply of goods or rendition of service... Gambling is one activity where two or more persons indulge in games of chance with each other and they do not render any service to each other." Petitioner by drawing distinction between 'lottery' and 'gambling', submits that there is no supply of an 'actionable claim' in gambling and that the reliance on the analogy of lotteries 'slavishly' adopted in Rule 31A of CGST Rules shows lack of understanding of basic concepts of law; Arguing forcefully that the GST levy only ought to be on 'GGR' (Gross Gaming Value, ie the difference between purchase value & redemption value of chips), the petition contends that the concept of total bet value' as a measure for GST introduced by CBIC Circular, is in contravention of the plenary legislation & rules; Petitioner further assails the said CBIC Circular, which according to the petitioner, creates an artificial/illogical bifurcation of entry to casino and gambling service; Petitioner therefore seeks quashing of SCN demanding 'extortionate", 'absurd', 'unlawful' GST. S-TS
24/10/2023
Income tax - Hindu Undivided Family- All about partition of a HUF:
1. Section 171: Section 171 of the Income Tax Act, 1961 defines the partition of Hindu Undivided Family (HUF) and deals with the provisions of assessment after its partition.
2. Distinguished from Hindu Law: The Partition of HUF should be recognized as per the Income Tax Act and not as per the Hindu Law. Section 6 of the Hindu Succession Act would govern the rights of the parties but insofar as income-tax law is concerned, the matter has to be governed by section 171(1) of the Income Tax Act, 1961.
3. Partial partition: Tax Laws do not recognize partial partition of property or/and persons after 30.03.1978 on insertion of sub-section (9) to Section 171 of the Income Tax Act. This restriction was put to avoid creation of multiple HUFs which was a misuse.
4. Distribution of assets at the time of partition of HUF: On a full partition of the assets of a Hindu Undivided Family (HUF), all the coparceners get their shares in the property. After the amendment in 2005, of Section 6 of Hindu Succession Act, 1956, daughters are also made coparceners and their rights are equal to those of the sons and therefore sons and daughters get the same share in the HUF property on partition.
5. Physical division by metes and bounds is necessary: Hindu Law does not require division of joint family property physically or by metes and bounds. However, partition as defined under Explanation to Section 171 of the Act means—
(i) where the property admits of a physical division, a physical division of the property, but a physical division of the income without a physical division of the property producing the income shall not be deemed to be a partition; or
(ii) where the property does not admit of a physical division, then such division as the property admits of but a mere severance of status shall not be deemed to be a partition.
6. Partition of HUF property can be done either through family settlement or through a partition deed: Partition of HUF property can be done either through family settlement or through a partition deed. Family settlement does not attract stamp duty and is not required to be registered, but partition deed attracts stamp duty and must be registered.
7. Procedures for recognition of partition: The procedure by which the partition gets its recognition are as follows:
(a) The HUF, which has been hitherto assessed, must make a claim to the assessing officer that the Hindu undivided family (HUF) properties have been subjected to total partition.
(b) Then, the Assessing Officer will make an inquiry into the claim after giving notice to all members of the HUF; and
(c) if he is satisfied that the claim is correct, then, he will record a finding that there was a total partition of the HUF, and he will also mention the date on which it has taken place.
8. Order under section 171 not applicable where an HUF has not been assessed to tax: The wordings of section 171 show that the section has no application to an HUF, which has not been hitherto assessed. – [CIT v. Hari Krishnan Gupta (2001) 117 Taxman 214 (Del.)]
9. Partition is not a transfer: Distribution of the assets of an HUF in the course of partition, would not attract any capital gains tax liability as it does not involve a transfer. There would be no clubbing of incomes under section 64 of the Income Tax Act as it would not involve any direct or indirect transfer.
Income Tax Condonation in filing of Form 10-IC:
1. Representations had been received by CBDT stating that Form No. 10-IC could not be filed for A.Y. 2021-22 within the due date or extended due date, as the case may be. It had been requested that the delay in filing of Form No. 10-IC for A.Y. 2021-22 may be condoned.
2. Form 10-IC is required to filed, if a Domestic Company chooses the option to pay tax at concessional rate of 22% under Section 115BAA of the Income Tax Act,1961.
3. On consideration of the matter, with a view to avoid genuine hardship to the domestic companies in exercising the option u/s 115BAA of the Act, CBDT in exercise of the powers conferred under section 119(2)(b) of the Act, hereby directs that: -
4. The delay in filing of Form No. 10-IC as per Rule 21AE of the Rules for previous year relevant to A.Y. 2021-22 is condoned in cases where the following conditions are satisfied:
a. The return of income for relevant assessment year has been filed on or before the due date specified under section 139(1) ofthe Act.
b. The assessee company has opted for taxation uls 115BAA of the Act in item (e) of "Filing Status" in "Part A-GEN" of the Form of Return ofIncome ITR-6.
c. Form No. 10-IC is filed electronically on or before 31.01.2024 or 3 months from the end of the month in which this Circular is issued, whichever is later.
(CBDT Circular 19/2023)
Some of the list of Gst notices across Indian corporates:
1. Siemens Ltd has filed a writ petition before the Bombay high court challenging show cause notice (SCN) issued by the GST authority, the company said in a regulatory filing on Monday. The German engineering and technology conglomerate’s Indian arm has challenged the receipt of the show cause notice proposing to levy GST on leasehold interest in the land located at Worli, Mumbai and freehold interest in the buildings on the property. The company estimates financial implications due to compensation, penalty etc. at ?246.95 crore. The company said it is legally advised that it has a robust case to present in response to the notice. Shares of Siemens Ltd closed down 0.75% at ?3,415.85 on Monday on the NSE. The company has 6,000 people in R&D and related functions in India who work in close collaboration with global engineering teams in locations including the United States, and Germany. Early this year, Siemens signed a contract worth ?26,000 crore with Indian Railways to supply and service electric locomotives for freight movement in India.
2. On October 16, Delta Corp had received a GST notice for short payment of tax to the tune of ?6,384 crore, taking the overall tax demand on the company to over ?23,000 crore. The company had said that the tax demands are arbitrary and contrary to law. Delta Corp also said that it will challenge them.
3. DGGI (Directorate General of GST Intelligence) Kolkata on October 13, 2023 had issued an intimation notice on Deltatech Gaming, a subsidiary of Delta Corp, seeking GST of ?6,236.8 crore for the period January 2018 to November 2022.
4. On October 8, Reliance General Insurance Company (RGIC), a subsidiary of Reliance Capital Ltd, had received multiple show cause notices from the DGGI, amounting to ?922.58 crore on the revenue generated from the services like re-insurance and co-insurance.
5. GamesKraft : Rs. 21,000 Crore: GamesKraft received notice in 2022, which it challenged in Karnataka High Court. Karnataka High Court ruled in favour of GamesKraft but Revenue approached the Supreme Court. The matter is sub-judice.
6. Delta Corp Group: Rs. 23,206 Crores
Notice-1 Delta Corp has received tax notices totaling Rs 16,822 Cr from the DGGI for the period between Jul-17 to Mar-22
Rs 5,682 Cr: Subsidiaries- Casino Deltin Denzong, Highstreet Cruises and Delta Pleasure Cruises.
Notice-2: 6,384 Cr Delta Corp: Rs. 11,140 Crores— Delta Corp claims that this GST demand is based on gross bet value and not gross gaming value.
This notice reignites the debate on the value of the tax applies and about the retrospective taxation.
7. ICICI Lombard: Rs. 2,000+ Crores: ICICI Lombard received a show-cause notice from the DGGI over non-payment of GST on co-insurance premiums and re-insurance commission.
8. LIC: Rs. 36,844 Crores: LIC has received a Notice for paying taxes at 12% instead of 18% for some invoices during the assessment year 2019-2020. Remember this is one year. For 5-6 years you can guess the amount.
9. SBI Life: Amount undisclosed: SBI Life received a tax notice from the Bihar GST Department for 'Non-reversal of the Input Credit availed & utilised under Rule 42.
10. Bajaj Finserv: Rs. 1,010 Crores: Bajaj Finserv's insurance arm (Bajaj Allianz General Insurance Company) receives GST Notice for failure to pay tax on the co-insurance premium.
11. Dabur: Rs. 320+ Crores: The Gurugram Zonal Unit of the Directorate General of GST Intelligence (DGGI) has issued the Notice to Dabur for GST Short/not paid.
12. Dream 11: Rs. 28,000 Crore
13. Play Game 24/7: Rs. 20,000 Crores
These are for 28% GST on the amount received.
14. DGGI has raised tax demand from online real money gaming (RMG) companies over Rs. 55,00 Crores.
Disguised payout: Banks, Insurer's and Online Gaming Industry face GST Notices .
The total net amount of GST Interest, Penalty and Fees for the period from July, 2017 to August, 2023 is as under:
GST Interest Rs. 19140.43 crores
GST Penalty Rs. 4796.99 crores
GST Fees Rs. 8777.15 crores
It may be noted that the accounting head exists in the accounting records of the O/o Pr.CCA, CBIC is fees and not late fees. It is also stated that the above figures includes collection for the FY 2022-23 which is upto (April, 2022 to March Syp.I) as final figures has not been compiled yet. Further, collection upto September, 2023 cannot be provided as the accounts for the month of September, 2023 is under preparation. S-RTI application filed.
23/10/2023
The DGFT issued Trade Notice No. 31/2023-24 dated October 19, 2023 regarding the discontinuation of the Issuance of a Physical copy of Restricted Import Authorisation with effect from October 19, 2023. To further improve ease of doing business, it is decided to discontinue the issuance of physical copy of Authorisation for Restricted Imports with effect from October 19, 2023. In this regard, the following points are submitted for information please –
All Authorisation for Restricted Imports issued on or after October 19, 2023 for EDI Ports shall be issued electronically only. No paper copy of the said Authorisation shall be provided. The Authorisation data shall be transmitted electronically to the Customs Port of Registration. Authorisation for Restricted Imports issued for any non-EDI port shall continue to be issued on paper.
After deletion of proviso to Section 12(8) of IGST Act 2017 w.e.f. 1st Oct. 2023
Place of supply for transportation Services is now location of recipient. Hence, freight paid by the exporter Located in India to service provider Located in India is now taxable Under FCM/ RCM.
Reserve Bank of India (RBI) Governor Shaktikanta Das has stated that the Rs 2,000 denomination notes are returning and only Rs 10,000 crore worth of such notes are still with the public. He expressed confidence that the remaining notes will also be returned or deposited back. Earlier this month, Das had announced that 87% of the Rs 2,000 notes being withdrawn had been deposited into banks, while the rest had been exchanged across counters. The RBI had previously declared its plan to phase out the Rs 2,000 note, which was introduced in 2016. Individuals or entities can exchange Rs 2,000 bank notes at the 19 RBI offices up to a limit of Rs 20,000 at a time.
Important changes with regard to payment of GST on supply of various services and sale of old, used goods and waste and scrap by the Railways on forward charge basis from 1.10.23 onwards. Hitherto upto 19.10.2023, all services provided by the Railways being the Central Government except the services of transport of goods and passengers were taxable on reverse charge basis and the Railways was paying gst on forward charge basis only on transport of goods and passengers. But now with the issue of Notifications 13/2023- CTR amending Notification 12/2017- CTR and Notification 14/2023- CTR amendming Notification 13/2017- CTR, all services provided by the Railways Services provided by the Railways like giving licences, commercial renting, railway engineering services and other services provided are made taxable on forward charge basis from 1.10.2023 in the hands of Railways themselves. Right from the beginning of GST, tax on Transport of goods and passengers is paid by the Railways on forward charge basis. Exemption available to IRFC on leasing of assets (rolling stock assets including wagons, coaches, locos) to Railways which was a main input service, was withdrawn from from 1.10.2021 onwards through Notification 7/2021-CTR dt 30.9.2021 making IRFC to pay gst at 18% on leasing services. Thus Railways get ITC on leasing services which can be used for payment of tax goods and services supplied by the Railways. Similarly sale of old and used goods, waste and scrap by the Railways is made taxable on forward charge basis by making suitable amendment to Notification 4/2017- CTR vide Notification 19/2023- CTR dt 19.10.2023 onwards. Now various services provided by the Railways in addition to sale of old , used and scrap of Railways are brought under forward charge mechanism from 20.10.2023 onwards with the issue of Notification 13/2023- CTR and 14/2023- CTR and 19/2023- CTR all dated 19.10.2023.
22/10/2023
TDS to be deducted only on commission charges and not on gateway charges: ITAT
M/s. Knowledge Hut Solutions Pvt. Ltd (ITA Nos. 466 & 281/Bang/2023)
Facts:
1. M/s. Avenue India Pvt. Ltd. and M/s. Razor Pay are gateway providers who collect fees from participants on the part of the appellant and charging commission. After returning the commission, they transfer the balance amount to the appellant.
2. TDS is deducted u/s. 194H on commission part and not on the whole receipt and the amount of Rs.1,32,629/- was deducted as credit of TDS. The company paid Rs.16,76,041/- and Rs.9,76,530/- towards gateway payment charges (commission) to M/s. Razor Pay and M/s. Avenue India Pvt. Ltd. respectively.
3. According to the revenue, the appellant has paid commission of Rs.15,34,844/- (Rs.25,11,375 – Rs.9,76,531) as reflecting in the books of accounts and thus addition on the same amount was made by the Ld.AO u/s. 194H of the Act which was further upheld by the Ld.CIT(A).
4. According to the appellant, Rs. 16,76,041/- and Rs.9,76,530/- was paid towards the gateway payment charges to the said M/s. Razor Pay and M/s. Avenue India Pvt. Ltd. and also reconciliation statement of commission expenses with books of accounts and the TDS returns was filed by the appellant.
Bangalore ITAT held as below:
1. The parties are service providers who collect fees from participants and they collect gateway payment commission from the appellant after returning the gateway charges they transfer the balance amount collected from the participants to the appellant.
2. We find that the payments made to gateway providers are not brokerage and TDS u/s. 194H of the Act is not liable to be deducted.
3. Thus taking into consideration the entire aspect of the matter and respectfully relying on the judgment passed by the different forums, we find that in the present facts and circumstances of the matter, TDS is not liable to be made u/s. 194H on gateway charges. The addition, is, therefore, deleted.
Chandigarh ITAT upholds the deletion of a hefty Rs.202 Cr addition made under Section 56(2)(viib) concerning the conversion of erstwhile loans into equity shares at a premium: ACIT, Circle, Shimla. VS I.A. Hydro Energy Pvt. Ltd. (ITA No. 548/CHD/2022)
Facts:
1. The assessee company came into existence on 23.03.2017 by conversion of a Firm. All the partners of the Firm became shareholders of the company. It was upon conversion of the firm to Company that the existing loans were converted into equity shares and thereby the assessee issued 2,25,00,000 equity shares of Rs 10/- each at premium of Rs 90/.
2. The DR claimed that the market value of the shares as per the NAV method and Rule 11UA of the Income Tax Rules is far less than the value at which the shares have been allotted.
3. The assessee contended that no money/consideration was actually received by the assessee on conversion of loans to shares, after a conversion of the partnership firm of the assessee company, and that thereby, the provisions of Section 56(2)(viib) of the Income Tax Act are not applicable.
4. Section 56(2)(viib) provides for taxation, if the company receives any consideration in excess of fair market value of shares.
5. The AO made huge addition of Rs. 202.50 crore under section 56(2)(viib).
ITAT Chandigarh held as below:
1. No money was actually received during the year under consideration, while the outstanding loans from preceding years were converted into share capital.
2. The legislative intent to prevent tax law abuse to defraud revenue was deemed absent since the receipt of loans in earlier years had been duly verified in previous assessments.
3. The revenue authorities are not authorized to choose a specific method of valuation; this discretion is vested with the assessee, subject to the rules. The assessing officer can verify the method chosen by the assessee, but it cannot be substituted by the NAV method.
4. Sec 56(2)(vii)(b) is not applicable. The appeal of the revenue is dismissed.
21/10/2023
Supreme Court holds that Tax Treaty MFN Clauses not triggered unless specific notification is issued: Assessing Officer Circle (International Taxation) Vs Nestle SA (Supreme Court) Civil Appeal No(S). 1420 of 2023
Facts:
1. Hon Supreme Court has issued a judgment on the application of the Most Favored Nation (MFN) clauses in India's tax treaties. In particular, the judgment concerns a batch of appeals to orders of the Delhi High Court involving the interpretation of the MFN clauses contained in India's tax treaties with countries that are members of the OECD.
2. India in 1998 had signed a tax treaty with the Netherlands, where a withholding tax of 10 per cent was allowed.
3. It later entered into treaties with Slovenia, Lithuania, and Colombia where it agreed to a similar beneficial rate of 5 per cent on dividend income if the recipient company held 10 per cent or more of the share capital in the Indian company.
4. Slovenia, Lithuania, and Colombia later became members of the OECD. Tax authorities sought to apply a 10 per cent rate on the dividend income of companies from the Netherlands, Switzerland, and France.
5. These companies argued that the lower rate of 5 per cent available to companies under the tax treaties with the countries of Slovenia, Lithuania and Colombia must also be applicable to them as all were members of the OECD.
Hon High Court held that:
MFN clauses are triggered automatically when the conditions of the treaty are satisfied, without the need for further notification; and
MFN clauses can be triggered by India's tax treaties with other OECD member countries even when the relevant country was not an OECD member at the time the relevant treaty was signed.
Note: Circular No. 3/2022 of 3 February 2022 states that notwithstanding the clarification on conditions for MFN clauses, where in the case of a taxpayer there is any decision by any court on this issue favorable to such taxpayer, the Circular will not affect the implementation of the court order in such case.
Hon SC held as below:
1. A preferential treatment given to a country under a double taxation avoidance agreement did not automatically get extended to other member countries unless the earlier treaty with them was amended.
2. Section 90(1) notification is necessary and a mandatory condition for courts, authorities, or tribunals to enforce a DTAA or any protocol modifying its terms, thereby altering existing provisions of law.
3. The interpretation of the term “is” is of present significance. Therefore, to claim the benefit of a “same treatment” clause based on the entry of a DTAA with India, the relevant date is the DTAA’s entry into force with India, not any subsequent date when the other nation becomes an OECD member.
4. A 2021 Delhi High Court ruling that allowed Nestle SA, Concentrix Services, Steria and others a concessional withholding tax rate of 5 per cent on dividend income from their Indian arms, is set aside.
Income Tax benefits to senior and super senior citizen:
1. Definition of senior citizen and super senior citizen: Individual resident who is of the age of 60 years or above but less than 80 years is a Senior Citizen. An individual resident who is of the age of 80 years or above is a Super Senior Citizen.
2. Basic exemption limits: For Senior Citizens the basic exemption limit is fixed at a figure of Rs. 3 lakh. For Super Senior Citizens, the basic exemption limit is fixed at Rs. 5 Lakhs.
3. Advance Tax benefit: A resident Senior/Super Senior citizen need not pay any advance tax, provided he does not have any income under the head Profits and Gains of Business or Profession.
4. Sec 80D benefits: The maximum limit for deduction u/s 80D in respect of payment made for health insurance premium in respect of a Senior/Super Senior citizen has been allowed at Rs. 50,000/-.
5. Interest income: A Senior/Super Senior citizen can claim a deduction upto Rs. 50,000/- u/s 8OTTB in respect of interest income earned on savings bank accounts, bank deposits, or any deposit with the post office or co-operative banks.
6. Income Tax Returns: A super senior citizen aged 80 years or above filing his return of income in Form SAHAJ (ITR-1) or SUGAM (ITR-4) and having total income of more than Rs. 5 lakh or having a refund claim, can file his/her return of income in paper mode.
7. Form 15H: A Senior/Super Senior citizen may submit form no.15H to the deductor for non-deduction of TDS on certain incomes referred to in that section, if the tax on his/her estimated total income for the concerned year comes at nil.
8. Non requirement of filing ITR: The following categories of Senior Citizens are not required to file their ITR: — Resident Senior Citizens, 75 years or above and Having only pension income and interest income only from the account(s) maintained with a bank in which they receive such pension.
20/10/2023
Over Rs 102 crore worth cash, jewellery seized in searches on contractors: I-T dept:
A total of Rs 94 crore cash and jewellery worth over Rs 8 crore were seized in the income tax searches, carried out between October 12 and 15 at 55 premises in Karnataka, Telangana, Andhra Pradesh and Delhi, in connection with alleged illegal wealth generated by civil contractors and real estate players, the Income Tax Department has disclosed.
A large amounts of cash — Rs 42 crore and Rs 52 crore seized from two premises in Bengaluru. Further, about 30 luxury wrist watches of foreign make were unearthed from the premises of a private salaried employee not engaged in the business of wrist watches. As per the department, the modus operandi of tax evasion detected indicates that these contractors were involved in inflating expenses by booking bogus purchases, non-genuine claim of expenses with sub-contractors and claiming ineligible expenses. The irregularities detected in utilisation of contract receipts have resulted in generation of huge unaccounted cash and creation of undisclosed assets.
The Central Government has made changes to Notification No. 11/2017- Central Tax (Rate).
1. These changes introduce conditions for taking ITC on input services in the same line of business.
2. ITC on such input services will be restricted to 2.5% when the supplier charges a higher tax rate.
3. The notification also omits certain entries.
4. These changes take effect on October 20, 2023.
For example, a restaurant that receives catering services from a supplier who charges a 18% GST rate will only be able to claim ITC on 2.5% of the GST paid.
5. A modification in Section 16 mandates buyers to settle their invoice value, including GST, within 180 days from the invoice date. Failure to do so will require them to pay the claimed Input Tax Credit (ITC) amount plus interest under Section 50.
Sections 37, 39, 44, and 52 are updated to limit taxpayers from filing GSTR-1, GSTR-3B, GSTR-9, and GSTR-8 for a tax period after three years from the due date.
6. Section 17(5) sees an amendment, including expenditure on Corporate Social Responsibility (CSR) initiatives for corporates as ineligible ITC.
7. Transactions like high sea sales, not falling under the goods or services category, are now exempt. Consequently, proportional ITC related to such sales cannot be claimed, per the revised Section 17(3).
8. Schedule III undergoes an amendment with the addition of paras (7) and (8) and explanation (2), effective retrospectively from July 1, 2017.
9. Amendment to Section 10 of the CGST Act allows businesses supplying goods through an e-commerce operator to opt for the composition scheme.
ITC-01–ITC for new Registration:
1. ITC-01 is a declaration form filed on GST portal for claiming the input tax credit by tax payer who is newly registered under GST
2. filing of this FORM ITC- 01 is mandatory to claim ITC on closing stock as on registered date.
3. A regular business man who is obtaining GST Registration, on that date, the person carrying on regular business should be holding stock of inputs, capital goods and finished goods at their place of business. The GST paid on such goods purchased cannot be claimed as input tax credit before the date of obtaining GST Registration, only after obtaining the GST Registration the tax payer can avail input tax credit of GST paid on such purchases.
4. Situations when the declaration FORM ITC-01 must be filed:
i. When an application for GST Registration is made within 30days of becoming liable to pay GST [Sec18(1)(a)]
ii. When any person opts for Voluntary Registration [Sec18(1)(b)]
iii. When any person opts out of Composition Scheme but continues to be registered as a regular tax payer [Sec18(1)(c)]
iv. When an Exempt supply of Goods/Services become taxable supply
[Sec18(1)(d)]
5. It should be noted that ITC cannot be claimed if the person fails to file Form ITC-01.
6. Points to remember while filing FORM ITC-01:
i. ITC in respect of service cannot be claimed in FORM ITC-01.
ii. Capital goods ITC can be claimed in case of Composition dealer opt out of Composition Scheme and where Exempted supply becomes taxable supply.
iii. Invoice details of ITC on Purchases as on the cut of date should be available.
iv. FORM ITC-01 should be filed within 30days of the date of Registration/migration to a regular scheme.
v. Invoices up to one year old, Capital Goods invoices up to 5years old.
vi. If the ITC claim is more than 2 Lac, CA or Cost Accountant certificate must be uploaded.
19/10/2023
The richie rich, whose names pop up in Swiss bank accounts and tax haven outfits, are relieved to discover that they would not be huddled together with muggers, shoplifters and pick- pockets in crowded magistrate courts once the tax office begins prosecution proceedings against them. In one such case, the Calcutta High Court ruled about a fort- night ago that the personal appearance of a person hauled up by the Income Tax (I-T) department under the Black Money law will not be necessary. The person in question, who along with her husband and mother-in-law, was found to be one of the directors of two companies in the British Virgin Islands (BVI), a Caribbean tax haven, will however have to give an undertaking that she will not leave the country without the prior permission of the trial court. “This is a positive ruling. Under the applicable laws, magistrate courts have been granted discretion and in fit cases, they can dispense with personal appearance of the parties involved. The high court observed that this was a complaint based on documents and personal attendance could be dispensed with. This could also have a positive impact in several ongoing prosecution cases concerning TDS defaults under the Income Tax Act,” said Ashish Meh- ta, partner at Khaitan & Co. While the magistrate court is empowered to spare the accused personal attendance, such discretion was seldom exercised. The ruling comes at a time when hundreds of wealthy individuals are inundated with I-T notices for offshore assets they never disclosed in the annual income tax returns. Most abhorred court appearances to escape media glare and out of embarrassment of being linked to crores of hidden money. All cases under the Black Money (undisclosed Foreign Income & Assets) and Imposition of Tax (BMA)-typically begins with the I-T department receiving information from overseas authorities under the information sharing pacts with those jurisdictions or running into leaked data. If such assets have not been disclosed by an assessee, the tax office sends a notice under BMA. If the latter’s response (to such a notice) is found unacceptable, the I-T department passes the assessment order. Soon after that and sometimes even before prosecution proceedings are initiated by filing a complaint before the magistrate’s court.
S-ET
The total number of income tax returns filed by personal income tax filers, - individuals and HUF- rose 94% between FY15 and FY23. As many as 74.6 million PIT returns were filed in FY23, as against 38.4 million in FY15.
SEBI tweaked guidelines pertaining to anti-money laundering standards, whereby partners holding a 10 per cent stake in a firm will come under the definition of beneficial owners. Earlier, the requirement was 15 per cent.
SEBI issued a circular amending the Foreign Portfolio Investors (FPI) Rules, in terms of additional granular disclosures to lift the veil off the Ultimate Beneficial Owners (UBO). The entities have only 90 days to comply with the mandates, which will be closing November 2023.
MCA imposed a substantial penalty of ?3 lakhs on M/s. My Wheels Private Limited for its failure to maintain a registered office as required by law. This case sheds light on the legal obligations of companies and the consequences of non-compliance with statutory provisions.
ROC Karnataka has imposed a penalty of Rs. 49.70 lakh on Atlas Logistics Private Limited for delayed appointment of a company secretary, as mandated by Section 203 of the Companies Act, 2013.
18/10/2023
The Supreme Court said that licence fees paid by telecommunication companies such as Bharti Airtel and Vodafone Idea after July 1999 would be treated as capital expenditure and not revenue expenditure.
GST authorities have issued intimation notices to about 70 foreign firms, which include subscription-based service providers, educational technology, online gaming, and advertising companies, to ensure compliance with the new tax norms. Effective from October 1, the new regulations now make all digital firms, including heavyweights like Netflix, Google, Facebook, and Spotify, liable for an IGST of 18 percent.
Government will bring out another production-linked incentive scheme for batteries to bring down cost and boost the adoption of electric vehicles in India.
Central Board of Direct Taxes hereby brings into effect Income-tax (Twenty-fourth Amendment) Rules, 2023 stating:
1. Substitution of words, Provided further that any person, not being a company or a firm, for words, Provided further that any person, in second proviso of Rule 114B.
2. Insertion of Proviso, after second proviso in Rule 114B stating, That a foreign company who,
i. Does not have any income chargeable to tax in India and
ii. Does not have a permanent account number
and enters into any transaction referred to at Sl. No. 2 or 12 of the Table, in an IFSC banking unit, shall make a declaration in Form No. 60.
3. Insertion in Rule 114BA stating exemptions of this rule.
4. Insertion in Rule 114BB stating exemptions of this rule.
5. Substitution of Form No. 60 in Appendix II of Principal Rules.
Notification Date: 2023-10-12
Notification No: NA (Processing of Applications at Central Reservation Centre (CRC))
Description: The Ministry of Corporate Affairs (MCA) has informed that the processing of application forms for the purpose of name reservation and incorporation at the Central Reservation Centre (CRC) is faceless and randomised and the applications if sent for resubmissions are normally not processed by the same official who has processed the application at the first instance. Stakeholders may inform the Ministry in case of any malpractice or irregularity on the part of any official/officer at CRC or any professional with supporting evidences at CVO-MCA@GOV.IN for taking action in accordance with the extent CVC guidelines.
17/10/2023
The Supreme Court has held that the provisions of the 'Most Favoured Nation' clause in a tax treaty are not triggered automatically and a separate notification is required. The SC's order is likely to result in re-opening of several high-value cases, and government officials estimate that the tax demands that follow could run into thousands of crores of rupees.
Goods and Services Tax Network has issued an advisory regarding Person supplying of Online Money Gaming services or OIDAR or Both– Form GST REG-10 and Form GSTR-5A.
Insolvency and Bankruptcy Board of India (IBBI) shall float two discussion papers - one on making changes in the 'Corporate Insolvency Resolution Process' (CIRP), and the other on 'corporate liquidation very soon. These discussion papers are intended to make changes in the regulations to maximise the value of recoveries and reduce the time taken for resolutions.
Delhi Government decided to increase the minimum wage of all workers, which will be applicable retrospectively from October 1 onwards skilled by 1.50% to Rs 21,215 from Rs 20,903. for semiskilled increased by Rs 286 from Rs 18,993 to Rs 19,276. for unskilled workers up by Rs 260 from Rs 17,234 to Rs 17,494.
16/10/2023
SC order on variable telecom fees paid by telecom operators being a capital or revenue expenditure.
The following tests were culled out:-
1. Capital expenditure is incurred with a view to get enduring benefit.
2. If the expenditure is made for substantial expansion or setting up it is capital expenditure. On the other hand if it is made for running the business, it is revenue expenditure.
3. Fixed and circulating capital test.
4. Mere payment in instalments does not convert a capital expenditure into revenue and vice versa.
A tabular presentation of different case laws with the facts of each case have been discussed from page 79 to page 90 in the said 127 pages detailed order.
Read More
https://taxguru.in/income-tax/telecom-licence-fee-is-a-capital-expenditure-sc.html
15/10/2023
IIT and NIT is not liable to pay service-tax: Commissioner, Customs Central Excise and Service tax, Patna Vs Shapoorji Pallonji and Company Pvt ltd & Ors[Supreme Court]
Date:October 13, 2023
Sub: Whether IIT,Patna and NIT Rourkela can be said to be government authority so as to be exempted from payment of service tax under the erstwhile service tax legislation, Definition of government authority explained threadbare, difference between “and” and “or” used in statute explained and relevance of punctuation in the interpretation explained. The Supreme Court in this case was confronted of interpreting the provisions of exemption notification as per which services provided to government authority was exempt from service tax and the definition of government authority was given in Clause 2(s) of the exemption notification as a board or an authority or any other body established with 90% or more participation by way of equity or control by Government and set up by an Act of the parliament or a state legislature to carry out the functions entrusted to a municipality under Article 243 W of the Constitution. This definition was later on broadened the scope of exemption by rephrasing the definition to make it more clear. On these facts question arose whether IIT Patna and NIT Rourkela were liable to pay service tax on construction services availed from Shapoorji as the Audit party in case of IIT Patna objected to the payment of service tax as in the opinion of the audit party of CAG, IIT Patna was a government authority and thus not liable for service-tax. The Supreme Court after examining the law in detail including the constitution bench decision in the case of Dileep kumar where the manner in which exemption notification has to be interpreted, also dealt with the use of the conjunction “or” and the semi-colon held that merely because the statute does not result in intended or desired result, there cannot be a reason for us to cross the Lakshman Rekha by employing tools of interpretation to interpret a provision keeping in mind its outcome.Interpretative tools should be used to make a statute workable and not to reach to a particular outcome. This judgement will be helpful for lot of educational institutions of the country.
Prevention of Money Laundering Act, 2002;
This is in continuation of the email dated 17th August, 2023 and 11th October, 2023 w.r.t. Notification under Prevention of Money Laundering Act, 2002. In this regard, we would like to reiterate here that in exercise of the powers conferred by sub-clause (vi) of clause (sa) of sub-section (1) of section 2 of the Prevention of Money-laundering Act, 2002, the Central Government, vide notification F.No. P-12011/12/2022-ES Cell-DOR dated May 03, 2023, notified certain financial transactions carried out by relevant persons, such as, individuals who obtained certificate of practice under the Chartered Accountants Act, 1949, the Company Secretaries Act, 1980 and the Cost Accountants Act, 1959, extracts of the same is given below:
The Central Government hereby notifies that the financial transactions carried out by a relevant person on behalf of his client, in the course of his or her profession, in relation to the following activities-
buying and selling of any immovable property;
managing of client money, securities or other assets;
management of bank, savings or securities accounts;
organisation of contributions for the creation, operation or management of companies;
creation, operation or management of companies, limited liability partnerships or trusts, and buying and selling of business entities,
shall be an activity for the purposes of said sub-section.
Explanation 1.- For the purposes of this notification ‘relevant person’ includes –
an individual who obtained a certificate of practice under section 6 of the Chartered Accountants Act, 1949 (38 of 1949) and practiced individually or through a firm, in whatever manner it has been constituted.
The Guidelines, in this regard, were issued with effect from 19th June, 2023 and hosted on FIU-IND website on 4th July, 2023, accessible at https://fiuindia.gov.in/pdfs/AML_legislation/AMLCFTguidelines04072023.pdf
Therefore, in accordance with the above guidelines, it is clear that reporting of reportable transactions by Chartered Accountants in respect of money laundering, terrorist financing and proliferation financing, is facilitated through ICAI.
Also, in accordance of Clause 4.4.1 of AML/CFT Guidelines for Professionals, The SRBs shall identify members holding certificates of practice, who are undertaking activities notified via ‘the notification’. Consequent to identification of such members, the SRBs shall obtain information (name, designation and contact details such as mobile number and email) related to principal officers and/or designated directors from them. The ICAI shall identify members as aforesaid and shall obtain information as mentioned above. Appointment of Designated Director and Principal Officer (Clause 4.4.2 of AML/CFT Guidelines for Professionals). In case where the relevant persons as defined under ‘the notification’ are firms, they shall appoint a Designated Director and Principal Officer, while in case of individual practicing professionals, the professional himself would be the Principal Officer in accordance with rule 2(1)(ba) and 2(1)(f) of PMLR. Hence, please find below the Google form wherein details of Principal Officer and/or Designated Director are to be filled by members who are engaged in notified activities as aforesaid: https://forms.gle/3YR1iQUeFtJHdh9NA You are advised to fill the above firm only when you are a Reporting Entity as per the said notification, latest by the end of 20thOctober, 2023.
14/10/2023
India's foreign exchange (forex) reserves dropped for the fifth straight week by a further $2.166 billion to $584.742 billion for the week ended October 6 - the lowest in more than five months, according to data by the Reserve Bank of India (RBI). India's forex kitty had gone down by $3.794 billion to $586.908 billion in the previous week. In October 2021, the country's forex kitty had reached an all-time high of $645 billion. The reserves took a hit as the central bank deployed the kitty to defend the rupee amid pressures caused majorly by global developments since last year.
Sleuths of the Income-Tax Department found cash amounting to crores beneath the bed at a flat in Bengaluru, sources stated on Friday. The I-T officers are questioning a former woman corporator and her husband in connection with the case. Sources said that vast amount of money is being collected from gold jewellers and other sources in Bengaluru to fund Assembly elections in five states, especially in Rajasthan. On getting tip offs in this regard, the I-T Department is conducting raids in the city. The cash, amounting to Rs 42 crore, was found during a raid conducted late on Thursday night at a flat located in Atmananda Colony near RT Nagar.
Partner should be entitled to all deductions while computing his share of profit for the salary received being considered as income from business: ITAT. The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the partner should be entitled to all the deductions which he was entitled while computing his share of profits in the firm.
The recent ruling by the Authority for Advance Rulings (AAR), Gujarat, in the case of M/s. Tata Autocomp Systems Ltd [Ruling No. GUJ/GAAR/R/2023/23 dated June 19, 2023], offers valuable insights into the Goods and Services Tax (GST) implications of deductions for canteen facilities, transportation services, and notice pay. The ruling clarifies that these deductions are not considered taxable under GST, with specific provisions regarding Input Tax Credit (ITC) eligibility based on the cost borne by the employer. The AAR Gujarat held that deductions from employees’ salaries for availing canteen facilities, transportation services provided to the employees and notice pay are not considered taxable under GST, and Input Tax Credit can be claimed on GST charged by service providers, with restrictions based on the cost borne by the employer.
The Mumbai tax tribunal upheld the order of the Commissioner of Income Tax Appeals or CIT (A) that imposed a penalty of 10 lakh rupees per financial year (Rs 30 lakh) on a taxpayer who had failed to disclose her foreign assets in her income tax returns.
One out of every two (46%) chief executives/managing directors at Nifty 50 companies earned more than ?20 crore in FY23, compared to one out of every four (27%) five years ago, a Deloitte study shared exclusively with ET has revealed. Also, half of the dozen promoter- incumbents earned more than ?20 crore in FY23, compared to 33% in FY18. In comparison, of the 29 professional incumbents, 45% earned ?20 crore-plus, up from 24% in FY23, according to the study. The study analysed 41 of the Nifty 50 companies, excluding public sector undertakings and three other companies where there was no active incumbent, or the MD had voluntarily relinquished compensation. The five-year period saw a new benchmark for compensation-the ?5-crore threshold.
Four GST Refunds related important changes wef 01.10.2023:
Key highlights & inferences below and detailed documentation is attached.
1. Export with payment & without payment is no more interchangeably optional. Substantial amendment in the IGST Act Sec 16 made effective.
However, at present only goods mentioned in the notification (Pan masala, tobacco and essential oils) are restricted from export with payment of duty and exported allowed only under LUT.
Exporters to have a vigilant watch since any commodities may be added to the list by CBIC by making an amendment to the notification. This may also be turned into specific list rather than negative list in future – can be made through CBIC notification since the substantive provisions of the law is already negatively worded.
2. No notification has been issued so far to notify the class of persons who may be allowed to make zero-rated supplies with payment of taxes. Hence, supplies to SEZ with payment of tax shall not be allowed until notified.
3. Proviso inserted in the Act to receive export proceeds within time limit prescribed under FEMA – earlier it was only through rules.
4. Supply of goods or services to SEZ shall be zero rated only if it is used for ‘authorised operations ’ – Earlier this restriction was operational through Rule 89. Now substantive amendment has been made in the act to settle disputes. Past period impact to be tested in the court of law. Whether rule is ultravires the act? - Policy decision has been upheld in the case of VKC Footsteps in the Supreme Court
13/10/2023
Central Board of Indirect taxes and Customs had issued Notification No. 51/2023-Central Tax dated September 29, 2023 regarding Seeks to make amendments (Third Amendment, 2023) to the CGST Rules, 2017 in supersession of Notification No. 45/2023 dated 06.09.2023.
Central Board of Indirect taxes and Customs had issued Notification No. 50/2023-Central Tax dated September 29, 2023 regarding Seeks to amend Notification No. 66/2017-Central Tax dated 15.11.2017 to exclude specific actionable claims.
Central Board of Indirect taxes and Customs had issued Notification No. 49/2023-Central Tax dated September 29, 2023 regarding Seeks to notify supply of online money gaming, supply of online gaming other than online money gaming and supply of actionable claims in casinos under section 15(5) of CGST Act.
Central Board of Indirect taxes and Customs had issued Notification No. 04/2023-Integrated Tax dated September 29, 2023 regarding Seeks to provide Simplified registration Scheme for overseas suppliers of online money gaming.
The gross GST revenue collected in the month of September, 2023 is ?1,62,712 crore out of which : CGST is ?29,818 crore, SGST is ?37,657 crore, IGST is ?83,623 crore (including ?41,145 crore collected on import of goods) and cess is ?11,613 crore (including ?881 crore collected on import of goods).
12/10/2023
Can deduction under Sec 54 and Sec 54F of the Income Tax Act be claimed simultaneously?
1. Under both these sections the investment in residential house has to be made within a period of two years from the date of sale of the respective assets. A longer period of three years is available if you go for self-construction or booking an under-construction residential house.
2. There is no specific bar in simultaneously claiming the exemption under both sections. The same has been decided by the Income Tax Appellate Tribunal in the decision of Venkata Ramana Umareddy Vs Dy. CIT (ITAT Hyderabad) (IT Appeal No. 552 (Hyd.) of 2012).
3. We can conclude that an assessee can claim deduction u/s 54 and 54F simultaneously subject to that the same has been acquired in fulfilment of the conditions stipulated under the said sections.
Facility of enrolment for supply of goods through e-commerce operators by GST un-registered suppliers.
1. In terms of the recent amendments to the Act and the rules and notification number 34/2023 dated 31.07.2023, persons supplying goods through e-commerce operators shall be exempt from mandatory registration under the CGST Act even if they supply goods through e-commerce operators (ECO) if they satisfy the following conditions:
(a)such person is engaged in the supply of goods through the ECO and such supplies are made only in one State/UT,
(b)such person does not make any inter-state supply,
(c)the said person has a Permanent Account Number (PAN) under the Income Tax Act, 1961,
(d)such persons shall declare his PAN (which shall be validated) on the common portal (i.e. GST Portal) along with the address of his place of business and the name of the State/UT or Union territory before making such supplies,
(e) such person has been granted an enrolment number on the common portal upon validation of his PAN before which he shall not make any such supply through any ECO.
2. GSTN has developed the necessary functionality for enrolment of unregistered persons and the same is available on the portal. Accordingly, unregistered person desirous of enrolling on the GST portal for making supplies of goods through ECOs in any one State/UT are hereby advised to follow the path/procedure specified below:
Visit the GST Portal at https://www.gst.gov.in/ and click the GST Portal link
•Select the "User Services" Tab and choose "Generate User Id for Unregistered Applicant"
•Click "Yes" on the Warning window which asks you to Continue
•Check the "To apply as a supplier to e commerce operators" box
•Proceed to fill the Form that opens on your screen
•Upon successful validation of your PAN the enrolment number will be generated by the portal.
The CBIC issued a Clarification on October 12, 2023, regarding certain media reports on the applicability of GST on Gangajal. Gangajal is used in pooja by households across the country and puja samagri is exempt under GST. GST on puja samagri was discussed in detail in the 14th and 15th meetings of the GST Council held on 18/19 May, 2017 and 3rd Jun, 2017 respectively and decided to keep them in the exempt list. Therefore, all these items have been exempt since the introduction of GST.
11/10/2023
Reserve Bank of India on October 5 said that people can claim unclaimed deposits of 23 additional banks on the Unclaimed Deposits - Gateway to Access inforMation (UDGAM) portal.
MCA is considering a regulatory framework for large unlisted companies that may have systemic implications. The ministry is of the opinion that there is a need for a rigorous regime for large unlisted companies, in contrast with the current "light-touch" regulation.
In a significant ruling, the Hon’ble High Court of Kerala, in the case of M/s. Henna Medicals vs. State Tax Office, Thalassery & Ors., held on 19th September 2023 that the disparity between GSTR 2A and GSTR 3B cannot serve as a valid reason to disallow Input Tax Credit (ITC). The court directed the Revenue Department to re-examine the provided evidence and issue fresh orders accordingly. The Hon’ble Kerala High Court, in WP(C) 30660 of 2023, rendered its judgment, drawing upon legal precedents. The court emphasized that denying ITC solely based on the disparity between GSTR 2A and GSTR 3B is not justifiable, citing the judgments of the Hon’ble Supreme Court in the case of State of Karnataka vs. M/s Ecom Gill Coffee Trading Private Limited [Civil Appeal No. 230 of 2023 dated March 13, 2023], and the Hon’ble Calcutta High Court in the case of M/s Suncraft Energy Private Limited vs. The Assistant Commissioner, State Tax, Ballygunge Charge [MAT 1218 of 2023 dated August 2, 2023]. The court also referred to the Hon’ble Kerala High Court’s judgment in the case of M/s Diya Agencies vs. State Tax Officer [WP (C) 29769/2023 dated September 12, 2023], highlighting that the difference between GSTR 2A and GSTR 3B should not be the sole basis for denying a legitimate ITC claim. The court directed the Assessing Authority to provide the petitioner an opportunity to present evidence supporting their ITC claim.
10/10/2023
Source:. Times of India
Reliance General Insurance Company (RGIC), a subsidiary of Reliance Capital Ltd, has received multiple show cause notices from the Directorate General of GST Intelligence, amounting to Rs 922.58 crore. According to sources, the company has received four notices from the DGGI demanding GST of Rs 478.84 crore, Rs 359.70 crore, Rs 78.66 crore, and Rs 5.38 crore respectively, on the revenue generated from the services like re-insurance and co-insurance. According to a tax expert, the RGIC auditors will have to provide for this amount in its quarterly results ending September 30, as a contingent liability. RGIC is the crown jewel of Reliance Capital which is undergoing a debt resolution process through NCLT. RGIC constitutes almost 70 per cent of the total value of Reliance Capital. RGIC received a show cause notice from the DGGI on September 28, amounting to Rs 478.84 crore in the matter of applicability of GST on re-insurance commission booked on the re-insurance services ceded to various Indian and Foreign Reinsurance companies, the sources said. The GST Authority's contention is that re-insurance commission forms part of the revenue recorded by the company in its books of accounts and thus it needs to pay GST on the same. Similarly, another show cause notice, amounting to Rs 359.70 crore, was received by the company on September 28, in the matter of applicability of GST on the co-insurance premium received as a follower in the co-insurance transactions, they said. The company's contention is that the lead insurer has already discharged its GST liability on the entire premium, therefore, there is no need for the company to pay GST on the realisation of Follower Premium.
But, the GST department is of the opinion that there is no provision in the GST Act where one registered person can collect and disburse tax on behalf of another, regardless of any co-insurance arrangement. In the co-insurance transaction, the insured has an option to spread their risk amongst more than one insurer by allocating risk share to multiple insurers. The company bearing the largest share of risk cover is termed as the lead insurer, while the other insurers sharing the risk are called to the participating co-insurers or followers.
In the third show cause notice, amounting to Rs 78.66 crore, the DGGI had initiated an investigation into the matter of availing input tax credit (ITC) without underlying services with regard to marketing expenses, during the period July 1, 2017 to March 31, 2022, sources said. In this matter the company has deposited, under protest, the ITC amount of Rs 10.13 crore. The fourth show cause notice received by the company from the DGGI is in the matter of non payment of GST under reverse charge basis on the import of reinsurance services from foreign reinsurers in respect of exempted crop insurance scheme, during the period July 2017 to January 2018. The GST Authority has issued a tax notice of Rs 5.38 crore in this matter, they added.
Reassessment proceedings against struck off companies are invalid unless the company is revived U/S 252 of the Companies Act:
Pandian Anbalagan Vs ITO (Madras High Court); W.P.No.11841 of 2022
Facts:
1. The petitioner was a Director of a private limited company that had been struck off from the official register of companies, effective from 29th October 2019. The petitioner presented a letter issued by the Ministry of Corporate Affairs to substantiate the striking-off of the company.
2. The petitioner received a notice under Section 148 of the Income Tax Act, which aimed to reopen the assessment for the Assessment Year 2015-16.
3. The petitioner contended that reopening the assessment against a company that had already been struck off was not valid.
4. According to the petitioner, the department should have initiated the process of revival under Section 252 of the Companies Act, in conjunction with Rules 11 and 87 of the National Company Law Tribunal (NCLT) Rules, within the stipulated timeframe.
5. The department, on the other hand, relied on Sections 176(5) and 176(7) of the Income Tax Act, (applicable to discontinued businesses) claiming that they entitled the department to pass an assessment order against the Principal Officer of the struck-off company.
Hon Madras HC held as below:
1. Section 176 of the Income Tax Act primarily deals with discontinued businesses and does not mention the struck-off status of a company.
2. The appropriate course of action for the department is to approach the National Company Law Tribunal (NCLT) in accordance with the provisions of Section 252 of the Companies Act, coupled with Rules 11 and 87 of the NCLT Rules, for the revival of the company.
3. Only after the company’s revival can the department initiate proceedings under Section 147 of the Income Tax Act.
Whether warranty expenses are allowable expenses under the Income Tax Act?
Query:
1. A manufacturing company is engaged in manufacturing, execution and commissioning of machine equipments. Defects existed in some of the sophisticated goods manufactured in the past and sold and the Company was making provisions in respect thereof.
2. Based on past experience and technical estimates for warranty, expenses are provided in accounts on an accrual basis. The Company provides for 0.5% on sale for liabilities under the contract towards obligations/warranties.
3. The question is whether such warranty expenses are allowable U/S 37(1) of the Income Tax Act?
Reply:
1. This case is very similar to a recent Jharkhand HC judgement in the case of PCIT Vs Heavy Engineering Corporation Limited (T.A. No. 25 of 2019), wherein it was held that:
Where defects existed in some of the sophisticated goods manufactured in the past and sold and the assessee was making provisions in respect thereof, deduction under section 37(1) could not be disallowed in respect of such provision made for warranty.
2. In fact the proposition that warranty expenses are allowable expenses has already been accepted by the Hon Supreme Court in the case of Rotork Controls vs. CIT ( 3506-3510 OF 2009), wherein it was held that a liability is a present obligation arising from past events, the settlement of which is expected to result in an outflow of resources and in respect of which a reliable estimate is possible of the amount of obligation. If the facts established show that defects exist in some of the items manufactured and sold then the provision made for warranty in respect of the army of such sophisticated goods would be entitled to deductions
09/10/2023
Whether non citing of DIN invalidates the orders passed under the Income Tax Act?
Case:
1. An Order u/s. 263 of the Income Tax Act was passed without citing the Document Identification Number (DIN) in the said Order.
2. However, along with the said order a separate communication letter was annexed wherein the DIN was intimated.
3. However, no reason was specified in the said intimation letter as to why DIN was not cited in the Order.
Is the order passed u/s 263 valid?
Reply:
1. This situation is very similar to a recent Calcutta HC judgement in the case of PCIT vs Tata Medical Centre Trust (ITA No: 202/2023), which quashed the order u/s 263 on the grounds of non mentioning of DIN.
2. Para 2 of Circular No. 19 of 2019 (14.08.2019) requires citing of DIN in communication and if not cited then reason thereof should be stated.
3. In Para 4 of Circular No.19 of 2019 (14.08.2019), it has been stated that any communication which is not in conformity with Para 2 and Para 3 of the said Circular - shall be treated as invalid and shall be deemed to have never been issued.
LTCG exemption from penny stocks is not entitled to exemption U/S 10(38) of the Income Tax Act: ITAT Kolkata
Manoj Jain (HUF) (I.T.A. No. 1782/KOL/2018)
Facts:
1. During the assessment proceedings, the Assessing Officer noted that the HUF had purchased 25,000 equity shares of the company on 15.03.2013 for a total of Rs. 14,97,708/-. In the assessment year under consideration, the HUF sold these shares for a total consideration of Rs. 62,23,703/-.
2. The Assessing Officer observed discrepancies in the financial statements of the company, indicating that the increase in the share price was not commensurate with its business activities. Additionally, the company was listed as one of 84 penny stock companies on the Bombay Stock Exchange, linked to unscrupulous brokers, entry operators, and money launderers involved in providing bogus accommodation entries.
3. The Assessing Officer concluded that the HUF had dealt with a penny stock company, and therefore, the claimed LTCG was bogus and not eligible for exemption under section 10(38). The alleged sale consideration was treated as unexplained cash credit under section 68.
4. The HUF's appeal to the Commissioner of Income Tax (Appeals) did not yield a favorable outcome, leading them to file an appeal before the Tribunal.
ITAT Kolkata held as under:
1. The issue concerned the genuineness of the claim for exempt income under section 10(38) regarding LTCG from the sale of equity shares of penny stock companies.
2. The burden of proof was on the assessee to establish the genuineness of the transactions, and in the absence of such evidence, the authorities were justified in treating the income as unexplained cash credit.
3. The LTCG claims were not valid, and the income should be treated as undisclosed income.
ALP of ESOP expenses cannot be taken to be nil:
BookingCom India Support & Marketing Services Private Limited (ITA No. 2069/MUM/2022)
Facts:
1. The TPO determined an ALP adjustment of INR 24,97,737 in relation to the reimbursement of Employee Stock Option Plan (ESOP) Expenses, considering them to be notional.
2. These ESOP expenses pertained to vested Restricted Stock Units (RSUs), which were granted to employees in 2015 and vested in the Financial Year 2017-18.
3. The appellant filed objections against this adjustment before the Dispute Resolution Panel (DRP), but the DRP upheld the adjustment.
4. Consequently, the AO passed the Final Assessment Order, making the same transfer pricing adjustment of INR 24,97,737.
ITAT Mumbai held as under:
1. The appellant had treated these expenses as part of operating costs, and since the appellant was compensated for its services at cost plus a markup of 5%, these expenses were recouped by the appellant as compensation for services, along with a 5% margin.
2. The ESOP expenses cannot be notional in nature, as the appellant had incurred these expenses, remitted them to the AE, and accounted for them as part of its costs.
3. The transfer pricing adjustment of INR 24,97,737 is set aside and the TPO/Assessing Officer is directed to re-compute the ALP based on the method adopted by the appellant for determining the ALP of the international transaction related to ESOP Expenses.
08/10/2023
As per the RBI notification dated September 30, 2023 "With effect from October 8, 2023, banks shall stop accepting Rs 2000 banknotes for credit to accounts or exchange to other denomination banknotes. Rs 2000 banknotes shall continue to be allowed to be presented at the 19 Regional Offices of RBI having Issue Departments (RBI Issue offices) for credit to the bank accounts in India or exchange." An individual can also send the notes through India Post to any of these 19 offices. Such credit shall be subject to relevant RBI / Government regulations, submission of valid identity documents and due diligence as deemed fit by RBI," said the RBI in an updated FAQ as of September 30, 2023. It is important to note that Rs 2,000 note continues to remain legal tender even now.
Huf karta has right to dispose an HUF property:
In petitions challenging final judgment and order wherein, the Madras High Court relied on Phoenix ARC (P) Ltd. v. Vishwa Bharati Vidya Mandir, (2022) 5 SCC 345 and dismissed the writ petition challenging sale proceedings of the Recovery Officer, Debt Recovery Tribunal (‘DRT’) under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’) on the ground of maintainability, the Division Bench of Sanjiv Khanna and S.V.N. Bhatti cleared the clouds around the entitlement of the Karta of a Hindu Undivided Family regarding right to sell/dispose of/alienate an HUF property. The petitioner’s father was the Karta of the HUF. The petitioner claimed that a property of joint family/ HUF was mortgaged by his father as one of the guarantors. The Court pointed towards the settled position of rights of Karta in relation with the HUF property. The Court cited Sri Narayan Bal v. Sridhar Sutar, (1996) 8 SCC 54 wherein, it was held that the Karta has the right to sell/dispose of/alienate an HUF property, even if a minor of the family has undivided interest. The Court explained that “an HUF is capable of acting through its Karta or an adult member of the family in the management of the HUF property.” The Court held that the petitioner’s father being the Karta of the HUF was entitled to mortgage the HUF property. It further clarified that neither the son(s) nor the other members of the HUF need to be consenting parties to the said mortgage. The Court cautiously expressed that post alienation of HUF property, a coparcener may challenge the act of a Karta in case the alienation was not done due to a legal necessity or for betterment of the estate, which was not the assertion established in the instant matter. The Court refused to interfere with the High Court’s decision and dismissed the instant petitions. [N. Balaji v. Presiding Officer Debt Recovery Tribunal, Petition for Special Leave to Appeal (Civil) No. 21476-21477 of 2023, Order dated 3-10-2023].
S-scconline.com
Average Infrastructure Loss Of $850 Billion Per Year Due To Climate Change: CDRI Report
1. Climate change has led to an annual average global loss in infrastructure sector to the tune of $850 billion, implying that 14% of the 2021-22 GDP growth is at risk, according to a report released by New Delhi-based Coalition for Disaster Resilient Infrastructure (CDRI).
2. The first of its kind report released puts in perspective problems faced by the Global South and its poor infrastructure governance.
3. The biennial report has estimated that about 67% of the global value of infrastructure assets is concentrated in high-income countries. The upper and lower middle-income countries account for 25% and 7%, respectively while they carry the highest relative risk with an average annual loss estimated at 0.4%, compared to 0.1% in high income countries.
4. The report has come out with the first-ever publicly available fully probabilistic risk model - Global Infrastructure Risk Model and Resilience Index (GIRI) - quantifying the average annual losses due to disasters.
5. The report has analysed nine infrastructure sectors and says to achieve the sustainable development goals (SDGs), nations need to invest $9.2 trillion annually in resilient infrastructure till 2050, of which $2.9 trillion is required in developing countries alone, including India.
07/10/2023
Highlights of 52nd Gst council meeting held on 07.10.2023 in Delhi
1. Tax Relief for Millet Floor and Products
In alignment with India’s ‘Year of Millets’ initiative, the GST Council decided to waive GST on floor containing 70% millets. Additionally, the tax rate on branded and pre-packaged millets flour preparation was reduced from 18% to 5%. This move aims to promote millet production and consumption in support of the governments’ initiative to promote millet consumption.
2. Tax Exemption for Extra Neutral Alcohol (ENA)
Extra Neutral Alcohol (ENA) used for the production of alcoholic beverages meant for human consumption is now excluded from GST. However, ENA intended for industrial use will continue to attract an 18% GST. This decision follows a recent Allahabad High Court ruling, reinforcing the responsibility of the GST Council and the Centre in taxing ENA for human consumption. It is declared in the meeting that, a separate tariff HS code has been created at 8-digit level in the Customs Tariff Act to cover rectified spirit for industrial use. The GST rate notification will be amended to create an entry for ENA for industrial use attracting 18 percent GST.
3. Reduced Tax Rate for Molasses
The tax rate on molasses, a crucial by-product of sugarcane used in alcohol production, was reduced from 18% to 5%.
4. Clarification on Taxation of Online Gaming, Casino & Horse racing
Concerns were raised regarding tax demands on online gaming and casino companies. The GST Council clarified that these taxes were not retrospective but had already been applicable to online games involving bets, attracting a 28% GST.
5. Revised Age Criteria for GSTAT Members & President
The GST Council established new criteria for the GST Appellate Tribunal. The minimum age for the president and members has been set at 50 years, with advocates requiring a minimum of 10 years of experience to become judicial members. The tenure of the president of GSTAT has been increased to 70 years of age from 67 years earlier. The Council also added that the members can hold their post till they attain the age of 67 years as opposed to 65 years earlier.
6. Forward Charge on Indian Railways Services
All goods and services supplied by Indian Railways will now be taxed under the Forward Charge Mechanism. This change allows Indian Railways to avail input tax credit (ITC) under GST, ultimately reducing their operational costs.
7. ITC on Export Remittances received in Special Rupee Vostro
The Council recommended issuing a circular to clarify the admissibility of export remittances received in Special rupee Vostro accounts for Input Tax Credit (ITC), following Reserve Bank of India guidelines.
8. Exemption to Foreign Vessels undertaking Coastal Run
To promote tourism in India’s coastal regions, especially the western coast, the Council granted integrated GST (IGST) exemption to foreign vessels undertaking coastal runs in India.
9. Future Plan to devise Cess and Surcharge
The GST Council discussed a future “perspective plan” to devise a cess or surcharge on top of GST levies after March 2026, when the GST compensation cess is expected to be phased out. The plan will detail the utilization of these surcharges.
10. Treatment of Corporate Loan Guarantees
A long awaited issue of the treatment of bank guarantees issued by the directors of companies for corporate loans was clarified in the meeting. It is clarified that Such guarantees by directors will not attract GST. However, guarantees issued by companies to their subsidiaries or parent companies will attract an 18% GST on 1% of the guarantee offered or the actual consideration, whichever is higher.
11. Amnesty Scheme to Appeal Against Demand Notice
Taxpayers have been granted an amnesty scheme until January 31, 2024, allowing them to file appeals against demand orders from the Revenue Department issued until March 2023. They can do so by paying a slightly higher proportion (12.5%) of the disputed tax levy as a “pre-deposit.”
12. Validity of Provisional Attachment of Property
The GST Council amended GST rules to stipulate that provisionally attached properties will be released after one year. Tax officers can provisionally attach properties, including bank accounts of GST-registered entities over non-payment of taxes, and this attachment will now be valid for a year and on expiry of one year span, that property will be free of attachment automatically.
Relief for Non-residents:
1. Non-residents without a Permanent Account Number (PAN) can now electronically submit Form 10F.
2. Form 10F is a self-declaration that non-resident taxpayers must provide alongside their tax residency certificates. This form allows non-residents to avail of TDS relief on income generated in India.
3. The Central Board of Direct Taxes has facilitated this process for non-residents by allowing them to e-file Form 10F on the income tax portal without the prerequisite of acquiring a PAN, simply by creating an account.
4. This relaxation comes shortly after the requirement to electronically file Form 10F starting from October 1 of this year.
5. In July 2022, the CBDT had initially mandated the electronic filing of Form 10F, but it was later deferred to April 1, 2023, for non-residents who do not possess a PAN and are not obligated to obtain one due to the logistical difficulties of obtaining an online Form 10F without a PAN. This deadline extension was subsequently extended to September 30, 2023.
6. These individuals have been hesitant to acquire an Indian PAN because they have no taxable income within India’s jurisdiction. This change enables non-residents to fulfill their compliance obligation of obtaining Form 10F without the PAN requirement.
Non residents not required to have PAN, can electronically file Form 10F without the need for a PAN number
1. The Central Board of Direct Taxes (CBDT), vide notification dated 16th July 2022, had mandated electronic filing of Form 10F. Non-residents who were not having PAN and not required to have PAN, were required to file Form 10F electronically from 01st October, 2023. For the purpose of filing Form 10F electronically, the non-residents were required to get themselves registered on the Income Tax Portal and such registration wasn’t possible without the PAN number.
2. To benefit those non-residents who are not required to obtain PAN number in India, CBDT has enabled filing of Form 10F without obtaining PAN number. Following is the procedure:
* The non-resident can click on the ‘Register‘ option on the e-filing portal
* Under the ‘others’ category, there is an option to choose ‘non-residents not having a PAN and not required to have a PAN‘.
* Certain basic details will need to be entered, like name, date of incorporation, tax identification number, status, and country of residence.
* The non-resident will then have to provide the details of the key person, i.e., name, date of birth, etc.
* The next step is to provide contact details, i.e., email address and mobile number, which will be verified through an OTP.
* Lastly, the non-resident will need to upload certain documents like its TRC, address proof, identification proof, and any other document if required.
* Finally, when registration is complete, the non-residents must digitally sign the form using DSC.
3. It should be noted that the above window is only for ‘non-resident not having a PAN and not required to have a PAN‘. Thus, the non-residents opting for this registration need to carefully determine and be sure that they are not required to obtain a PAN.
06/10/2023
Gstn Advisory dared 06/10/2023 in respect of introduction of Compliance Pertaining to DRC-01C (Difference in Input Tax Credit (ITC) available in GSTR-2B & ITC claimed in the GSTR-R3B)
1. The Government vide Notification No. 38/2023 - Central Tax dated 04th Aug, 2023 inserted the Rule 88D in CST Rule, 2017 dealing with difference in input tax credit available in GSTR-2B and ITC availed in GSTR-3B. This functionality vis a vis this rule has now started operating on the GST portal.
2.The system now compares the ITC available as per GSTR-2B/2BQ with the ITC claimed as per GSTR-3B/3BQ for each return period. If the claimed IT exceeds the ITC available as per GSTR-2B by predefined limits, as directed by competent authority, the taxpayer shall receive an intimation in the form of Form DRC-01C.
3.Upon receiving the intimation, the taxpayer must file a response using Form DRC-01C Part B. The taxpayer has the option to either provide details of the payment made to settle the difference using Form DRC-03 or provide an explanation for the difference out of the options provided in the form or even choose a combination of both options and file it.
4.In case, no response is filed by the impacted taxpayers in Form DRC-01C Part B, such taxpayers will not be able to file their subsequent period GSTR-1/IFF.
5. To further help taxpayers with the process, a detailed manual containing the navigation details is available on the GST portal. It offers step-by-step instructions and addresses various scenarios related to the functionality. The link is stated below:
https://tutorial.gst.gov.in/downloads/news/return_compliance_itc_mismatch_intimation_in_form_gst_drc_01c
Income Tax Act 1961 Section 10(46) Notification for DMF Trust:
1. CBDT has issued Notification No. 86/2023-Income Tax dated 4th October 2023, under Section 10(46) of the Income Tax Act, 1961. This notification pertains to the classification of ‘District Mineral Foundation Trusts’ (DMF Trusts) as a specific class of Authority for tax purposes.
2. Section 10(46) of the Income Tax Act, 1961, empowers the Central Government to notify certain entities as a ‘class of Authority’ for specific income sources. In this case, DMF Trusts have been included in this classification.
3. The following income sources arising to DMF Trusts are now covered under this notification: Contribution by lease Holder to DMF as per the Mines and Minerals (Contribution to District Mineral Foundation) Rules, 2015.
Interest received from lease holders for late payment.
Any Penalty charged to lease holder.
Income from Interest on fund available under DMF.
Interest received on Saving Bank Accounts. Interest received on Excess Fund invested in Term Deposit.
4. However several conditions have to be met for this notification to be effective:
Each DMF Trust should not engage in any commercial activity.
The activities and the nature of the specified income should remain unchanged throughout the financial years.
DMF Trusts should file a return of income in accordance with the provisions of clause (g) of sub-section (4C) of section 139 of the Income Tax Act, 1961.
5. This notification is deemed to have been applied for the assessment year 2023-2024, relevant to the financial year 2022-2023, and will be applicable for assessment years 2024-2025 to 2027-2028 relevant to financial years 2023-2024 to 2026-2027 for the Trusts mentioned in the provided schedule.
05/10/2023
Delay of 433 days in filing Income tax Appeal: Kerala HC directs Income Tax Commissioner to Decide Condonation Application
P R Combines Vs ACIT (Kerala High Court) (WP(C) No. 28145 of 2023)
Facts:
1. The petitioner had filed statutory appeals against the assessment orders with a delay of 433 days. However, the delay had not been condoned, and the appeals had not been admitted for further proceedings.
2. During the pendency of the appeals and the applications for delay condonation, the income tax authorities issued the recovery cum garnishee orders to recover the assessed tax amount.
3. The petitioner’s counsel submitted that the petitioner was willing to deposit 20% of the assessed tax amount, with the condition that the recovery cum garnishee orders would not be enforced until the final outcome of the appeals.
Hon Kerala HC held as under:
1. The petitioner was directed to deposit 20% of the assessed tax amount within one month from the date of the court’s order.
2. The appellate authority (Commissioner of Income Tax Appeals) was instructed to proceed with the applications for condoning the delay and the appeals expeditiously and to decide them in accordance with the law.
3. The recovery cum garnishee orders and the recovery cum garnishee orders challenged in the writ petition were to be kept in abeyance until the disposal of the applications and appeals.
4. If the petitioner failed to make the deposit of 20% of the assessed tax amount within the stipulated time, the income tax department would be free to enforce the recovery cum garnishee orders.
5. Further no opinion has been expressed on the merits of the matter.
04/10/2023
Is Germany the ‘Sick man of Europe’? Little notice has been paid to the deep economic troubles of Germany, the world’s fourth-largest economy. A sputtering of the German economic growth engine has the potential to tip the rest of the euro zone economy into recession, and set the stage for another round of debt crises.
Germany has now registered three consecutive quarters of negative economic growth. It will be the only G-7 economy to experience a recession this year, according to the International Monetary Fund.
Following are the most glaring reasons for the deep economic troubles:
1. Allowing itself to become overly dependent on Russia for its energy supply. As a result of this dependence, and in light of the country’s large, energy-intensive heavy industry sector, Germany was the country hardest hit by the cessation of Russian natural gas exports and the spike of natural gas prices following Russia’s Ukraine invasion.
2. Germany’s dependence on the Chinese export market is now looking like another one of these policy errors. China’s economy is on the cusp of a Japanese-style lost economic decade in the wake of the bursting of its property and credit market bubble. German exports of goods and services to China amount to around 3% of Germany’s gross domestic product, while revenue from Germany’s Chinese subsidiaries account for over 6% of Germany’s GDP.
3. Its failure to have invested adequately in the high-tech sectors that might have reduced the German economy’s dependence on its heavy industry sector. It is estimated that the country’s investment in information technology as a share of GDP is less than half that in the U.S. or France.
4. Germany is suffering from poor demographics, fractious politics, and a hawkish European Central Bank resorting to high interest rates to regain inflation control.
It’s been nearly two decades since Germany shrugged off its “sick man of Europe” label with a series of labor market reforms that ushered in years of economic outperformance. Unfortunately, the phrase is making a comeback.
Source: Barron’s
India's external debt rises to $629.1 billion at end-June 2023
1. The Reserve bank of India (RBI) Thursday released the external debt data of India which rose marginally to USD 629.1 billion at June-end 2023, although the debt-GDP ratio declined to 18.6%.
2. The external debt recorded an increase of USD 4.7 billion over USD 624.3 billion at end-March 2023, the RBI data said.
3. Valuation effect due to the appreciation of the US dollar vis-à-vis the major currencies such as yen and SDR2 amounted to USD3.1 billion. Excluding the valuation effect, external debt would have increased by USD 7.8 billion instead of USD 4.7 billion at end-June 2023 over end-March 2023.
4. US dollar-denominated debt remained the largest component of India’s external debt, with a share of 54.4% at end-June 2023, followed by debt denominated in the Indian rupee (30.4%), SDR (5.9%), yen (5.7%), and the euro (3.0%).
5. At end-June 2023, long-term debt (with original maturity of above one year) was placed at USD 505.5 billion, recording an increase of USD 9.6 billion over its level at end-March 2023, the report said.
6. The share of short-term debt (with original maturity of up to one year) in total external debt declined to 19.6% at end-June 2023 from 20.6% at end-March 2023. Similarly, the ratio of short-term debt (original maturity) to foreign exchange reserves declined to 20.8% at end-June 2023 (22.2% at end-March 2023).
7. Loans remained the largest component of external debt, with a share of 32.9%, followed by currency and deposits (22.9%), trade credit and advances (19.0%) and debt securities (16.8$).
The Reserve Bank of India (RBI) last week prepared a draft to curb those who willfully default on loans or those who fail to repay loans despite their ability to repay. These proposed rules may increase the problems of willful defaulters. In fact, willful defaulters means those borrowers who have the ability to repay the loan but still do not do so. RBI has started preparations to take strict action against such people. In the new draft of the Central Bank, it has been said that willful defaulters taking loans of more than Rs 25 lakh will be cracked down on in many ways. The special thing is that these proposed rules are based on the feedback of loan giving companies and suggestions of various courts.
Why is RBI taking this step?
This change against willful defaulters has become very necessary as the cases of willful non-repayment of loans have increased in recent years. A report said that by the end of December 2022, the intentional default loan amount had reached about Rs 3.4 lakh crore. Such defaulters are nothing but criminals to the financial system, because they borrow and run away. Since the bank is the custodian of public money and when the money lent as loan is not returned, the depositors have to suffer the consequences.
03/10/2023
Vedanta to demerge biz into six firms:
1. Vedanta Ltd’s board has decided to demerge business units into independent “pure play” companies each of which will be listed entities with their own board and management. Each entity will pursue a tailored growth strategy and investors will have a menu of options in which to put their funds.
2. For every one share in Vedanta Ltd our shareholders will get one share in each of the new five listed entities. The six entities post-demerger will be Vedanta Limited (which will retain its stake in HZL, FACOR, Nicomet, Semiconductors & Display), Vedanta Base Metals (Sterlite Copper, VZI), Vedanta Aluminium, Vedanta Power, Vedanta Oil & Gas and Vedanta Steel & Ferrous Materials.
3. Separately, Hindustan Zinc Ltd in a statement said it could create separate legal entities for its zinc and lead, silver, and recycling businesses to help capitalise on “distinct market positions” and attract investors.
4. Rationale for Demerger:
a. Simplifies Vedanta’s corporate structure with sector focussed independent businesses.
b. Provides opportunities to global investors, including sovereign wealth funds, retail investors and strategic investors, with direct investment opportunities in dedicated pure-play companies linked to India’s remarkable growth story through Vedanta’s world class assets.
c. With listed equity and self-driven management teams, these demergers provide a platform for individual units to pursue strategic agendas more freely and better align with customers, investment cycles and end markets.
d. Enables to better highlight, and for the market to more easily value, the remarkable technological advances, environmental stewardship and robust growth stories within Vedanta’s family of companies.
Audit Report to be filed by Trusts under the Income-tax Act
CBDT has Notified New Audit Report Forms
Rules 16CC and 17B of the Income-tax Rules, 1962 have been substituted w.e.f. 01-04-2023 vide Income-tax amendment (3rd Amendment) Rules, 2023.
CBDT notified new audit reports Form 10B and 10BB to be furnished by charitable or religious trusts and other institutions.
Amended Rules: 16CC and 17B (w.e.f. 01/04/2023)
1. Change in Form in which Audit report is to be given
2. Change in the format of the Audit report
3. Comprehensive change in annexures forming part of the Audit Report
Who is required to file Form 10B?
If the total income of the trust or institution, without giving effect to the provisions of sections 11 and 12 or Section 10(23C) (iv), (v), (vi), (via) of the Act, exceeds rupees five crores during the previous year; or
If such trust or institution has received any foreign contribution during the previous year; or
If such trust or institution has applied any part of its income outside India during the previous year.
Who is required to file Form 10BB
Any other case not covered in Form 10B.
Consequences of Non-Compliance with Form 10B Provisions:
Failure to file Form 10B as required can lead to serious consequences, including:
1. Loss of Tax Exemption: The charitable or religious organization may lose its tax exemption status.
2. Tax Liability: The organization may become liable to pay income tax on its earnings.
3. Penalties: Penalties and interest may be levied for non-compliance.
01/10/2023
The Reserve Bank of India (RBI) on September 30 said it has decided to extend the deadline for public to exchange, submit Rs 2000 notes till 7 October. As the period specified for the withdrawal process has come to an end, and based on a review, it has been decided to extend the current arrangement for deposit / exchange of Rs 2000 banknotes until October 07, 2023," the RBI said in a press release.
Order passed without mentioning DIN is invalid despite subsequent communication. This case underscores the significance of compliance with procedural requirements, even when subsequent communications attempt to rectify shortcomings. The inclusion of the Document Identification Number in official documents is a crucial aspect of maintaining validity and transparency in administrative procedures.
Read More
https://taxguru.in/income-tax/order-passed-mentioning-din-invalid-despite-subsequent-communication.html
New TCS from 1st October 2023 for various foreign remittances:
1. Educational Purposes: When it comes to foreign remittances for educational purposes, there is no Tax Collection at Source (TCS) applied if the amount being sent is below Rs 7 lakhs. However, if the remittance for education exceeds Rs 7 lakhs, a nominal TCS rate of 0.5% comes into effect. It’s important to note that if the remittance for education is not funded by a loan, a slightly higher TCS rate of 5% is charged. This ensures that larger educational expenses exceeding Rs 7 lakhs are subject to a reasonable TCS.
2. Medical Purposes: For remittances intended for medical purposes, a 5% TCS is collected if the amount crosses the threshold of Rs 7 lakhs. The Ministry of Finance has clarified that the rate of TCS remains consistent for all travel and ancillary expenses related to both medical and educational treatments. This means that expenses such as hostel fees for a child studying abroad can also be considered as funds remitted for medical purposes.
3. Foreign Tour: Currently, foreign tour packages are subjected to a 5% TCS without any specific threshold limit. This applies to the entire cost of the tour package. However, starting from October 1, for purchases of overseas tour packages up to Rs 7 lakhs in a financial year, a TCS of 5% will continue to apply.
When the total cost of the tour package surpasses Rs 7 lakhs, a higher TCS rate of 20% will be applicable. This significant increase in TCS aims to regulate outward overseas remittances, including various expenses like bank account transfers, forex card loading, foreign exchange, travel expenditures, and business trips.
4. Investments: Regarding investments made abroad, such as purchasing stocks, mutual funds, and cryptocurrencies, a TCS rate of 20% will be applicable if the investment amount exceeds Rs 7 lakhs. However, if the investment falls below this threshold limit, no TCS will be imposed.
This exemption encourages smaller-scale investments. It’s crucial to understand that if one invests in domestic mutual funds that have exposure to foreign stocks, it will not be considered as remittance under the Liberalised Remittance Scheme (LRS) and, therefore, will not be subject to TCS.
5. Credit Card Transactions: Credit card transactions are not governed by the Liberalised Remittance Scheme (LRS). Therefore, they do not fall under the purview of TCS.
However, it’s essential to distinguish between payment modes: debit cards and forex cards do come under LRS regulations. Whether TCS is charged on these cards depends on the specific purpose of the transaction.
30/09/2023
The Hon'ble Supreme Court in the case of Union of India v. Mohit Minerals (P.) Ltd. [2022] 138 taxmann.com 331 (SC) dated 19-05-2022 held that the supply of goods by the foreign supplier along with the transportation services constitutes a composite supply of goods under GST. Therefore, a separate levy on ocean freight would contradict the principle of composite supply. The levy was held as not in line with the GST provisions of Composite supply. As a consequence of this judgment, the provisions relating to reverse charge on ocean freight have now been omitted by the Government from the IGST notifications w.e.f. October 01, 2023.
Taxpayers who have paid GST on this transaction can claim ITC for the same.
Important Judgement by Kerala High Court : DIYA AGENCIES v. THE STATE TAX OFFICER [WP(C) NO. 29769 OF 2023]
Held:-
Input Tax Credit Cannot Be Denied Solely Based on GSTR-2A; Emphasis on Supporting Evidence and Remand
The Kerala High Court has ruled that the denial of input credit should not be solely based on the absence of entries in GSTR-2A. The court emphasizes the importance of considering additional supporting evidence.
Remand and Evidence Submission: The case has been sent back to the proper officer for further examination, and the court has instructed the taxpayer to submit relevant evidence to support their claim for input tax credit.
29/09/2023
CBDT notifies changes to Rule 11UA in respect of ANGEL TAX. The Finance Act, 2023, brought in an amendment to bring the consideration received from non-residents for issue of shares by an unlisted company within the ambit of section 56(2)(viib) of the Income-tax Act, 1961(the Act), which provides that if such consideration for issue of shares exceeds the Fair Market Value (FMV) of the shares, it shall be chargeable to income-tax under the head ‘Income from other sources’. Taking into consideration the suggestions received in this regard and detailed interactions held with stakeholders, Rule 11UA for valuation of shares for the purposes of section 56(2)(viib) of the Act has been modified vide notification no. 81/2023 dated 25th September, 2023.
The key highlights of the changes in Rule 11 UA are:
a) In addition to the two methods for valuation of shares, namely, Discounted Cash Flow (DCF) and Net Asset Value (NAV) method, available to residents under Rule 11UA, five more valuation methods have been made available for non-resident investors, namely, Comparable Company Multiple Method, Probability Weighted Expected Return Method, Option Pricing Method, Milestone Analysis Method, Replacement Cost Method.
b) Where any consideration is received for issue of shares from any non-resident entity notified by the Central Govt., the price of the equity shares corresponding to such consideration may be taken as the FMV of the equity shares for resident and non-resident investors, subject to the following:
(i) To the extent the consideration from such FMV does not exceed the aggregate consideration that is received from the notified entity, and
(ii) The consideration has been received by the company from the notified entity within a period of ninety days before or after the date of issue of shares which are the subject matter of valuation.
c) On similar lines, price matching for resident and non-resident investors would be available with reference to investment by Venture Capital Funds or Specified Funds.
d) Valuation methods for calculating the FMV of Compulsorily Convertible Preference Shares(CCPS) have also been provided.
e) A safe harbor of 10% variation in value has been provided.
The notified Rule provides for expansion of the valuation methodologies to include globally accepted methodology and provide a broad parity to resident and non-resident investors.
Income Tax illegally levied must be refunded: Bombay HC:: Grasim Industries Ltd Vs ACIT (Bombay High Court) Appeal Number : Writ Petition No. 2505 of 2012
Facts:
1. Petitioner had set up a Gas-based Sponge Iron Plant in India for which it entered into a Foreign Technical Collaboration Agreement with one M/s. Davy Mckee Corporation (DAVY) and another party. DAVY was to deliver to Petitioner the necessary design, drawing and data with respect to the Sponge Iron Plant outside India.
2. Petitioner agreed to pay a sum of US $ 16,231,000/- net of Indian Income-tax, if any, leviable. In other words, it was agreed that if any withholding tax was required to be deducted, it will be borne by Petitioner and DAVY would be paid the net amount of US $ 16.23 millions.
3. Petitioner sought from Assistant Commissioner of Income Tax (ACIT) to facilitate remittance of the amount due to DAVY on account of the above services without deduction of tax at source. However, ACIT stated that 30% tax is payable on the amount remitted. Accordingly, petitioner paid the sum under protest.
4. Petitioner, along with DAVY, filed Writ Petition No.448 of 1994 in this Court challenging the constitutional validity of the provisions of Section 9(1)(vii) of the Act, the assessment orders for Assessment Year 1990-91 and 1991-92 in the case of DAVY and the taxability of the amount received by DAVY under the agreement under Section 9(1) (vii) of the Act.
5. By an order dated 5th May 2010, Hon Bombay HC was pleased to hold that the assessment orders passed by Respondents No.4 and 5 subjecting the income received by DAVY from Petitioner under the agreement dated 22nd October 1989 was not correct and Respondents were directed to pass fresh assessment orders excluding the income received by DAVY by way of fees for technical services from Petitioner under the agreement.
6. Finally, by an order dated 24th August 2012, the revenue refused to give effect to the order of this Court holding that Petitioner was not entitled to the refund of withholding tax deposited by Petitioner as the same was on behalf of DAVY and, therefore, no effect can be given in the case of Petitioner.
Hon Bombay HC held as below:
1. In New India Industries Ltd & Anr. v Union of India & Anr. (AIR 1990 Bom. 239) this Court held that taxes illegally levied must be refunded. The doctrine of unjust enrichment has to be applied after having regard to the facts of each case.
2. Once the appellant succeeds in the Appeal, the Revenue Authorities must proceed on the basis that the appellant did not have any obligation to make the payment.
3. Thus, the amount wrongly deducted or paid to the Revenue Authorities where it was not required to be paid would become refundable to the appellant.
28/09/2023
Right to sue for damages is a capital receipt and not taxable: ITAT Mumbai
Virendra Bhavanji Gala Vs PCIT (ITA No. 1654/Mum/2023)
Facts:
1. The assessee is an individual who entered into an MOU with Aadi Properties LLP with the intention to book commercial space to be developed and constructed in a proposed project by M/s. Aadi Properties LLP on a plot of land for consideration of Rs. 10,75,00,000/-.
2. Accordingly, payment of Rs. 25,00,000/- by cheque drawn on the Bank of India was paid by the assessee. The amount was nearly 2.33% of the total consideration payable by the assessee.
3. Later on, the project did not materialise and was aborted, and accordingly, the builder cancelled the allotment, returning the advance that was not deposited in the bank by the assessee. The assessee then filed suit before the Bombay High Court, claiming damages.
4. Thereafter, a consent decree was passed by the Bombay High Court on the basis of consent terms filed by the parties. As per the consent decree, an amount was agreed to be paid by Aadi Properties LLP by way of damages for its inability to provide the commercial space and the assessee not waiving the ‘right to sue’.
5. AO completed the assessment u/s. 143(3), accepting the return of income, and confirmed that the capital receipt received of Rs. 7,65,26,000 was not taxable.
6. PCIT invoking revisionary jurisdiction u/s 263 issued the show-cause notice, PCIT held that the assessment order passed by the AO was erroneous in so far as it was prejudicial to the interest of the revenue as per clause (d) of Explanation 2 to Section 263.
27/09/2023
ITAT Mumbai held as below:
1. The right that a person acquires upon the establishment of a breach of contract is a mere right to sue.
2. Despite the wildest possible definition of capital asset in Section 2(14), a right to a capital asset must fall within the expression ‘property of any kind’.
3. Section 6 of the Transfer of Property Act, of 1882, uses the same expression ‘property of any kind’ in the context of the transferability of any property under that Act. Section 6 of the Transfer of Property Act, of 1882, makes an exception for a right to sue while defining property of any kind.
4. The right to sue for damages is held to not be an actionable claim and cannot be assigned.
5. Thus, damages on account of right to sue is a capital receipt and accordingly not chargeable to tax.
26/09/2023
Provisions of Sec 56(2)(vii)(C) are not applicable in the case of bonus shares
ITA No. 387/Del/2021 Smt Aruna Chandhok
Facts:
1. The assessee received bonus shares and bonus units from M/s Tech Mahindra Ltd and JM Arbitrage Advantage Fund-Bonus Options The assessee was show caused as to why the addition u/s 56(2)(vii)(c ) of the Act should not be made in respect of these bonus shares and bonus units.
2. The assessee vide her submissions dated 04/01/2019 submitted that provisions of section 56(2)(vii)(c ) of the Act would not apply to bonus shares at all as it is merely done by capitalization of profits.
3. The AO however, proceeded to treat the bonus shares/bonus units issued, to be taxed u/s 56(2)(vii)(c ) of the Act and added a sum of Rs 36,10,63,656/-.
ITAT Delhi held as below:
1. The issue of bonus shares by capitalization of reserves is merely a reallocation of the companies funds. There is no inflow of fresh funds or increase in the capital employed, which remains the same.
2. The total funds available with the company remains the same and issue of bonus shares does not result in any change in respect of capital structure of the company.
3. Any profit derived by the assessee on account of receipt of bonus shares is adjusted by depreciation in the value of equity shares held by him. In the instant case, there is no material on record to infer that bonus shares have been transferred with an intention to evade tax, which is the object of the provision in question.
4. Thus, the provisions of Section under Section 56(2)(vii)(c) of the Act are not attracted to the fact situation of the case.
25/09/2023
What is Equalisation Levy?
1. Meaning:
Equalisation levy is a direct tax which is withheld at the time of payment by the service recipient.
2. Conditions for services included w.e.f 01.06.2016:
Payment should be made to Non-Resident. Aggregate amount of consideration does not exceed Rs 1 lacs in F.Y.
3. What services are covered W.e.f 01.06.2016 @6% on:
Online Advertisements
Any provision for digital advertising space Facilities /service for the purpose of online advertisement.
4. Equlaisation Levy on e-commerce supply or services (Finance Act 2020)-
Equalisation levy shall be charged at the rate of 2 % of the amount of consideration received or receivable by e-commerce operator from e-commerce supply of goods and services made by it.
To a person resident in India or to a non-resident in the specified circumstances or to a person who buys such goods /services using IP address located in India.
5. Not applicability in the case of E Commerce Operator:
E-commerce operator has a permanent establishment in India and such e-commerce supply is conducted with such PE.
Sales, Turnover, gross receipts from e-commerce supply or services is less than Rs 2 crore during the previous year.
6. No credit in home country:
Equalisation levy is not the part of Income Tax Act, 1961 hence non-resident e-commerce operator will not get the credit of the same in their home county. If an e-commerce operator fails to deposit the Equalisation Levy, then a penalty equal to the amount of equalisation levy that he failed to deposit will be charged.
24/09/2023
Dividend Income From Indian Entity’s Establishment In Oman Having ‘Permanent Establishment’ Status Under DTAA Not Taxable In India: Supreme Court
Principal Commissioner Of Income Tax-10 v M/S Krishak Bharti Cooperative Ltd. (CA No 836 of 2018)
Facts of the Case:
1. The case involved a multi-State Co-operative Society registered in India, engaged in the business of manufacturing fertilizers.
2. The Co-operative Society entered into a joint venture with Oman Oil Company, forming the Oman Fertilizer Company SAOC (OMIFCO) in Oman. The Co-operative Society had a 25% share in OMIFCO.
3. OMIFCO manufactured fertilizers purchased by the Indian Central Government. The Co-operative Society had a branch office in Oman, registered independently as a company under Omani laws and had a permanent establishment status in Oman.
4. Under Indian tax laws, the Assessing Officer allowed tax credit for the dividend income received by the Co-operative Society from OMIFCO. Omani tax laws, however, exempted this dividend income from taxation starting from the year 2000 and accordingly no tax was paid by the assessee.
5. The Principal Commissioner of Income Tax (PCIT) issued a notice under Section 263 of the Income Tax Act.
6. The PCIT rejected the Co-operative Society's contentions, asserting that the tax exemption under Article 25(4) of the Double Taxation Avoidance Agreement (DTAA) read with Article 8 of the Omani Tax Laws was not applicable.
7. The Co-operative Society appealed to the Income Tax Appellate Tribunal (ITAT), which ruled in their favor, stating that the PCIT's order was without jurisdiction. The Delhi High Court, however, dismissed the ITAT's decision, leading to the appeal in the Supreme Court.
Hon. Supreme Court Judgment:
1. The Court examined various provisions, including Article 8, Article 8(bis), Article 11, and Article 25 of the DTAA between India and Oman.
2. The Court concluded that Article 8(bis) exempted dividend tax received by the Co-operative Society from its permanent establishment in Oman, and Article 25 ensured the same tax treatment in India.
3. The Court also considered a letter from the Omani Finance Ministry, clarifying the purpose of Article 8(bis) and confirming that tax exemption was intended to promote economic development within Oman.
4. The Court found that the Co-operative Society's establishment in Oman had been treated as a permanent establishment in the past, and there was no reason to change this classification.
5. The Court rejected arguments that the letter from the Omani Finance Ministry had no statutory force, stating that it was a clarificatory communication interpreting existing Omani Tax Laws.
6. Ultimately, the Co-operative Society's right to claim tax exemption in India was upheld, based on the provisions of the DTAA and Omani Tax Laws.
23/09/2023
Sec 44ADA is not applicable where income is not earned on account of professional consultancy
Shri Vishnu Dattatraya Ponkshe v. CPC Bengaluru (ITA No. 1570/Mum/2023)
Facts:
1. The taxpayer, Vishnu Dattatraya Ponkshe, reported their income under Section 44AD of the Income Tax Act, indicating an income rate of 8% on receipts totalling Rs. 8,30,800, generated from a consultancy business related to stamp duty and registration.
2. Within this amount, there was a receipt of Rs. 4,81,280 on which TDS (Tax Deducted at Source) was deducted under Section 94J of the Income Tax Act.
3. During the assessment process, the Assessing Officer (AO) added 50% of the income under Section 44ADA of the Act, resulting in an additional Rs. 2,40,640.
4. Dissatisfied with this assessment, the assessee appealed to the Commissioner of Income Tax (Appeal), who subsequently dismissed the appeal. Consequently, the taxpayer filed another appeal before the tribunal.
5. Section 44ADA of the Income Tax Act pertains to individuals engaged in legal, medical, engineering, architectural, professional accountancy, technical consultancy, interior decoration, or other professions as specified by the Board in the official gazette.
ITAT Mumbai held as below:
1. The taxpayer being assessed had only completed their 10th standard education and lacked the qualifications to work as a legal, medical, engineering, architectural, professional accountant, or technical consultant.
2. No addition is to be incurred under section 44ADA of the Income Tax Act 1961 for the income made via the business of the consultancy service.
22/09/2023
Income Tax Return filing: CBDT extends due date for charitable trusts and ITR-7
The Central Board of Indirect Taxes (CBDT) on September 18 announced an extension in the deadline for filing Form 10B/10BB and ITR-7 till October 31, 2023. The due date for furnishing Audit reports in Form 10B/Form 10BB for the Financial Year 2022-23, which is 30.09.2023 has now been extended by the Central Board of Direct Taxes (CBDT) to 31.10.2023. The due date of furnishing of Return of Income in Form ITR-7 for Assessment Year 2023-24, which is 31.10.2023 is also extended to 30.11.2023.
(CBDT Circular No. 16/2023)
Note:
Form 10B
Under Section 12A of the Income-tax Act, 1961, Form 10B is concerned with audit reports, towards the case of fund, trust, or institution, any university or other educational institution, or any hospital or other medical institution.
Form 10BB
Form 10BB is applicable as per Rule 16CC under section 10. The purpose is to regulate the income of educational institutions, universities, and medical institutions.
ITR-7 Form
ITR-7 Form can be used by persons including companies who are required to furnish returns under Section 139(4A) section 139(4B) or section 139(4C) or Section 139(4D).
21/09/2023
Supreme Court Clarifies Eligibility for Section 80P Deduction under IT Act
KERALA STATE CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK LTD. KSCARDB (CA No. 5005-5007 OF 2019)
Facts:
1. The Assessee claimed deduction under Section 80P(2)(a)(i) which was disallowed by the AO on the premise that Assessee is neither a primary agricultural society nor a primary co-operative agricultural and rural development bank but a ‘co-operative bank’, thus, hit by the exclusion of Section 80P(4). Both CIT(A) and ITAT upheld the applicability of Section 80P(4) which was also upheld by Kerala High Court.
2. Assessee receives funds from NABARD and in turn lends money to its member societies which makes it an Apex Society. Assessee does not requires any Banking licence from the RBI.
Note: Section 80 P of income tax Act was amended in 2008 by adding subsection 80 P (4) which disallows deductions under 80 P for Cooperative banks coming under the Banking Regulation Act (BR).
Hon. SC held as below:
1. Only a state cooperative bank, upon obtaining a license under Section 22 of the Banking Regulation Act, 1949, would fall within the scope and meaning of a banking company under Section 2(c) of the same Act.
2. In the instant case, although the appellant society is an apex cooperative society within the meaning of the State Act, 1984, it is not a co-operative bank within the meaning of Section 5(b) read with Section 56 of the BR Act, 1949.
3. The assessee is eligible for deduction under section 80P of the Income Tax Act.
20/09/2023
Cognizant’s Rs. 19,000 Crores Buyback via Court-approved Scheme is a Colourable Device: ITAT
M/s.Cognizant Technology- Solutions India Pvt. Ltd. Versus ACIT
Case No.: ITA No.269/Chny/2022
Facts:
1. Assessee-Cognizant Technology had purchased its own shares from non-resident shareholders (three shareholders are residents of the USA, and one shareholder is a tax resident of Mauritius) in a ‘Scheme of Arrangement & Compromise’ sanctioned by the High Court of Madras in terms of provisions of Section 391-393 of the Companies Act, 1956.
2. In accordance with the scheme, the assessee purchased 94,00,534 equity shares from its shareholder at the price of Rs.20,297/- per share and paid a total consideration of Rs.19,080.26 crores.
3. Assessing Officer (AO) held that consideration paid by the assessee to its shareholders for the purchase of its own shares was liable to tax as deemed dividend under section 2(22)(d). Consequently, the assessee was liable to pay Dividend Distribution Tax (DDT) under section 115-O.
4. On the other hand, the assessee submits that ‘Scheme of Arrangement & Compromise’ was sanctioned by the High Court of Madras in terms of Sections 391 to 393 of the Companies Act, 1956. It cannot be considered as buyback of shares in terms of provisions of Section 77A or reduction of capital in terms of Sections 100-104/402 of the Companies Act, 1956.
5. The assessee maintained that the scheme was implemented for the following reasons:
(i) To increase earnings per share;
(ii) To streamline corporate ownership;
(iii) To optimize the overall capital structure and
(iv) To reduce the risk in terms of foreign currency fluctuations in respect of rupee funds.
ITAT Chennai held as below:
1. Two essential prerequisites must be satisfied in order to come within the ambit of section 2(22)(d), i.e., there must be a distribution to the shareholders on the reduction of the capital and further, it must be to the extent that the company possess accumulated profits. Here, both conditions are satisfied to treat the transaction within Section 2(22)(d).
2. Once the assessee states it is not buyback under section 77A, it should automatically fall back to section 77 r.w.s sections 100-104 of the Companies Act, 1956 ie reduction of capital.
3. On closer examination of the scheme’s true purpose, it becomes evident that it primarily serves two objectives:
(i) transferring the capital base of the company to shareholders based in Mauritius.
(ii) distribution of the company’s accumulated profits to non-resident shareholders, all while avoiding the scope of any provisions related to the taxation of payments made for the purchase of its own shares.
4. It was undoubtedly clear that the scheme was only a colourable device intended to evade legitimate tax dues.
19/09/2023
CBDT Expands The List Of Securities Eligible For Tax Exemption On A Recognised Stock Exchange In IFSC
1. Section 47(viiab) exemption's scope has been expanded by the Central Board of Direct Taxes (CBDT).
2. Section 47(viiab) of Income Tax Act, exempts transfers of capital assets made by non-residents on recognised stock exchanges situated in any International Financial Services Centre (IFSC) from paying capital gains tax.
3. The exemption is now available to units of investment trust, units of exchange-traded funds and units of schemes framed under International Financial Services Centres Authority (Fund Management) Regulations, 2022.
4. The exemption is available only if following three conditions are met:
a. The transfer is made on a recognized stock exchange located in any IFSC.
b. The consideration for the transfer is paid or payable in foreign currency.
C. The capital asset is one of the assets specified in section 47(viiab).
Notification No. 71/2023
Date: 12/09/2023
17/09/2023
ITAT Mumbai allows Standard Chartered Bank a loss of Rs 1427 Crores on account of securities scam :: Standard Chartered Bank (ITA No.884/Mum/2003) (AY 1993-94)
Facts:
1. In the return of income the Assessee had claimed loss of INR 1,427.59 Crores on account of securities transaction scam. During the assessment proceedings, the Assessee claimed that during the security scam various payments were made by the Assessee for purchase of securities which were never delivered to the Assessee. Similarly, the Assessee had sold several securities but did not receive the sale consideration. The loss was perpetrated by brokers in collusion with the bank employees.
2. The aforesaid amounts, represented loss suffered by the Assessee during normal course of business which was allowable as deduction under Section 28 of the Act. Alternatively, it was contended by the Assessee that Assessee should be allowed deduction for the aforesaid amount under Section 36(1)(vii) of the Act being bad debts.
3. After examining each of the transactions in respect of which the Assessee has made a claim for loss, the Assessing Officer allowed deduction for INR 333.45 Crores only.
4. As regards balance claim of deduction for Loss of INR 1,094.14 Crores the Assessing Officer concluded that the Loss of INR 1,094.14 Crores pertained to transactions which were irregular and were not undertaken in the normal course of business by the Assessee. Therefore, the Assessee was not entitled to claim deduction Section 28 or Section 36(1)(vii) of the Act.
Note: Assessee placed reliance on Circular No. 35-D (XLVII-20) [F. No. 10/48/65-IT(A-1)], dated 24/11/1965 wherein it was clarified by the CBDT that loss arising due to embezzlement by the employees should be treated as incidental to the business.
ITAT Mumbai held as below:
1. There is no dispute that the Assessee had written off the amount to this extent of deduction for loss allowed by the CIT(A) during the relevant previous year and, therefore, the CIT(A) was correct in holding that the losses can be said to have crystallized during the relevant previous year.
2. Even during the appellate proceedings before us noting has been placed on record to show that the transactions in respect of which claim of loss has been made by the Assessee were in violation of any of the guidelines issued by RBI.
3. The transactions under consideration were regular transactions undertaken by the Assessee during the ordinary course of business.
4. Thus, we do not find any infirmity in the order passed by CIT(A) in allowing deduction for such loss under Section 28 or Section 36(1)(vii) of the Act. Accordingly, the ground raised by the Revenue is dismissed.
Interest income cannot be excluded while calculating the book profit for calculating the remuneration to partners: ITAT:: M/s. Feelings Vs PCIT (ITAT Panaji) (TA No. 149/PAN/2019)
Facts:
1. Assessee partnership firm had claimed deduction of partners remuneration u/s 40(b)(v). The book profit comprised of income from operation of ?3,00,000/- and balance of ?4,66,45,829/- represented by interest income earned/accrued.
2. The AO accepted the claim in 143(3) order. However, PCIT u/s 263 set aside the assessment for misplacing explanation 3 in arriving eligible amount of book profit for the purpose of clause (v) of sub-section (b) of 40.
3. Revenue’s contention was that the assessee earned interest income by investing its surplus business funds and interest so earned was to be taxed under the head ‘Income From Other Sources’ and hence such interest income was to be excluded from book profit while computing permissible remuneration u/s 40(b)(v) .
ITAT Panaji held as below:
1. Guj HC in CIT Vs J J Industries [ 358 ITR 531-Guj HC] which followed SC judgement in the case of Apollo Tyres Ltd 255 ITR 273 (SC) held that the AO is not entitled to re-compute the P&L profits, even if income from other sources is included in the P&L A/c.
2. In Md. Serajuddin & Bros. Vs CIT [ 80 DTR 46 Cal HC] and in CIT Vs Paramount Premises Ltd. [190 ITR 259 Mum HC ], it was held that, any interest earned from the funds deployed which arose out business activity can by no stretch of imagination be categorized under the head income from other sources.
3. In CIT vs. Lok Holdings [308 ITR 356 Mum HC ] it was held that interest earned from deposit of funds linked to any business activity is income from business & profession & thus, cannot be categorized as income from other sources.
4. The interest income, thus, cannot notionally be excluded while determining allowable of deduction of remuneration to partners u/s 40(b(v) .
Note: Interestingly, Circular 12/2019 dt. 19/06/2019 excludes all incomes such as capital gain, interest, rental income, income from other sources etc. which do not fall under the head ‘profit or gain of business or profession’, from the figure of book profit for the purpose of section 40(b)(v).
What is PPT under the MLI?
1. The Principle Purpose Test (PPT) is a key provision under the Organization for Economic Cooperation and Development (OECD) Model Tax Convention on Income and Capital (OECD MC).
2. The OECD MC serves as a template for bilateral tax treaties- Double Taxation Avoidance Agreements between countries, providing a framework for the allocation of taxing rights and the prevention of double taxation.
3. The PPT is a general anti-abuse rule that empowers tax authorities to deny tax treaty benefits if it can be established that one of the principal purposes of a transaction or arrangement was to obtain such benefits.
4. In other words, if it can be shown that obtaining treaty benefits was one of the main reasons or motivations behind a particular transaction or arrangement, tax authorities can disregard those benefits for tax purposes.
5. The above does not mean that treaty benefits cannot be obtained in all the cases. Treaty benefits can still be granted if it is established that there are other valid, non-tax-related reasons for the transaction or arrangement.
16/09/2023
Cognizant’s Rs. 19,000 Crores Buyback via Court-approved Scheme is a Colourable Device: ITAT:: M/s.Cognizant Technology- Solutions India Pvt. Ltd. Versus ACIT
Case No.: ITA No.269/Chny/2022
Facts:
1. Assessee-Cognizant Technology had purchased its own shares from non-resident shareholders (three shareholders are residents of the USA, and one shareholder is a tax resident of Mauritius) in a ‘Scheme of Arrangement & Compromise’ sanctioned by the High Court of Madras in terms of provisions of Section 391-393 of the Companies Act, 1956.
2. In accordance with the scheme, the assessee purchased 94,00,534 equity shares from its shareholder at the price of Rs.20,297/- per share and paid a total consideration of Rs.19,080.26 crores.
3. Assessing Officer (AO) held that consideration paid by the assessee to its shareholders for the purchase of its own shares was liable to tax as deemed dividend under section 2(22)(d). Consequently, the assessee was liable to pay Dividend Distribution Tax (DDT) under section 115-O.
4. On the other hand, the assessee submits that ‘Scheme of Arrangement & Compromise’ was sanctioned by the High Court of Madras in terms of Sections 391 to 393 of the Companies Act, 1956. It cannot be considered as buyback of shares in terms of provisions of Section 77A or reduction of capital in terms of Sections 100-104/402 of the Companies Act, 1956.
5. The assessee maintained that the scheme was implemented for the following reasons:
(i) To increase earnings per share;
(ii) To streamline corporate ownership;
(iii) To optimize the overall capital structure and
(iv) To reduce the risk in terms of foreign currency fluctuations in respect of rupee funds.
ITAT Chennai held as below:
1. Two essential prerequisites must be satisfied in order to come within the ambit of section 2(22)(d), i.e., there must be a distribution to the shareholders on the reduction of the capital and further, it must be to the extent that the company possess accumulated profits. Here, both conditions are satisfied to treat the transaction within Section 2(22)(d).
2. Once the assessee states it is not buyback under section 77A, it should automatically fall back to section 77 r.w.s sections 100-104 of the Companies Act, 1956 ie reduction of capital.
3. On closer examination of the scheme’s true purpose, it becomes evident that it primarily serves two objectives:
(i) transferring the capital base of the company to shareholders based in Mauritius.
(ii) distribution of the company’s accumulated profits to non-resident shareholders, all while avoiding the scope of any provisions related to the taxation of payments made for the purchase of its own shares.
4. It was undoubtedly clear that the scheme was only a colourable device intended to evade legitimate tax dues.
New mechanism to claim TDS credit, where TDS credit was deducted in the subsequent year and income was claimed in the previous year:
1. CBDT (Central Board of Direct Taxes) notified Form 71 on August 30, 2023, to enable taxpayers to claim TDS credit for income that has been declared in their income tax returns (ITRs) for a previous assessment year, but the tax was deducted at source (TDS) in a subsequent financial year.
2. The Finance Act of 2023 introduced a new sub-section (20) to Section 155 of the Income Tax Act, 1961, which provides for this facility. This new provision came into effect from October 1, 2023.
3. To claim TDS credit under this provision, the taxpayer must submit Form 71 to the tax authorities. The form can be downloaded from the website of the Income Tax Department.
4. The following information must be mentioned in Form 71
* The taxpayer's name, PAN, and address
* The assessment year in which the income was declared in the ITR
* The financial year in which the TDS was deducted
* The amount of TDS deducted
* The reason for claiming TDS credit
The form must be signed by the taxpayer and submitted to the tax authorities along with a copy of the ITR in which the income was declared.
5. The tax authorities will then verify the information provided in the form and allow the TDS credit, if it is valid.
15/09/2023
Delays in returning property papers to cost banks- In a relief for home and personal loan borrowers, RBI has asked lenders to ensure that they return property documents within a month after a loan is repaid. Failure in doing so will require lenders to compensate the borrower at Rs 5,000 per day, RBI's new guidelines say.
Morever, if there is any loss or damage to the original property documents (partially or fully), lenders must assist the borrower in obtaining duplicate or certified copies and bear the associated costs.
Recently on Friday, 11th August 2023, the Kerala High Court issued a significant decision that sheds light on the procedural complexities of voluntary retirement and the withdrawal of the application for voluntary retirement by the employee. The case was ruled over by Justices Alexander Thomas and C. Jayachandran, who stressed the significance of adhering to statutory rules when accepting applications for voluntary retirement. Faziludeen (Petitioner), a senior accountant who had applied for voluntary retirement on medical grounds. The central issue of controversy was the withdrawal of this application and the authorities' subsequent acceptance of the retirement request. The petitioner submitted the initial application on 07th October, and then tried to withdraw it the following day. The authorities, however, accepted the application, compelling the petitioner's retirement from duty with retroactive effect from the date of application. The petitioner's subsequent attempts to withdraw the retirement request were denied, prompting the legal challenge. The judgment, states, "An application for voluntary retirement tendered by an employee is claimed to have been accepted in a lightning speed by the employer, so that withdrawal of the same tendered on the very next day could not be acted upon. The nuances of withdrawing an application for voluntary retirement before acceptance, in the backdrop of the relevant rules is the issue involved in this Original Petition." The court examined Rule 48-A of the CCS (Pension) Rules, which govern voluntary retirement, and emphasized the necessity of complying to the three-month notice period.
14/09/2023
The Bar Council of India on Friday offered to conduct the Common Law Entrance Test (CLAT) for admissions to law schools. The apex lawyers' body said it has mechanism to conduct CLAT in multiple regional languages, as it did for AIBE (All India Bar Examination). The exam is currently conducted by the Consortium of NLUs on rotational basis. BCI said this arrangement amongst the national law universities has no statutory recognition. It added that BCI is the "sole interested statutory body in the field of legal education" but is given no role or supervision in the said admission test. The development comes in a public interest litigation filed by a law student seeking the conduct of CLAT-UG 2024 not only in English but also in other regional languages mentioned in the eighth schedule of the Constitution. The matter is fixed for hearing on October 06 before a division bench of Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad.
The Delhi High Court has asked the Municipal Corporation of Delhi to urgently take appropriate action on the “serious issue” of stray dog menace. “… the issue of stray dog menace is a serious issue, which needs to be addressed with urgency by the concerned authority. Let a copy of this order be sent to Commissioner, MCD for taking appropriate action,” Justice Dinesh Kumar Sharma said.
What is India Middle East Europe Economic Corridor?
1. The announcement of a multimodal transport and energy corridor between India and Europe via the Middle East today at the G20 summit marks a breakthrough in post-Partition India’s quest for deeper connectivity with the regions to the north-west of the Subcontinent.
2. Long anxious about China’s connectivity projects in the region under its decade-old Belt and Road Initiative, India has finally found a new formula to connect to both Arabia and Europa.
3. The project would involve the building of a railway line across the Arabian Peninsula through the United Arab Emirates and Saudi Arabia and develop shipping connectivity to India and Europe on either end of this corridor.
4. This project is also significant considering India had sought various trans-regional connectivity projects with Pakistan. But Pakistan was adamant in its refusal to let India gain access to land-locked Afghanistan and Central Asia.
5. The corridor is set to increase efficiency, reduce costs, enhance economic unity, lower greenhouse gas emission and generate jobs across Asia, Europe and Middle east region.
6. The new project would include pipelines for electricity, hydrogen and railways and will contribute to international energy security.
13/09/2023
Taxpayers with AATO greater than or equal to 100 crores will not be allowed to report invoices, Dr/Cr notes older than 30 days on the e-invoice portal. For example, an invoice dated Nov. 1, 2023, cannot be reported on e-invoice portal after Nov. 30, 2023.
15th Sep 2023, is the last date to deposit second instalment of Advance Tax (45%) by all assessees except 44AD & 44ADA cases.
30th Sep 2023 is the last date to file electronically various audit reports Like Tax Audit Report, MAT/ AMT Audit Report etc. where due date of ITR is 31 Oct.
30 Sep is the last date to file Form 26Q, 27Q & 27EQ for Q1 of FY 23-24. Last date for 24Q for same period was 31 Jul.
12/09/2023
CBDT Expands The List Of Securities Eligible For Tax Exemption On A Recognised Stock Exchange In IFSC
1. Section 47(viiab) exemption's scope has been expanded by the Central Board of Direct Taxes (CBDT).
2. Section 47(viiab) of Income Tax Act, exempts transfers of capital assets made by non-residents on recognised stock exchanges situated in any International Financial Services Centre (IFSC) from paying capital gains tax.
3. The exemption is now available to units of investment trust, units of exchange-traded funds and units of schemes framed under International Financial Services Centres Authority (Fund Management) Regulations, 2022.
4. The exemption is available only if following three conditions are met:
a. The transfer is made on a recognized stock exchange located in any IFSC.
b. The consideration for the transfer is paid or payable in foreign currency.
C. The capital asset is one of the assets specified in section 47(viiab).
Notification No. 71/2023
Date: 12/09/2023
11/09/2023
e invoicing Updates:
1. 2-Factor Authentication for all taxpayers with AATO above Rs 20 Cr is mandatory from 1st November 2023.
2. As per directions by GST Authority, a time limit of 30 days for reporting of invoices from date of invoice is imposed on e-invoice portals, and is applicable for taxpayers with AATO greater than or equal to 100 crores from 1st November 2023.
3. As per the Notification No. 78/2020 dated 15th Oct 2020, tax payers having Aggregate Annual Turn Over (AATO) above Rs 5 Crore, shall use valid 6 or 8 digit HSN code in e-Invoices and e-Waybills and other tax payers shall use atleast 4 digit HSN code in E-Invoices and E-Way Bills. This will be made Mandatory from 1st October 2023 in e-Waybill and e-Invoice Systems.
Note: pls see details on https://einvoice1.gst.gov.in/
The GST e-invoice system issued an Update on September 11, 2023, indicating that, as per the directives of the GST Authority, a 30-day time limit for reporting invoices from the date of their issuance is now mandatory for e-invoice portals. This requirement applies to taxpayers with an Aggregate Annual Turnover ("AATO") equal to or exceeding 100 crores and will be effective from November 1, 2023. It is to update you that it has been decided by the GST Authority to impose a time limit of 30 days for reporting of invoices from date of invoice, on e-invoice portals. This time limit is applicable for taxpayers with AATO greater than or equal to 100 crores. Hence, the taxpayers in this category will not be allowed to report invoices older than 30 days on the date of reporting.
Please note that this restriction will apply to the all document types for which IRNs are to be generated. Thus, the Credit / Debit note will also have to be reported within 30 days of issue from date of issue. For example, if an invoice has a date of November 1, 2023, it cannot be reported after November 30, 2023.
This validation will come into effect from November 1, 2023.
Source from: https://einvoice1.gst.gov.in/Documents/advisory080923.pdf
10/09/2023
Power to call for information and restrictions on its disclosure
• Section 151 of the CGST Act 2017 amended so as to empower the jurisdictional commissioner to call for information from any person relating to any matters dealt with in connection with the Act
• Section 168 of the CGST Act, 2017 amended so as to enable the jurisdictional commissioner to exercise powers under section 151 to call for information
• Section 152(1) of the CGST Act, 2017 amended so as to provide that no information obtained under sections 150 and 151 shall be used for the purposes of any proceedings under the Act without giving an opportunity of being heard to the person concerned
Power to call for information
• For section 151 of the CGST Act, the following section substituted -
• "151. The Commissioner or an officer authorised by him may, by an order, direct any person to furnish information relating to any matter dealt with in connection with this Act, within such time, in such form, and in such manner, as may be specified therein.".
• Reference to section 151 omitted from section 168 (2)
• Thus, the jurisdictional commissioner can call for information under section 151
09/09/2023
When the cash in hand before demonetisation can be justified, cash deposit during demonetisation cannot added: ITAT Delhi:: The DCIT, Central Circle-29, New Delhi vs. M/s. Bhanu Infrabuild Pvt. Ltd.,(ITA No.2433/Del/2022)
Facts of the Case:
1. The Assessing Officer (AO) made an addition of Rs. 1,24,50,000/- under Section 68 of the Income Tax Act. This addition was based on the suspicion that the cash deposits made by the taxpayer during the demonetization period were unexplained.
2. The primary contention of the AO was that the cash in hand was unusually and consistently high in the books of accounts and purportedly withdrawn for salary and other costs but not actually spent.
3. The taxpayer argued that the cash deposits could be explained. They claimed that the cash deposits were generated from the cash balance available as of 08.11.2016, which had been created through a combination of cash withdrawals from banks before demonetization and the opening cash balance as of 01.04.2015.
4. The Assessing Officer had alleged that the taxpayer's cash books were manipulated to show cash withdrawals and deposits in a manner that explained the cash deposits during demonetization.
Tribunal's Decision:
1. Comparing the fiscal years 2015-16 and 2016-17, the cash withdrawals from banks and cash deposits into banks were found to be similar.
2. The cash deposits were adequately explained by the cash balance available as of 08.11.2016, which, in turn, had been built up from cash withdrawals and the opening balance.
3. The taxpayer had a consistent practice of maintaining high cash balances for extended periods and that the cash withdrawals and deposits were in line with their normal business operations.
4. The appeal of the revenue is dismissed.
08/09/2023
Gujarat High Court Rules: No IGST on Ocean Freight in CIF Contracts
Summary:
The Gujarat High Court, in the case of Bhavani Industries v. Union of India [2023] 154 taxmann.com 167, delivered a significant verdict on August 31, 2023, regarding the GST treatment of ocean freight in CIF (Costs, Insurance, and Freight) contracts. This ruling has important implications for businesses involved in international trade.
Key Points:
1. Background: The case involved a show-cause notice demanding IGST payment on ocean freight for imports under CIF contracts. The notice argued that IGST should be paid by the importer since the goods were transported by vessel from outside India to an Indian port.
2. Legal Precedent: The Gujarat High Court referred to the precedent set by the Apex Court in the Union of India v. Mohit Minerals (P.) Ltd. [2022] case, which clarified that no IGST is pavable on ocean freight in CIF contracts under the reverse charge mechanism.
3. Impact: This ruling provides clarity on the liability to pay IGST on ocean freight in CIF contracts. Businesses involved in such contracts will no longer need to bear the burden of IGST payments, reducing costs and simplifying compliance for international trade.
4. Legal Framework: The court based its decision on the interpretation of relevant sections of the Integrated Goods and Services Tax Act, 2017, and the Central Goods and Services Tax Act, 2017/Gujarat Goods and Services Tax Act, 2017.
5. Conclusion: The Gujarat High Court's decision in the Bhavani Industries case is a significant development for businesses engaged in international trade. It confirms that IST is not applicable on ocean freight under reverse charge in CIF contracts, providing relief to importers and streamlining GST compliance in this context.
07/09/2023
According to estimates, a name change from India to Bharat might cost the country upwards of Rs 14,000 crore—the amount spent by the Centre on its food security scheme every month. Although renaming of a country or a province might seem like a superficial exercise, it involves changes at hyperlocal, district, state, national and international levels. This makes it a time-consuming and expensive affair that will require coordination from various public and private bodies, in addition to the perceptive change that will have to be made at the individual citizen level. The complexity of such an exercise will be multifold for a country like India which is not just the most populous country in the world, but also one of the most diverse nations with a myriad of cultures, languages and ethnicities residing within its physical boundaries. According to Olivier, the average marketing cost of a large enterprise is around 6 per cent of its total revenue. Rebranding exercises, in turn, cost up to 10 per cent of the company’s overall marketing budget. If a similar model is applied to India’s case, the resultant cost is a huge amount. For the fiscal ended 2023, India's revenue receipts was Rs 23.84 lakh crore, including tax and non-tax revenue. Olivier included both revenue streams in his model for estimating the cost of Swaziland's renaming. Applying the same formula with India's revenue, one arrives at an estimated cost of Rs 14,304 crore to rename India to Bharat. For perspective, the Centre spends close to Rs 14,000 crore every month on its food security programme that feeds 80 crore Indians. Whether the central government is serious about going ahead with the name changing exercise will become clear at the upcoming special session of the Parliament. For now, we know that foreign head of states will attend G20 official dinner with the President of Bharat. The G20 Summit, scheduled to be held September 9-10 at the Bharat Mandapam in Pragati Maidan, New Delhi, will witness participation from US President Joe Biden, UK Prime Minister Rishi Sunak, French President Emmanuel Macron, German Chancellor Olaf Scholz, Australian PM Anthony Albanese, Japan PM Fumio Kishida and Brazilian President Luiz Inacio Lula da Silva, among other world leaders. Notably, Chinese President Xi Jinping will skip the G20 Meeting and Chinese Premier Li Qiang will attend in his place. S-BL
In CGST Rules 2017, after rule 31A, the following rules shall be inserted,
namely:-
31B. Value of supply in case of online gaming including online money gaming.–
Notwithstanding anything contained in this chapter, the value of supply of online gaming, including supply of actionable claims involved in online money gaming, shall be the total amount paid or payable to or deposited with the supplier by way of money or money’s worth, including virtual digital assets, by or on behalf of the player:
Provided that any amount returned or refunded by the supplier to the player for any reasons whatsoever, including player not using the amount paid or deposited with the supplier for participating in any event, shall not be deductible from the value of supply of online money gaming.
31C. Value of supply of actionable claims in case of casino.– Notwithstanding anything contained in this chapter, the value of supply of actionable claims in casino shall be the total amount paid or payable by or on behalf of the player for –
(i) purchase of the tokens, chips, coins or tickets, by whatever name called, for use in casino; or
(ii) participating in any event, including game, scheme, competition or any other activity or process, in the casino, in cases where the token, chips, coins or tickets, by whatever name called, are not required:
Provided that any amount returned or refunded by the casino to the player on return of token, coins, chips, or tickets, as the case may be, or otherwise, shall not be deductible from the value of the supply of actionable claims in casino.
Explanation.- For the purpose of rule 31B and rule 31C, any amount received by the player by winning any event, including game, scheme, competition or any other activity or process, which is used for playing by the said player in a further event without withdrawing, shall not be considered as the amount paid to or deposited with the supplier by or on behalf of the said player.”
According to a report in the Financial Times, the London Stock Exchange Group (LSEG) is planning a blockchain-based exchange to target private markets. It will tokenize traditional or real world assets rather than cryptocurrencies and aims to support cross border digital asset trading. The project is still at an early stage. However, the report claims LSE’s blockchain solution would be the first major stock exchange to launch end-to-end trading and settlement using the technology. That’s not entirely true as SIX went live with its SIX Digital Exchange (SDX) in 2021, including a regulated digital central securities depositary (CSD). “The ultimate goal is a global platform that allows participants in all jurisdictions to be able to interact with people in other jurisdictions completely abiding by rules, laws and regulations, potentially multiple jurisdictions simultaneously, which is something that hasn’t been possible in an analogue world,” Murray Roos, head of capital markets at the LSE Group told the FT. The stock exchange has already started discussions with the UK Treasury and regulators in other jurisdictions. He cited the difficulty of trading across borders if you have a buyer and seller of different nationalities, selling a stock based in a third jurisdiction. AsiaNext, a Singapore joint venture between SIX and Japan’s SBI also has international trading in its sights, but started by targeting cryptocurrencies. Several stock exchanges worldwide are progressing blockchain and tokenization initiatives, in some cases for end-to-end exchanges and in other cases for post trade. The Deutsche Borse’s CSD Clearstream launched D7, a DLT-based post trade solution. In a Ledger Insights opinion piece, Jens Hachmeister of Clearstream outlined the potential for DLT in capital markets. HKEX is another where blockchain is used post trade for specific scenarios. And the Tel Aviv Stock Exchange recently announced digital asset plans.
In Japan, JPX, the operated of the Tokyo Stock Exchange announced plans to tokenize stocks by 2025. It has already been involved in a tokenized green bond issuance. SBI launched the Osaka Digital Exchange, which will start to trade tokenized stocks soon.
06/09/2023
Practical example on TCS on remittance under LRS:
X is on H1B visa in USA and his wife is on H4. Both of them have NRE & NRO Accounts in India. Their parents wish to gift $210,000 for EB5 petition, will they have to bear TCS when they remit funds to their NRO or NRE Account in India?
1. The Financial Act 2020 had added Sub-section (1G) in Section 260C of the Income Tax Act 1961. The provision to collect tax on remittance was introduced in the Finance Act. The tax collected at source (TCS) at the rate of 5% was imposed on the money sent outside India under the Liberalised Remittance Scheme (LRS).
2. Finance Act 2023 amended Sec 206C(1G) and increased the TCS rate to 20% in case of payments exceeding Rs 7 Lakhs from 1st October, 2023. Threshold of Rs. 7 Iakh per financial year per individual shall be applicable for all the payments under the LRS, through all modes of payment. regardless of the purpose.
3. Thus, for first Rs 7 lakh remittance under LRS there shall be no TCS. Beyond this Rs 7 lakh threshold, TCS shall be at the rate of -
a) 0.5% (if remittance for education is financed by loan taken from a financial institution);
b\ 5% (in case of remittance for education/medical treatment);
c) 20% for others.
4. According to Section 206C(1G), TCS does not apply to money transferred by NRIs from their NRO account to their NRE/foreign account.
Conclusion: TCS rate of 20% shall be applicable for remittance into the NRO or NRE accounts from 1st October, 2023. However for transfer from NRO to NRE account, no TCS shall be applicable.
Write-Off Of A Bad Debt Can’t Be Held To Be An Asset Under Section 153A(1) Of The Income Tax Act, 1961: Bombay High Court
Ashok Commercial Enterprises (WP-2595-2021 & ORS)
Facts:
1. The petitioner/assessee is a partnership firm engaged in the business of financing, i.e., giving loans to parties on interest against cheques and bills of exchange. Petitioner is also engaged, in the business of trading in shares, property and broking.
2. The common AO of the petitioner and Hubtown Limited prepared a satisfaction note. The satisfaction note stated that the ledger account of the petitioner in the books of Hubtown Limited which showed monies received, repayment made, and interest entries thereon had a bearing on the income of the petitioner. The ledger account revealed income in the form of an asset stated to be a deposit in the account had bearing on the income of the petitioner beyond six years.
3. The assessee contended that the satisfaction note refers only to the loan account between the petitioner and Hubtown Limited and the alleged escapement is only in respect of the part thereof which is written off during the year. Writing-off of a bad debt cannot fall within the ambit of income, represented in the form of an asset. In any event, this write-off has been allowed in the original assessment proceedings and hence it cannot be said to be income that has escaped assessment.
4. The AO contended that the proceeding under Section 153C was initiated as per provisions of Section 153C, as the incriminating material was found during the search of another assessee that belongs to the petitioner. The entire proceeding up to the stage of the passing order passed under Section 153C read with Section 144 of the Act was done in accordance with the law.
Hon Bombay HC held as below:
1. In order to make an assessment for an assessment year which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year, in which the search was conducted, the 4th proviso to Section 153(A)(1) sets out certain further conditions which are required to be fulfilled before a notice can be issued for the relevant assessment years.
2. Clause - (a) of the 4th proviso requires that the Assessing Officer must have in his possession books, documents or evidence which reveal that income represented in the form of an asset which has escaped assessment amounts to or is likely to amount to rupees fifty lakhs or more.
3. Explanation 2 to Section 153A(1) of the Act sets out an expanded definition of the word “asset” for the purposes of the 4th proviso.
4. So, write-off of the bad debt cannot be held to be an asset under section 153A(1) of the Income Tax Act, 1961.
India’s Q1 GDP growth at 7.8%
1. Country’s Gross Domestic Product (GDP) clocked 7.8 per cent growth rate in the April-June quarter of 2023-24, as against 13.1 per cent during the corresponding period last year, according to the statistics released by the National Statistical Office (NSO).
2. However, GDP growth in the April-June quarter fell slightly short of the RBI’s projection of 8 per cent three weeks back,
3. but India retained the tag of the world’s fastest-growing major economy as China’s GDP growth in the same period was announced at 6.3 per cent.
3. Of the eight major sectors, agriculture grew by Rs 17,200 crore or growth by 3.5 per cent Rs 5.12 lakh crore which was higher than the 2.4 per cent growth registered in April-June 2022-23, over the same period in 2021-22.? 4. Moreover, the growth in the manufacturing sector fell to 4.7 per cent in the first quarter of the current fiscal as against 6.1 per cent in the year-ago period.
5. Gross value addition was Rs 30,000 crore, taking the cumulative GVA to Rs 6.67 lakh crore. The GDP growth in the preceding two quarters was 6.1 per cent (January-March) and 4.5 per cent (October-December).
6. Moody’s has increased its forecast for India’s Gross Domestic Product (GDP) growth to 6.7 percent, up from the previous estimate of 5.5 percent for 2023.
05/09/2023
Merely because holding company is located in BVI, treaty benefit of India Singapore cannot be denied: ITAT Delhi
The Golden State Capital Pte Ltd (ITA No. 1686/Del/2022)
Facts:
1. The Assessee is a subsidiary of Red Cap Trading Ltd, engaged in the investment holding and general wholesale trade. Shares were disposed off in the year under consideration by the Assessee. The Assessee earned short term capital gains of Rs. 1,92,63,473/-
2. While filing the return of income for AY 2018-19, the Assessee claimed short term capital gains of Rs. 1,92,63,473/- to be exempt as per Article 13 of India Singapore Double Taxation Avoidance Agreement and long term capital loss of Rs. 3,16,74,056/- was carry forward in subsequent years.
3. The Assessee furnished the Tax Residency Certificate (TRC) issued by Singapore Tax Authorities The ld AO held the Assessee ineligible for treaty benefit due to lack of commercial substance in Singapore.
4. The AO also held that the scheme of arrangement employed by the Assessee is one of tax avoidance through treaty shopping mechanism. This observation is made in the context that the Assessee?s holding company is situated in BVI with which DTAA is not entered into by India.
ITAT Delhi held as below:
1. The ld. AO in all fairness ought to have accepted the assessment orders of Singapore Tax Authorities which goes to prove that the Assessee is a tax resident of Singapore and is independently carrying on its business activities in Singapore.
2. The AO has not questioned the satisfaction of the LOB clause or the Independent Chartered Accountant certificate at any stage except in the present proceedings. Consequently, the petitioner is a bonafide entity and not a shell/conduit entity as it complies with the LOB clause to the India- Singapore DTAA as the expenditure has been incurred in Singapore and the same has been certified by an independent chartered accountant and accepted by the authorities in Singapore.
3. Hence we direct the ld. AO to allow benefit of carry forward of long term capital loss to the Assessee and allow exemption of short term capital gains.
Commission payment cannot be disallowed without any allegation regarding genuineness: Bombay HC
The Indian Hume Pipe Co. Ltd. Versus Commissioner of Income Tax (Income Tax Appeal No.744 Of 2002)
Facts:
1. The assessee paid commission to M/s. Chintambi & Swaminathan, Hyderabad; A. Mohan Menon; and M/s. Manyam Engg. Enterprises, Hyderabad. The Assessing Officer allowed only 1/3 as deductible expenditure and disallowed the balance of 2/3.
2. AO was of the opinion that the entire payment cannot be considered laid out wholly and exclusively for the purpose of the business because neither the appellant assessee nor the recipients of the commission could show that orders were procured with their assistance. Therefore, the role of the commission agent is only in respect of follow-up inquiries.
Bombay HC held as below:
1. There was no allegation made in the assessment order of any flowback of the commission payment by the commission agent to the assessee, nor was it contended.
2. The commission agents have confirmed the receipt of the commission. The payments have been made through banking channels.
3. Therefore, the genuineness of the payment cannot be doubted.
4. The finding of the AO and the tribunal for disallowing part of the commission payment was not justified.
04/09/2023
Income received as royalty from India shall be taxed on receipt basis: ITAT Bangalore
ABB Switzerland Ltd. (ITA No.273/Bang/2023)
Facts of the Case:
1. The assessee in this case is ABB Switzerland Ltd, formerly known as ABB Technology Limited. ABB Switzerland Ltd had received royalty income from ABB India Ltd, and the dispute in question pertains to the assessment year 2014-15.
2. The issue revolves around whether this royalty income should be taxed on an accrual basis or a receipt basis under the India-Switzerland Double Taxation Avoidance Agreement (DTAA).
3. The assessee claimed that the income should be taxed on a receipt basis, as per the provisions of the DTAA, while the tax authorities contended that it should be taxed on an accrual basis as per the Indian Income Tax Act.
ITAT Bangalore held as below:
1. Interpretation of Article 12(1) of the India-Switzerland DTAA, suggests that royalties can be taxed on a receipt basis.
2. When there’s a conflict between the DTAA and domestic laws regarding the taxation of such income, the DTAA provisions should prevail.
3. This means that the income should be taxed upon receipt, not on accrual.
4. Regarding the claim that the income had already been offered for taxation in a subsequent year, the ITAT decided to send this issue back to the Assessing Officer (AO) for further examination.
The Ministry of Commerce and Industry, through Trade Notice No. 25/2023-24 issued on September 1, 2023, has announced the organization of monthly workshops on E-commerce exports, scheduled for the first week of every month. The Central Government has revised the Standard Input and Output Norms (SION) for Leather, Leather Products, and Footwear through the issuance of Public Notice No. 30/2023 on September 1, 2023. The notification shall come into force from 15th.
03/09/2023
Plywood and Wooden flush door shutters (Quality Control) Order, 2023 dated 29.8.2023 [F. No. P-14031/9/2023-CI]
In exercise of the powers conferred by section 16 of the Bureau of Indian Standards Act, 2016 (11 of 2016), the Central Government, after consulting the Bureau of Indian Standards, is of the opinion that it is necessary or expedient so to do in the public interest, hereby makes the following Order, namely:-
1. Short title and commencement. –
(1) This Order may be called the Plywood and Wooden flush door shutters (Quality Control) Order, 2023.
(2) It shall come into force with effect from six months from the date of notification.
(3) Provided that for Small Enterprises as defined under the Micro, Small, and Medium Enterprises Development Act, 2006 (27 of 2006), it shall come into force with effect from nine months from the date of publication of this notification.
(4) Provided that for Micro Enterprises as defined under the Micro, Small, and Medium Enterprises Development Act, 2006 (27 of 2006), it shall come into force with effect from twelve months from the date of publication of this notification.
2. Compulsory use of Standard Mark. – Goods or articles specified in column (1) of the Table shall conform to the corresponding Indian Standard specified in column (2) of the Table and shall bear the Standard Mark under a license from the Bureau of Indian Standard as per Scheme-I of Schedule-II to the Bureau of Indian Standards (Conformity Assessment) Regulations, 2018: Provided that nothing in this Order shall apply to goods or articles manufactured domestically for export.
3. Certification and enforcement authority. –The Bureau of Indian Standard shall be the certifying and enforcing authority for the goods or articles specified in the said Table.
4. Penalty for contravention. –Any person who contravenes the provisions of this Order shall be punishable under the provisions of the Bureau of Indian Standards Act, 2016.
The Finance Act, 2023, brought in an amendment for the purposes of calculation of ‘perquisite’ with regard to the value of rent-free or concessional accommodation provided to an employee, by his employer. The new income tax rules that will provide relief to the taxpayers provides that: 10 percent of salary in cities having a population exceeding 40 lakhs as per the 2011 census. 7.5 percent of salary in cities having a population exceeding 15 lakhs but not exceeding 40 lakhs as per the 2011 census. Rent-free housing is a perk provided by the employer to employees, in which the employee receives a place to live from the employer for little to no cost. It’s an employee benefit that is taxed under the “Salaries” heading and is related to their employment. The Employees will pay less tax due to the decreased taxable value of rent-free housing, increasing their take-home pay. Starting from 1st September, 2023 under the new amendments, employees who are provided with unfurnished rent-free accommodation from non-government sources will get a reduction in the valuation of such houses i.e., their taxable base is going to be reduced now with the revised rates.
The ITAT Chennai ruled in favor of Noordeen Ahmed Amina, deleting the penalty imposed under Section 271D. The decision underlines the legislative intention to discourage cash dealings in immovable property transactions, irrespective of whether the transactions involve disclosed or undisclosed income. ITAT deletes Section 271D Penalty for Assessee with Majority Cheque Payments in Property Sale. Appeal Number : ITA No. 1118/ Chny/ 2022 Date of Judgement/Order : 26/07/2023 Related Assessment Year : 2018-19.
CBIC vide Notification No. 09/2023–Central Tax dated March 31, 2023 has extended the time limit specified under Section 73(10) of the CGST Act for issuance of order under Section 73(9) of the CGST Act, for recovery of tax not paid or short paid or of input tax credit wrongly availed or utilized for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax, in respect of a tax period for FY 2017-18, 2018-19 and 2019-20.
The time limit for passing orders under Section 73 of the CGST Act, has been extended in a following manner:
Tax Period :: Due Date for filling Annual Return :: Order u/s 73 to be passed before
2017-18 :: 05.02.2020 (For Chandigarh, Delhi, Gujarat, Haryana, Jammu & Kashmir, Ladakh, Punjab, Rajasthan, Tamilnadu and Uttarakhand)
07.02.2020 (For all other states). :: 31.12.2023
2018-19:: 31.12.2020 :: 31.03.2024
2019-20 :: 31.03.2021:: 30.06.2024
So, time limit for issuance of the Show Cause Notice (“SCN”) under Section 73 would be at least three months prior to the time limit specified in sub-section (10) of Section 73 of the CGST Act for issuance of order, in a following manner:
Tax Period :: Due Date for filling Annual Return :: SCN u/s 73 to be passed before Order u/s 73 to be passed before
2017-18:: 05.02.2020 (For Chandigarh, Delhi, Gujarat, Haryana, Jammu& Kashmir, Ladakh, Punjab, Rajasthan, Tamilnadu and Uttarakhand)
07.02.2020 (For all other states) :: 30.09.2023 :: 31.12.2023
2018-19 :: 31.12.2020 :: 31.12.2023 :: 31.03.2024
2019-20 :: 31.03.2021 :: 31.03.2024 :: 30.06.2024
02/09/2023
Gstn Advisory dated 31.8.2023 on Reporting of ITC Reversal opening Balance. Please read the following advisory carefully before proceeding ahead for reporting the ITC Reversal opening balance:
1. Taxpayers are permitted to use this facility to report their ITC Reversal Balance that has not been re-claimed.
2. The taxpayer is advised to report solely those reclaimable ITC reversal balances that meet the legal criteria for re-claim and have not been previously claimed by the taxpayers.
3. Taxpayers may report their opening balance until 30th November 2023. After 30th November 2023, the option to report the opening balance will be removed, and it will be assumed that the taxpayer has no ITC Reversal Balance to report.
4. Taxpayers may amend their opening balance until 31st December 2023. Any reported balance after this date will be considered final and cannot be further amended.
5. After 31st December 2023, the updated value shall be frozen with no further attempts provided to the taxpayers to amend their ITC Reversal Balance and this ITC Reversal value will be sent to the Jurisdictional Tax Officer for review.
6. Due diligence should be done while reporting/amending the ITC reversal opening balance, because only 3 time amendment is allowed.
7. The opening balance that has been reported or amended by the taxpayers shall be credited to the "Electronic Credit Reversal and Re-claimed Statement". This statement will be used to validate the taxpayer's ITC Re-claimed amount in Table 4A(5) & 4D(1) of form GSTR-3B.
Note: Taxpayers should only utilize this functionality if they have an ITC reversal balance that is eligible for re-claim but has not yet been re-claimed.
Electronic Credit Reversal & Reclaimed Statement
1. Functionality to update the opening balance of IC reversed in4B(2) but yet to be reclaimed
2. Opening Balance = 4B2 (July 2022 to July 2023) - 4D1 (August 2022 to July 2023)
3. Last Date to update is 30th Nov 2023
4. Amendment can be done till 31st December 2023
5. Only 3 amendments are allowed
6. GSTR 3B validation will be carried upon based on the balance available in the Electronic Credit Reversal & Reclaimed
Statement
01/09/2023
Export of non-basmati rice falling under chapter 1006 30 90 is changed to *prohibited* category from *free* export category through the DGFT Notification No. 20/2023 dt 20.7.2023 issued by the Government. However, relaxation is given by the Government through the DGFT Notification 30/2023 dt.30.8.2023 to allow export of non- basmati rice to Butan, Mauritius and Singapore with the quantity of non- basmati rice quota prescribed for export as under.
Export is subject to the quota allowed to a particular country and not a total relaxtion through the Notification dated 30.8.2023.
Export of 79000 MTS of Non-Basmati White Rice (under HS code 1006 30 90) to Bhutan.
Export of 14000 MTS of Non-Basmati White Rice (under HS code 1006 30 90) to Mauritius.
Export of 50,000 MT of Non-Basmati White Rice (under HS code 1006 30 90) to Singapore.
Punjab National Bank (PNB) on Wednesday announced the launch of a mobile application based on the GST Sahay scheme. With this integration, PNB has become the first public sector bank to facilitate frictionless credit flow to MSMEs using GST invoices, the bank said in a statement. The initiative is also in line with the bank’s strategy to further the development of the MSME sector and digital credit ecosystem in the country. The PNB GST Sahay App makes the entire loan process digitised and helps eliminate any manual intervention for borrowers and makes the process more cost-effective, fast, and smooth, it said. Through this service, the loan amount will be directly credited into the borrower’s current account with the bank. Speaking at the launch of PNB GST Sahay App, the bank’s MD Atul Kumar Goel said, “our bank has been a pioneer in serving top industrialists as well as the masses and providing small loans to non-corporate/farm and non-farm to MSMEs.”
31/08/2023
Form 27C is a declaration form for non-deduction of Tax Collected at Source (TCS) by the buyer of goods to its supplier, according to the Income Tax Act. According to the rules, the seller of products is required to collect taxes from the buyer. If the buyer is not required to pay TCS, he or she can file Form 27C.: Functionality for Revision of Form 27C is now available on e-Filing portal.
Refer latest FAQs
Question 1: Who is required to file Form 27C on E-filing portal, buyer or seller?
Resolution: The Seller is required to file Form 27C on E-filing portal.
Question 2: How can buyer furnish the declaration to seller under section 206C(1A) for obtaining goods without collection of tax?
Resolution: The Buyer is required to manually fill Part-I of form 27C and submit it to the seller.
Question 3: What are the prerequisites for filing of Form 27C?
Resolution: The following are the prerequisites for filing of Form 27C-
Seller should have TAN
TAN of seller should be active and registered on the e-Filing portal.
Question 4: What is the process to file Form 27C on E filing portal?
Resolution: Following are the steps to file online Form 27C-
Step 1: Seller to login on Income Tax Portal i.e. www.incometax.gov.in using TAN as User ID.
Step 2: Navigate to e-file -----> Income Tax Forms ----> File Income Tax Forms---- > Persons not dependent on any Source of Income (Source of Income not relevant)----- > Form 27C.
Step 3: Fill the details in “Part I- Details of the buyers” and “Part II- Details of seller, Attachments and Verification”.
Step 4: The seller shall scan and upload part I of the form, received from buyers as attachments under “Part II- Details of seller, Attachments and Verification” of the online form and proceed for filing Form 27C.
Question 5: Which documents/details are required to file Form 27C on e-filing portal?
Resolution: Following documents/ details are required-
Details of the buyers (Name, PAN/Aadhar, Address, Status, email id, Mobile no, Nature of Business, Nature of goods and Purpose of utilizing the goods shall be provided for each Buyer)
Date on which declaration is furnished
Date of debiting of the amount payable by the buyer to the account of the buyer or receipt of the amount payable from the buyer in cash or by issue of a cheque or draft or by any other mode
Self-certified copies of the declaration made by the buyers stating that the goods purchased are not to be utilised for trading purposes.
Question 6: What is the due date for filing Form 27C?
Resolution: Form 27C shall be filed by the seller on or before the 7th day of the month next following the month in which the declaration is furnished to him by the buyer.
Question 7: Is it possible to revise filed Form 27C?
Resolution: Yes, filed Form 27C details can be revised. User needs to choose “Revised” option along with relevant Financial Year and Month selection to proceed for revision mechanism.
Question 8: Is it possible to revise filed Form 27C for a particular period (i.e. Financial Year and Month combination) more than once?
Resolution: No, Form 27C filed for a particular Financial Year and Month combination can be revised only once. Once a revision is filed, no further revision for same period shall be allowed.
What is the declaration under section 194C(6)?
1. The declaration under section 194C(6) of the Income Tax Act is a statement that the transporter has to make to the payer that he does not own more than ten goods carriages at any time during the previous year and that he is engaged in the business of plying, hiring or leasing goods carriages.
2. The declaration should also contain the PAN number, which is mandatory for claiming the benefit of non-deduction of TDS.
3. The declaration should be furnished to the payer before the end of the financial year or before the date of filing of return of income by the payer, whichever is earlier.
4. A copy of the declaration has to be kept by the transporter for his records.
30/08/2023
Gstn Advisory dated 28/08/2023 for applicants where GST Registration application marked for Biometric-based Aadhaar Authentication
1. Rule 8 of CST Rules had been amended to provide that those applicants who had opted for authentication of Aadhaar number and identified on the common portal, based on data analysis and risk parameters, shall be placed for biometric-based Aadhaar authentication and taking photograph(s) of the applicant.
2. Pilot for implementation of the above change is ready and the functionality is ready for roll out by GSTN portal. This functionality is being launched in Puducherry from 30th August, 2023 in the pilot phase. After submission of application in Form GST REG-01 and before generation of ARN, the applicant will either get the message for visiting GST Suvidha Kendra (GSK) or a link on the declared Mobile and Email ID; as may be applicable at TRN stage, based on identification by common portal so that registration process may be completed.
3. Those applicants who get the link on Mobile & Email ID for Aadhaar Authentication, they can proceed for completing their application as per existing implementation.
4. However, those applicants who get message for visiting GSK, will be required to visit at the designated GSK as conveyed on Mobile/Email and get biometric authentication for all required persons as per the GST Application Form REG-01. The applicants are requested to visit GSK before the TRN expiry date as detailed in Email for Biometric-based Aadhaar Authentication process. In this case, Application Reference Number (AN) will be generated only after the completion of Biometric-based Aadhaar Authentication process.
5. The days of operation of GSK would be as advised by the administration in your state.
Mera Bill Mera Adhikar' Invoice Incentive Scheme:
1. The 'Mera Bill Mera Adhikar' invoice incentive scheme is an innovative program aimed at promoting transparency and encouraging proper invoicing within the Goods and Services Tax (GST) framework. This scheme offers participants a chance to win attractive cash prizes ranging from ?10,000 to ?1 crore just by uploading GST Invoices on the designated Mobile Apps which will be available on both IOS and Android.
2. Eligible Regions :
Initially launched in Assam, Gujarat, Haryana, Puducherry, Daman & Diu, and Dadra & Nagar Haveli.
3. Participation Criteria :
Any invoices issued by suppliers who are registered under the Goods and Services Tax (GST) will be eligible for participation in this scheme.
4. Cash Prize Draws :
Monthly and quarterly draws determine cash rewards (?10,000 to ?1 crore), motivating suppliers and consumers.
5. Minimum Purchase Value and Limit :
Invoices must exceed ?200 for the draw, with up to 25 monthly entries from 1st September, 2023.
6. The 'Mera Bill Mera Adhikar' scheme drives tax compliance, transparent invoicing, and accountability. The scheme is more than just offering money; it's an approach to improve how taxes are followed and how invoices are used correctly.
7. It encourages suppliers and buyers to be truthful and precise, building a system where everyone plays by the rules. This will promote the use of genuine invoices, specially in the B2C transactions.
Nostro Account maintenance charges are not Interest U/S 2(28A)
ITO v. The Hongkong & Shanghai Banking Corporation Ltd. [TS-471-ITAT-2023(Mum)]
Facts:
1. Revenue disallowed the Nostro Account maintenance charges that the assessee had paid outside of India. This disallowance was made under Section 40(a)(i) of the Income Tax Act due to the non-deduction of tax at source according to Section 195. Subsequently, proceedings under Section 201(1) and 201(1A) were initiated against the assessee for Tax Deducted at Source (TDS) non-compliance.
2. The assessee argued that these charges had been directly debited by overseas banks and weren’t separately remitted. The Revenue, however, asserted that the Nostro Account maintenance charges should be classified as ‘interest’ under Section 2(28A), consequently treating the assessee as a TDS defaulter.
3. The charges paid in relation to Nostro Accounts were fundamentally bank charges incurred for managing accounts situated in foreign banks. These charges were directly debited in the accounts held with these overseas banks.
ITAT Mumbai held as below:
1. There was no evidence indicating that the assessee had engaged in borrowing, credit utilization, or incurring debt linked to the Nostro Account maintenance charges.
2. These maintenance charges were essentially standard bank fees rather than interest payments.
3. The maintenance charges for Nostro Accounts should not be categorized as interest under Section 2(28A) of the Income Tax Act.
29/08/2023
GST amendments:
1. W.e.f. 01st Oct, in case of on counter sales, POS shall be determined on the basis of recipients place - Section 10(1)(ca) of IGST act
2. In case difference b/w GSTR-1 & GSTR-3B, notice in form DRC-01B Part-A shall be issued by the department. Taxpayers shall file a reply within 7 days otherwise the department can initiate recovery proceedings U/s 79.
3. In case ITC difference b/w GSTR-3B vs GSTR-2B, notice in form DRC-01C shall be issued by the department and taxpayer needs to file a reply within 7 days, otherwise the department can issue SCN u/s 73 or 74.
4. Compulsory furnishing bank account within 30 days of registration. Failing to which will lead to system based suspension of registration under rule 21A. Further on furnishing bank details, registration will restore automatically.
5. Presence of registered person is not mandatory at registered address on physical verification by department - Rule 9
6. Section 16(4) related to time limit for ITC availment is not ultra vires to the constitution - Andhra Pradesh high count in case of Tirumala Konda Plywood
7. ITC can be denied even after collecting GST from recipient - Patna high court in case of Aastha Enterprises.
8. The Hon’ble Andhra Pradesh High Court in M/s Arhaan Ferrous and Non-Ferrous Solutions Pvt. Ltd. v. Deputy Assistant Commissioner [Writ Petition No.15481 of 2023 dated August 03, 2023] held that the assessee is responsible only to the extent of establishing that he bonafidely purchased goods from the supplier for valuable consideration after verifying the GST registration of the said supplier on the GST portal.
In absence of any proof of defects in cash sales and cash deposit, the same cannot be regarded as an unexplained credit: ITAT Mangal Bullion Pvt. Ltd. (ITA No. 1407/Mum/2021)
Facts:
1. The assessing officer (AO) noted during assessment proceedings that the assessee had deposited cash of ?2,09,65,000/- in its account with Bharat Co-operative Bank. The AO issued a notice asking the company to provide details of the source of these cash deposits.
2. In response, the company explained that the cash deposits were a result of retail and wholesale sales of gold bars and ornaments. It mentioned that these cash sales took place between November 1, 2016, and November 8, 2016. The company presented sales bills, customer addresses, and PAN details for transactions above ?2 lakhs.
Issues Raised in Appeals:
1. The AO made additions to the income of the company, treating the cash deposits as unexplained cash credit.
2. The company filed appeals challenging these additions. The AO raised questions about the deletion of the addition made for unexplained cash credit due to failure to explain cash sales.
3. The company appealed against the addition made under sections 68 and 69A and alleged violation of natural justice.
ITAT Order:
1. The company had provided comprehensive details, including sales bills, customer addresses, and PAN details, to support the cash sales. The sales were duly accounted for in the company's books of account and resulted in profit, which was properly taxed.
2. The AO did not prove any defects in the company's books with respect to sales and stock details. The company had explained the nature and source of credit in its books of account by providing ample evidence.
3. The AO should have conducted further inquiries with the customers in case of any doubts in his mind.
4. The addition of ?33,29,886/- (related to certain sales) be deleted and addition of ?1,76,35,114/- (related to other sales) should also be deleted. The company's appeals are valid.
28/08/2023
Registered sale deed of an immovable property is not necessary to give rise to a transfer U/S 2(47): Smt.Sapnaben Dipakbhai Patel (ITA No.2414/Ahd/2013)
Facts:
1. The assessee has purchased a piece of land from Shri Bhikhubhai N. Padshala and Shri Sandipbhai B. Padshala for total sum of Rs.67,96,432/- vide purchase deeds dated 18.12.2007, 28.02.2008 and 4.3.2008. The assessee, thereafter, entered into an agreement to sell (Banakhat) with Shri Sanjeev D. Shah, proprietor of Capital Consultancy (SDS) and agreed to sell the said agriculture land for a consideration of Rs.76,75,413/-.
2. The possession of the land was not transferred by the assessee. She had received a sum of Rs.3,00,000/- as advance against the proposed agreed consideration of Rs.76,75,413/-.
3. Subsequently, by a sale deed dated 2.3.2009, the said land was agreed to be sold to one Gatil Properties P.Ltd. (GPPL) for a sum of Rs.10,64,08,660/-. In this agreement, the assessee was the selling party, GPPL was the purchasing party.
4. The issue before the ITAT was whether the agreement to sell could be ignored and whether the land would be deemed to have been transferred by the assessee directly to the GPPL only when alleged sale deed dated 27.1.2010 was executed and short term capital gain is to be construed at that point?
ITAT Ahmedabad held as below:
1. The rights assigned by the assessee by virtue of the agreement to sell are of capital nature and this agreement was enforceable in law under the Specific Relief Act. Her right in the property after the execution of this agreement has been curtailed or encumbrance has been created.
2. The whole scheme for introduction of clauses (v) and (v) in section 2(47) of the Income Tax Act was that the capital gain is taxable in the year in which such transactions are entered into even if the transfer of immovable property is not effective or complete under the general law.
3. The alleged gains on sale of property calculated in the hands of the assessee are not sustainable. We allow the appeal of the assessee and delete the addition of Rs.6,83,09,792/- from the hands of the assessee.
27/08/2023
The Delhi govern ment's plan to revise circle rates of residential and commercial areas in the capital is back on the drawing board. Officials said the previous plan prepared by the revenue department proposing the creation of sub-categories in A to H categories of residential areas with multiple slabs of circle rates was returned by the finance department with certain objections and suggestions. "We have decided to carefully study the suggestions and rework our proposal," said a senior revenue department official. "Since there is a big-gap in the existing circle rates and the market rate at which the sale and purchase of properties take place, we will propose-a hike of up to 35%, But based on the feedback received from the stakeholders, we will also consider downgrading or upgrading the categories of certain colonies based on their location, facilities and existing market rates," theofficial said. Circle rates, or minimum rates for valuation of land and immovable property in the national capital, were last hiked for residential areas in all existing categories in 2014. The government, however, increased the circle rate on farming land earlier this month from just 58 lakh per acre fixed in 2008 to Rs 2 crore to Rs 5 crore depending on the location. The Delhi government formed an empowered committee in 2016 and set up four working groups in 2021 to give recommendations to revise the rates, but no final decision could be taken. Former deputy CM Manish Sisodia had in March 2022 emphasised that revising circle rates as per the market rates had become a must to increase the government revenue in sectors other than GST and LG VK Saxena too had asked the revenue department in September last year to give a presentation on the proposal it had finalised, a perfect draft could not be readied.
Impact of BRICS expansion:
1. The BRICS bloc of Brazil, Russia, India, China, and South Africa have agreed to admit Saudi Arabia, Iran, Ethiopia, Egypt, Argentina and the United Arab Emirates.
2. Saudi Arabia and the UAE would add important economic heft to the group, which now includes several important Organization of Petroleum Exporting Countries members as well as Russia—giving it a relevancy in the geopolitics of the global oil market.
3. Egypt’s key strategic location, control of the Suez Canal, and newly discovered gas fields are all probably viewed by the BRICS group as potentially lucrative, both economically and politically, over the coming decades.
4. In the view of the BRICS states, including the newly invited members, reducing global US economic and financial leverage would create a more level playing field, while countries such as Iran would view it as a way to further reduce the impact of sanctions.
5. There are indications that BRICS leaders are working on identifying measures to reduce their reliance on the US dollar in trade.
6. The expanded BRICS now increases its share of global GDP from 32% to 37% on a PPP basis.
7. Whether this expanded group manages to challenge the economic dominance of the G7, is something that only time can tell.
In terms of all companies whose equity shares were listed on NSE (main board) as on 31st March 2023, the Indian Big 5 audit firms handled 551 assignments of 1,869 companies (for which auditor details were available for 2022-23) or 29.48% of the total, the report said. The top 10 audit firms accounted for audits of as many as 707 companies or 38% of the total. Leading the league table was the
EY Group with 146 companies, KPMG Group (136), Deloitte Group (124), Walker Chandiok (85) and PWC (65)
S-ET
New Guidance Note on Tax Audit introduces additional responsibilities for tax auditors regarding GRATUITY.
1. Checking and reporting whether provision for Gratuity is made in the company's accounts (AS 15 or Ind AS 19) for mercantile system accounting.
2. If not, to be reported in the Tax Audit Report, with potential qualifications.
3. Tax auditors need to ensure that the gratuity trust, if applicable, is approved by the CIT.
4. Provision for gratuity is in compliance with the rules and regulations stated in the trust deed. With this new requirement tax auditors can contribute to accurate financial reporting and adherence to tax laws.
5. Key question that need to be checked for compliance/ requirement of Gratuity Provision in case of companies (listed as well as unlisted companies):
Whether employee count is 10 or more anytime in company (irrespective of turnover of company) ? : if answer is Yes – Gratuity Provision is mandatory as per AS 15 by following Actuarial Valuation PUCM method, as Gratuity act is applicable to them and this is Defined benefit post employment plan as per AS15.
26/08/2023
Income Tax newly revamped website was launched by Shri. Nitin Gupta, Chairman, CBDI, at the 'Chintan Shivir', organised by the Directorate of Income Tax (Systems) at Udaipur on August 26, 2023. "The revamped website is another initiative in providing enhanced taxpayer services and will continue to educate taxpayers and facilitate tax compliance," the CBDT mentioned.
Additional Features of the new website:
1. This website serves as a comprehensive repository of tax and other related information. It provides access to Direct Tax laws, several other Allied Acts, Rules, Income Tax Circulars, and Notifications, all cross-referenced and hyperlinked.
2. The site also offers a 'Taxpayer Services Module' featuring various tax tools to assist taxpayers in filing their income tax returns."
3. The interface of new website is very user friendly. The focus of new website is to educate taxpayer also, therefore all the content related to income tax has been
placed properly on the website.
4. The website is also focusing on the tax compliance therefore major due dates of tax compliance have been shown on the website with reverse countdown.
5. Revamped website has been aesthetically redesigned with a mobile responsive layout.
6. The website also has a 'Mega Menu' for content, with new features, and functionalities.
7. The new functionalities, allow users to compare different Acts, Sections, Rules, and Tax treaties.
8. All relevant content on the site is now tagged with income tax sections for easy navigation.
9. Further, dynamic due date alert functionality provides reverse countdowns, tooltips, and links to relevant portals to help taxpayers comply easily.
10. It has Given the option to print or email the relevant portions of the law directly without opening the relevant law web page first.
11. Further, a due date feature has been added which updates the upcoming deadlines related to Income Tax.
12. In addition, a comprehensive compilation of all other portals (services like PAN card application, etc.) of Income Tax has also been made with guides on how to use those portals.
13. The backend servers of the portal have also been enhanced to increase the speed. The website is made compatible with a wide range of devices and browsers which will allow convenient access even on the go.
14. The 'Contact Us' page of the website has also been revamped to provide support helplines for all the services provided under the Income Tax Department including PAN-related queries, e-filing of returns, refunds, and grievance redressal forums.
15. The new website has features like real guidance like pop-up clarifications, tooltips, contextual help, and others.
25/08/2023
A mere cross charge of software for use in India, without transfer of copyright is not taxable in India: ITAT Delhi
GE Precision Healthcare LLC (ITA No.404/Del/2023)
Facts:
1. The assessee, a resident of USA, received an amount of Rs.10,66,35,790/- towards software licence fee cross charged to its affiliates in India. However, the software licence fee received as reimbursement from the affiliates was not offered to tax in India by the assessee.
2. Assessing Officer held that the reimbursement of software licence fee is to be treated as income from other sources under section 56(1) of the Act and Article 23(3) of the tax treaty between India and USA.
3. The assessee stated that the amount received, being in the nature of business income under Article 7 of India - USA DTAA, is not taxable in India in absence of a Permanent Establishment (PE).
ITAT Delhi held as below:
1. The residuary provisions of Article 23 will not apply to items of income, which can be classified under other provisions of the tax treaty, but their taxability is subject to fulfillment of conditions mentioned therein.
2. The receipts in dispute could have been characterized either as royalty income falling under Article 12 or business income under Article 7 of the tax treaty. However, in view of the ratio laid down in judicial precedents (decision of the Hon’ble Supreme Court in case of Engineering Analysis Centre of Excellence Pvt. Ltd. and the decision of Hon Bombay High Court in case of DIT Vs. Infrasoft Ltd, the income is not taxable as royalty.
3. Alternatively, it could have been taxed as business income under Article 7 of the tax treaty. However, in absence of a PE, it cannot be taxed in India as business income too.
4. Therefore, we direct the Assessing Officer to delete the addition.
Chandrayaan Budget is half the budget of Interstellar: Chandrayaan-3 is the first mission to successfully touch down on the moon's south pole on Wednesday. How much does this epoch making project cost?
1. Chandrayaan 3's total cost comes down to around Rs 615 crore, according to former ISRO Chairman K Sivan. The lander, rover, and propulsion modules cost around Rs 215 crore. The launch costs are estimated to be Rs 365 crore.
2. Russia's Luna-25 costs roughly Rs 1,600 crore. NASA, by comparison, is on track to spend roughly $93 billion on its Artemis moon programme through 2025, the US space agency's inspector general has estimated.
3. Interestingly, Chandryaan 3's Rs 615 crore budget is less than the recently released movie Adipurush. Adipurush's budget was around Rs 700 crore. Furthermore, the latest moon mission is way cheaper than the budget of space-based movies like Interstellar (Rs1,368 crore) and The Martian (Rs 885 crore).
24/08/2023 CBDT has, issued guidelines for Assessing Officers (pursuant to Supreme Court judgment in Abhisar Buildwell), explaining as to how to implement the judgment in the context of Apex Court providing powers to Assessing Officer to reopen completed/ unabated assessments under section 147/148 of Income Tax Act, subject to fulfilment of conditions, in cases where no incriminating material is found during search.
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?The income tax, which is inundated with information shared by other countries on foreign assets of Indians, has sensed that insisting on an affidavit would be a quicker way to handle the cases. Taxman Takes Affidavit Route to Uncover Undisclosed Foreign Assets.
New Tax Regime Vs Old Tax Regime For FY24: Around 5.5 crore taxpayers may have switched to the new tax regime in the current fiscal year, as the new income tax system has become more appealing for the financial year 2023-24 with a rebate on income up to 7 lakh.
Expenditure incurred for earning income is to be allowed even if society is not registered under section 12A. ITAT Kolkata [State Health Society Assam v. ITO - Appeal Number : I.T.A. No. 119 & 124/GAU/2020.
LLP Amnesty scheme introduced by MCA from 1.9.23 to 30.11.23. Condonation of delay in filing of Form-3, Form-4 and be Form-11 under section 67 of Limited Liability Partnership Act, 2008 read with section 460 of the Companies Act, 2013.
NFRA Prima Facie Has No Jurisdiction To Initiate Proceedings For Audits Conducted Prior To Its Constitution In 2018: Telangana High Court.
Total banking transactions at GIFT International Financial Services Centre (IFSC) here reached USD 508 billion till July 2023. GIFT IFSC Executive Director said that till July 2023, the total banking asset size at GIFT IFSC stood at USD 41.20 billion, and cumulative derivative transactions booked by banks were worth USD 632 billion.
23/08/2023
National Judicial Data Grid (NJDG) is a database of orders, judgments and case details of 18,735 District & Subordinate Courts and High Courts created as an online platform under the eCourts Project. Data is updated on a near real-time basis by the connected District and Taluka courts. It provides data relating to judicial proceedings/decisions of all computerized district and subordinate courts of the country.All High Courts have also joined the National Judicial Data Grid (NJDG) through web services, providing easy access facility to the litigant public. Through the eCourts services platform using elastic search technology, currently litigants can access case status information in respect of over 23.58 crore cases and more than 22.56 crore orders / judgments pertaining to these computerized courts as on date. Case data is available on NJDG for both civil and criminal cases with the ability to perform drill-down analysis based on the age of the case as well as the State and District. NJDG works as a monitoring tool to identify, manage and reduce pendency of cases. It helps to provide timely inputs for making policy decisions to reduce delays in disposing of cases and helps in reducing case pendency.
https://pib.gov.in/PressReleasePage.aspx?PRID=1951373
Mere production of invoices, account details and documents evidencing transportation of goods does not absolve the assessee from the rigor provided under sub-clause (c) of Section 16(2) of the CGST Act, which requires the credit of tax, collected from the purchasing dealer
Patna High Court - M/s AASTHA ENTERPRISES Vs THE STATE OF BIHAR
GST - Section 16(1), 16(2)(c) of the CGST Act, 2017 – Eligibility and conditions for claiming Input Tax Credit
- Eligibility of purchasing dealer to claim input tax credit in the event of non-payment of tax by selling dealer after collecting it from the purchaser - validity of department’s action of recovery of tax from the purchasing dealer, which tax liability has already been satisfied by payment of the tax component to the selling dealer and evidenced by tax invoice
- Whether the purchasing dealer can be denied Input Tax Credit in the event of non-payment of tax by selling dealer or the State is obliged to initiate proceedings against the selling dealer, who defaulted payment of collected tax to the State
HELD
– The conditions for enabling benefit of input tax credit are available in clauses (a) (b) and (c) of Section 16(2) which are in seriatim; the said conditions are to be satisfied together and not separately or in isolation
- Input Tax Credit by the very nomenclature contemplates a credit being available for the purchasing dealer in its credit ledger by way of payment of tax by the supplier to the Govt
– mere production of invoices, account details and documents evidencing transportation of goods does not absolve the assessee from the rigor provided under sub-clause (c) of Section 16(2) of the CGST Act, which requires the credit of tax, collected from the purchasing dealer; either in cash or through utilization of admissible Input Tax Credit, having actually paid tax to the Government. This in effect is a burden of proof cast on the purchasing dealer who claims ITC, which is a right created under statute, sustainable only under the specific terms of the statute
- The mere fact that there is a mode of recovery provided under the statute would not absolve the liability of the taxpayer to satisfy the entire liability to the Government
- The purchasing dealer being the person who claims Input Tax Credit could only claim it if the supplier who collected the tax from the purchaser has paid it to the Government and not otherwise
- The statutory levy and the further benefit of ITC conferred on the purchasing dealer depends not only upon the collection by the seller but also the due payment by the seller to the Government. When the supplier fails to comply with the statutory requirement, the purchasing dealer cannot, without credit in its account, claim Input Tax Credit and the remedy available to the purchasing dealer is only to proceed for recovery against the seller
– The Govt. definitely could use its machinery to recover the amounts from the selling dealer and if such amounts are recovered at a later point of time, the purchasing dealer who paid the tax to its supplier could possibly seek for refund. However, as long as the tax paid by the purchaser to the supplier, is not paid up to the Government by the supplier; the purchaser cannot raise a claim of Input Tax Credit under the statute
– the claim of ITC raised by the petitioner cannot be sustained when the supplying dealer has not paid up the tax amount to the Govt; despite collection of tax from the purchasing dealer.
The writ petition is dismissed.
Conditions for availment of credit
- It is true that Input Tax Credit is a concept introduced in the tax regime, all over the country for the purpose of avoiding the cascading effect of taxes. The benefit of such credit being availed by a purchasing dealer who sells or manufactures goods, using raw materials on which tax has been paid is a benefit or concession conferred under the statute as has been held in ALD. Automobile Private Limited. Necessarily, the conditions for such availment of credit has to be scrupulously followed failing which there can be no benefit conferred on the assessee. The benefit is one conferred by the statute and if the conditions prescribed in the statute are not complied; no benefit flows to the claimant.
Whether recovery from purchasing dealer amounts to double taxation
HELD
- The contention of double taxation does not impress us especially since the claim is denied only when the supplier who collected tax from the purchaser fails to pay it to the Government. Taxation as has been held is a compulsory extraction made for the purpose of public good, by the welfare State and without the levy being paid to the Government; there can be no claim raised of the liability to tax having been satisfied and hence there is no question of double taxation.
22/08/2023
MOF Inviting comments vide letter dated 16.8.2023 on the draft Form No. 6C for implementing the amendment made by the Finance Act, 2023 wrt Sub-section (2A) of the Section 142 of the Income
Tax Act, 1961 regarding inventory valuation. To enable the Assessing Officer to direct the assessee to get inventory valued by a Cost Accountant, nominated by the Pr Chief Commissioner or Chief Commissioner or Pr Commissioner or Commissioner. Assessee is required to furnish the report of inventory valuation in the prescribed form duly signed and verified by the Cost Accountant.
CBDT notifies exchange rate for TDS on income payable in foreign currency
1. Rule 26 of the Income-tax Rules, 1962 has been amended. The new rule states that when deducting tax at source on income payable in foreign currency: For income payable to an assessee outside India, to a Unit located in an International Financial Services Centre, or by a Unit located in an International Financial Services Centre to an assessee in India, the applicable exchange rate will be the telegraphic transfer buying rate of the foreign currency on the date when the tax deduction is required.
2. “Telegraphic transfer buying rate", in relation to a foreign currency, means the rate or rates of exchange adopted by the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), for buying such currency.
(Notification 64/2023)
Allahabad High Court condones delay in depositing tax under Direct Tax Vivad Se Vishwas Act
Digvendra Pratap Singh (WP No. 1510 of 2022)
Facts:
1. The petitioner had submitted his declaration as required by the Direct Tax Viwad Se Vishwas Act , 2020, within the stipulated timeframe.
2. The designated authority had issued a certificate to him indicating the tax payable and the deadlines for payment.
3. The last date for depositing the arrears of tax had been extended several times, with the final date set as October 31, 2021.
4. On the last date, which happened to be a Sunday, the petitioner dropped a cheque in the bank's drop box to clear the remaining tax amount.
5. However, the cheque was processed and credited on November 3, 2021, leading to a delay of three days.
6. The petitioner explained that the delay was due to an accident and knee injury he suffered on November 1, 2021, which prevented him from visiting the bank.
Hon. Allahabad HC held as below:
1. Hon. Supreme Court had ruled in the case of M/s. Shekhar Resorts Limited (Unit Hotel Orient Taj) v. Union of India & Ors [CA No. 8957 of 2022], where it was noted that if a delay in depositing arrears of tax under the scheme is due to extraordinary circumstances such as sickness of the declarant and there's no one to manage their affairs, then the court should allow the declarant to deposit the amount despite the delay.
2. A delay of three days in depositing the arrears of tax of Rs. 8,67,137 should be condoned, and the remaining balance tax deposited by the petitioner should be accepted.
21/08/2023
CBDT notifies Rule for determination of value of perquisite in respect of residential accommodation provided by employer
1. The Finance Act, 2023 brought in an amendment for the purposes of calculation of “perquisite” with regard to the value of rent-free or concessional accommodation provided to an employee, by his employer.
2. Accordingly, CBDT has modified Rule 3 of the Income-tax Rules, 1961 to provide for the same, effective from 1 September 2023.
3. The categorisation and the limits of cities and population have now been based on the 2011 census as against the 2001 census earlier. The revised limits of population are 40 lakh in place of 25 lakh and 15 lakh in place of 10 lakh.
4. The earlier perquisite rates of 15%, 10% and 7.5% of the salary have now been reduced to 10%, 7.5% and 5% of the salary respectively.
5. In case the accommodation is continued to be provided to the same employee for more than one previous year, the amount calculated shall not exceed the amount so calculated for the first previous year, as multiplied by the ratio of the Cost Inflation Index (CII) for the previous year for which the amount is calculated and the CII for the previous year in which the accommodation was initially provided to the employee.
(Notification No. 65/2023 dated August 18, 2023)
RBI Launched UDGAM Portal Today for Public to Search their Unclaimed Deposits across Multiple Banks. Find Your's/ Family Member's UNCLAIMED MONEY In Bank Accounts thru the link:
https://udgam.rbi.org.in/unclaimed-deposits/#/login
Currently 7 Banks are available on the UDGAM Portal.
1) State Bank of India
2) Punjab National Bank
3) Central Bank of India
4) Dhanlaxmi Bank Ltd
5) South Indian Bank Ltd
6) DBS Bank India Ltd
7) Citibank
The search facility for remaining banks on the portal would be made available in a phased manner by October 15, 2023.
The Delhi High Court on Monday sought the stand of the Union Government on a plea challenging the inclusion of Chartered Accountants, Company Secretaries or Cost Accountants within the definition of "Reporting Entities" and casting other obligations on them under the Prevention of Money Laundering Act (PMLA). A division bench comprising Chief Justice Satish Chandra Sharma and Justice Sanjeev Narula granted time to Additional Solicitor General Chetan Sharma to obtain appropriate instructions in the matter and listed it for hearing on October 04. The plea has been moved by Rajat Mohan, a practicing Chartered Accountant, challenging the gazette notification published on May 05 which expanded the definition of the word "person" used in Section 2(1) (sa)(vi) as well as the definition of the word “activity" under the Act. Specifically, a class of professionals i.e. Chartered Accountants/Company Secretaries/Cost Accountants have been included within the definition of "Reporting Entities" and onerous obligations under the PMLA have been put on them with consequences of noncompliance leading to criminal prosecution," the plea states. Mohan is represented by Senior Advocate Trideep Pias. The petition has been moved by Advocate Shweta Kapoor. It is Mohan's case that the effect such inclusion is that they virtually make him and others notified under the impugned notification "engage virtually" in policing their own clients who interact with them in a fiduciary capacity "even when a case under the PMLA has not even commenced." The plea states that the impugned notification has "virtually put the cart before the horse" and that the PMLA was not meant to harass persons prior to there even being a predicate offence in existence.
Important Gst case laws:
1. GST: Confiscation of goods alongwith conveyance - expired E-way bill - since the petitioner has submitted its reply taking the stand that there was break down of the vehicle and the driver fell ill but no reason has been assigned by any of the authorities in the impugned orders for disbelieving the same - Matter restored back for fresh adjudication - HC
2. GST: Validity of determination of Tax / GST when the Confiscation of goods u/s 130 was set aside - While proceedings u/s 67 and Section 74 are distinct in scope and purpose, at the same time, the essential facts found non-existent in the proceedings under Section 67 would have a material bearing on proceedings under Section 74 of the Act drawn up on the same basis. - HC
3. GST: Non-service of SCN - violation of principles of natural justice - Cancellation of GST registration - It was the bounden duty of the petitioner to have verified its common portal that is made available as per the provision. - The contentions raised in the writ petition that Ext P1 assessment order was not served as per the provisions of the Act is untenable. - HC
4. GST: Input tax credit - ITC of GST paid on the inward supply for fixing of plant and machinery to earth by foundation or structural support which is used for making outward supply of goods/ services is admissible up to this extent only. - AAR
5. GST: Validity of SCN issued u/s 73 of GST Act - In any event, the issue as to whether a show cause notice is bad and lacks detail or is unintelligible to qualify to be a show cause notice cannot be put in a straight-jacket formula and has to be decided considering the facts and circumstances of the cases on hand. - The Ld. single Bench rightly refused to interdict the SCN - HC
6. GST: Validity of objection raised in GST audit report - The petitioner has not come against any order passed by the authority concerned. In any case, if the petitioner shall have any grievance with regard to the audit report and the subsequent order in connection with notice under Annexure-5, then he may raise the objection before the assessing authority. The petitioner shall get a chance to have its say in the assessment proceeding. - Petition dismissed as pre-mature - HC
7. GST: Cancellation of GST registration of petitioner - Although the impugned order is an appealable order, but considering that this is a clear case of violation of the principles of natural justice, it is considered apposite to entertain the present petition - HC
8. GST: Jurisdiction - Assistant Excise and Taxation Officer (Enf.) Gurugram was a ‘Proper Officer’ or not - Inter-state supply of goods - In view of the said enabling provisions u/s 20 of the IGST Act, 2017, the provisions of Chapter XIV of GST Act, 2017 which deals with inspection, search, seizure and arrest and power of inspection, search and seizure (Section 67 and 68 of CGST Act, 2017) are applicable to the inter-State supply of goods. - Petition dismissed - HC
9. GST: Rejection of Refund claim of voluntary deposit (during investigation) - recovery of GST from petitioner without serving a show cause notice in accordance with Section 74(1) of GST Act - Refund to be granted with interest @6% - HC
10. GST: Refund of amount recovered from the petitioner upon encashment of the bank guarantee - the revenue authorities were obligated in law to deal with that application in terms of Section 54(7) of the Act, within a period of 60 days. Failing that, the revenue further became exposed to discharge interest liability on the delay in making the refund at the statutory rate from the end of 60 days from 02.06.2019. - HC
11. GST: Violation of principles of natural justice - ex-parte impugned order - There are no reason for the adjudicating authority to pass that ex parte order, without any further notice. Since no order had been passed on that date, the adjudicating authority was obligated to fix another date. To that extent the petition must succeed. - HC
20/08/2023
While it is common for people to express their feelings, frustrations or criticism on messaging platforms, a bank employee's message on a WhatsApp group criticising the management and belittling higher authorities landed him in the soup. He filed a petition before the Madurai Bench of the Madras High Court seeking relief.
Granting him relief, Justice G.R. Swaminathan observed, "There is something called 'right to vent. Every employee or member of an organisation will have some issue or the other with the management. It is in the interest of the organisation that the complaints find expression and ventilation. It will have a cathartic effect. If in the process the image of the organisation is affected, then the management can step in, but not till then." The court quashed the charge memo issued against the petitioner by the bank.
The court was hearing a petition filed by A.Lakshminarayanan, an employee of Tamil Nadu Grama Bank, Thoothukudi, and a trade union activist. He was facing disciplinary action after he had posted messages against the authorities on a private WhatsApp group created for union activities. The court said Article 19(1)(a) of the Constitution guaranteed freedom of speech and expression subiect to reasonable restrictions. "Let us assume that a group of employees are having a chat in one of their homes. So long as it is a private chat, it cannot attract the regulatory framework of the management. The common law principle is 'every man's home is his castle'. If bar room gossip is published, that would definitely attract contempt of court. But then, so long as it remains private, cognisance cannot be taken," the court observed. The principles applicable to a chat in a home could be applied to what took place in an encrypted virtual platform that had restricted access. Such an approach alone would be in consonance with liberal democratic traditions. We were yet to enter the worlds envisaged by Aldous Huxley in 'Brave New World' and George Orwell in '1984: What the respondent proposed amounts to thought-policing, the court observed.
The court observed that the concept of privacy was now a recognised fundamental right. Not only individuals but even groups had privacy rights. Time had come to recognise the concept of 'group privacy. The court observed that in the coming days, powerful managements might be possessed with Pegasus-like technology providing them access to private conversations. Courts might dread such a scenario, but then would still firmly say that charges could not be framed on the strength of information gleaned through such means. Of course, the content shared over the end-to-end encrypted communication platform must be within the legal bounds. The members of the WhatsApp group formed by the petitioner felt aggrieved by some of the bank's actions and the petitioner expressed his views. Of course, the manner of expression could not be said to be in good taste, but everyone had his own way of articulating. The message posted by the petitioner could not be said to attract the Conduct Rules laid down by the management. The petitioner apologised for the language used. In these circumstances, the act committed by the petitioner could not amount to misconduct, the court observed.
Sec 43B- expenses deductible only on actual payment:
A. As per Sec 43B of the Income Tax Act, certain expenses as indicated below are deductible only when actually paid by the assessee:
1. Taxes, Duties, and Fees: Any sum payable as tax, duty, cess, or fees by any name under any law.
2. Contributions to provident funds, superannuation funds, gratuity funds, or other welfare funds for employees.
3. Any sum payable as bonus and commission to an employee.
4. Any interest payable on loans or borrowings from public financial institutions, Central or State Government, or NBFC (applicable from assessment Year 2024-25) declared by the Central Government.
5. Any interest payable on loans or advances from scheduled banks or cooperative banks.
6. Any sum payable to an employee for unused leave.
7. Any sum payable to the Indian Railways for the use of assets.
8. Any amount paid late under section 15 of the Micro, Small and Medium Enterprises Development Act. (applicable from assessment Year 2024-25)
Some selected case laws on Sec 43B:
1. Full Bench of Hon. Supreme Court has held in the case of Checkmate Services P. Ltd. vs CIT 3614 (2022) (09) (SC) that belated deposit of employees’ contribution are not deductible under section 43B, if paid beyond the time prescribed under the relevant Act.
2. Hon Supreme Court in the case of M.M. Aqua Technologies Ltd. v CIT [2021] 129 taxmann 145 (SC), has held that issue of debentures against the outstanding interest liability as final discharge of liability would be treated as actual payment of interest and such amount need not to be disallowed under Section 43B.
3. Interest due on payment of Municipal Tax of property is not considered as tax, hence it will not be disallowed section 43B. (CIT vs. Orient Bewarages Ltd., (2000) 164CTR (Kolkata) 529.
4. Allahabad High Court has held, in the case of CIT vs. Sinyaovi Industries Ltd.,(2014) 111 DTR (Allahabad) 274 that interest on excise duty is extended liability and it will not be allowed and section 43b will apply.
5. Electricity duty is not falling within the preview of section 43B, hence if paid after due date, is an admissible expenses. (CIT vs. Urja Vikas Nigam Ltd. (2011)322 ITR 579(guj).
Maintenance of a Website is now Mandatory for Stock Brokers & Depository Participants. Failure to submit/upload the details within the prescribed timelines would be treated as non-compliance and attract penal/disciplinary action. For Details refer SEBI Circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/30 dated 15th February, 2023.
19/08/2023
Betting firms like PariMatch launder crores out of the country using shell firms and crypto transactions: TOI Report
1. Indian authorities are grappling to curtail the growing prevalence of overseas gaming and betting applications that are evading taxes in India through the conversion of earnings into cryptocurrency and the utilization of networks of shell companies.
2. As per a TOI report, at the center of one of the largest such networks under investigation stands Parimatch, a Cyprus-based group, that even engages in advertising during local sports leagues on television.
3. The DGGI in Mumbai has recently managed to uncover and dismantle one such network linked to Parimatch. As per the TOI report, The network was responsible for amassing Rs 700 crore from Indian users of gaming apps, and the funds were subsequently funneled out through conversion into cryptocurrency. The DGGI tracked network's activities for months, scrutinised the backgrounds of 50 entities and individuals in Delhi, along with 350 in Kolkata, TOI report stated.
4. A crypto exchange operator based in Mumbai was apprehended by the agency for handling one set of shell companies endorsed by dummy directors. The operator revealed that Rs 96 crore collected from app users had been transformed into cryptocurrency.
5. Wallets were used in the name of these shell companies, which were used to divert money through crypto currency. Most of these individuals were drivers, street vendors, or individuals in miscellaneous roles who had shared their details with a book-entry operator (also involved in hawala payments) in exchange for a modest sum.
6. These gaming companies lack a physical presence in India and solely communicate through email, phone calls, or intermediaries.
Source: Times of India Report on 16th Aug, 2023
Mere production of invoices, account details and documents evidencing transportation of goods does not absolve the assessee from the rigor provided under sub-clause (c) of Section 16(2) of the CGST Act, which requires the credit of tax, collected from the purchasing dealer
Patna High Court - M/s AASTHA ENTERPRISES Vs THE STATE OF BIHAR
GST - Section 16(1), 16(2)(c) of the CGST Act, 2017 – Eligibility and conditions for claiming Input Tax Credit
- Eligibility of purchasing dealer to claim input tax credit in the event of non-payment of tax by selling dealer after collecting it from the purchaser - validity of department’s action of recovery of tax from the purchasing dealer, which tax liability has already been satisfied by payment of the tax component to the selling dealer and evidenced by tax invoice
- Whether the purchasing dealer can be denied Input Tax Credit in the event of non-payment of tax by selling dealer or the State is obliged to initiate proceedings against the selling dealer, who defaulted payment of collected tax to the State
HELD
– The conditions for enabling benefit of input tax credit are available in clauses (a) (b) and (c) of Section 16(2) which are in seriatim; the said conditions are to be satisfied together and not separately or in isolation
- Input Tax Credit by the very nomenclature contemplates a credit being available for the purchasing dealer in its credit ledger by way of payment of tax by the supplier to the Govt
– mere production of invoices, account details and documents evidencing transportation of goods does not absolve the assessee from the rigor provided under sub-clause (c) of Section 16(2) of the CGST Act, which requires the credit of tax, collected from the purchasing dealer; either in cash or through utilization of admissible Input Tax Credit, having actually paid tax to the Government. This in effect is a burden of proof cast on the purchasing dealer who claims ITC, which is a right created under statute, sustainable only under the specific terms of the statute
- The mere fact that there is a mode of recovery provided under the statute would not absolve the liability of the taxpayer to satisfy the entire liability to the Government
- The purchasing dealer being the person who claims Input Tax Credit could only claim it if the supplier who collected the tax from the purchaser has paid it to the Government and not otherwise
- The statutory levy and the further benefit of ITC conferred on the purchasing dealer depends not only upon the collection by the seller but also the due payment by the seller to the Government. When the supplier fails to comply with the statutory requirement, the purchasing dealer cannot, without credit in its account, claim Input Tax Credit and the remedy available to the purchasing dealer is only to proceed for recovery against the seller
– The Govt. definitely could use its machinery to recover the amounts from the selling dealer and if such amounts are recovered at a later point of time, the purchasing dealer who paid the tax to its supplier could possibly seek for refund. However, as long as the tax paid by the purchaser to the supplier, is not paid up to the Government by the supplier; the purchaser cannot raise a claim of Input Tax Credit under the statute
– the claim of ITC raised by the petitioner cannot be sustained when the supplying dealer has not paid up the tax amount to the Govt; despite collection of tax from the purchasing dealer.
The writ petition is dismissed.
Conditions for availment of credit
- It is true that Input Tax Credit is a concept introduced in the tax regime, all over the country for the purpose of avoiding the cascading effect of taxes. The benefit of such credit being availed by a purchasing dealer who sells or manufactures goods, using raw materials on which tax has been paid is a benefit or concession conferred under the statute as has been held in ALD. Automobile Private Limited. Necessarily, the conditions for such availment of credit has to be scrupulously followed failing which there can be no benefit conferred on the assessee. The benefit is one conferred by the statute and if the conditions prescribed in the statute are not complied; no benefit flows to the claimant.
Whether recovery from purchasing dealer amounts to double taxation
HELD
- The contention of double taxation does not impress us especially since the claim is denied only when the supplier who collected tax from the purchaser fails to pay it to the Government. Taxation as has been held is a compulsory extraction made for the purpose of public good, by the welfare State and without the levy being paid to the Government; there can be no claim raised of the liability to tax having been satisfied and hence there is no question of double taxation.
18/08/2023
Treatment of shares in the books determines the taxation: ITAT
M/s J.M. Financial Ltd (I.T.A. No.3987/Mum/2015)
Facts:
1. During the year under consideration, the assessee has shown long term capital gain of Rs.1730,58,51,513/- on sale of shares in JMMSSPL to MSSPL.
2. The Assessing Officer proceeded to treat this gain as the business income of the assessee for the reason that the assessee was in the business of shares and securities as a broker and was also involved in share trading business.
3. The Ld.CIT(A) upheld the order of assessment by holding that the termination of the joint venture was to avoid commercial inconvenience accruing in the future as a joint venture and that termination was a result of split of business arrangement between the assessee and its partners.
4. According to the appellant since these shares were held as capital asset for more than 8 years therefore, the gain on sale has to be treated as LTCG.
ITAT Mumbai held as below:
1. The Assessee did not participate in the day to day operations of the Company, however it had a right as a shareholder to nominate 4 members to the board of the Company while Morgan Stanley could nominate.
2. The shares were reflected as investments and not stock in trade in the books of accounts of the assessee.
3. It is observed by the Hon'ble Supreme Court in the case of Azadi Bachao Andolan that an act which is otherwise valid in law cannot be treated as to evade tax merely on the basis of some suspicious underlying motive supposedly resulting in some economic detriment or prejudice to the Revenue.
4. In the result, the appeal of the assessee is allowed and the appeal of the revenue is dismissed.
CBDT notifies rules to calculate life insurance income where premium exceeds Rs.5 lakh
1. The Central Board of Direct Taxes (CBDT) issued a notification no. 61/2023, on 16 August notifying new guidelines under Section 10(10D) of the Income Tax Act, 1961, prescribing a mechanism for calculating income from life insurance policies where the aggregate annual premium exceeds Rs.5 lakh.
2. The CBDT has notified the Income Tax Amendment (Sixteenth Amendment), Rules, 2023, prescribing Rule 11UACA for calculating income concerning the sum received upon maturity of life insurance policies where the premiums exceed Rs.5 lakh and such policies are issued after 1 April 2023.
3. As per the rules, the tax exemption on the maturity benefits under Section 10(10D) of the Income Tax Act for the policies issued after 1 April 2023 would be applicable if the aggregate premium paid is up to Rs.5 lakh a year.
4. For premiums beyond Rs.5 lakhs, the maturity proceeds will be added to the individual’s income and taxed at the applicable rates. This change in the tax provision of life insurance policies, except Unit Linked Insurance Policy (ULIP), was announced in the Union Budget 2023-24.
5. According to the CBDT notification, Section 10(10D) of the Income Tax Act provides income tax exemption on the amount received under a life insurance policy, including the amount allocated through a bonus on such a policy subject to certain exclusions.
6. From the assessment year 2024-25, the amount received under a life insurance policy issued after 1 April 2023 (other than a ULIP) will not be exempt under Section 10(10D) of the Income Tax Act when the premium amount payable for any of the previous years during the term of the policy exceeds Rs.5,00,000.
7. The CBDT guidelines regarding the sum received upon maturity of life insurance policies are elaborate and provide examples on the computation of the eligible exemption. However, the taxation provision for the sum received on the death of an insured is not changed and is exempt from income tax.
17/08/2023
Interest income, earned by clubs on FDs in banks which are corporate members, is taxable: SC
SECUNDRABAD CLUB ETC. (CA No. 5195-5201 of 2012)
Facts:
1. Hon Supreme Court was dealing with a batch of SLPs arising from the decision of the Andhra Pradesh and Madras High Court, pertaining to the Secunderabad Club, Madras Gymkhana Club, Madras Cricket Club, and the M/s Wellington Gymkhana Club, amongst others.
2. The High Courts in the impugned decision had held that the interest earned on the bank deposits made by the assessee Clubs is liable to be taxed in their hands and that the principle of mutuality would not apply.
3. Hon SC in Commissioner of Income Tax vs. M/s Cawnpore Club Ltd., Kanpur, (2004) 140 Taxman 378 (SC), had held that with respect to the “other questions” which arose in the appeal, the assessee club could not be taxed because of the principle of mutuality (other questions were not however specified).
4. Hon SC in Bangalore Club vs. Commissioner of Income Tax, (2013) 5 SCC 509, had ruled that the interest earned by the assessee Clubs on the surplus funds invested in FDs with the corporate member banks will not fall within the ambit of the mutuality principle.
Against a background of the above, seemingly conflicting judgements, Hon SC has held as below:
1. If any income is earned by the Clubs through its assets and resources, from persons who are not members of the Clubs, such income would also not be covered under the principle of mutuality and would be liable to be taxed under the provisions of the Income Tax Act.
2. Where the bank has a right to utilize the said fixed deposit amounts for its banking business subject to repayment of the principal along with interest, then, the element of complete identity between the contributors to the common fund and the participators in the surplus would be lost, which is a sine qua non for the application of the principle of mutuality.
3. The plea that the two-judge Bench judgement of the top court in Bangalore Club vs. is not a binding precedent is liable to be dismissed.
4. In the case of Cawnpore Club, top court had did not spelled out what “the other questions” were in respect of which the respondent could not be taxed owing to the principle of mutuality.
Conclusion: Interest income earned on fixed deposits (FDs) made by Clubs in the banks which are members of those Clubs has to be treated like any other income from other sources within the meaning of Section 2(24) of Income Tax Act, 1961.
HC Dismisses Writ for Petitioner’s Delay in Approaching the Writ Court
Few key elements were observed:
1. Timeline of Events: The timeline of notices, participation in proceedings, and final assessment orders is crucial in understanding why the petition was dismissed.
2. Contesting the Order: The petitioner challenged the notice under Section 148A(b) but did not approach the court after subsequent orders and notices.
3. Legal Stance: The High Court’s stance of not interfering, considering the belated approach and the existence of an alternate remedy, was pivotal in the case.
Read more
https://taxguru.in/income-tax/hc-dismisses-writ-petitioners-delay-approaching-writ-court.html
16/08/2023
The Hon’ble Andhra Pradesh High Court in M/s Arhaan Ferrous and Non-Ferrous Solutions Pvt. Ltd. v. Deputy Assistant Commissioner [Writ Petition No.15481 of 2023 dated August 03, 2023] held that the assessee is responsible only to the extent of establishing that he bonafidely purchased goods from the supplier for valuable consideration after verifying the GST registration of the said supplier on the GST portal.
Persons are making supplies of goods through an ECO (who collects TDS u/s 52) has aggregate turnover below registration limit will be exempted from GST
Registration w.e.f. 1.10.2023, subject to the following:
a) Not make any inter-State supply of goods;
b) Not make supply of goods through ECO in more than one State/UT;
c) have a Permanent Account Number;
d) before making any supply of goods through ECO, must declare their PAN and address;
e) have been granted an enrolment number based on (d);
f) shall not be granted more than one enrolment number;
g) make no supply of goods through ECO before grant of enrolment number and
h) on granting registration u/s 25, the enrolment number shall be ceased.
[Notification No. 34/2023-Central Tax]
Online gaming relative to GST in the 51st GST council meeting
1. Actionable claim would not include online gaming for the purpose of GST
2. GSTC approves bringing deposits of money, money’s worth, virtual digital assets by players under GST ambit
3. Online money gaming includes games based on both skill & chance
4. Council approves bringing online money gaming supplied by entity located outside taxable territory under IGST ambit
5. Council will review rates in 6-8 months of implementation
6. Casino, horse racing and online gaming will be taxed at the uniform rate of 28% on the initial value of the bets placed - no matter the activities are a game of skill or chance.
7. Winnings will not be taxed if player continues to pump it again in same game
8. If player exits and re-enter with past winnings, it will be treated as fresh bet.
9. Simplified single registration scheme shall be introduced for payment of liability on online gaming by supplier located outside India
10. Access to gaming sites will be blocked if they fail to comply with the provision of registration and payment of taxes.
15/08/2023
Whether RCM is applicable on all the services supplied by Director of a company to the same company?
1. Services supplied by a Director of a company/body corporate to the company/body corporate in his private or personal capacity such as services supplied by way of renting of immovable property to the company or body corporate are not taxable under RCM
2. Only those services supplied by the Director of company or body corporate, which are supplied by him as or in the capacity of Director of that company or body corporate shall be taxable under RCM in the hands of the company or body corporate.
3. Reference to Circular No. 201/13/2023-GST dated 01.08.2023
Gst Judgement – Amount deposited through DRC-03 may not be treated as voluntary payment under section 74(5). Refund allowed on such deposit with interest.
Citation - 2023-VIL-521-P&H
M/s PARSVNATH TRADERS Vs PRINCIPAL COMMISSIONER, CGST AND ANOTHER
Date of Order – 27-07-2023
HIGH COURT OF PUNJAB AND HARYANA
The search was conducted on the basis of that the petitioner had availed illegal ITC after making bogus purchases. The search was conducted on 05-02-2021. The petitioner deposited Rs.20 lac with DRC-03 on 05-02-2021 and Rs.3070216.00 on 16-02-2021 with DRC-03.
The respondents even did not issue any show cause notice and no order determining its tax liability had been passed by them. The petitioner made request in writing to the respondents to refund the amount of Rs.50,70,216/- (Rs.20.00,000+Rs.30,70,216) got deposited from it but the prayer made by the petitioner was rejected by order dated 18.05.2021.
The writ filed and prayer made by the petitioner for setting aside the order rejecting the request made by it for refund of the amount of Rs.50.70 lacs and also for further directing the respondents No.1 to refund the above said amount.
Relevant para of the judgement:
Further, it is also the well-established that no collection of tax from an assessee can be insisted upon prior to final determination of liability being made. According to the revenue, with the inception of Section 74(5), the collection of amounts in advance has attained statutory sanction, provided the same are voluntary in form GST DRC-03. Now it is to be considered as to whether the deposit of sum Rs.50.70 lacs which was made by the petitioner during the course of investigation, is to be considered as voluntary deposit of amount which had allegedly been claimed by it by way of ITC on the basis of purchases made by it from M/S Royal which are alleged to be false purchases? According to the petitioner, since there was no assessment and even demand by way of issuance of show cause notice, the amount deposited by it could not be appropriated especially when it was not voluntary deposit. Interestingly, this petition is pending since the year 2021, admittedly no-show cause notice has been issued against the petitioner in accordance with Section 74(1) of the Act till date. As asserted by the revenue, the payments of Rs.50.70 lacs (Rs.20 lacs+Rs.30.70 lacs) as made by the petitioner on two different dates constituted ‘self ascertainment’ and triggered the provisions of Section 74(5) of the Act and were voluntary deposits. However, we are unable to accept this contention for the reasons that if that would have been actually the position, then the respondents must have contained material on record to show that the petitioner had in fact, accepted the ascertainment made by it and the revenue had applied its mind and arrived at the conclusion that ‘self ascertainment’ by the assessee was adequate/inadequate. The petitioner on the contrary is shown to have consistently contested its liability to make payment of the tax. The deposit of the aforementioned amount on the day of search and shortly thereof, when the proprietor of the petitioner was naturally under the stress of search/investigation does not amount to lead to ‘self assessment’ or ‘self ascertainment’. The ‘self ascertainment’ which is contemplated under Section 74(5) of the Act, 2017 is in the nature of ‘self assessment’ and amounts to a determination by it which is unconditional and not as in the present case when shortly after depositing the amount Rs.50.70 lacs, the petitioner approached the revenue for refund of the same. Such recovery is not permissible. In this regard, reliance can be placed upon in M/s Bhumi associate’s case (supra) wherein, it was observed that at the time of search/inspection proceedings under the provisions of Central/Gujarat Goods and Services Tax Act, 2017, no recovery in any mode by cheque, cash, e-payments or adjustment of ITC should be made.
The direction was given to refund amount 50.70 lakh with interest @ 6% per annum within a period 6 weeks of the date of order (judgement’s date).
Unclaimed amount of 71,45,762 Cr is lying idle due to lack of nominee update.
PF : 58,000 crores
LIC : 21,500 Cr.
Mutual Funds : 24,000 Cr.
Bank Deposits : 42,262 Cr. & many more
Advisory to check & update nominees for the sake of family
13/08/2023
The IGST (Amendment) Bill, 2023, represents a significant modification to the original IGST Act of 2017. Introduced in Lok Sabha on 9th August 2023, The Amendment Bill of 2023 brings about several pivotal changes:
1. Online Gaming Exclusion: By redefining clause (17) of section 2, online money gaming is excluded from the definition of Online Information and Data Access or Retrieval (OIDAR) services.
2. Change in Tax Levy for Specific Goods: The amendment of section 5 and other clauses enables the Government to notify certain goods for different tax treatments.
3. Clarification on Place of Supply: The addition of specific clauses in section 10 sets clear rules about the place of supply when goods are made to non-registered persons.
4. Special Provision for Online Money Gaming: Section 14A is introduced to regulate the supply of online money gaming by overseas suppliers, including the need for single registration under the Simplified Registration Scheme.
Recommendations of the GST Council: The amendments also stem from the 50th and 51st meetings of the GST Council, aiming to provide clarity on taxability for various entertainment forms.
Important TDS Updates in Budget 2023
1. Section 194BA – Introduction of TDS on income from online gaming.
2. Section 196A – Non-residents earning income from mutual funds in India can provide a Tax Residency Certificate starting April 1st, 2023, to avail the TDS benefit as per the rate specified in the tax treaty, instead of the standard 20% rate.
3. Section 192A – TDS rate on PF withdrawal for employees without PAN reduced to 20% from the maximum marginal rate.
4. Section 193 – No exemption from TDS on interest from listed debentures. TDS must be deducted on interest earned from such specified securities.
5. Section 194N – Increased TDS threshold for cash withdrawal by co-operative societies. From April 1st, 2023, TDS will be deducted on cash withdrawals exceeding Rs 3 crore, up from the previous limit of Rs 1 crore.
Bhartiya Nagrik Suraksha Sanhita Bill 2023 to replace CRPC in Lok Sabha
Sections - 533
160 sections changed
9 sections added
9 sections removed
Bhartiya Nyay Sanhita Bill 2023 to replace IPC
Sections - 356
175 sections changed
8 new sections added
22 sections removed
Bhartiya Sakshya Bill 2023 to replace Evidence Act 1872
Sections - 170
23 sections changed
1 section added
5 sections removed
Reserve Bank Governor said the move to impose a 10 per cent incremental cash reserve ratio for a limited period will help suck out Rs 1 lakh crore of excess liquidity from the system.
China slides towards deflation:
1. China's economy has slipped into deflation after consumer prices declined in July for the first time since February 2021.
2. The east Asian country and second biggest economy of the world had seen a significant slowdown in economic progress, owing to prolonged period of stringent Covid-19 pandemic induced lockdown.
3. The consumer and product price index (factory gate)—slipped to the deflationary zone in July, with y-o-y decline of 0.3% and 4.4%, respectively. For CPI, this is first fall since February 2021, while PPI has declined for the 10th month in a row. The Chinese economy grew 6.3% in Q2-2023, against 4.5% in Q1—but that was largely because of the base effect.
4. The central bank has cut rates by only 0.1 percentage points. Given falling inflation, the real cost of borrowing is growing.
5. A potential positive impact of an extended period of deflation in the country may be that it helps to curb rising prices in other parts of the world, including India.
6. However, if cut-price Chinese goods flood global markets it could have a negative impact on manufacturers in other countries. That could hit investment by businesses and squeeze employment.
7. On Thursday, the US President referred to China’s economic vulnerabilities as “a ticking time bomb,” adding: “When bad folks have problems, they do bad things.”
Investors from Mauritius, Singapore, Cyprus under Taxman’s lens for CCD gains:
1. Foreign investors from Mauritius, Cyprus and Singapore have been on the receiving end of a number of notices for gains from investment in fully or compulsorily convertible debentures (CCDs) issued by Indian companies.
2. CCDs, which are compulsorily converted into equity after a specified period, had gained popularity after the Double Taxation Avoidance Agreements (DTAA) of these regions with India were amended in 2017, with the aim of taxing capital gains on shares in India.
3. The DTAAs, post amendment, made capital gains on “shares” taxable in India. However, the amendments do not apply to debt instruments.
4. The FDI guidelines treat CCDs as equity for the purposes of reporting to the Reserve Bank of India. The tax department argues that CCDs should be treated as shares because RBI treats these instruments at par with equity.
5. Legal precedent: The Bangalore Bench of the Income-tax Appellate Tribunal (ITAT) in the case of CAE Flight Training (India) Pvt. Ltd.[ ITA No. 2060/Bang/2016] has ruled that compulsorily convertible debentures (CCDs) are to be regarded as debt, and not equity, for the purpose of the Income-tax Act.
12/08/2023
HUF: Benefits and Hurdles:
The Hindu Undivided Family (HUF) is a recognized legal entity under the Income-tax Act, 1961. It is treated as a separate ‘person’ for tax purposes, distinct from its individual members.
Benefits of HUF:
HUF offers several tax-saving benefits and investment opportunities:
1. Tax Exemption: An HUF enjoys tax exemption limits similar to individuals. A member of an HUF can avail complete tax exemption on any amount of income received from business done by the HUF, as the same is taxable in the hands of the HUF. According to the Income Tax Act, tax rebates and deductions can be availed under sections 80C, 80D, 80DD, and 80TTA for the HUF account.
2. Tax-Free Gifts: Gifts collected up to a worth of Rs 50,000 will be tax-free. For instance, a father who owns an HUF account can gift a property or money of higher worth to a son who owns a smaller HUF account; however, he should specify that the gift is for the son’s HUF and not to him as an individual. This allows tax benefits under section 64(2) and 56(2).
3. Investment Opportunities: The HUF corpus can be used for investment in tax-free money instruments and Equity Linked Savings Scheme (ELSS) to earn tax benefits under Section 80C of the Income Tax Act. Although an HUF cannot hold a Public Provident Fund (PPF) account in its name, it can avail tax deductions for the amount deposited by the HUF in PPF accounts of its members on their behalf.
Hurdles with HUF Dissolution:
While HUF offers significant tax planning benefits, there are challenges in its dissolution:
1. Transfer of Property: Since all members of the HUF have the right in the properties and assets of the HUF, joint assets cannot be sold without the consent of all its members. As a member owns his/her right in the HUF automatically by birth, he/she cannot bequeath his/her share to anyone.
2. No Universal Recognition: One of the challenges with HUF is that it is not recognized universally in any other country, except India. This poses difficulties in terms of income assessment for HUF members who move abroad or obtain foreign citizenship.
3. HUF Partition and Dissolution: An HUF may need to be dissolved in case of the death of members or in the event of a partition between members of the HUF. Once an HUF is closed and dissolved, its assets and properties need to be distributed among all its members, which can be a complex process.
Allahabad High Court has held that the activities carried out by lawyers are not ‘commercial activity’ and electricity rates charged from commercial establishments cannot be charged for lawyers' chambers for carrying out professional activities.Case Title: Tehsil Bar Association, Sadar Tehsil Parisar, Gandhi Nagar, Ghaziabad vs. U.P. Power Corporation Limited.
The UP Government exempted stamp duty on Gift of property to family members. As per the following notification issued by the UP Govt on 3rd August,2023 , the stamp duty to be paid in case of gift to any family members shall be restricted to Rs 5,000 only. The family members have been defined . Exemption is only for residential property and agriculture property.
A record 82,628 entities including companies and limited liability partnership (LLP) firms were incorporated in India in the first four months of the current fiscal, the ministry of corporate affairs (MCA) said on Wednesday, citing data from the latest version of its corporate filing portal. Also, as many as 1.96 million forms were filed on the latest version of the MCA21 (version 3, or V3) portal between April and July, the ministry said in a series of tweets. The ministry’s statement comes amid a furore over technical glitches involving the V3 portal since its rollout for companies on January 23. Data also shows that 243,155 forms relating to LLPs were fi- led this fiscal until July 16, higher than 209,064 a year ago.
11/08/2023
The Rajya Sabha passed the Digital Personal Data Protection Bill, 2023 on 9th August, 2023. It was already approved by Lok Sabha on August 07, 2023. The Bill provides for the processing of digital personal data of individuals, thus recognising the right of the individuals to protect their personal data for lawful purposes. It applies to the processing of digital personal data within the territory of India or processing of digital personal data outside the territory of India, if such processing is in connection with any activity related to offering of goods or services to Data Principals (i.e. whose data is collected) in the territory of India. The Bill is based on the following seven principles:
1. The principle of consented, lawful and transparent use of personal data (obtaining consent of the Data Principal i.e. whose data is collected);
2. The principle of purpose limitation (use of personal data only for the purpose specified at the time of obtaining consent of the Data Principal);
3. The principle of data minimisation (collection of only as much personal data as is necessary to serve the specified purpose);
4. The principle of data accuracy (ensuring data is correct and updated);
5. The principle of storage limitation (storing data only till it is needed for the specified purpose);
6. The principle of reasonable security safeguards; and
7. The principle of accountability (through adjudication of data breaches and breaches of the provisions of the Bill and imposition of penalties for the breaches).
Exemplary Penalties are provided in the bill for upto Rs. 250 crores for and for failure to take security measures to prevent data breaches.
The Bill is expected to soon become a law now after receiving assent of the President of India.
Delhi HC judgement on Benami Act:
Sh. Parmod Kumar Jain vs Mr. Satish Jain & Ors (CS(OS) 182/2017 with CRL. M.A. 7383/2018)
Facts:
The suit property was purchased by Dr. R.N. Jain (the father) in the name of the mother, i.e., his wife, out of his own funds, for his own use and for the use of his family and not for the sole benefit of the mother. Even the possession of the suit property is with all the parties and that the mother was having no independent right in the suit property. The entire sale consideration for purchase was paid by late Dr. R.N. Jain.
Rattan Mala Jain, one of the co-owners of the suit property, approached plaintiff in the month of September 2016 and informed plaintiff that defendant No.1 has filed a suit for partition of the suit property on the basis of alleged gift deed dated 07.06.2006 executed by defendant No.2 (the mother) in favour of defendant No.1.
Since the suit property belonged to Dr. R.N. Jain (the father), after his demise, the said property now belongs to all his sons with life interest to his wife (the mother), as per his last and final Will dated 05.09.1992.
Hon Delhi HC held as below:
A cause of action is a bundle of facts which are required to be proved for obtaining relief and for the said purpose, the material facts are required to be stated but not the evidence except in certain cases where the pleadings relied on are in regard to misrepresentation, fraud, wilful default, undue influence or of the same nature. So long as the plaint discloses some cause of action which requires determination by the court, the mere fact that in the opinion of the Judge the plaintiff may not succeed cannot be a ground for rejection of the plaint
From the aforesaid decision and even otherwise as held by this Court in a catena of decisions, while considering an application under Order 7 Rule 11CPC, the Court has to go through the entire plaint averments and cannot reject the plaint by reading only few lines/passages and ignoring the other relevant parts of the plaint.
10/08/2023
TDS not required to be deducted on commission paid to overseas agents: Delhi HC
Case Title: PCIT Versus Maharani Enterprises
Case No.: ITA 22/2021
Facts:
1. The respondent/assessee had sought a deduction of expenditure, which was the commission paid to agents overseas, but had not deducted the tax at source.
2. According to the AO, the non-deduction of TDS under Section 195 of the Income Tax Act, disentitles the assessee to avail of any deduction on that account.
3. The assessee contended that the commission paid to overseas agents was not chargeable to tax under the Act. Therefore, it had no obligation to deduct TDS.
4. The department contended that the question of whether any income is chargeable to tax in the hands of a non-resident agent is required to be considered in its assessment, and notwithstanding the question regarding the chargeability of such income, the payer is required to deduct and deposit TDS on any payments made by it.
Hon. Delhi HC held as under:
1. There is no material on record to even remotely suggest that the non-resident, who had been paid the export commission, had any permanent establishment in India, carried on any business within the taxable territory in India, or had any business connection in India rendering them liable to pay tax.
2. Section 195 of the Act provides for the deduction of tax in respect of the income that is chargeable under the Income Tax Act. There is no obligation on the part of an assessee to deduct or deposit tax if the payments made by it to non-residents are not chargeable to tax under the Income Tax Act.
3. The appeal of the revenue is dismissed.
Set off of brought forward losses is allowed in case of change in shareholding pattern within the group: ITAT Mumbai
Hiranandani Healthcare Private limited Vs.
CIT (A), National Faceless Appeal Centre, Delhi
I.T.A. No. 3240/Mum/2022 (A.Y. 2012-13) I.T.A. No. 204/Mum/2023 (A.Y. 2014-15)
Facts:
1. The main issue in the appeal pertains to the rejection of the assessee’s claim for set-off of brought forward losses under section 79 of the Income Tax Act.
2. The appellant, engaged in healthcare services, underwent a change in shareholding pattern, with shareholders being M/s. Fortis Healthcare Limited (FHL) and M/s. Fortis Healthcare Holdings Pvt. Limited (FHHPL).
3. The Assessing Officer contended that the change triggered section 79, which disallows carry forward of losses in case of a change in shareholding.
4. The appellant argued that section 79 applies only if shares carrying over 51% voting power are transferred from one group to another, not within the same group.
ITAT Mumbai held as below:
1. The use of expression “persons” in section 79 of the Act would signify that the ‘group of shareholders’ in contrast to a single person.
2. Section 79 does not apply if 51% voting power is beneficially held by the same group in both years of loss incurrence and the set-off year.
3. As both FHL and FHHPL constituted the same group, the change in shareholding within this group did not trigger section 79.
4. So set off of brought forward losses can be allowed.
09/08/2023
The income-tax department has sent notices to many professionals who have earned income outside their regular salary but did not declare in their tax returns. Most of the notices issued were for financial years 2019-2020 and 2020-2021. In a number of cases, the income from the so-called moonlighting, or job outside full-time employment, was higher than the regular salary. As most of the payments were made online and some were received from overseas accounts, the tax department’s system was able to detect these undeclared incomes easily during data scrutiny. We have found a large number of instances of IT, accounting and management professionals who were getting payment monthly or quarterly from two or more companies but were declaring income only from their full-time job in their income tax returns. In the first phase notices were sent to individuals where the average undeclared annual payments ranged between ?5 lakh and ?10 lakh. Such instances were more during fiscal years 2019-2021, officials said. The department has so far sent notices to more than 1,100 people. S-ET
The Directorate General of Foreign Trade (DGFT) on Friday announced that its decision to restrict the import of certain laptops and computers under HSN 8471 will come into effect from November 1, 2023. After this set date by the government, no one will be allowed to import laptops, computers, and related items without a license. DGFT in its notification stated, “Import consignments can be cleared till October 31, 2023, without a licence for restricted imports.” The notification further said that liberal transitional arrangements will be notified for the import of laptops, tablets, all-in-one personal computers, and servers till October 31. Earlier, the government body had announced its decision to restrict the import of laptops, tablets, all-in-one personal computers and ultra-small form factor computers and servers without a license. These electronics can be imported only against a valid license meant for restricted imports. The said restriction shall not be applicable to Imports under Baggage Rules, as amended from time to time,” stated the Ministry of Commerce and Industry.
08/08/2023
Shrinking 'AAA' Club: Just 9 countries now hold top Fitch rating
1. The fallout from Fitch Ratings’ downgrade of the US puts the focus on the countries still holding onto the coveted top credit grade - AAA rating.
2. Economies with the highest credit rating at S&P Global Ratings, Fitch and Moody’s Investors Service include Germany, Denmark, Netherlands, Sweden, Norway, Switzerland, Luxembourg, Singapore and Australia. Canada is rated AAA by two of the ratings companies.
3. Fitch’s downgrade of the US sovereign follows the cut by S&P in 2011, leaving Moody’s as the only major rating company keeping its top-tier grade for the world’s largest economy. Fitch said the cut reflects expected fiscal deterioration and a growing government debt burden after repeated debt-limit standoffs.
Global Minimum Corporate Tax (GMCT): Balancing Tax Fairness
1. GMCT was agreed upon by 136 countries as part of the OECD plan to implement a 15% global minimum tax rate starting in 2023.
2. The GMCT aims to prevent multinational enterprises from shifting profits and tax revenues to low-tax jurisdictions (tax havens) and create a more balanced global tax framework.
3. Large international corporations would be subject to a minimum 15% tax.
4. The need for GMCT arose due to the increasing trend of multinational corporations shifting profits to tax havens to minimize their tax liabilities.
5. The proposed two-pillar solution includes addressing the allocation of taxing rights between countries (Pillar One) and setting a global minimum tax rate (Pillar Two).
6. Pillar One ensures MNEs pay taxes in jurisdictions where they generate profits, even without a physical presence, based on where consumers are located.
7. Pillar Two sets a global minimum tax rate, allowing countries to apply a “top-up tax” if a company’s effective tax rate is below the agreed minimum.
8. Challenges include potential impact on sovereign tax policies, opposition from smaller countries with lower tax brackets, and potential economic stalemate in developing nations.
9. The GMCT could increase India’s tax base, leading to economic growth and a level playing field for Indian companies competing with MNCs.
07/08/2023
Income Tax deduction for scientific research:
1. Where any assessee carries out any research of scientific nature related to the business carried on by him, 100% expenses are deductible in the following manner (Sec 35(1)(I) and Sec 35(1)(iv):
a. Expenditure incurred BEFORE the commencement of business:
Capital Expenditure:
I) Capital expenditure (other than expenditure on acquisition of land) incurred during three years immediately preceding the date of commencement of business shall be allowed as an expense in the year in which the business commences.
ii) Such capital expenditure can be incurred on acquisition of P&M, construction of building, acquisition of vehicles, etc for the purpose of scientific research.
iii) Where any assessee has purchased any land & building, expenditure is allowed only for the building portion and not for the land portion.
Revenue Expenditure:
I) Following revenue expenditure incurred during three years immediately preceding the date of commencement of business shall be allowed as an expense in the year in which the business commences:
- Salary paid to employees engaged in scientific research (excluding perquisites)
- Purchase of materials used in scientific research
b. Expenditure incurred AFTER the commencement of business:
Capital Expenditure:
I) 100% of the capital expenditure incurred by an assessee on scientific research in relation to his business is allowed as an expense in the year in which the capital expenditure is incurred by the assessee.
ii) Capital expenditure incurred on acquisition of land is not allowable as deduction Where any assessee has purchased any land & building, expenditure is allowed only for the building portion and not for the land portion.
Revenue Expenditure:
I) Entire revenue expenditure incurred by an assessee on scientific research in relation to his business is allowed as an expense in the year in which such expenditure is incurred.
No depreciation can be claimed u/s 32 in respect of those assets for which deduction has been claimed u/s 35.
2. Any expenditure incurred by a company, on scientific research (not being in nature of cost of land and building) on in-house scientific research and development facilities as approved by the prescribed authorities is allowed as 100% deduction as under:
a. Company, engaged in any business biotechnology or of manufacture or production of any article or thing, other than those specified in the list of Eleventh Schedule.
b. Company should enter into an agreement with the prescribed authority for co operation in such research and development and audit of accounts maintained for such facilities.?c. Expenditure on scientific research in relation to Drug and Pharmaceuticals shall include expenses incurred on clinical trials, obtaining approvals from authorities and for filing an application for patent. d. Only companies having in-house R&D centre(s) recognised by DSIR are eligible to make application for approval under section 35 (2AB) of the Income Tax Act.
e. For approval, companies having DSIR recognised in-house R&D centres are required to submit application in Form 3CK.
06/08/2023
4.65 crore Income tax filers paid Zero Tax for FY 2022-23 & only 1.69 lakh showed income > 1 crore
Number of tax filers in each bracket
Upto rs 5 lakh 465 Lakh
Rs 5 -rs 10 lakh 110 Lakh
Rs 10 -rs 20 lakh 45 lakh
Rs 20 -rs 50 lakh 19 lakh
Rs 50L -rs 1 crore 3.3 lakh
Rs 1 crore above 1.69 lakh
Total ITR filed 6.77 crore
Gst Notifications of 05th august 2023
E-way bill for intra-state movement of gold and precious stone: The Government of India, through notification No. 38/2023 dated 4th August 2023, has introduced Rule 138F by allowing State governments to mandate e-way bills for intra-state movement of gold and precious stone.
Key points
1. Minimum threshold: Rs 2lakhs
2. Part A is only required; Part B not required
Excess credit claimed in GSTR-3B as compared to GSTR-2B: The Government of India, through notification No. 38/2023 dated 4th August 2023, has introduced Rule 88D which provides that, in case of mismatch above a specified percentage-
1. An Intimation will be issued to the taxpayer in Part A of form DRC-01C
2. The taxpayer has to submit reply (Payment of tax or explanation for mismatch) in Part B of form DRC-01C
3. Non-submission of reply will lead to restriction in filing of subsequent period GSTR-1/IFF in terms of Rule 59(e).
4. DRC-01 C intimation issued by the system need not to be signed by any officer
04/08/2023
India on Thursday said it will impose a licensing requirement for imports of laptops, tablets and personal computers with immediate effect, a move that could hit hard the likes of Apple, Dell and Samsung and force them to boost local manufacturing. Current regulations in India allow companies to import laptops freely, but the new rule mandates a special licence for these products similar to restrictions India imposed in 2020 for inbound TV shipments. India's electronics imports, which include laptops, tablets and personal computers, stood at $19.7 billion in the April to June period, up 6.25% year-on-year. A government source, who did not want to be named, told reporters shipments that have been ordered will be allowed without licences until Aug. 31. The move is expected to benefit contract manufacturers like Dixon Technologies (DIXO.NS), whose shares rose more than 7% on the news. The move's spirit is to push manufacturing to India. It's not a nudge, it's a push. India has extended a deadline for companies to apply for a $2 billion incentive scheme to attract investments in IT hardware manufacturing. The scheme is key to India's ambitions to become a powerhouse in the global electronics supply chain, with the country targeting annual production worth $300 billion by 2026. The country has imposed high tariffs in the past on products like mobile phones to catalyze domestic output. The restriction will help India to import such hardware only from "trusted partners", the first government source added. Half of India's restricted items are shipped from China, with whom Delhi's relationship has soured since border clashes in 2020, leading to several anti-China steps to curb investment and trade from India's neighbour.
Global investment company Davidson Kempner Capital Management has reportedly issued a legal notice to Aakash Educational Services, the test-prep subsidiary of Byju's. The legal notice claims alleged covenant breaches on the Rs 2,000 crore loan sanctioned to the company. According to a report in Economic Times, the X legal notice said that it reserves the right to invoke Aakash's pledged shares which were offered as collateral and potentially take control of the company. Incidentally, Byju's too sent a notice to Aakash's promoters recently. It has asked the promoters to honour the agreement to close the acquisition of the coaching centre that was first announced in 2021. It is not clear so far if Byju's too has sent a legal notice to Aakash. Aakash promoters have said no to share swap Sources close to the matter told ET that the equity-swap part of the Byju's-Aakash deal is still pending. Aakash's promoters, the Chaudhry family and investment fund Blackstone informed the edtech major recently on the breach of terms and that they will not go ahead with the pending share swap. Sources claimed that there are tax implications to the equity swap because of which the promoters of Aakash have opposed completing the share swap.
The income tax act offers certain tax exemptions and deductions in relation to the house rent allowance (HRA) and donations. To claim such an exemption from HRA, a taxpayer can resort to submitting a fake rent receipt to enjoy the said exemption. A fake rent receipt or taking a false deduction of donations can result in a tax notice asking for valid documents, proof of rental payments, proof of donations made, etc. Misrepresentation or suppression of facts, claim of expenditure not supported by documentary evidence, or recording any false entries in the books of accounts is considered as misreporting of income, and hence a penalty of an amount equal to 200 percent of tax payable on such underreported income can be levied under section 270A.
In addition to this, there could be interest implications as well at the time of re-computing the income by the tax officer by disallowing the fake rent receipts and donations. It is pertinent to note that there is a provision of imprisonment as well for dealing with such cases.
The AAAR, Maharashtra, in the matter of M/s Chep India Private Limited [Order No. MAH/AAAR/DS-RM/02/2023-24 dated June 05, 2023] held that the transaction between two GSTINs of same person would be considered as lease transaction and accordingly taxable as supply of services in terms of Section 7 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”).
Facts:
M/s. Chep India Private Ltd. (“the Appellant”) is engaged in the business of leasing of pallets, crates and containers (“Equipments”) and multiple GST registrations all over India including in the state of Maharashtra, Karnataka and Tamil Nadu.
The Maharashtra unit owns the equipment and entered into leasing agreement with the customers and other units located across all over India. Thereafter Maharashtra unit leases the equipment to Karnataka units based on their demand requirement by executing Memorandum of Understanding (“MOU”) under the cover of the delivery challan and raises periodical invoices on Karnataka unit for lease charges (‘Transaction 1’). The Karnataka unit further leases such equipment to end customers for consideration through and would be charging lease charges from its customers based on the period for which the equipment was used by the customer. In case if such equipment is required by another unit of the Appellant say, Tamil Nadu, instead of sending such equipment back to Maharashtra, Karnataka unit undertakes to transport of such equipment directly to Tamil Nadu unit upon instructions from Maharashtra unit (‘Transaction 2’). Upon receipt of equipment by Tamil Nadu unit, Maharashtra unit raises invoice to Tamil Nadu unit for lease amount, while Karnataka unit raises invoice to Maharashtra unit for facilitation of movement of equipment to Tamil Nadu unit.
The Appellant filed an advance ruling seeking whether leasing of equipment by Maharashtra unit to other unit would be considered as lease transaction, and if yes what would be the valuation of such services. The AAR, Maharashtra vide Advance Ruling No. GST-ARA-82/2020-21/B-111 dated December 01, 2022 ruled that the leasing of equipment by Maharashtra unit to other unit would be considered as lease transaction since both units i.e. Maharashtra unit and other units are distinct person as per Section 25 of the CGST Act. In respect of valuation the AAR ruled that, the lease charges which would be charged by the other branch to the ultimate customer would be the value of supply for branch transfer.
Aggrieved by the second question, the Appellant filed an appeal before the AAAR, Maharashtra seeking the valuation of lease transaction between the distinct persons.
Issue:
Whether movement of the equipment between distinct person would be considered as supply and what would be value of leasing services undertaken between distinct person for charging GST?
Held:
The AAAR, Maharashtra, in Order No. MAH/AAAR/DS-RM/02/2023-24 held as under:
Observed that, there is no dispute that lease transaction between Maharashtra unit and Karnataka unit would be considered as supply in terms of Section 7 of the CGST Act. Clarified that, the Karnataka unit is in the possession of the goods and Maharashtra unit is the owner of the goods, the movement undertaken by Karnataka unit (a lessee) to Tamil Nadu unit cannot be termed as supply in terms of Section 7 of the CGST Act. In respect of valuation the court noted that, the transaction value i.e. the price actually paid cannot be treated as the value of supply since, the supply is undertaken between the related persons i.e., the branches of the same company. Relied on the case of M/s BG Shirke Construction Technology Pvt. Ltd. [Advance Ruling No. GST-ARA- 42/2019-20/21-22/B-56] wherein AAR, Maharashtra ruled that in case where the recipient is distinct person, and the recipient is eligible for full input tax credit the valuation may be done as per second proviso to Rule 28 of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”).
Held that, the Karnataka unit (recipient of leasing service) is eligible for full input tax credit of the lease transaction and hence the value declared in the invoice would be the value of goods or services or both as per second proviso to Rule 28 of the CGST Rules.
03/08/2023
Vivad Se Vishwas Scheme:II (Contractual Disputes) Scheme for Effective Settlement: Date: August 2, 2023
The Department of Expenditure, Ministry of Finance, has taken a significant step towards resolving pending contractual disputes of the government and government undertakings by launching the "Vivad se Vishwas II – (Contractual Disputes)" scheme. This initiative was announced in the Union Budget 2023-24 by the Union Finance Minister, Smt. Nirmala Sitharaman.
In her Budget speech (Para 67), the Finance Minister outlined the objectives of the scheme: "To settle contractual disputes of government and government undertakings, wherein arbitral award is under challenge in a court, a voluntary settlement scheme with standardized terms will be introduced. This will be done offering graded settlement terms depending on pendency level of the disputes."
The Department of Expenditure issued detailed guidelines for the scheme on May 29, 2023. The last date for submission of claims under this scheme is October 31, 2023.
A. The scheme is applicable to all domestic contractual disputes where either the Government of India or an organization under its control is one of the parties.
B. The eligibility criteria for settlement under this scheme are as follows:
1. For disputes with an Arbitral Award passed on or before January 31, 2023.
2. For disputes with a Court Award passed on or before April 30, 2023.
Under the scheme, for Court Awards passed on or before April 30, 2023, the settlement amount offered to the Contractor will be up to 85% of the net amount awarded or upheld by the court. For Arbitral Awards passed on or before January 31, 2023, the settlement amount offered is up to 65% of the net amount awarded.
C.To streamline the process, the Government e-Marketplace (GeM) has developed a dedicated web-page for implementing this scheme. All eligible claims will be processed only through GeM. For non-GeM contracts of the Ministry of Railways, contractors may register their claims on IREPS (www.ireps.gov.in).
D. The Ministry of Finance, Department of Expenditure, has made available the details of the scheme on its official website.
E. This initiative comes as a relief to many contractors and organizations involved in contractual disputes with the government. The scheme offers an opportunity for an amicable settlement and provides standardized terms for resolving disputes. Contractors are encouraged to avail the benefits of this scheme and submit their claims within the stipulated time frame.
F. The Vivad se Vishwas – II (Contractual Disputes) scheme is a step towards promoting a more business-friendly environment and reducing litigation burden, fostering smoother contractual relationships between the government and its stakeholders.
G. For more information and to check the eligibility criteria, interested parties can visit the official website of the Department of Expenditure, Ministry of Finance.
H. One take advantage of this opportunity to settle disputes and pave the way for a more efficient and harmonious business ecosystem.
I. Press Release link : https://pib.gov.in/PressReleasePage.aspx?PRID=1945072#:~:text=The%20Department%20of%20Expenditure%2C%20Ministry,by%20the%20Union%20Finance%20Minister.
MCA Update :
In our continuous endeavor to serve you better, the Ministry of Corporate Affairs is launching Refund form on V3 portal effective on 04th August 2023. Refund form on
V2 portal will continue for availing refund for forms filed in V2.
Payment made more than once on MCA Portal or the extra payment made, for any V3 forms shall be allowed thru this refund form.
Stakeholders are informed that Beta Version of View Public Documents /VPD] service in V3 shall be launched on 16th August 2023 for V3 documents (only for Testing purposes between 7:00 pm to 10:00 pm daily). Existing V2 VPD Service shall remain available for the stakeholders.
E Way Bill:: Two Factor Authentication is further extended till 20/08/2023 for the last time based on requests from some taxpayers. After this no further extension will be provided. Users are requested to register for 2FA immediately and also create sub-users so that EWB activities are managed without any problem.
02/08/2023
Outcomes of 51st Gst council meeting held on 02.08.2023 - discussions over online gaming :
1. GST council approves clear definition of actionable claims at Aug 2 meet
2. GSTC approves inclusion of online money gaming in definition of online gaming
3. GSTC approves defining online gaming as those ‘offered on internet or e-network, incl online money gaming’
4. GSTC approves bringing deposits of money, money’s worth, virtual digital assets by players under GST ambit; Definition approved by GSTC of online money gaming includes games based on both skill & chance
5. GSTC approves inserting definition of ‘virtual digital asset’ in gst law as defined in it act
6. GSTC approves bringing online money gaming supplied by entity located outside taxable territory under IGST ambit
7. GSTC approves proposal to block all online gaming apps/platforms not complying with tax rules
8. Council if required will review rates on online gaming & casinos in 6-8 months
S-CNBC Tv18
https://www.pib.gov.in/PressReleasePage.aspx?PRID=1945208
Companies are struggling to deal with increasing GST notices from different state departments as taxation is a centralised function in most companies and they, especially in services companies, find it difficult to segregate businesses per state. The number of such notices from states, seeking documents and representations as part of tax Scrutiny, has increased significantly since the conclusion of GST compensations for states in July 2022. Since now the states have to generate their revenue independently their revenue departments are in overdrive, sending notices to companies at even the smallest pretext, and their numbers may only increase in the future, experts said. States have started examining the GSTN data, cross checking it with income tax records, and conducting reconciliations, which has led to issuance of a number of notices to businesses.
Gst: Rent paid for paying guest (PG) and hostel accommodations, which are not like residential dwellings, would attract 12% GST, the authority for advance rulings (AAR) in Karnataka has ruled in a case of Srisai Luxurious Stay LLP.
Punjab has got the dubious distinction in the region of having the highest amount of fraud worth over Rs 515 crore in terms of fraudulent cases of GST registration by misusing PAN or Aadhaar details of other people to claim an input tax credit (ITC) in the last six years.
The Ministry of Corporate Affairs (MCA) has taken action against Sarada Pleasure And Adventure Limited and its directors for not conducting board meetings, as required by Section 173 of the Companies Act, 2013. The MCA has imposed penalties on the company and its directors for this violation.
SEBI has mandated the submission of legal entity identifier (LEI) details for all non-individual foreign portfolio investors (FPIs). LEI is a unique 20-character code used globally to identify distinct financial entities. Currently, LEI is only sought voluntarily during registration and know-your-customer (KYC) formalities.
01/08/2023
Gist of Gst circulars and notifications issued on 31.07.23 and 01.08.23
The CBIC vide Circular No. 201/13/2023-GST dated August 01, 2023 has issued clarifications regarding the applicability of GST on certain services based on the recommendations of the GST Council in its 50th meeting held on July 11, 2023. It is hereby clarified that services supplied by a director of a company or body corporate to the company or body corporate in his private or personal capacity such as services supplied by way of renting of immovable property to the company or body corporate are not taxable under RCM. Only those services supplied by director of company or body corporate, which are supplied by him as or in the capacity of director of that company or body corporate shall be taxable under RCM in the hands of the company or body corporate under notification No. 13/2017-CTR (Sl. No. 6) dated June 28, 2017.
It is hereby clarified that supply of food or beverages in a cinema hall is taxable as ‘restaurant service’ as long as:
a) the food or beverages are supplied by way of or as part of a service, and
b) supplied independent of the cinema exhibition service.
It is further clarified that where the sale of cinema ticket and supply of food and beverages are clubbed together, and such bundled supply satisfies the test of composite supply, the entire supply will attract GST at the rate applicable to service of exhibition of cinema, the principal supply.
200/12/2023-GST
Clarification regarding GST Rates and Classification of certain goods based on the recommendations of the GST Council in its 50th meeting held on 11th July, 2023
27/2023-Central Tax
Seeks to Notify the Provisions of S 123 of the Finance Act, 2021 (13 of 2021).
28/2023-Central Tax
Seeks to Notify the Provisions of Sections 137 to 162 of the Finance Act, 2023 (8 of 2023).
29/2023-Central Tax
Seeks to Notify Special Procedure to be followed by a registered person pursuant to the directions of the Hon’ble Supreme Court in the case of *Union of India v/s Filco Trade Centre Pvt. Ltd.,* SLP(C) No.32709-32710/2018.
30/2023-Central Tax
Seeks to Notify Special Procedure to be followed by a registered person engaged in manufacturing of certain goods.
Notification No. 31/2023- Central Tax dated 31.07.2023
The CBIC notified to implement a Pilot based program to take place in the Union Territory of Puducherry to evaluate the effectiveness of risk-based biometric Aadhaar authentication for registration applicants.
Earlier vide Notification No. 27/2022-Central Tax dated 26.12.2022, the same was made applicable for the State of Gujarat.
Notification No. 32/2023- Central Tax dated 31.07.2023 exempts the registered person whose aggregate turnover in the financial year 2022-23 is up to two crore rupees, from filing annual return for the said financial year.
Notification No. 33/2023- Central Tax dated 31.07.2023
The CBIC notified “Account Aggregator” as the systems with which information may be shared by the common portal based on consent under Section 158A of the Central Goods and Services Tax Act, 2017. The Notification shall be effective w.e.f. 01st October, 2023.
Notification No. 34/2023- Central Tax dated 31.07.2023
The CBIC has provided relaxation from mandatory registration to micro-enterprises making sales through E-Commerce platforms. The relaxation is provided to persons making supplies of goods through E-commerce operator, and having aggregate turnover not exceeding threshold limit for registration, subject to fulfillment of certain conditions like person shall not make any inter-state supplies of goods, no supply of goods through E-commerce operator in more than one State or Union territory.: Applicable wef 01.10.2023
35/2023-Central Tax
Seeks to Appoint Common Adjudicating Authority in respect of show cause notices in favour of against *M/s BSH Household Appliances Manufacturing Pvt Ltd.*
Notification No. 01/2023 – Integrated Tax dated 31.07.2023
The CBIC provided restriction of IGST refund route in respect of exports of Pan masala, Tobacco and Mentha oil.
The gross GST revenue collected in the month of July, 2023 is rs 1,65,105 crore of which CGST is rs 29,773 crore, SGST is rs 37,623 crore, IGST is rs 85,930 crore (including rs 41,239 crore collected on import of goods) and cess is rs 11,779 crore (including rs 840 crore collected on import of goods). The government has settled rs 39,785 crore to CGST and ?33,188 crore to SGST from IGST. The total revenue of Centre and the States in the month of July 2023 after regular settlement is ?69,558 crore for CGST and rs 70,811 crore for the SGST. The revenues for the month of July 2023 are 11% higher than the GST revenues in the same month last year. During the month, the revenues from domestic transactions (including import of services) are 15% higher than the revenues from these sources during the same month last year. It is for the fifth time, the gross GST collection has crossed Rs. 1.60 lakh crore mark.
The CBIC vide Circular No. 201/13/2023-GST dated August 01, 2023 has issued clarifications regarding the applicability of GST on certain services based on the recommendations of the GST Council in its 50th meeting held on July 11, 2023. It is hereby clarified that services supplied by a director of a company or body corporate to the company or body corporate in his private or personal capacity such as services supplied by way of renting of immovable property to the company or body corporate are not taxable under RCM. Only those services supplied by director of company or body corporate, which are supplied by him as or in the capacity of director of that company or body corporate shall be taxable under RCM in the hands of the company or body corporate under notification No. 13/2017-CTR (Sl. No. 6) dated June 28, 2017.
It is hereby clarified that supply of food or beverages in a cinema hall is taxable as ‘restaurant service’ as long as:
a) the food or beverages are supplied by way of or as part of a service, and
b) supplied independent of the cinema exhibition service.
It is further clarified that where the sale of cinema ticket and supply of food and beverages are clubbed together, and such bundled supply satisfies the test of composite supply, the entire supply will attract GST at the rate applicable to service of exhibition of cinema, the principal supply.
31/07/2023
Gist Of Gst Notifications issued on 31.07.2023
Notification No. 31/2023- Central Tax dated 31.07.2023
The CBIC notified to implement a Pilot based program to take place in the Union Territory of Puducherry to evaluate the effectiveness of risk-based biometric Aadhaar authentication for registration applicants.
Earlier vide Notification No. 27/2022-Central Tax dated 26.12.2022, the same was made applicable for the State of Gujarat.
Notification No. 32/2023- Central Tax dated 31.07.2023 exempts the registered person whose aggregate turnover in the financial year 2022-23 is up to two crore rupees, from filing annual return for the said financial year.
Notification No. 33/2023- Central Tax dated 31.07.2023
The CBIC notified “Account Aggregator” as the systems with which information may be shared by the common portal based on consent under Section 158A of the Central Goods and Services Tax Act, 2017. The Notification shall be effective w.e.f. 01st October, 2023.
Notification No. 34/2023- Central Tax dated 31.07.2023
The CBIC has provided relaxation from mandatory registration to micro-enterprises making sales through E-Commerce platforms. The relaxation is provided to persons making supplies of goods through E-commerce operator, and having aggregate turnover not exceeding threshold limit for registration, subject to fulfillment of certain conditions like person shall not make any inter-state supplies of goods, no supply of goods through E-commerce operator in more than one State or Union territory.: Applicable wef 01.10.2023
Notification No. 01/2023 – Integrated Tax dated 31.07.2023
The CBIC provided restriction of IGST refund route in respect of exports of Pan masala, Tobacco and Mentha oil.
https://egazette.gov.in/WriteReadData/2023/247740.pdf
29/07/2023
Dept. can’t issue fresh SCN on same issue against which order of Appellate Authority attained finality: The Hon’ble JHARKHAND High Court in the case of AMBEY MINING PVT. LTD. V/s COMMISSIONER OF STATE TAX decided on 17-7-2023
Issue : Two show cause notices issued by different authorities for same period. Is it valid?
Hon'ble High Court Judgement: Revenue cannot re-agitate and issue fresh show cause notices again for same cause of action covering same period against which order passed by first Appellate Authority has been accepted by department and same has attained finality.
Judgement on Refund rejected on mismatch ground but without considering the reconciliation statement provided by the taxpayer:
Citation - 2023-VIL-481-DEL: M/s SHIVBHOLA FILAMENTS PRIVATE LIMITED Vs ASSISTANT COMMISSIONER CGST & ANR*
Date of Order – 25-07-2023
HIGH COURT OF DELHI
Relevant paras of judgement
•It is apparent from the above that although the Appellate Authority had flagged issues on the basis of which certain amount of refund as claimed by the petitioner was required to be rejected, however, no exercise was conducted to determine the extent of the refund claimed, which was untenable. The petitioner had submitted reconciliation statements, and had reduced its claims for refund substantially to restrict the same to the quantum of refund, that according to the petitioner, was due.• Plainly, it is not apposite for the concerned authorities to simply reject an application for refund on the ground of any mismatch without permitting the tax payer to reconcile the same and provide the necessary explanations.
•In the present case, the petitioner was not heard by the Adjudicating Authority and no such exercise for determining the amount of refund admissible was undertaken.•The case was restored to reconsider the refund applications for determining the amount of refund payable to the petitioner after affording the petitioner an opportunity to be heard.
28/07/2023
E- Invoice Alert
1. GST e-invoicing compulsory having aggregate turnover exceeding Rs. 5 Crores w.e.f 1st August 2023
2. The criteria for aggregate turnover is to be checked during any preceding F.Y. from F.Y. 2017-18 onwards
For example, if your aggregate Turnover exceeds INR 5 Cr. in any F.Y. since the inception of GST to 2022-23, E-Invoicing is mandatory from 1st August 2023.
3. Register on e-Invoice Portal
4. Integration of billing software with e-Invoicing
5. Recipients of goods or services to seek a suitable declaration from their vendors who fall under the e- Invoicing limit to ensure that Valid Tax Invoices/Debit Notes/Credit Notes along with QR Code (embedded with IRN) are issued to enable availment of the Input tax credit.
6. Mandatory only for B2B transactions and exports (with or without payment of tax).
Myth:
Generation of e-invoice in GST means the generation of invoice in GSTN portal, but it is not so.
The fact is that the registered persons generates invoice using their own accounting or billing software. Upload the information contained in such invoices in the notified common portal and then generate a unique Invoice Reference Number (IRN) and quick response (QR) code.
Non-applicability :-
1. A unit in Special Economic Zone
2. Insurer or a Banking Company or a financial institution including a NBFC
3. Goods Transport Agency
4. Services by way of Passenger transportation service
5. Services by way of admission to Exhibition of Cinematograph Films in Multiplex screens.
The Delhi High Court set aside the reassessment against the addition of a 7 crores loan of the assessee from a shell company under section 68 of the Income Tax Act, 1961, in the absence of valid reason. Spirit Global Construction Pvt Ltd, Spirit Infradevelopers Pvt. Ltd. [SIDPL] and Spirit Infrastructure Pvt. Ltd [SIPL]. SGCPL had filed its Return Of Income [“ROI”] as Rs.1,04,98,240/-. On 04.06.2011, the said ROI was processed under Section 143(1) of the Income Tax Act, 1961[“the Act”]. The appellant/revenue conducted a search and seizure action under Section 132 of the Act against what is compendiously described as the K.J.S. Ahluwalia Group [“KJS Group”], which included cases involving another group going by the name Prabhatam Group. The search and survey action brought to the fore certain incriminating material. The said material, according to the appellant/revenue, was suggestive of the fact that loans and advances had been received by SGCPL from certain shell companies which were a part of the KJS Group; the shell companies being: Tanish Tradecom Pvt. Ltd [“TTPL”], Puneet Oils and Chemicals Ltd [“POCL”]. The amount said to have been received, as a loan, from TTPL and POCL was Rs. 3.5 crores each i.e., a total of Rs. 7 crores, which was added under Section 68 of the Act; since, according to the Assessing Officer [“AO”], it constituted unexplained credit in the books of SGPCL. Since reasons for issuing notice under Section 148 had not been furnished, on the very same date when the reply was filed i.e., 17.02.2014, the respondent/assessee asked to be furnished a copy of the reasons recorded for triggering assessment/reassessment proceedings against it. Justice Rajiv Shakdher and Justice Tara Vitasta Ganju observed that the statutory [prerequisite] condition was not met by the AO before entering the realm of reassessment/assessment proceedings. The Court set aside the reassessment.
27/07/2023
GST evasion of 3.3 lakh crores in last 5 years, of which 1.08 lakh crores recovered
Highest GST evasion state-wise
Maharashtra (Rs 62,053 crore),
Karnataka (Rs 40,762 crore),
West Bengal (Rs 31,142 crore),
Gujarat (Rs 27,822 crore)
Delhi (Rs 24,343 crore).
Highest number of fake GST registration state-wise
Delhi (5,810)
Tamil Nadu (2,654)
Gujarat (2,364)
Punjab (2,214)
Maharashtra (2,163)
Special GST drive
During a special drive from May 16 to July 9, 2023, tax evasion of *Rs 10,902 crore detected and Rs 45 crore has been recovered*. The Input Tax Credit (ITC) of Rs 470 crores blocked.
The Union finance ministry has notified the rate of interest for provident fund contributions at 8.15%
for 2022-23. The Ministry of Labour and Employment, Government of India, has conveyed the approval of the Central Government under para 60 (1) of Employees' Provident Fund Scheme, 1952 to credit interest for the year 2022-23 to the account of each member of the EPF Scheme..," said a circular by the Employees' Provident Fund Organisation (EPFO). This would enable the EPFO to credit the 8.15% rate of interest to subscribers on their PF contributions for last fiscal. The Central Board of Trustees of the EPFO, which is chaired by Union Labour and Employment Minister Bhupender Yadav, had on March 28 recommended the 8.15% interest rate for FY23.
Following the recommendation of the CBT, the rate of interest has to be approved and notified by the finance ministry. It is only then that it can be credited into members' accounts. Typically, the interest rate is notified by the finance ministry in the first quarter of the fiscal and subscribers were waiting for the notification for FY23. The 8.15% interest rate for EPF contributions for FY23 is just a tad higher than the multi-decadal low 8.1% interest rate for FY22. Prior to this, the lowest interest rate on PF deposits was 8% in 1977-78. Members have been hoping for a higher interest rate on their EPF contributions but the decision on the rate of interest is based on the projected income of the retirement fund manager. For FY23, the EPFO is projected to have an income of Rs 90,497.57 crore. The EPFO is the country's largest retirement fund manager with 70.2 million contributing members and 0.75 million contributing establishments. Interest credit for FY22 was delayed for subscribers due to software issues as the passbook of subscribers had to be split into taxable and non-taxable contributions.
26/07/2023
The Income-tax Appellate Tribunal’s (ITAT) Mumbai bench recently dealt with a case where the long-term capital gains earned by a non-resident Indian on sale of property were mistakenly disclosed in the tax return of his wife, also a non-resident. In turn, she had duly paid taxes against such capital gains. The income-tax (I- T) official sought to add Rs 1.2 crore (the undisclosed long-term capital gains) to the income of the husband and raise a tax demand, but the ITAT took a more practical view. The ITAT bench noted it is a peculiar case where income has been declared and tax paid, but by the wrong person. It said the same income cannot be taxed twice. It directed the wife should get a refund (for the taxes on long-term capital gains paid by her) and this refund should be adjusted against the demand raised in the husband’s case. “The method by which it (this adjustment) has to be carried out is left to the tax authorities without there being any burden on the taxpayer.
INCOME TAX: Appellant firm was engaged in a business of road repairs and construction in which appellant has shown purchases from various entities during the AY 2009-10 and 2010-11. The Assessing Officer (A.O.) issued a notice u/s.133(6) of the Income-tax Act, 1961, which was not complied with by the appellant. The appellant failed to produce the said parties for verification, and the A.O. treated the entire purchases as bogus, adding the amount back to the appellant’s income. The Commissioner (Appeals) held that the purchases were bogus but only the profit element embedded in such purchases should be considered for addition to the appellant’s income. (Principal Commissioner of Income-tax v. Vishwashakti Construction;2023 151 taxmann.com 93 Bombay dated 04.05.2023)
GST: A proposed revision of goods and services tax (GST) rates, aimed at boosting revenue collections and fixing tax anomalies, is unlikely before the 2024 general elections, as the recent meeting of the GST Council did not reconstitute the key ministerial group responsible for examining the matter.
GST: The Goods and Services Tax Network (“GSTN”) has released the GSTR-9 and GSTR-9C offline utility for the financial year 2022-23. The utility can be downloaded from the GST portal.
25/07/2023
GST: Charging of EV batteries at public charging stations will be subject to 18% GST- AAR Karnataka. The fee collected by charging stations would include two components: energy charges and service charges. Energy charge refers to the number of units of energy consumed and service charge refers to the services provided.
GST: In case of wrong availment and subsequent reversal of IGST credit, for applicability of interest U/s 50(3), it needs to be seen whether the aggregate balance in electronic credit ledger of IGST, CGST & SGST/UTGST has fallen below such wrongly availed ITC or not. In case, the aggregate balance has been more than the wrongly availed ITC, then no interest would be payable. However, if the aggregate balance is lower than the wrongly availed ITC, then interest would be payable on differential amount. Further, it is clarified that balance of GST Compensation Cess in ECL would not be included for above specified interest calculation. (CBIC Circular.192/04/2023-GST Dated.17.07.23)
GST: In the event of multiple E-Commerce operators (ECO) in a single transaction, following clarification has been issued to determine the ECO responsible for collection of TCS: Where the supplier side ECO himself is not the supplier and finally releases the payment to supplier, then this supplier side ECO shall be required to comply with compliances under section 52 including collection of TCS. In this case buyer side ECO would not be required to do any compliance U/s 52 or to collect TCS Where the supplier side ECO himself is the supplier then buyer side ECO shall be required to comply with compliances under section 52 including collection of TCS while releasing payment to such supplier side ECO. (CBIC Circular-194/06/2022-GST Dated.17.07.23)
Refund of unauthorized GST Payment made during search proceeding
The Hon’ble PUNJAB & HARYANA High Court in the case of WILLAM E CONNOR ASSOCIATED & SOURCING PVT. LTD.V/s UNION OF INDIA decided on 4-5-2023
Amount collected by GST authorities during search without authority of law is it Constitutional?
Hon'ble High Court held: Since Department failed to place any evidence explaining that amount deposited by Assessee during search under Section 74 of CGST Act, 2017 was collected legally as per authority of law, therefore, petition was allowed and Department was directed to refund collected amount.
24/07/2023
With effect from October 1, 2023, India’s top 100 listed entities (based on market capitalisation) would have to mandatorily confirm, deny, or clarify market rumours to the stock exchanges, and this requirement extends to the top 250 listed entities with effect from April 1, 2024. The Securities and Exchange Board of India (“SEBI”), by way of notifying amendments to the LODR Regulations on June 14, 2023 (“LODR Amendments”), has introduced this mandatory requirement under Regulation 30 read with Schedule III of the LODR. Regulations (referred as the “Market Rumours Amendment”).
At least 30 investors in Indian online gaming companies have written a letter to the Indian PM asking for a meeting to discuss the GST Council’s recent decision to tax real-money games at 28 percent on the ‘full bet value’.
GST: Certain B2C sectors, including construction and scrap, are prone to generating fake GST invoices as some part of their chain is outside the tax net, CBIC Chairman Vivek Johri said.
GST: The 58th Report of the Standing Committee on Agriculture, Animal Husbandry and Food Processing on ‘Research and Development in Farm Mechanisation for Small and Marginal Farmers’, tabled in the Lok Sabha Friday recommended single standards for farm equipment, GST on spare parts and components of tractors up to 40 HP be reduced from current 12 per cent.
GST: Where pumps manufactured by applicant (assessee) is expected to be installed and fastened at its place of installation throughout its operational life, same on installation would be an immovable property, therefore, installation, repair and maintenance of pumps at sewerage pumping station would qualify as "works contact service" as per Section 2(119). (2023_ 152 taxmann.com 519 _AAR - WEST BENGAL_19-05-2023)
GST: No GST on activity of conversion of wheat into fortified whole meal atta and its supply to public distribution system. (2023_ 152 taxmann.com 513 _AAR - WEST BENGAL_19-05-2023)
23/07/2023
ITD clarified that an inoperative PAN is not an inactive PAN. One may file the ITR irrespective of PAN becoming inoperative. However, those with ‘inoperative’ PAN cards will not be issued pending refunds and interest on such refunds. Both TDS & TCS will be collected at a higher rate for such individuals.
PANs of OCIs/foreign citizens, who may have applied for PAN under resident status and not updated their residential status to the JAO or have not filed ITR in any of the last 3 AYs, have been inoperative. OCIs/foreign citizens are required to intimate their residential status to their respective JAO along with supporting documents with a request to update their residential status in PAN database. Details of JAO can be found at - eportal.incometax.gov.in/iec/foservices. In case of delay by JAO, they can share their details by email adg1.systems@incometax.gov.in & jd.systems1.1@incometax.gov.in along-with copy of correspondence to JAO.
INCOME TAX: How to report your “PAN MISUSE” by someone to ITD:
Step 1: Visit the official portal of TIN NSDL;
Step 2: Search for the customer care section on the home page, which will open a drop-down menu; Step 3: Open ‘Complaints/ Queries’ from the drop-down menu. Now, a complaint form will be opened.;
Step 4: Fill in the details required in the complaint form, enter the Captcha code and click on ‘Submit’.
22/07/2023
INCOME TAX: Blindly relying on AIS to file ITR may invite a notice. Because there are certain incomes that are not reflected in AIS. E.g., if you have invested in RBI's floating rate bonds or Sovereign Gold Bonds, the interest earned from these will not reflect in your AIS. So is the case with interest earned in your PPF account. Interest earned from Sovereign Gold Bonds and RBI floating rate bonds are taxable in the hands of an individual, however the PPF interest is exempt from income tax. Banks, post offices & NBFCs are the reporting entities for STF, not RBI.
INCOME TAX: ITAT, Chandigarh allows IT exemption to Punjab Plastic Waste Management Society. Earlier, the CIT(E), Chandigarh, on 19.09.19, rejected the application u/s.12A for grant of registration. The ITAT held that “Section 2(15) of the IT Act provides preservation of our environment to be a charitable purpose. Meaning thereby, that action of petitioner oriented towards preservation of / saving/ conservation of our environment has been construed and held by the legislature to be a charitable action.”
GST: Holding of shares of subsidiary comp by holding comp cannot be treated as supply of service by holding comp to the said subsidiary comp and cannot be taxed under GST. ( CBIC circular based on 50th council meeting)
GST: If common input services procured by HO from a 3rd party, but attributable to both HO and BOs or exclusively to one or more BOs, HO has the option to distribute ITC by following the ISD mechanism. However, if it wishes to distribute the ITC to its BOs, the HO will have to mandatorily register itself under the ISD mechanism. Taxpayers can also adopt for a cross charge mechanism and bill the branches by adopting the value as per Rule 28 of the CGST Act, which would effectively mean that any value is acceptable if the recipient branch is entitled for full credit. (CBIC circular based on 50th council meeting)
GST: CBIC issued circular no.198/10/2023-GST on July 17th 2023 clarifying the mandatory e-invoice for the GST registered persons on Supply to Govt depts in conformity with the recommendations of the 50th GST Council.
21/07/2023
CBIC Circulars Issued on 17.07.2023 from 192 to 199 ::
192- Clarification on charging of interest under section 50(3) of the CGST Act, 2017, in cases of wrong availment of IGST credit and reversal thereof.
193- Clarification to deal with difference in Input Tax Credit (ITC) availed in FORM GSTR-3B as compared to that detailed in FORM GSTR-2A for the period 01.04.2019 to 31.12.2021.
Gst Circular 193 issued on 17th July 2023 comes with some caveats
Circular 183/15/2022 - GST allowed input tax credit to the recipient by way of producing the invoices not reflected in 2A and the following certificates :
ITC Difference from a supplier in a FY
Certificate
1. Upto 5 Lakhs: Certificate from such supplier
2. More than 5 Lakhs: Certificate from CA/CMA
The benefit of the circular 183/15/2022 - GST has been extended for the period from 01st April 2019 to 31st December 2021 subject to the limits in Rule 36(4). Period & percentage of ITC over 2A for which the benefit can be availed
1. 2017-18: No Limit
2. 2018-19: No Limit
3. 01st April 2019 to 08th October 2019: No Limit
4. 09th October 2019 to 31st December 2019: 20%
5. 01st January 2020 to 31st December 2020: 10%
6. 01st January 2021 to 31st December 2021: 5%
7. After 01st January 2022: No ITC if not reflected in 2B
194- Clarification on TCS liability under Sec 52 of the CGST Act, 2017 in case of multiple E-commerce Operators in one transaction.
195- Clarification on availability of ITC in respect of warranty replacement of parts and repair services during warranty period.
196- Clarification on taxability of shares held in a subsidiary company by the holding company.
197- Clarification on refund related issues.
198- Clarification on issue pertaining to e-invoice.
199- Clarification regarding taxability of services provided by an office of an organisation in one State to the office of that organisation in another State, both being distinct persons.
Employee costs are no longer mandatory for cross-charge valuation, even if the recipient branch office is ineligible for Input Tax Credit and does not have the protection of 2nd Proviso to Rule 28. Though the circular lacks explicit reasoning behind this beneficial clarification, it seemingly acknowledges that employees belong to the organization as a whole, rather than being confined to the specific branch of the organisation. The clarification would substantially benefit large healthcare and restaurant service organisations operating in multiple states across the nation. The Advance Ruling of Columbia Asia Hospitality and similar others lose their relevance.
20/07/2023
The Central Board of Indirect Tax & Customs has issued 9 Notifications dated 17th of July 2023 in relation to the 50th Council Meeting held on the 11th of July 2023.
The following are the Notifications issued by CBIC:-
1. Notification No. 18/2023-Central Tax Rate - Extension of Due Date for Filling of GSTR-1 for the state of Manipur extended till 31st of June 2023.
2. Notification No. 19/2023-Central Tax Rate - Extension of Due Date for Filling of GSTR-3B for the state of Manipur extended till 31st of June 2023.
3. Notification No. 20/2023-Central Tax Rate - Extension of Due Date for Filling of GSTR-3B quarterly fillers for the state of Manipur extended till 31st of June 2023.
4. Notification No. 21/2023-Central Tax Rate - Extension of Due Date for Filling of GSTR-7 for the state of Manipur extended till 31st of June 2023.
5. Notification No. 22/2023-Central Tax Rate - Amnesty Scheme for non-fillers of GSTR-4 for the period of July 2017 to March 2019 or F. Y. 2019-20 to 2021-22 extended till 31st of August 2023.
6. Notification No. 23/2023-Central Tax Rate - Amnesty Scheme for Revocation for Cancelled GST Registration on or before 30th December 2022 extended till 31st of August 2023.
7. Notification No. 24/2023-Central Tax Rate - Amnesty Scheme for Withdrawal of Assessment under Section - 62 of CGST Act, 2017 extended till 31st of August 2023.
8. Notification No. 25/2023-Central Tax Rate - Amnesty Scheme for non-fillers of GSTR-9 for the period of 2021-22 extended till 31st of August 2023.
9. Notification No. 26/2023-Central Tax Rate - Amnesty Scheme for non-fillers of GSTR-10 extended till 31st of August 2023.
The Notifications can be accessed at: https://egazette.gov.in/WriteReadData/2023/247376.pdf
https://egazette.gov.in/WriteReadData/2023/247377.pdf
19/07/2023
Notification No. 22/2023 – Central Tax
Due date of the Amnesty Scheme to GSTR-4 non-filers was extended to August 31, 2023
No. 23/2023 – Central Tax
Due Date for the Extension of the time limit for the application for revocation of cancellation of registration was extended to August 31, 2023
No. 24/2023 – Central Tax
Due Date for the Amnesty scheme for deemed withdrawal of assessment orders issued under Section 62 was extended to August 31, 2023
No. 25/2023 – Central Tax
Due date of the Amnesty Scheme to GSTR-9 non-filers was extended to August 31, 2023
No. 26/2023 – Central Tax
Due date of the Amnesty Scheme to GSTR-10 non-filers was extended to August 31, 2023
The Notifications can be accessed at: https://egazette.gov.in/WriteReadData/2023/247376.pdf , https://egazette.gov.in/WriteReadData/2023/247377.pdf
The Bombay high court on 14 July 2023 said the amended IT Rules that include the provision for a fact check unit (FCU) that will flag “fake, false or misleading” content on social media about the govt might be “excessive”, quipping that one cannot “bring a hammer to kill an ant”. The court is hearing petitions filed by the stand-up comedian Kunal Kamra, and media bodies the Editor’s Guild and the Association of Indian Magazines against Rule 3(i)(II)(C) of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2023 – commonly known as the new IT Rules, that gives powers to the FCU. The next hearing will be on July 27.
18/07/2023
GST: All Kerala Gold and Silver Merchants Association has opposed the move to implement e-way bill in the gold trade sector, saying that it would impact several small-scale ornament manufacturing units. It is feared that the setting up of a limit of rs 2 lakh for applicability of e-way bill would wipe out small traders from the gold trading sector.
GST: The directorate general of GST (DGGI) has sent tax demand notices to several corporate houses over corporate guarantees given on behalf of their subsidiaries and to multinationals where they have given such guarantees for their Indian units. DGGI said the practice is a ‘service’ liable for taxation under GST. In the case of MNCs, tax authorities are seeking GST dues from the local unit under RCM.
GST: The Revenue Department will soon file an appeal in Supreme Court against Karnataka High Court ruling in May, that had quashed a Rs 21,000-crore GST demand against online gaming company Gameskraft.
MCA has decided to withdraw another 7,338 prosecutions launched under Companies Act and pending before various courts. This would lead to significant decrease of 21.86 per cent in the pending prosecutions being pursued by the Central Government. The MCA had constituted a committee to undertake a thorough review of all pending litigations. Long pending prosecutions for compoundable offences have been identified for withdrawal.
10. CORPORATE LAW: DICGC (Deposit Insurance and Credit Guarantee Corporation) asks banks to display their Logos, QR Codes on their websites by 31.08.23. DICGC is an Indian govt owned subsidiary that provides insurance on bank deposits in India. It ensures that bank customers are protected and can claim up to a certain amount of their deposits, in case a bank faces financial difficulties or goes bankrupt.
17/07/2023
Few immediate effects on PAN becoming inoperative:
1. Payment in cash of an amount exceeding Rs 50,000 in connection with travel to any foreign country or payment for purchase of any foreign currency at any one time would need verification through a valid PAN Card
2. Payment of an amount exceeding Rs 50,000 to a mutual fund for purchase of its units will not be accepted without a PAN Card
3. A time deposit of amount exceeding Rs. 50,000 or aggregating to more than Rs 5 lakh during a financial year with a bank company or a co-operative bank, post office, or NBFC would need a PAN card verification for completion
4. A taxpayer would need a valid PAN card for making a payment of an amount aggregating to more than Rs 50,000 in a financial year as life insurance premium to an insurer
5. Sale or purchase of shares of a company not listed in a recognised stock exchange for amount exceeding Rs. 1 lakh per transaction will not be possible without an operative PAN Card
6. Payment in cash of an amount exceeding Rs 50,000 in connection with travel to any foreign country or payment for purchase of any foreign currency at any one time would need verification through a valid PAN Card
7. Payment in cash of an amount exceeding Rs 50,000 to a hotel or restaurant against bill at any one time will not be accepted without a PAN Card
8. In absence of a PAN card, making an application for issue of a credit or debit card will not be possible
9. You cannot open a bank account with a banking company or a co-operative bank. But the rule is not applicable for Basic Savings Bank Deposit Account
10. Opening of a demat account with a depository, participant, custodian of securities or any other person with Sebi won't be possible without a valid PAN Card
Gold investment can be done in many forms like buying jewelry, coins, bars, gold exchange-traded funds, Gold funds, sovereign gold bond schemes, etc. Purchasing gold in the form of gold exchange-traded funds (gold ETFs), sovereign gold bonds (SGBs), issued by the Reserve Bank of India, and gold mutual funds has been gaining popularity of late.
1. The Centre launched Sovereign Gold Bonds (SGB) 2023-24-Series I from June 19 to 23 and has priced it at Rs 5,926. The issuance date for Series I FY24 is June 27.
2. SCBs offer a 2.5% interest per annum, payable semi-annually and maturity is linked with the market price of gold.
3. SGBs offer tax benefits, including exemption from capital gains tax if held until maturity.
4. One can buy SCBs in denominations of 1 gram of gold, and multiples.
5. The SGBs can be bought through Scheduled Commercial banks, Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices, National Stock Exchange of India Limited and Bombay Stock Exchange Limited.
6. Gold exchange-traded funds are those that depend on the domestic price of physical gold. Here the investment is done in a dematerialised (demat) way, which can be bought and sold on the stock exchange.
7. Some of the top gold ETFs in India at present are: HDFC Gold ETF, SBI Gold ETF, IDBI Gold ETF, Axis Gold ETF, Kotak Gold ETF, Aditya Birla Sun Life Gold ETF, Nippon India Gold ETF, Invesco India Gold ETF, Quantum Gold ETF, UTI Gold ETF, and ICICI Prudential Gold ETF.
8. Gold mutual funds offer investors a convenient and cost-effective way to take advantage of the gold price without physically owning the precious metal.
9. Some of the top gold mutual funds in India at present are: Axis Gold Fund, SBI Gold Fund, Aditya Birla Sun Life Gold Fund, HDFC Gold Fund, Kotak Gold Fund, and ICICI Prudential Regular Gold Savings Fund (FOF).
Update on internationalisation of Indian Rupee:
1. A year ago, the RBI’s report on currency and finance had said that the ‘internationalisation’ of the rupee is “inevitable.” ‘Internationalisation’ implies that the rupee can be freely transacted by both resident and non-residents, and can be used as a reserve currency for global trade.
2. The BIS Triennial Central Bank Survey of 2022 reports that only 1.62% of global transactions are settled in Indian rupee, while the number of transactions settled in the Chinese renminbi and dollar were 7.01% and 88.45%, respectively.
3. Via a circular dated July 11, 2022, the central bank allowed the international settlement of trade in Indian Rupees for export and import of goods and services.
4. In mid March, Bhagwat Karad, Minister of State for Finance informed Rajya Sabha that RBI has granted approvals in 60 cases for the opening of Special Rupee Vostro Accounts for correspondent banks from 18 nations.
5. These include India’s neighbours like Myanmar, Fiji, Sri Lanka and Mauritius. Even banks from Botswana, Germany, Guyana, Israel, Kenya, Malaysia, New Zealand, Oman, Russia, Seychelles, Singapore, Tanzania, Uganda, and the United Kingdom have signed deals for Special Rupee Vostro Accounts.
6. Bangladesh became the 19th nation that signed for bilateral trade settlements in Indian rupee.
7. The Reserve Bank of India and the Central Bank of UAE (CBUAE) on Saturday signed two Memorandums of Understanding (MoU) to strengthen the use of local currencies for cross-border transactions and for interlinking their payment and messaging systems.
Delhi HC ruling on gst refund : W.P.(C) 7248/2023 & CM APPL. 28227/2023 : Date of Decision: 07th July, 2023
Refund has been granted by Hon'ble Delhi High Court on 07-07-2023 in the matter of Advance System V/s Commissioner CGST Delhi North on the ground that once an appeal has been succedded before the appellate authority no fresh refund applications are to be filed. Further, even if an application is filed the proper officer has no power to hold the refund on any ground or to issue any Deficiency Memo/Show Cause Notice and has to forthwith grant the claim to the applicant. Undisputedly, the petitioner had filed its application in the requisite form (GST RFD-01) along with the necessary declarations and undertaking.
The respondents alledged that the applications were defective and the review has proposed to file an appeal against the OIA. The court held that We are also unable to accept that the petitioner’s refund can be withheld merely on the ground that the respondent proposes to review the Orders-in-Appeal dated 31.01.2023. However, it is clarified that the disbursement of the refund in favour of the petitioner would not preclude the respondents from availing their remedies against the Orders-in-Appeal in accordance with law. The respondent shall also process the petitioner’s request furnished in Form GST-PMT-03 in accordance with law.
16/07/2023
TDS U/S 194Q on payments made to Kachha Arahitia
1. Kachha Arahitia are involved in selling crops on behalf of farmers. They are agents for an unnamed principal. The remuneration of the Kachha Arahitia consists solely of commission and he is not interested in the profits and losses made by his constituent. The Kachha Arahitia does not have any dominion over the goods.
2. TDS U/S 194Q is deducted by the purchasers from Kachha Arahitias. The buyer in such cases is treating the kachha Arahitias as a seller therefore covering the transaction U/S 194Q for the purposes of TDS. The transaction of sale by the Kachha Arahitia is not part of his turnover/ business receipts.
3. The CPC while processing the returns of Kachha Arahitia raises the objection that the turnover of sales is not declared in the gross receipts.
4. CBDT in its circular: No 452 [F.No. 201/3/85-IT(A-II)], Dt. 17/03/1986 had clarified in Para 4 of circular that so far as Kachha Arahitias are concerned the turnover does not include the sales effected on behalf of principals and only the gross commission has to be considered for the purpose of section 44AB.
5. So some clarification is required on this issue from the CBDT, on whether TDS needs to be deducted on the transaction of sale through Kachha Arahitias.
IPL's enterprise valuation rises 80% to hit $15.4 billion in 2023
1. The stand-alone brand value of the IPL is now USD 3.2 billion, up by 80% from USD 1.8 billion in 2022.
2. The business enterprise value of the IPL stands at USD 15.4 billion, which is up by 80% from USD 8.5 billion in 2022, as per a brand valuation study by Global investment bank Houlihan Lokey, Inc., the results of which were issued on Monday.
3. This increase is mostly because of the media rights agreement signed with Viacom18 and Disney Star for the period 2023–2027 following a highly contentious auction.
4. From 2008 and 2023, the IPL’s media rights grew at a CAGR of 18%, while the rise between the 2017 and 2023 cycles rose by an amazing 196%. Source: Times of India
Scrutiny of ITRs using Advanced AI Tools:: IT processing and refund can take time this year. This year, they are going to scrutinize the returns very strictly. For this they are adapting the specially designed, self automated and modified Artificial Intelligence software program (AI) for scrutinizing the filed ITRs. This program will first collect the data linked with your PAN card, then it will automatically follow the linked data with your Aadhar card. After this the AI will tally the transactions linked with your Aadhar and PAN with the bank accounts attached. Now it will collect all details of fixed deposits, quarterly interests credited, share dividends, share transactions, mutual fund and shares, long term and short term gains of all bank accounts you declared & attached yourself with your Income Tax ITR returns filed by you. Now it will start tallying the undeclared bank accounts on your name and also with the joint name -(where you are second or third member to operate the account). It will also search the postal accounts and bank accounts with all cooperative banks, local credit institutions, postal fix deposits, interests, postal RDs, MIS, senior citizen saving schemes etc either single or jointly with second name where your investments are made with the family members who are non registered ITR filers. The PAN card will now be checked with the government registry office for any Land and immovable property transactions in the current and previous three years.
After all this, they workout the debit cards, credit cards transactions, passport, visa attached tour details, two & four wheeler purchase or sale etc. The complete data collected will be tally with data you furnished /declared through your Income Tax Return. Also will be tally with TDS cut in AS26 data. The decleared and undeclared factual income tax will be calculated automatically and demand will be sent to you under Section 143(i). The full proof automated AI-ITR program is successfully finalized & tested and will be implemented first time from this year onwards. So income tax processing will be delayed somewhat. All the ITRs are expected to process late in the last week of July or in the first week of August. Because this specially designed AI-ITR program has enough capacity to do all this work in a fraction of seconds. S- post
As part of Operation Goldmine, the Directorate of Revenue Intelligence (DRI) confiscated 48.20 kg of Gold Paste at Surat International Airport. This seizure represented one of the largest amounts of gold ever intercepted at an airport in recent years. According to the information, the officials from the DRI apprehended three passengers who had arrived from Sharjah via Air India Express Flight No. IX172 at Surat International Airport on 7th July 2023. These individuals were suspected of smuggling gold in paste form into India. Subsequent to the examination of their hand baggage and check-in luggage revealed the presence of 43.5 kg of gold paste concealed within 20 packets of white colour, cleverly hidden within five black belts.
The Directorate of Enforcement (ED) carried out search operations at 25 locations on 02.06.2023 in the case registered against Mohammad Ejaj Bomar & others (GST Fraud case) under the provisions of the Prevention of Money Laundering Act (PMLA), 2002. ED searched the premises of accused persons who were involved in preparing bogus documents based on which fake GST firms were made and the entities which were used for providing bogus Input Tax Credit (ITC). it was found that these accused persons have changed the mobile number linked to the Aadhar card of several persons promising them financial assistance under the government scheme and later on used these Aadhar for obtaining PAN and then GST registration. As per the police charge sheet, fake invoices of more than Rs.1102 Crore involving evasion of GST of Rs. 122 Crore using 461 bogus firms were issued. The accused created fake entities through forged documents to obtain GST registration. Later on, these fake entities are passing on Input Tax Credits to beneficiaries by generating fake invoices on a commission basis. Payment for these fake invoices is made through banking channels and later on, the amount is settled in cash between the operator of the fake entity and the beneficiary.
15/07/2023
The Chandigarh bench of the Custom, Excise and Service Tax Appellate Tribunal (CESTAT) held that the Small Scale Industry (SSI) exemption cannot be denied on the ground of usage of the surname of the family in the separate entity by the assessee; Mankoo Machine Tolls Pvt. Limited.
RBI has issued press release to update the public on the withdrawal of rs 2000 denomination banknotes. In May 2023, the RBI announced the withdrawal of rs 2000 banknotes from circulation. As of March 31, 2023, the total value of rs2000 banknotes in circulation was rs 3.62 lakh crore, which decreased to rs 3.56 lakh crore by May 19, 2023. According to data received from banks, as of June 30, 2023, rs 2.72 lakh crore worth of rs 2000 banknotes have been returned from circulation since the announcement on May 19. This leaves rs 0.84 lakh crore worth of rs 2000 banknotes still in circulation as of June 30. In other words, 76% of the ?2000 banknotes in circulation as of May 19, 2023, have been returned. Data collected from major banks reveals that 87% of the returned rs 2000 banknotes are in the form of deposits, while the remaining 13% have been exchanged into other denomination banknotes.
14/07/2023
50th gst council meeting highlights:
1. RBL Bank & ICBC bank considered as specified banks exempt from IGST on gold, silver or platinum import.
2. Exemption on satellite launch services supplied by ISRO, Antrix Corporation Limited & New Space India Limited (NSIL) extended to such services supplied by entities in private sector also to encourage start-ups.
3. GTAs will not be required to file declaration for paying GST under forward charge every year. Once they exercise this option for a particular FY, they shall be deemed to have exercised it for the future FYs also, until and unless they file a declaration to revert to RCM. Option to pay GST under FC to be exercised from 1st January to 31st March of preceding FY.
4. Services supplied by a director to his company in his personal capacity is not taxable under RCM. Services supplied in the capacity of director of company shall be taxable under RCM in the hands of the company.
5. Supply of food and beverages in cinema halls is taxable as restaurant service as long as they are supplied as service independent of cinema exhibition service. Where the sale of cinema ticket & supply of food/ beverages are clubbed together, & such bundled supply satisfies the test of composite supply, the entire supply will attract GST at the rate applicable to service of exhibition of cinema, i.e., the principal supply.
6. Casino, Horse Racing and Online gaming to be taxed at the uniform rate of 28%. No differentiation between Game of skill and Game of chance for GST Purpose. Tax will be applicable on the face value of the chips purchased in the case of casinos, on the full value of the bets placed with bookmaker/totalisator in the case of Horse Racing and on the full value of the bets placed in case of the Online Gaming. Suitable amendments to be made to law to include online gaming and horse racing in schedule III as taxable actionable claims.
7. Council has recommended the Rules governing appointment of President and Members of the proposed GSTAT. Provisions of Finance Act, 2023 pertaining to GSTAT may be notified by the Centre w.e.f 01.08.2023 and the Chief Secretary of Maharashtra to be nominated as one of the members of the Search cum selection committee. Regarding the number of State Benches, it is decided to start it in phase wise.
8. Relaxations provided in FY 2021-22 in respect of various tables of GSTR-9 & 9C will continue for FY 2022- 23. For easing compliance burden of smaller taxpayers, exemption from filing of annual return (in form GSTR-9/9A) for taxpayers having aggregate annual turnover up-to 2 crores will continue for FY 2022-23 also.
9. ISD mechanism is not mandatory for distribution of ITC of common input services procured from third parties to the distinct persons.
10. No GST is chargeable by the manufacturer on replacement parts and/ or repairing services provided to customers without consideration during the warranty period. No reversal of ITC is also required to be made by the manufacturer.
11. Refund of accumulated ITC u/s. 54(3) of CGST Act for a tax period will be restricted to ITC on inward supplies reflected in GSTR-2B of the said tax period or any previous tax period.
12. Only name, and not the name and full address of the recipient, on the tax invoice is required in cases of supply of taxable services by or through an ECO or by a supplier of OIDAR services to an unregistered recipient.
The balance of ITC in electronic credit ledger, under the heads of IGST, CGST and SGST altogether, has to be considered while calculating interest liability be paid u/s.50(3) of CGST Act in respect of wrongly availed and utilized IGST credit.
13. Amnesty schemes notified on 31.03.2023 regarding non-filers of GSTR-4, GSTR-9 & GSTR-10, revocation of cancellation of registration & deemed withdrawal of AOs issued u/s. 62 of CGST Act is extended till 31.08.2023.
14. As recommended GoM on implementation of E-way bill for movement of Gold/ Precious stones under chapter 71, Council recommended inserting rule.138F in CGST Rules, & SGST Rules of States wanting to mandate the requirement.
15. As recommended by GoM on Capacity based taxation & Special Composition Scheme approved by Council in 49th meeting, Council made the following recommendations: Issuance of notification u/s. 148 prescribing a special procedure to be followed by manufacturers of tobacco, pan masala & other similar items for registration of machines and filing of special monthly returns;
Insertion of sec.122A in CGST Act providing for special penalty for non-registration of machines by such manufacturers;
Amending sec.16 to be notified w.e.f 01.10.23 to provide restriction of IGST refund route in respect of exports of tobacco, pan masala & other similar items.
16. Recommended the following amendments in CGST Rules to strengthen the registration process and to effectively deal with fraudulent registrations in GST: Amendment in rule 10A to provide that the details of bank account, in name and PAN of the registered person, to be furnished within 30 days of grant of registration or before filing GSTR-1/ IFF,
Amendment in rule 21A(2A) to provide for system-based suspension of the registration of such registered persons who do not furnish the details of valid bank account within the specified time period;
Insertion of 3rd proviso in rule 21A(4) to provide for automatic revocation of such system-based suspension upon compliance with provisions of rule 10A; Amendment in rule 59(6) to provide that where a registered person has not furnished details of a valid bank account under rule 10A, he may not be allowed to file GSTR-1; Amendment in rule 9 & rule 25 to do away with the requirement of physical verification of business premises to conduct in the presence of the applicant and also to provide for physical verification in high risk cases even when Aadhaar has been authenticated.
17. Pilot to conduct in Puducherry for risk-based biometric-based Aadhaar authentication of registration applicants.
18. As recommended by GST Council in 48th meeting, rule 88C was inserted in CGST Rules w.e.f 26.12.2022 for system- based intimation to registered person where the output tax liability as per GSTR-1 exceeds that disclosed in GSTR- 3B. Council now recommended insertion of Rule 142B & DRC-01D to provide for manner of recovery of such tax. Recommended a mechanism for system-based intimation to taxpayers in respect of the excess availment of ITC in GSTR-3B vis a vis that made available in GSTR-2B above a threshold, along with the procedure of auto-compliance on the part of the taxpayers, to explain the reasons for the difference or take remedial action in respect of such difference.
19. For this purpose, rule 88D & DRC-01C to be inserted in CGST Rules along with amendment in rule 59(6).
20. To improve discipline in filing of annual return, GSTR-3A to be amended to provide for issuance of notice on failure to furnish Annual Return in GSTR-9 or GSTR-9A by due date.
21. Rule 64 & GSTR-5A to be amended to require OIDAR service provider to provide details of supplies made to registered persons in India in his return in GSTR-5A.
22. Explanation 3 to insert in rule 43 to prescribe ‘value of supply’ of goods from Duty Free Shops at arrival terminal in international airports to incoming passengers to be included in value of exempt supplies for reversal of ITC.
23. Sub-rule 3A to be inserted in rule 162 to prescribe the compounding amount for various offences under sec.132.
24. Insertion of rule 163 in CGST Rules to provide for manner and conditions of consent-based sharing of information of registered persons available in common portal with other systems and issuance of a notification u/s.158A for notifying “Account Aggregators” with whom information is to be shared.
25. Insertion of clause (ca) in sec.10(1) to clarify 'place of supply' in respect of supply of goods to unregistered persons.
26. To form a State level coordination Committee comprising of GST officers from State and Central GST administration for knowledge sharing on GST and coordinated efforts towards administrative and preventive measures.
27. 2nd interim report of GoM on IT System Reforms was discussed, in which GoM recommended various system- based measures & more use of 3rd party data for risk management and fraud control.
13/07/2023
Clarification On Taxability Of Income Earned From Off-Shore Investments In Investment Fund Routed Through An AIF
1. Circular No. 14/2019 dated 03.07.2019, issued by the CBDT, clarifies the taxability of income earned by non-resident investors from offshore investments routed through investment funds. The circular applies to Category I or Category II Alternative Investment Funds (AIFs) regulated under the SEBI regulations.
2. With the Finance Act of 2023, the definition of ‘investment fund’ under the Income-tax Act, 1961 was amended to include a reference to the International Financial Services Centres Authority (Fund Management) Regulations, 2022 under the IFSCA Act, 2019.
3. The circular has been amended to state that the provisions of Section 115UB of Chapter XII-FB apply to Category I or Category II AIFs regulated by either SEBI or the IFSCA and regulated under the Securities and Exchange Board of India (Alternative Investment Fund) Regulations. 2012) made under the Securities and Exchange Board of India Act. 1992 or regulated under the International Financial Services Centres Authority (Fund Management) Regulations, 2022 made under the International Financial Services Centres Authority Act, 2019 (50 of 2019). (Circular No.12/2023)
Important observations of the SC while upholding tweaks to CVC Act and Delhi Police Act:
Following are the observations of the Hon Supreme Court while upholding tweaks to the Central Vigilance Commission Act and Delhi Special Police Establishment Act:
1. The court must remain within its self-imposed limits and should not lightly declare a law passed by Parliament unconstitutional.
2. The challenge to any Act would be sustainable only if it is established that the legislature concerned had no legislative competence to enact on the subject. The other ground on which the validity can be challenged is that such an enactment is in contravention of any of the fundamental rights stipulated in Part III of the Constitution or any other provision of the Constitution.
3. Another ground that could be culled out from the recent judgements of this court is that the validity of the legislative act can be challenged on the ground of manifest arbitrariness.
4. The judiciary cannot sit in judgment over the wisdom of the legislature which frames laws, the court must remain within its self-imposed limits and should not lightly declare a law passed by Parliament unconstitutional.
Dr Jaya Thakur vs Union of India (WP No: 456 OF 2022)
Buyer who has defaulted to a medium enterprise, need not pay int at 3 times bank rate: The New India Assurance Co. Ltd. v Winsome International Ltd. Citation: 2023 LiveLaw (Cal) 180
Hon. Calcutta HC held as below:
1. Three kinds of enterprises are defined in three distinct ways under MSMED Act and cannot be viewed as a common set of similar enterprises.
2. “Medium enterprise’’ is defined under Section 2(g) as an enterprise classified under Section 7 and the sub-clauses thereunder. A “micro enterprise” is defined under Section 2(h) while a “small enterprise” is defined under Section 2(m) of the Act.
3. The distinction becomes further important with reference to the definition of “supplier” under Section 2(n) which has been defined to mean a “micro” or “small” enterprise which has filed a memorandum with the authority referred to under Section 8(1). Medium enterprise is not included in Section 2(n).
4. Section 16 of the Act deals with the rate of interest payable by a defaulting buyer to a “supplier”, as required under Section 15 which in turn deals with the liability of a buyer to make payment to a supplier. Section 16 uses the term “supplier” which traces back to Section 2(n), thus excluding a medium enterprise from the scope.
5. Exclusion of a “medium enterprise” from the definition of a supplier and the liability fixed on a buyer to make payment to it under Section 16 of the Act at three times the bank rate, therefore, establishes that interest components could not have been awarded to the respondent/supplier/claimant in the arbitration in accordance with the mandate of Section 16 of the Act.
6. A stay is ordered on the impugned award, upon payment of the principal amount, along with interest at a rate of 8% instead of 24.6%.
12/07/2023
Decisions taken in the 50th GST Council meeting.
1. Transporters will not be required to file declaration for paying GST under forward charge every year
2. No RCM on services supplied by a director of a company to the company in his private or personal capacity such as supplying services by way of renting of immovable property to the company
3. Relief for taxpayer, Govt extended the special procedure regarding mismatch in ITC availed in GSTR-3B and 2A for two more years i.e 2019-20 and 2020-21
4. Amnesty schemes notified vide notifications dated 31.03.2023 regarding non-filers of FORM GSTR-4, FORM GSTR-9 & FORM GSTR-10 returns, revocation of cancellation of registration extended till 31.08.2023
5. To do away with the requirement that the physical verification of business premises is to be conducted in the presence of the applicant
6. To provide for physical verification in high risk cases even where Aadhaar has been authenticated.
7. System-based intimation to the taxpayers in respect of the excess availment of ITC in FORM GSTR-3B vis a vis that made available in FORM GSTR-2B
8. Supply of food and beverages in cinema halls is taxable at 5%
9. If the sale of cinema ticket and supply of food and beverages clubbed together then gst rate of cinema ticket will apply
10. 28% GST on the value of the chips purchased in casinos
11. 28% GST on the full value of the bets placed in Casino, Horse Racing and Online Gaming
12. GST Appellate tribunal will be started in a phased manner
13. Relaxations provided in FY 2021-22 in respect of various tables of FORM GSTR-9 and FORM GSTR-9C be continued for FY 2022-23
14. No GSTR-9 for turnover upto 2 crores for FY 22-23
15. Input Services Distributor (ISD) mechanism is not mandatory for distribution of input tax credit of common input services procured from third parties to the distinct persons as per the present provisions of GST law. Amendment may be made in GST law to make ISD mechanism mandatory prospectively
16. Detailed Circular to be issued to provide clarity on liability to reverse input tax credit in cases involving warranty replacement of parts and repair services during warranty period
17. Refund of accumulated input tax credit (ITC) to be restricted to ITC appearing in FORM GSTR-2B only
18. Only Name of state on tax invoice instead of complete address and name in cases of supply of taxable services by or through an ECO
19. Reduction of gst rate from 18% to 5% on LD Slag (for protection of environment)
20. Reduction of gst rate from 18% to 5% on fish soluble paste
21. Reduction of gst rate from 12% to 5% on imitation zari thread
22. Reduction of gst rate on uncooked/unfried snack pellets to 5%
23. In case of new registrations, the detail of bank account is required to be furnished within 30 days of registration or filing of return of outward supplies, which ever is earlier.
Otherwise registration will get suspended and will be revoked automatically on updation of bank details.
Highlights of 50th Gst council meeting:
1. Cancer treatment drugs, special medicines and food for special medical purpose will be exempt from GST.
2. Tax exemption has been extended to satellite launch services provided by private parties.
3. Raw Cotton from farmers to cooperatives has been clarified as taxable.
4. GST rate reduced for following 4 items- (a) Uncooked and unfried snack pellets reduced from 18% to 5%; (b)Fish soluble paste reduced from 18% to 5%; (c) Imitation zari thread reduced from 12% to 5%; and (d) LD slag to be at par with blast furnace slag, reduced from 18% to 5%.
5. Council approved to reduce GST on Food and Beverages at cinema halls from 18% to 5%.
6. Council decided to levy 28% tax on Online Gaming, Horse Racing, Casinos. There will be no differentiation between Game of skill and Game of chance for GST purpose.
7. States raised their concerns over inclusion of GSTN under PMLA without prior discussion. The matter was however, not discussed further in the meeting.
8. Private bank account details mandatory now for persons seeking GST registration.
9. GST appellate tribunals in first phase are to be mostly set up in capital cities of states and where high court benches are there. To start with, seven GST tribunals will be set up in Maharashtra, and two tribunals will be set up in West Bengal.
10. Council approved 22% cess rate on MUVs, but sedan not included in it. 11. Import of cancer medicine for personal use exempted from GST.
12. Proposal on reduction of GST rates on apple cartons to 5% or nil from current 18% decided to be sent to the fitment committee.
11/07/2022
Gross Direct Tax collections for FY 2023-24 up-to 9th July, 2023 are at Rs. 5.17 lakh crore, higher by 14.65% over gross collections for corresponding period of preceding year. Net collections at Rs. 4.75 lakh crore are 15.87% higher than net collections for the corresponding period of last year. Refunds of Rs. 42,000 crores have been issued up-to 9th July, 2023 which are 2.55% higher than the refunds issued during the corresponding period in the preceding year.
INCOME TAX: The interest income accruing in respect of the employee’s contribution over Rs. 2,50,000 shall be taxable under the head of ‘income from other sources’. However, if such a person has contributed to a fund in which there is no contribution by the employer, the limit of Rs. 2,50,000 shall be increased to Rs. 5,00,000.
The Supreme Court has ruled that the assessee is not entitled to deduction under Section 80- IB of the Income Tax Act, 1961 on the amount received / profit derived from the Duty Entitlement Pass Book Scheme (DEPB) and the Duty Drawback Schemes. (Saraf Exports vs. Commissioner of Income Tax, Jaipur-III; 2023 LiveLaw SC 299)
GST: On its six-year anniversary of the introduction of the GST, the CBIC explains that taxpayers are only liable to pay interest if they used an incorrectly claimed ITC to satisfy their GST due. A decision from the retrospective date (01.07.2017) has been taken to provide relief to taxpayers where interest has to be paid from the day when it has been wrongly utilized. The rate of interest on wrongly availed and utilized ITC has been reduced to 18% from 24% w.e.f. 01.07.2017.
10/07/2022
The Supreme Court on Tuesday held that, once there is a valid insurance policy in favour of a person, the claim for reimbursement of the expenses incurred must be paid. It also observed that once the insurance company has accepted that concealment of a disease at the time of purchasing the policy was not material as it was not related to the disease that caused death, it cannot later refuse further claims or renewal of insurance policy on the same ground.
Jammu and Kashmir and Ladakh High Court held that when the company is an offender, vicarious liability of its directors can be imputed in terms of the provisions of a statue, making it a deeming fiction. But one cannot draw a presumption that MD or the Directors or officers or employees for that matter are responsible for all acts committed by or on behalf of the company. It depends upon the respective roles assigned to the officers or employees of a company. [Reema Arora vs Department of Agriculture, CRM(M) No. 156/2021, decided on 10-03-2023]
09/07/2023
Changes notified in Sec 66 of the Act : The government has included the Goods and Services Tax Network on the list of entities mandated to share information with the Enforcement Directorate (ED) and the Financial Intelligence Unit (FIU) under the Prevention of Money Laundering Act. The government on Friday notified changes to Section 66 of the Act to add GSTN as the 26th entity to the list:
1. It will now have to disclose information to the ED and FIU if a probe falls under their jurisdiction or if the agencies require information for their investigation.
2. The FIU and ED will also share information with the GSTN if they find the involvement of any GST assessee in suspicious forex transactions.
3. The move comes on the back of the ED initiating a probe into a fake GST registration case, where some people allegedly used stolen Permanent Account Numbers and Aadhaar to get GST registrations and set up shell entities for money laundering.
4. The central and state GST authorities had selected more than 60,000 GST Identification Numbers (GSTINs) for physical verification by field tax officers under a nationwide drive. Of the-se, over 50,000 numbers had been verified. As much as 25% of them were fake and the authorities have so far suspended over 11,000 GSTINs.
5. Apart from the ED and FIU, the-list of entities that need to share information include the Competition Commission of India, Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India, Serious Fraud Investigation Office and Director General of Foreign Trade on it.
6. The list is amended from time to time. S-ET
No tax can be levied on the principles of estoppel: ITAT:: Cornet Hotel Services & Suppliers Pvt. Ltd. Versus DCIT Case No.: I.T.A. No. 4613/Del/2019
Facts:
1. The appellant/assessee declared its income by filing its original return of income, in which the revenue receipts generated from operations of "Hotel/Resort" were shown as "rental income". Subsequently, the assessee, by revising its return of income, declared its income and offered the ‘revenue receipts’ from the operation of the "Hotel" under the heading "Business Income".
2. The AO, however, assessed the management license fees as income under the heading "House Property," as declared by the Assessee in the original return of income.
3. The assessee contended that there is no fixed amount for giving the building or resort to M/s Four Seasons, and the management license fees fluctuate according to the revenue generated from the business. Therefore, under any circumstances, the receipt of revenue from M/s Seasons cannot be construed as "Rental income from House Property".
4. The AO was of the view that the assessee itself has deducted the TDS under the head ‘rental income’. The Assessee has earned rental income from House property, and therefore, no interference is warranted in the decision of the authorities below to treat the revenue receipts as rental income from house property.
ITAT Delhi held as below:
1. No tax can be levied on the principle of estoppel. Just because the Assessee has shown the receipt or income in the wrong head does not make him liable for tax.
2. The management licence fees are taxable under the heading "Income from Business" and not "Income from House Property" when granting licences to manage and operate hotel premises.
CBDT to keep close tabs on IVF clinics, hotels, others to add new filers
1. The Central Board of Direct Taxes (CBDT) is aiming at a rise of 10 per cent in new filers and decided to keep close tabs on transactions done at in-vitro fertilisation (IVF) clinics, medical colleges providing admission under non-resident Indians (NRI) quota, hospitals, hotels, banquets and retailers of designer clothing, watches, and luxury brands, The Times of India (TOI) reported on Thursday.
2. According to the annual action plan circulated to officers, there is widespread violation of the rule mandating reporting of transactions of over Rs 2 lakh. Compliance with the requirement to provide a PAN card is also low. From the tax department's perspective, there is inadequate matching of these transactions with the returns filed by individuals. This has been identified as an area of concern, and officials have been instructed to carry out the exercise in a subtle manner.
3. The income tax department has been focusing on high-value transactions for several years and sending out notices to those whose annual returns do not tally with their spending. However, the I-T department has refused to provide any data on the success that it has achieved in obtaining additional revenue. In the financial year 2021-22 (FY22) some 780 million returns were filed, an increase of 6.8 per cent over the 730 million returns filed in FY21.
What is FCPA legislation of USA?
1. Introduction: The Foreign Corrupt Practices Act (FCPA) holds a significant position as the primary Anti-Bribery legislation in the United States.
2. Scope: Enacted in 1977, the FCPA carries extensive global implications, reaching entities and individuals outside the US through its extra-territorial jurisdiction.
3. Further amendments: In 1998, further amendments were made to align with the requirements of the OECD Anti-Bribery Convention.
These amendments expanded the scope of the FCPA, covering payments made to secure “any improper advantage,” reaching certain foreign individuals committing acts in furtherance of bribery within the United States, and applying criminal penalties to foreign nationals employed by or acting as agents of U.S. companies.
4. FCPA consists of 2 primary provisions:
Anti-Bribery Provisions: These provisions prohibit corrupt payments to foreign officials, including facilitation payments.
Accounting Provisions: The FCPA mandates accurate books and records, as well as the establishment of robust internal controls to prevent and detect corrupt practices.
5. Enforcement agencies: The Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) are the primary enforcement agencies for the FCPA.
The SEC enforces civil violations by issuers, while the DOJ handles criminal violations by issuers, as well as civil and criminal violations by domestic concerns and foreign persons or businesses involved in FCPA violations within the United States.
08/07/2023
When the remaking of India’s socialist financial landscape began in 1993, very few people believed in the project — some of the 40 applications to set up new private-sector banks were so frivolous that they were written on postcards. Three decades later, things are far more serious. Finance in the most-populous nation is moving into a higher gear. Of the two big changes expected this year, one has just occurred and created a juggernaut bigger than Morgan Stanley. The other splash may see the birth of India’s own Ant Group Co., a digital-lending powerhouse being set up by the country’s wealthiest tycoon. These disruptions are taking place on the strength of a much larger consuming class that finance has helped create along the way. But is it big enough to sustain the industry’s latest makeover? The test will come in the deposits market. Among the more serious aspirants for a banking license in 1993 — one that didn’t send in its application on a postcard — was Housing Development Finance Corp., then a 16-year-old specialist mortgage lender in a country where the culture of debt-financed homeownership was still in its infancy. After nearly three decades of spectacular growth, HDFC Bank Ltd. finally swallowed up its parent, HDFC, on July 1. The combined entity, as HDFC investors’ stakes are swapped for shares in the bank over the next few days, will have a market value of $173 billion. What’s more, the juggernaut is showing no sign of slowing down. To sustain its 20% pace of annual asset expansion, the bank will need stable funding. Suresh Ganapathy, head of financial services research in India at Macquarie Group Ltd.’s brokerage unit, estimates that the newly bulked-up HDFC Bank will go after as much as 20% of the banking system’s incremental deposits over the next three to four years. This could be highly destabilizing, at a time when the overall industry is gasping for liquidity. India’s extreme income inequality has an impact on banking. Individual savings, which account for three-fifths of deposits, are heavily skewed toward top earners. At the bottom of the pyramid, there are practically no savings. But this rather narrow affluent class is currently grappling with a post-pandemic surge in inflation and trying to protect its living standards with debt. Higher interest rates, however, mean paying more to lenders for mortgages and other consumer credit. What’s left of the surplus at the family level is going into mutual funds in search of better returns — and only then entering the banking system. This year’s other big development in Indian finance is a demerger — a spinoff. In May, shareholders of Reliance Industries Ltd., the country’s most valuable conglomerate, approved splitting a new consumer-finance unit into a separate company with its own stock-market listing soon. When it comes to acquiring new borrowers at a low cost, tycoon Mukesh Ambani’s Jio Financial Services Ltd. will have a ready cachet of more than 400 million subscribers of his dominant telecom business. Additionally, Reliance operates India’s largest retail chain, and has ambitious plans to compete against the likes of Unilever Plc in general merchandise trade, where the No. 1 ingredient for a successful mom-and-pop store is credit for working capital. S-ET
Bombay HC grants tax benefit under India- Singapore DTAA to Citicorp:: CIT vs Citicorp Investment Bank (Singapore) Ltd., 2023 (ITA no. 256 of 2018)
Facts:
1. The Respondent Assessee was registered as a Foreign Institutional Investor (‘FII’) in the debt segment with SEBI and was a tax resident of Singapore for the AY under consideration.
2. Assessee declared capital gains on sale of debt instruments in its return of income and also claimed exemption as per Article 13(4) of the Double Taxation Avoidance Agreement (DTAA) between India and Singapore.
3. However, Article 24 of the DTAA states that income in a Source State shall be exempt from tax only if such amount is remitted to or received by the other Contracting State, i.e., Singapore in this case.
4. The Assessing Officer (‘AO’) held that since the Assessee did not show that repatriation was made to Singapore, in view of Article 24 of the DTAA, it was not entitled to the relief claimed under Article 13(4).
5. The Assessee contended that being a FII, it was liable to tax in Singapore on its worldwide income and that even the Singapore Revenue Authority, vide their certificate dated 16 April 2012, had confirmed the taxation of its income from buying and selling of Indian debt securities in India as accruing or derived from Singapore and therefore, taxable in Singapore, whether or not the same was remitted or received in Singapore.
Hon. Bombay High Court held as under:
1. Entire amount of revenue, whether remitted or not remitted, was taxed in Singapore as mentioned on the face of the certificate issued by the Singapore tax authorities and therefore, Article 24(1) would not apply.
2. Further, referring to Circular No. 789 dated 13 April 2000, it was held that certificate of residence issued by Singapore tax authorities would constitute sufficient evidence for accepting the position of law in Singapore.
3. Therefore, it was held that provisions of Article 24 of the DTAA would not be applicable and exemption under Article 13(4) of the DTAA could be claimed if global income of the Assessee was taxable in Singapore, i.e., the State of Residence.
07/07/2023
The intelligence and criminal investigation (I&CI) wing of the income tax department who carried out verification at the sub-registrar office in Red Hills (Chennai) for the past few days has reportedly unearthed undisclosed financial transactions worth over 2,000 crores. According to sources, the sub-registrar office did not produce the statement of transactions for the last five years, thus hiding the information of high-value transactions to the income tax department.
INCOME TAX: ITAT Visakhapatnam ruled that when proceedings are initiated against a deceased assessee, a notice issued in the name of the deceased person cannot bind the legal heirs unless a proper notice is issued to them. Therefore, any notice issued in the name of a deceased person is considered invalid and cannot be enforced in law. (Aemala Venkateswara Rao vs ITO, Ward-2-1, Guntur, 2019 _105 taxmann.com 14 Visakhapatnam – Trib.)
INCOME TAX Deduction u/s.80EEB: Section 80EEB of the IT Act enables individuals to avail a tax deduction of up to ?1.5 lakh on the interest paid for a loan taken exclusively for purchasing electric vehicle, subject to following conditions:
(a) Only individuals are eligible to claim the tax deduction;
(b) The loan must be taken from 1st April 2019 to 31st March 2023;
(c) Loans must be obtained from approved banks and NBFCs;
(d) The deduction is available only once.
06/07/2023
The GST Council is likely to finalize rules next week for transporting gold and precious stones worth ?2 lakh or more by merchants, so that states can monitor their movement and prevent leakages. According to the proposed rules, states will be at liberty to mandate GST registered entities to report the movement of gold and precious stones worth ?2 lakh or more, within the state, by way of generating e-way bills or electronic permits before starting transport.
Gst Geocoding of 1.8 crore addresses of registered businesses has been conducted and live for all states and union Territories. This geocoding will helpful in finding out the exact location of the registered entities and check bogus registrations. These addresses can be either accepted or updated by the registered entities as per their requirement.
As per the recent update on the GST Portal, the GSTR-3B tab will not open before the filing of GSTR-1.
05/07/2023
CBDT has intensified scrutiny of transactions at In-Vitro Fertilisation (IVF) clinics, NRI college admissions, luxury goods shops, hotels and banquets, due to evidence of large cash transactions at these places. A rule requiring the reporting of transactions of more than INR200,000 has reportedly been widely ignored, while large amounts of cash transactions remain undocumented. Compliance with the requirement to provide PAN for these transactions also low.
The Income Tax raid at Bhubaneswar on DN group of companies (Real Estate Co) is still continuing on day two. The raid was continuing all night long. The Revenue Department has started to crack down on the fake notes that has been seized from the popular group of builders from various locations across Bhubaneswar. According to reports, a team of experts reached and identified the seized currency as fake notes. As another shocking fact it has been seen that during the raid, cash receipts of over Rs. 100 crores have been unearthed till now.
The two-month campaign to get rid of fake GSTINs, which will end on July 15, has already resulted in the cancellation of 4,972 GST registrations and the discovery of tax evasion totalling over Rs 15,000 crore. 16,989 GSTINs are found to be non-existent, out of which 11,015 GSTINs have been suspended and 4,972 cancelled.
The GST Council at its next meeting on Tuesday is likely to exempt cancer medicine Dinutuximab imported by individuals from tax, decide on applicability of GST on food or beverages served in multiplexes and come out with a clear definition of utility vehicles for levying a 22% cess.
04/07/2023
GST: Where supplier committed default in reporting entries with respect to purchase made by assessee and it was admitted by supplier that payment for such purchase including GST value was received from assessee, since it is a settled law that no one cannot be made to suffer for default of another, petition was allowed and assessee was entitled to get refund- HC (2023_ 8_ Centax _47 M.P._13-06-2023)
GST: Hon’ble Delhi High Court in the case of M/s Balaji Exim Vs. Commissioner, CGST (W.P No. 10407 & 10423 of 2022 dated March 10, 2023), has held that the allegations of availing of fake credit cannot be a ground for rejecting the refund applications, unless it is established that the petitioner has not received the goods or paid for them.
Some facts about Gst collections: Rs 1,61,497 crore gross GST revenue collected for June 2023; records 12% Year-on-Year growth. Gross GST collection crosses rs 1.6 lakh crore mark for 4th time since inception of GST; 71.4 lakh crore for 16 months in a row; and rs 1.5 lakh 7th time since inception. Average monthly gross GST collection for Q1 of FY2021-22 is 1.10 lac crores; FY2022-23 is rs 1.51 lac crores; and FY2023-24 is 1.69 lac crores, respectively.
CORPORATE LAW: RBI has cancelled the banking licenses of two co-op banks i.e., Malkapur Urban Co-operative Bank Ltd, Maharashtra and Shushruti Souharda Sahakara Bank Niyamita, Karnataka, due to inadequate capital and earning prospects. The banks have ceased operations and depositors will be entitled to receive up to ?5L from the DICGC.
03/07/2023
The reverse merger of HDFC with its subsidiary HDFC Bank has resulted into a combined business of over rs 41 lakh crore:
1. On July 1st, HDFC and its subsidiary HDFC Bank completed their reverse merger, resulting in a combined business worth over rs 41 lakh crore, bringing them closer to the State Bank of India (SBI), the country's largest lender. As of March 31, 2023, SBI's total business stood at rs 70.30 lakh crore.
2. However, the merged entity's combined profit in FY23 was higher at rs 60,000 crore compared to SBI's rs 50,232 crore. Following the merger, HDFC Bank's capital increased to rs 1,190.61 crore, with the flexibility to adjust the share capital.
3. With the merger, HDFC Bank now ranks as the world's fourth most valued lender and has narrowed the asset size gap with state-owned SBI to become the second-largest Indian bank. The merged entity's total business as of March 2023 reached rs 41 lakh crore, with a net worth exceeding rs 4.14 lakh crore.
Some FAQs for removal of difficulty on issues pertaining to TCS on LRS and purchase of overseas tour program package.
Some important FAQs issues by CBDT, pertaining to TCS on LRS are listed below:
1. Since there are different TCS rates on LRS for the first six months and next six months of the financial year 2023-24, whether the threshold of Rs 7 lakh, for the TCS to become applicable on LRS, applies separately for each six months?
Answer: No. The threshold of Rs 7 lakh, for the TCS to become applicable on LRS, applies for the full financial year. If this threshold has already been exhausted; all subsequent remittances under LRS, whether in the first half or in the second half, would be liable for TCS at applicable rate.
2. Whether the threshold of Rs 7 lakh, for TCS to become applicable on LRS, applies separately for each remittance through different authorised dealers?
Answer: It is clarified that the threshold of Rs 7 lakh for LRS is qua remitter and not qua authorised dealer.
The details of earlier remittances under LRS by the remitter during the financial year may be taken by the authorised dealer through an undertaking at the time of remittance.
3. There is threshold of Rs 7 lakh for remittance under LRS for TCS to become applicable while there is another threshold of Rs 7 lakh for purchase of overseas tour program package where reduced rate of 5% TCS applies. Whether these two thresholds apply independently?
Answer: Yes, these two thresholds apply independently. For LRS, the threshold of Rs 7 lakh applies to make TCS applicable. For purchase of overseas tour program package, the threshold of Rs 7 lakh applies to determine the applicable TCS rate as 5% or 20%.
4. What is the scope of remittance under LRS for medical treatment/education purposes?
Answer: (i) remittance for purchase of tickets of the person to be treated medically overseas (and his attendant) for commuting between India and the overseas destination; (ii) his medical expense; and (iii) other day to day expenses required for such purpose
Source: Circular No. 10 of 2023 dated 30th June, 2023
01/07/2023
The gross Goods and Services Tax (GST) revenue collected in June 2023 was ?1,61,497 crore, 12% higher than the same month last year. Out of the gross GST collected, Central Goods and Services Tax (CGST) comprised ?31,013 crore, State Goods and Services Tax (SGST) ?38,292 crore, Integrated Goods and Services Tax (IGST) ?80,292 crore (including ?39,035 crore collected on import of goods) and cess ?11,900 crore (including ?1,028 crore collected on import of goods).
INCOME TAX: To give adequate time to Banks and Card networks to put in place requisite IT based solutions, the Government has decided to postpone the implementation of its 16th May 2023 e-gazette notification on LRS & TCS. Gist of the notification: (a) Transactions through International Credit Cards while being overseas would not be counted as LRS and hence would not be subject to TCS. (b) Threshold of Rs. 7 Lakh per financial year per individual u/s.206C (IG) (I) shall be restored for TCS on all categories of LRS payments, through all modes of payment, regardless of the purpose. Thus, for first Rs 7 Lakh remittance under LRS there shall be no TCS. Beyond this Rs 7 Lakh threshold, TCS shall be 0.5% (if remittance for education is financed by education loan); 5% (in case of remittance for education/medical treatment); and 20% for others. (c) Increase in TCS rates which were to come into effect from 1st July, 2023 shall now come into effect from 1st October, 2023.
Income tax on dividend income: Dividend received on or after 1 April 2020 is taxable in the hands of the investor. Any expenses of interest incurred for borrowing fund for investing is allowed as a deduction up-to max of 20%. Moreover, TDS is deducted @10% on dividend income in excess of Rs 5,000 from a company or mutual fund. However, a resident individual receiving dividends whose estimated annual income is below the exemption limit can submit form 15G to the company or mutual fund paying the dividend.
Income tax on sale of securities: If equity shares listed on a stock exchange are sold within 12 months of purchase, the seller may make a short-term capital gain (STCG) taxable at 15%. short-term capital gain = Sale price minus Expenses on Sale minus the Purchase price. If equity shares listed on a stock exchange are sold after 12 months of purchase, the seller may make a long-term capital gain (LTCG). When the long- term capital gain is more than Rs.1 lakh, this attracts tax@10%. Long-term capital gains (LTCG) on the transfer of listed equity shares and equity-oriented mutual fund schemes were tax-free until the 2017-18 fiscal year.
30/06/2023
CBDT extends the time limits for submission of certain TDS/TCS Statements: Due date for filing of TDS/TCS statements in Form Nos. 26Q, 27Q & 27EQ for first quarter of FY 2023-24 has been extended to 30th September, 2023. (CBDT Circular No.9/2023 in F. No. 370149/109/2023-TPL dated 28.06.2023)
GST: Tata Sons has challenged a Rs 1,500 Cr tax claim by the GST department on the $1.27 billion settlement it made with NTT Docomo in 2017. The GST department claims that Tata Sons gave a loan to its subsidiary, Tata Teleservices, to settle the dispute with Docomo and is therefore liable to pay taxes on the loan amount.
GST: No GST Under RCM On Director’s Services Provided in Individual Capacity: Where there is contract of service, regarding specific technical expertise/skill and consideration is received by the person (director of the company) as remuneration or commission towards specific services provided by him to the company is outside the ambit of RCM.
GST: Hon’ble Jharkhand High Court in the case of M/s Shree Ram Agrotech “the petitioner” has set aside the demand order & consequent recovery proceedings in view of non-compliance with provisions regarding issuance of Show-Cause Notice and adjudication order as prescribed under GST law. (Rule 142 of the JGST Rules requires that along with DRC-01, a detailed Show Cause Notice, as per Section 73 (1), shall also be served to the Assessee prior to imposition of any tax, interest, or penalty. Section 73 (9) of the JGST Act, 2017 a detailed adjudication order is to be passed and served to the assessee for imposing any tax, interest, or penalty.)
29/06/2023
AAR holds ITC reversal not required on commercial credit note received towards post-sale discount. This Tax Alert summarizes a recent ruling [1] of the Andhra Pradesh Authority for Advance Ruling (AAR). The issue involved was whether a recipient is required to proportionately reverse the input tax credit (ITC) to the extent of commercial credit note issued by the supplier towards post-sale discount. Applicant in the present case is engaged in the business of selling various electronic items purchased from its supplier. The supplier provides various post-sale discounts for which it raises commercial credit notes (without the tax component). Further, the supplier does not reduce its value of supply and adjust the corresponding output GST attributable to such credit notes since it does not fulfil the conditions provided in Section 15(3)(b) of the Central Goods and Services Tax Act, 2017 (CGST Act).
AAR observed that the post-sale discount received by the applicant should not affect the transaction value determined as per Section 15 of the CGST Act [2. Accordingly, the applicant is eligible for full credit of tax charged in the original invoice, provided it pays to the supplier the value of supply, as reduced by the discount, plus the amount of original tax charged in the invoice. Thus, applicant is not required to reverse ITC to the extent of commercial credit notes received.
AAR also pointed out that such credit notes should not be used as a conduit to transfer ITC fraudulently. If such a case is noticed at any point, the same shall be liable for penalty under Section 132(b) of the CGST Act.
Earlier, vide Circular No. 105/24/2019-GST, it was clarified that the recipient is not required to reverse ITC attributable to post-sale discount received through commercial credit notes issued by supplier, as long as such recipient pays the balance amount to the supplier along with the entire tax charged in the original invoice.
However, the above Circular was subsequently withdrawn.
GST: The Maharashtra bench of the Authority for Advance Rulings (AAR) recently held that a GST is chargeable against maintenance charges collected by a residential cooperative society from members if monthly maintenance is over Rs 7,500.
GST: If you have a jewellery business and are required to buy second-hand gold, then you will only pay GST on the profit earned on resale, the Karnataka Bench of the Authority for Advance Ruling (AAR) recently. An application for the same was filed by Bengaluru-based Aadhya Gold Private Ltd.
28/06/2023
Cash deposits from earlier deposits cannot be disbelieved: ITAT Bangalore
Smt. Hemavathi Ramesh (ITA No.251/Bang/2023)
Facts:
1. During the course of assessment proceedings, assessee was asked to show cause as to why cash deposited amounting to Rs.12,40,000/- during the demonetization period ought not to be brought to tax.
2. The AO only accepted the explanation regarding Rs.1 lakh, out of the rental income of Rs.2,41,000/- and Rs.2,74,000/- out of the past savings. AO held that the assessee’s explanation was unsatisfactory regarding the source of other cash deposited and brought to tax Rs.8,66,000/- under section 69A of the Act.
3. The AO, had accepted that assessee was in receipt of Rs.5,50,000/- as lease deposit on 12.04.2016, the same ought to have been accepted as a source of cash deposit.
4. The assessee had also disclosed income from other sources amounting to Rs.2,64,804/- comprising of bank interest of Rs.14,804/- and sundry receipts and gifts of Rs.2,50,000/- for which the assessee has duly paid the taxes. So, he contended that, for a sum of Rs.2,50,000/- also, the credit should be given while calculating the addition under section 69A of the Act.
ITAT Bangalore held as below:
1. Once the petitioner assessee disclosed the source as having come from the withdrawn made on a given date from a given bank, it was not for respondents Nos. 1 and 2 to concern themselves with what the assessee did with that money.
2. The ITO had only two choice before him. One was to reject the explanation as not believable for the reason that on his investigation on such pigmy deposit was ever made in the bank. In the alternative he ought to have called upon the assessee-petitioner to substantiate his claim by documentary evidence.
3. Having exercised neither of the choice, it was not open to the ITO to merely surmise that it would not be probable for the assessee to keep Rs. 15,000 unutilised for a period of two years.
4. Since the fact that receipt of Rs.5,50,000/- has not been doubted by the AO, I am of the view that some amount would be available with the assessee for making the impugned cash deposits. On facts of the instant case, I reasonably estimate a sum of Rs.4,00,000/- as available for making the impugned cash deposits.
5. I am of the view that a further reduction of Rs.2,50,000/- is also required while determining the source of cash deposit. Therefore, I grant a deduction of Rs.6,50,000/- (Rs.4,00,000/- + Rs.2,50,000/-) and balance amount of Rs.2,16,000/- alone shall be brought to tax under section 69A of the Act.
6. In the result, appeal filed by the assessee is partly allowed.
Important changes w.r.t Liberalised Remittance Scheme (LRS) and Tax Collected at Source (TCS)
1. The Ministry of Finance, Government of India has, via a press release dated 28th June, 2023, announced significant changes to the Liberalised Remittance Scheme (LRS) and Tax Collected at Source (TCS), which shall be implemented from 1st October, 2023 as against earlier deadline of 1st July, 2023.
2. One of the notable changes is the restoration of the threshold for triggering TCS on all categories of LRS payments. The threshold of Rs 7 lakh per financial year per individual, regardless of the purpose, will now determine whether TCS is applicable.
3. Summary of the revised TCS rates for LRS payments from 1st October 2023:
A. LRS for education financed by a loan:
i) No TCS for the first Rs 7 lakh
ii) 0.5% TCS for amounts exceeding Rs 7 lakh
B. LRS for medical treatment/education (other than financed by a loan):
i) No TCS for the first Rs 7 lakh
ii) 5% TCS for amounts exceeding Rs 7 lakh
C. LRS for Overseas Travel:
i) 5% TCS for the first Rs 7 lakh
ii) 20% TCS for amounts exceeding Rs 7 lakh
C. LRS for other purposes:
i) No TCS for the first Rs 7 lakh
ii) 20% TCS for amounts exceeding Rs 7 lakh
27/06/2023
In recent times, a new type of scam has emerged, targeting unsuspecting individuals through fraudulent income tax refund calls. Scammers posing as income tax officers contact their targets, claiming to offer refunds for excess taxes paid. It is essential to be aware of this scam and exercise caution to safeguard your finances.
INCOME TAX: The income-tax department has sent notices to 15 such social media influencers, who had flaunted their overseas holidays and luxury shopping, for paying zero or "substantially low" tax despite receiving hefty fees from companies whose products they promoted through their posts. The list includes a high-profile fashion influencer, a lifestyle and fitness coach, travel influencers and an influencer known for posts on Bollywood.
GST Fake Firms traced: CGST Delhi West Commissionerate busts nexus of more than 30 fake firms and arrests a person in special drive against fake registrations. The CGST Delhi West Commissionerate under CGST Delhi Zone, upon analysis of an entity under investigation as part of Special Drive against fake registrations, found multiple entities registered on the same address wherein the said address was found existent during verification but the owner of the said premises denied any knowledge about existence of any firms. Supply chain analysis revealed that there was no movement of goods from the said address. Accordingly, searches were undertaken at multiple locations in Delhi discovered using data analytics and it was found that a person named Shiva has been obtaining KYC credentials from persons on the pretext of getting loans sanctioned for them and subsequently selling the firms. Further search revealed that Shiva has created more than 30 fake firms and sold them in cash at a premium. He also stated that to avoid physical verification, he used AADHAR authentication to obtain these GST registrations.
These multiple firms were found to have availed/passed on ineligible ITC of more than 50 crore. Accordingly, Shiva violated Section 132 of the CGST Act, 2017 and was arrested. He was remanded to judicial custody today. Further investigation is in progress.
Source: PIB
ICICI Prudential Life Insurance Co. has been served a Goods and Services Tax show cause-cum- demand notice for Rs 492.06 crore by the Directorate General of GST Intelligence for the period from July 2017 to July 2022. The matter largely relates to an industrywide issue of claiming ineligible input tax credit. The insurance provider said that it will take appropriate steps in due course in reply to the notice and contest the matter.
26/06/2023
GST: The current practice of issuing bills with state GST components creates challenges for traders with manufacturing centres in different states. The government is actively considering a proposal to allow commodity exchange accredited warehouses to issue integrated GST to allow corporate hedgers and traders to take delivery on the exchange platform to benefit from set-off.
GST: The Jharkhand HC held that the application for a refund under section 77 for the payment made in the wrong head cannot be rejected on the grounds of limitation because circular bearing no. 162/18/2021 read with notification no. 35/2021-Central Tax, dated 24.09.2021 provide for the extension of limitation of refund in case of wrong deposit. (Gajraj Vahan (P.) Ltd. vs State of Jharkhand; W.P.T NO. 1801 OF 2021 Dated May 10, 2023)
The Noida Police have arrested three Delhi-based persons in connection with a multicrore GST scam which has resulted in the loss of revenue to the government, officials said on Friday. With this, the total number of arrests in the case has increased to 15. Noida Additional Deputy Commissioner of Police (ACP) Shakti Mohan Avasthy said the scam pertains to thousands of bogus companies being floated and input tax credit (ITC) being claimed on their behalf. The three suspects involved in the case were arrested by officials of the Sector 20 police station on Thursday while they were en route to Greater Noida via the DND, police said. Those arrested have been identified as Atul Gupta, Sumit Garg and Manan Singhal, all residents of the Rohini area in Delhi, a police spokesperson said. “The trio was involved in generating fake, bogus bills which were used to claim ITC, resulting in revenue loss,” Avasthy told PTI. Earlier this month, the Noida Police busted a gang involved in what is now known as the “GST Scam” wherein over 3,077 bogus companies were unearthed on whose behalf ITC was being claimed. Initial police investigations showed transactions of around Rs 8,500 crore from these bogus firms, according to senior officials.
S-DeccanHerald
25/06/2023
DGGI Gurugram officials bust racket involving 539 fake entities and fraudulently claiming ITC of Rs. 1,124.66 crore, one held in another operation, GST evasion of Rs. 97.44 crore through a network of 19 fake entities busted in an intelligence-based operation.
GST: The State Cabinet chaired by Chief Minister Naveen Patnaik on Wednesday approved Odisha Goods and Services Tax (Amendment) Bill, 2023 that proposes to simplify the provisions and provide certain facilities to taxpayers and tax authorities in the state. Provision has also been made for the Goods and Services Tax Appellate Tribunal constituted under the CGST Act, 2017 to be the appellate tribunal under the OGST Act for hearing appeals against the orders passed by the appellate authority or the revisional authority. It also enabled the creation of principal benches and state benches instead of area benches or national benches or regional benches of the appellate tribunal.
GST: Tribunal held that the directors are providing the service of renting of immovable property in their individual capacity as owners of the premises and not as directors of the company and accordingly, the company cannot be asked to pay service tax under the reverse charge mechanism. (M/S Cords Cable Industries Limited vs Commissioner, Central Excise, Jaipur (Rajasthan) – CESTAT New Delhi-Service Tax Appeal No. 52207 of 2018)
CORPORATE LAW: Can a court grant a relief, which is not prayed for by the petitioner? Based on an examination of the Code of Civil Procedure and Supreme Court judgments, it is evident that courts operate within limitations when it comes to granting relief. Courts cannot provide relief that has not been specifically requested by the petitioner. This understanding establishes the existence of a “Lakshman Rekha” or boundary that courts must respect in their jurisdiction. In conclusion, it is clear that courts are bound by the prayers of the petitioner when it comes to granting relief i.e. COURTS CANNOT GRANT A RELIEF, WHICH IS NOT PRAYED FOR BY THE PETITIONER
AAR, Telangana in the case of M/s Kaveri Exports “the applicant” has issued a ruling holding that turnover pertaining to the sale of duty credit scrips would not be relevant for computation of the refund of input tax credit. (Appeal Number: TSAAR; Order No. 12/2023; Date of Judgement: 24/05/2023).
24/06/2023
GST: The Court in the case of Valerius Industries Vs. Union of India, reported in [2019] 70 GSTR 147 (Gujurat) held that, the power of provisional attachment under section 83 of the act should be exercised by the authority only if there is reasonable apprehension that the assessee may default the ultimate collection of the demand that is likely to be raised on completion of the assessment. It should therefore be exercised with extreme care and caution. The Court held that power under section 83 of the act should not be used as a tool to harass the assessee, nor should it be used in as manner which may have irreversible detrimental effect on the business of the assessee.
GST: The Centre has asked state governments to approve changes to their respective Goods and Services Tax laws by October to enable the setting up of an appellate tribunal with its principal bench in Delhi. The tribunal will have benches across states by December.
GST: Incentive received from manufacturer for promotion of sale of products purchased through distributors is not trade discount and cannot be excluded from taxable value. (151 taxmann.com 351; AAAR-MAHARASHTRA; 13-06-2023).
23/06/2023
Don’t force service charge on customers’: Following brawl at Noida mall, consumer affairs department writes to restaurant bodies: The Department of Consumer Affairs has written to Kabir Suri, the President of National Restaurant Association of India (NRAI), and Suresh Poddar, the President of Federation of Hotel and Restaurant Association of India (FHRAI), over the brawl that allegedly broke out between customers and restaurant staff in a Noida mall over a service charge of Rs 970 on Sunday.
The notice, issued on Tuesday by department secretary Rohit Kumar, stated that service charge is a discretionary charge and should not be “imposed forcefully on consumers, especially when consumers are dissatisfied with the service provided to them by the restaurant.” A video of customers and staff purportedly hitting each other in Spectrum Mall in Noida’s Sector 75 was shared widely on social media Monday.
“I urge you to suitably advise the members of your association not to insist on levying a service charge on the consumers on a mandatory basis, especially when a request to remove it from the bill is raised by a consumer. You would agree that any such charge is in the nature of tips or gratuity, which a consumer may decide to pay voluntarily depending upon her/his satisfaction with the quality and service provided by the establishment,” the letter stated.
Income tax: Please note vide Notification No. 5/2022 dated 29.07.2022, w.e.f. 01/08/2022 the time-limit for e-verification or submission of ITR-V shall be 30 days from the date of filing the return of income.
1. The new time-limit for e-verification or submission of ITR-V shall now be 30 days from the date of filing the return of income.
2. Where ITR data is electronically transmitted but e-verified or ITR-V submitted beyond the time-limit of 30 days of transmission of data, in such cases the date of e-verification/ lTR-V submission shall be treated as the date of furnishing the return of income and all consequences of late filing of return under the Act shall follow.
3. If ITR data is electronically transmitted and ITR-V is submitted within 30 days of transmission of data then in such cases the date of transmitting the data electronically will be considered as the date of furnishing the return of income.
4. The date of dispatch of speed post of duly verified ITR-V shall be considered for the purpose of determination of the 30 days period.
ITAT, by Public Notice dated 16.06.2023, notifies dates of virtual and physical hearing during July - September 2023 at 10 ITAT benches; The benches covered by the Public Notice are Agra, Dehradun, Jabalpur, Jodhpur, Cochin, Nagpur, Panaji, Patna, Ranchi and Guwahati
SEBI vide its Notification dated June 14, 2023 made various amendments in the SEBI (LODR) Regulations, 2015 and few of the amendments has been effective from the date of notification (i.e. June 14, 2023) and few of such amendments shall be effective on the thirtieth (30th) day of the said notification (i.e. July 14, 2023).
One of the amendment has been done in the Schedule V (Annual Report) w.r.t. disclosures of the particulars of Senior Management and the same shall be effective from July 14, 2023.
Extract of the relevant provisions of said amendment is as below: -
Schedule V (Annual Report)
5B. Senior management: Particulars of senior management including the changes therein since the close of the previous financial year.
Therefore, the Board of the listed entity is required to capture the said disclosures in their annual report if the same is approved by the Board of Directors on or after July 14, 2023.
PAN needs to be mandatorily linked with Aadhaar within a further extended date of 30.06.2023. In case it is not so done yet, please link your PAN with Aadhaar, as soon as possible or else:
1. PAN shall become inoperative under the Income-Tax law, attracting liability to several consequences on or after 01.07.2023.
2. No refund shall be made against such PANs. 3. Interest shall not be payable on such refund for the period during which PAN remains inoperative.
4. TDS and TCS shall be deducted /collected at a higher rate, as provided in the Act.
Copy and Click here to check status and link your PAN and Aadhaar, if not done so far: https://eportal.incometax.gov.in/iec/foservices/#/pre-login/bl-link-aadhaar
NRIs, individuals residing in specific states, a citizen who is no longer Indian citizen or above the age of eighty years (in the last two years) are exempted from PAN-Aadhaar linking and eventually from penalties.
22/06/2023
As the last date for the exchange of 2000 notes is 30th September, every person will reach the bank for exchanging it. Huge notes of Rs 2000/- being deposited in to bank account is under monitoring of Government Agencies. Keep proper evidences of such transactions. One of many ways being practised widely to exchange this note is to make deposit in your bank a/c and withdraw in different denominations. So, it is important for you to know the following tax implications on such bank deposits and withdrawals.
(a) Deposits: No tax, but reported as SFT when deposit in a FY is 10L or more in a savings a/c, (or) 50 L or more in a current a/c.
(b) Withdrawal: U/s 194N of IT Act, TDS will be deducted at (i) 2% in excess of Rs 1 Cr in a FY (If ITR filed for 3 consecutive years); (ii) 2% in excess of Rs 20 lakh in the FY and 5% in excess of Rs 1 Cr (In all other cases).
Spend now, worry later is the mantra in Argentina, where inflation has crossed 100%:
1. Despite a biting economic crisis, restaurants in Buenos Aires are full and queues for theater and concert tickets long.
2. With inflation at 114 percent year-on-year and around eight percent month-on-month, Argentines figure they may as well spend their salaries before they lose more value.
3. it is the peso’s downfall that is fuelling the restaurant industry’s upswing. Argentines are eager to get rid of the currency as quickly as they can, and that means the middle and upper classes are going out to eat more often—and that restaurateurs and chefs are plunging their revenues back into new restaurants.
4. Hyper Inflation has encouraged people to spend faster because saving is difficult. Wages are spent faster and faster. Money spends less time in the hands of those who earn it because it loses value.
5. In wealthier circles, the rush to go out is a symptom of a symptom of a shrinking middle class that, no longer able to afford bigger purchases. It is consumption for satisfaction — happines in the moment, as per some experts.
Using artificial intelligence, the Income Tax Department has identified people whose ratio of donation against income earned is skewed for the financial year 2018-19. On basis of this, department is sending notices to tax evaders and reassessing several income tax returns, especially those in which cases deductions have been claimed for donations made to charitable trusts and political parties.
Arecent extensive operation by the Goods and Services Tax (GST) authorities has revealed tax evasion amounting to ?30,000 crore. The evasion is said to have been facilitated through the use of stolen identities, including approximately 18,000 Permanent Account Numbers (PAN) and Aadhaar cards. It has been alleged that the beneficiaries of various government schemes such as PM Kisan and social security programmes, had their identities misused to establish 4,000 fictitious companies and 16,000 fraudulent GST registrations. The Goods and Services Tax authorities initiated a comprehensive two-month operation against tax evasion, commencing on May 16. In the initial week, approximately 10,000 fraudulent registrations were identified.
1. To tackle the organised nature of the evasion, the GST authorities collaborated with other agencies such as the Income Tax Department, Enforcement Directorate and the Ministry of Corporate Affairs.
2. These agencies also initiated independent actions against the individuals and companies involved in this evasion, with operations in 16 states.
3. Multiple locations have been subject to searches by tax authorities, leading to the arrest of seven persons in this matter. According to a senior official, this operation uncovered a significant and well-coordinated network operating across 16 states.
4. The shell companies were utilised to produce counterfeit invoices, which were subsequently sold to different businesses to claim the input tax credit. In a multi-state endeavour, three distinct teams collaborated to establish shell companies using stolen identities, fabricate fraudulent e-way bills and invoices, and distribute these invoices to companies in need.
5. Besides, certain individuals had been appointed as directors of these companies without their knowledge, and this came to their attention when they received tax notifications at their residences. Authorities will soon issue notices to the companies that utilised these counterfeit invoices to fraudulently claim the input tax credit.
6. Initially, the Gujarat state GST officials discovered a scam involving counterfeit invoices that utilised stolen identities in Bhavnagar and Surat. This prompted the initiation of a nationwide campaign. Subsequently, similar operations were conducted in various states, including Uttar Pradesh, Madhya Pradesh, Rajasthan, Delhi, Maharashtra, Kerala, Punjab and Haryana.
S-News18
Delhi Govt notifies procedure for revocation of cancellation of regn upto 30.6.2023 vide Notification No 03 dated 21.6.2023
CBDT notification no 43 dated 21.6.23- Bullet points of the notification:
1. 115BAC opting employees entitled for allowances exemption subject to conditions;
2. 115BA,115BAA,115BAB domestic cos, 115BAC indls/HUFs/AOPs/BOIs/ artificial person; 115BAD 115BAE coop society- restriction on dep allowance to 40% of wdv;
3. Notified Form 10IEA for opting in/ opting out/ re-entering of 115BAC for individuals/ HUFs/ AOPs/ BOIs/ artificial persons - to be filed within due dates u/s 139(1) in case of a person having income fm business or profession and person not having income from business or profession
4. Form 10IEA To be furnished electronically under digital signature or electronic verification code
5. PDGIT(systems) or DGIT(systems) to specify the procedure, standard, manner and be responsible for formulating policies in relation to form 10IEA
21/06/2023
CBDT has notified the appeals that shall be completed under the recently notified e- Appeal Scheme 2023.
Assessment order passed before the expiry of the time granted by the AO to the petitioner to file reply to the SCN. The Court observed that the impugned assessment order is not sustainable in law and the same was set aside. The case was remanded back to the AO concerned to pass a fresh assessment order in accordance with law after giving an opportunity to the petitioner to file reply to the SCN. (Bhadrish Jayantilal Sheth v. ITO, WPA 8232 of 2022, Judgement on 17-05-2022).
Filing of a reply to SCN in form DRC-06 is not mandatory u/s. 73(9), 74(9) and 76(3) of GST Act and the reply so filed through post shall also be treated as valid. (Madras HC in case of Asia Chennai Engineering vs Assistant Commissioner ST FAC; 2022 TAXSCAN HC 773)
GST: GST department cannot deny the benefit of linking of GSTIN on death of proprietor merely on the technical ground that the application for cancellation of GST registration was made using a wrong form. (Rajasthan High Court in case of A.H. Marble Crafts vs The Commissioner Tax; 2022 TAXSCAN HC 755)
GST: The Delhi High Court in a significant case, allowed to grant the refund of IGST claimed by the petitioner on exported goods after deducting differential duty drawback. (Kishan Lal Kuria Mal International vs Union of India; 2022 TAXSCAN HC 735)
20/06/2023
INCOME TAX: JDA is officially the first document containing all agreed terms and conditions between the developer and the land owner and this should mandatorily be registered to avoid action from tax departments and delay in approval from RERA.
GST: The GST Council is likely to consider CBIC's proposal in its meeting scheduled to take place next month. According to CBIC proposal, it aims to introduce additional validations within the GST system with the goal of keeping track of evasion and fake ITC claims. The strategy to go in for additional validation both at the time of registration and filing of return. The validation would be done by the tax department and ITC claims could be blocked in cases of mismatch.
Online skill-based gaming operators pay GST at the rate of 18% on the service fee charged to players. This is consistent with the status under the erstwhile service tax regime. The Group of Ministers (constituted by the GST Council) is now debating whether GST should be levied at a rate of 28% on service fees and buy-in amounts (that is, same GST levied on betting and gambling). The matter is likely to be taken-up in the 50th GST Council meeting scheduled on 11th July 2023.
GST: Non-submission of reply to Show Cause Notice (SCN) could not be a ground for cancellation of registration. (151- taxmann.com 238 _Allahabad_27-02-2023)
19/06/2023
INCOME TAX: CBDT has notified Special Courts under section 280A of the Income-tax Act, 1961 and section 84 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 for the state of Jharkhand at Ranchi, Jamshedpur, and Dhanbad.
INCOME TAX: The Mumbai Bench of ITAT has recently ruled that the interest subsidy provided through the Technology Upgradation Fund Scheme (TUFS) is not liable to be taxed as income. According to the bench, even though the interest subsidy received under TUFS is recorded in the books of account as a net deduction against interest costs, it is of a capital nature. (M/s Grasim Industries Ltd Vs Dy. CIT; ITA Nos. 84 & 351/Mum/2023)
Interest subsidy received under technology upgradation fund is a capital receipt: ITAT Mumbai :M/s Grasim Industries Ltd; AY.2009-10: ITA Nos. 84 & 351/Mum/2023
Facts:
1. The subject matter of the appeal was whether the subsidy received by the assessee for technology upgradation fund amounting to rs 83,426,992/– is capital receipt not chargeable to tax or revenue receipt chargeable to tax.
2. The AO considered it as a revenue receipt. On appeal before the learned CIT – A, after considering the submission of the assessee found that coordinate bench in ITA number 4220 and 4704/M/2015 dated 24/2/2020 in assessee’s own case has held that subsidy received by the appellant company under technology upgradation fund scheme is a capital receipt.
3. The contention of the AO was that the main intention of the technology upgradation fund scheme was to actually set off and is out the interest burden of the assessee company. The assessee has reduced the interest subsidy from the interest paid on various loans and therefore the interest income and interest expenditure both were treated as revenue expenditure and therefore the interest subsidy on technology upgradation fund is a revenue expenditure.
ITAT Mumbai held as below:
1. The coordinate bench in assessee’s own case- ITA number 4220 and 4704/M/2014 dated 24/2/2020 has held that the subsidy received by the appellant company under technology upgradation fund scheme is capital receipt. The ld. Authorized Representative for the assessee submitted that the Hon’ble Rajasthan High Court in the case of PCIT vs. Nitin Spinners Ltd. in DB Income Tax appeal No.31/2019 decided on 19/09/2019 has held subsidy received under TUF as capital in nature. Similar view has been taken by Mumbai Tribunal in the case of ACIT vs. SVG Fashions Ltd. in ITA No.704/Mum/2016 for assessment year 2012-13 decided on 17/07/2018.
2. The interest subsidy received under technology upgradation fund scheme, though credited in the net off against the interest expenditure in the books of account is still capital in nature and therefore not chargeable to tax.
3. In the result, appeal of the learned AO as well as the cross objections filed by the assessee are dismissed.
INCOME TAX: The recent notice from IT dept required the submission of comprehensive details regarding the CA, TRP, or other professionals involved in the filing of ITR. This development has brought to light the need for safeguarding the interests of professionals engaged in ITR filings. As a protective measure, it is recommended that a well-drafted declaration be obtained from the assessee prior to the filing of their ITR.
18/06/2023
GST: Non submission of certified copy of assessment order while filing the appeal is only a technical defect. Assessee was allowed to file the certified copy as collected and the Appellate Authority was directed to dispose of the appeal with reasoned order in accordance with law. (Odisha HC in case of Atlas Pvc Pipes Ltd v. State of Odhisha (2022) (65) G.S.T.L.45O (Odisha)
GST: The demand to reduce the GST rate on cement from 28% to 18% is likely to be referred to the GoM on rate rationalisation at the next meeting of the GST Council on July 11. Developers get the credit only in the case of under-construction properties. In construction-completed properties, there is no GST liability, and the tax on raw materials gets embedded into the property’s price. Cement is classified under the 28% tax slab, with an additional cess of 12%, taking the total GST rate for cement products to 31.36%.
The Maharashtra bench of AAAR has held that the incentive earned by the reseller from a US entity is not in the nature of a ‘trade discount'. The reseller will have to bear GST of 18% on such an incentive, which was based on attaining quarterly targets on eligible Intel products.
Authority kept the vehicle, caught the good when driver en-steered the vehicle to some other spot rather than the place of supply. And, asked for a huge penalty to release the detained vehicle. Since the tax in regard to goods was paid and transportation was appropriately secured by legitimate documentation, authority isn't right to ask for huge penalties. Rather, authority ought to have asked the driver to reroute the vehicle to the place of supply.
Pension fund regulator PFRDA is planning to introduce a systematic withdrawal plan to give flexibility to pension account holders to withdraw a lump sum fund as per their choice on completion of 60 years. The new plan which is expected to be ready by September or October this year, will allow NPS Subscribers to periodically withdraw either monthly, quarterly, half-yearly or annually till the age of 75 years. PFRDA increased the entry age up to 70 and the exit age to 75 keeping in view longevity.
MCA is planning to harden a crackdown on non-functional (shell) companies. The physical verification of “non-functional or non-compliant firms” by the Registrar of Companies (RoC) will pick up further. The MCA has already notified the Companies (Incorporation) Third Amendment Rules, 2022, by introducing Rule 25B, which typically sets out the precise process that has to be followed by the RoC for conducting physical verification of a company’s registered office. The introduction of the new rules further bolsters the power of the RoC, who has been already authorised under Section 12(9) of the Companies Act to undertake the physical verification of a company’s registered office if they have reasonable doubt about a company’s operations.
17/06/2023
Section 35 of the CGST Act, 2017 lists the documents to be maintained by a registered person. As per the section, every registered person shall keep and maintain, at his principal place of business, as mentioned in the certificate of registration, a true and correct account of—
(a) production or manufacture of goods;
(b) inward and outward supply of goods or services or both;
(c) stock of goods;
(d) input tax credit availed;
(e) output tax payable and paid; and
(f) such other particulars as may be prescribed
The list of documents which have been prescribed has been provided in Rule 56 of CGST Rules , 2017, which provides for certain documents including account of the goods or services imported or exported or of supplies attracting payment of tax on reverse charge, accounts of stock etc. The above documents along with original invoices of supply and purchases, are required to be maintained and produced in case of any proceedings before authorities.
LTCG from dealing in penny stocks is bogus: ITAT Ahmedabad: Hemil Subhashbhai Shah Versus DCIT: Case No.: ITA No.1121/Ahd/2018
Facts:
1. Shares were found by the Investigation Directorate, Kolkata, to be penny stocks whose prices were artificially manipulated and rigged to provide gains or losses to entities as per their requirements in return for cash.
2. It was a scam unearthed by the Investigation Wing, revealing that through the collusive involvement of entry operators, brokers, and beneficiaries, the accommodation has been provided to beneficiaries by artificially rigging the prices of the shares.
3. The AO found the shares dealt with by the assessee to be such shares identified as penny stock by the Investigation Wing, Kolkata, and as per the AO, the Investigation Wing revealed the assessee as one of the beneficiaries.
4. The long-term capital gain returned by the assessee was treated as bogus, and all documentary evidence filed by the assessee to prove the genuineness of its claim was rejected as not sufficient to discharge the onus cast on the assessee.
5. The assessee contended that the finding of the department that the transaction of the sale of shares was bogus was flawed since the assessee had discharged its onus of proving the genuineness of the transactions, since all the documentary evidences were submitted.
ITAT Ahmedabad held as under:
1. The burden in the cases where the facts showed a phenomenal and fanciful rise in shares in a short span of time and thereafter a steep fall, all unsupported by the financials of the companies, was heavy and could not be discharged by filing mere documentary evidence of the sale and purchase of shares.
2. The assessees' failure to show how they were prejudiced by not providing the report cannot be held to be an infraction of the principle of natural justice to invalidate the order of the AO.
3. The addition of bogus long-term capital gains is hereby upheld.
16/06/2023
INCOME TAX: (a) Gross Direct Tax collections for FY 2023-24 as on 17.06.23 at Rs. 4.19 lakh crore, grow at 12.73% over collections of corresponding period in preceding year. (b) Net DT collections at Rs. 3.79 lakh crore, grow at 11.18%. (c) Advance Tax collections for 1st quarter, at Rs. 1.16 lakh crore, grow at 13.70%. (d) Refunds amounting to Rs. 39,578 crore issued up-to 17.06.2023, higher by 30.13% over preceding year.
TDS not required to be deducted on purchase discount allowed by newspapers to advertising agencies: Calcutta HC: Case Title: Commissioner Of Income Tax TDS, Versus ABP Private Limited: Case No.: ITA/458/2008
Introduction:
1. Whether Appellate Tribunal was justified in law in holding that trade discount allowed by the assessee to INS accredited Advertising Agent was not in the nature of Commission and therefore not subjected to TDS under the provision of Section 194H of the Income Tax Act”
2. The following decisions are in favour of the respondent/assessee. CIT Vs. Living Media India Limited in ITA No.1264 of 2007 passed by the High Court of Delhi dated 6th May, 2008, decision of the High Court of Allahabad in Jagran Prakashan Ltd. Vs. Deputy Commissioner of Income Tax (TDS), reported in (2012) 345 ITR 288 (All.), Bombay HC judgement in the case of Principal Commissioner of Income Tax Vs. Dempo Industries (P.) Ltd., reported in (2021) 126 taxmann.com 112 (Bom.)
3. The Courts have held in the above judgements that the trade discount given by the assessee, engaged in business of publishing and selling newspaper, to newspaper vendors and advertising agencies was not in the nature of commission and no TDS was to be deducted under Section 194H on same.
4. The CBDT issued Circular being No.5 of 2016 dated 29th February, 2016 which states that no TDS is attracted on payments made by television channels or newspaper companies to the advertising agency for booking, procuring, or canvassing for advertisements.
Hon Calcutta HC held as below:
The Tribunal deeply examined the factual position, and more importantly, the various clauses as contained in the rules and regulations prescribed by the Indian Newspaper Society noted that there was no principal and agent relationship between the newspaper and the advertising agency.
GST: The Karnataka state government has submitted a request to the Centre to bring GST frauds under the Indian Penal Code (IPC).
GST: Finance minister Nirmala Sitharaman while chairing a review meeting on Friday (16.06.23) asked the indirect tax department to further strengthen the GST registration process, using technology to curb fake entities in the ecosystem. Sitharaman was told that 11,140 fake registrations already been detected and action initiated against them. GST council is likely to consider penal measures at its next meeting on July 11 against the entities involved in the fake GST invoice racket.
Gst Instruction No. 03/2023-GST dt. 14.6.2023
The proper officer before processing of the applications for registration will give special attention to following ...
(i) where any registration of same PAN has been cancelled previously;
(il) where any registration of same PAN is suspended at
the time of verification;
(iti) whether any application of same PAN has been
rejected previously;
(iv) whether the place of business appears to be risky;
(v) whether the proof of address appear to be suspicious/ doubtful
Risk rating of the Application for registration will be done by the Directorate General of Analytics and Risk Management (DGARM), in coordination with GSTN. Each application will be assigned rating such as High, Medium and Low risk. Instruction regarding processing of applications for registration has been issued by for. Strengthening the process of verification of applications for registration in order to prevent the menace of fake or bogus registrations.
15/06/2023
Important points to be taken care during the All India Special Drive of GST in Fake Registrations::
1. Name Board should be there with GSTIN mentioned at all Principal/Additional place of business.
2. Certificate of Registration under GST to be visible affixed at Principal/Additional place of Business.
3. Original Registration Documents like PAN, Aadhar, Electricity Bill, Rent Agreement etc to be ready.
4. Purchase Invoices, Sales Invoices, E-way bill, Delivery Challans etc.
5. Physical stock matches with stock in books of accounts.
6. If multiple businesses are registered on same premises proper demarcation is done to identify the area, stock etc. (Stick Labels etc. with name for demarcation)
7. If Jobwork for multiple persons is done from same premises proper demarcation is done of stock.
8. All address where goods are stored/warehoused are disclosed in GST Registration Certificate.
9. For Composition dealers – Along with Certificate of Registration, board should prepared with words
“COMPOSITION TAXABLE PERSON NOT ELIGIBLE TO COLLECT TAX ON SUPPLIES"
The above are not exhaustive alerts and vary from business facts and circumstances for every dealer.
FATCA reporting by reporting entities in India
1. India and USA have entered into Foreign Account Tax Compliance Act (FATCA) non tax treaty for for disclosure of foreign assets of US residents located outside USA.
2. IRS of USA has been permitted to take reports annually from Indian banks and foreign banks located in India against bank accounts maintained by tax resident of USA like maximum outstanding balance in account in calendar year (December 31) in India.
3. Reporting Indian banks are required to send FATCA letters to customers located in India for knowing about their assets, bank accounts, citizenship and residential status.
Around 6,500 wealthy individuals from India are projected to emigrate in 2023, as per the Henley Private Wealth Migration Report 2023, which monitors global wealth and investment migration patterns. This is a slight dip from the previous year's exit of 7,500 millionaires. However, India is among the top five countries which are likely to see the largest net outflows of millionaires this year. The report also predicted, the high net-worth individual population is projected to experience a remarkable 80% increase by 2031, positioning India as one of the world's fastest-growing wealth markets during this period. This growth will be primarily fuelled by thriving financial services, healthcare, and technology sectors within the country.
Where are the wealthy individuals headed?
The top five destinations for net inflows of high-net-worth individuals in 2023 are projected to be Australia, the UAE, Singapore, the USA, and Switzerland.
1. Australia: Australia's consistent attraction of high-net-worth individuals, especially from Asia, Africa, and now high-income countries like the UK, continues in 2023. Over the past two decades, approximately 82,000 wealthy individuals have relocated to Australia, with an additional 5,200 expected this year.
2. UAE: The UAE is expected to welcome around 4,500 millionaires in 2023, a substantial increase from the previous average of 1,000 per year. India is the largest contributor, followed by the UK, Russia, Lebanon, Pakistan, Turkey, Egypt, South Africa, Nigeria, Hong Kong, and China.
3. Singapore: Singapore continues to attract wealthy individuals, mainly from the rest of Asia. A net inflow of approximately 3,200 high-net-worth individuals is expected in the city-state in 2023.
4. America: America is expected to attract a net inflow of approximately 2,100 new high-net-worth individuals in 2023, mainly from Asia. Traditionally, most affluent people who move to the USA are involved in the entertainment, financial services, and tech sectors.
5. Switzerland: Despite recent issues with the Swiss banking system and specifically Credit Suisse, Switzerland is still projected to attract a net inflow of approximately 1,800 high-net-worth individuals in 2023. Although lower than the net inflow last year, this shows that the country's enduring appeal lives on.
S-Mint
Absence of Formal Loan Agreement or Repayment Schedule Does Not Justify Treating Unsecured Loan as Unexplained Cash Credit u/s 68 of Income Tax Act: ITAT: Shri Niteshkumar Maganbhai (ITA No. 1763/Ahd/2019)
Facts:
1. The AO found that the assessee during the year under consideration received an unsecured loan of Rs.2,38,76,229/- from Sri Salim Hamid Menon, a resident of Dubai.
2. He received interest free unsecured loan to fund ongoing project with a condition that amount will be refunded once revenue is generated from the project.
3. The assessee in support of his argument furnished copy of confirmation letter but no agreement.
4. However, the AO found that the assessee has not furnished proper details of the lender such as the address9 as well as return of income of the lender.
5. Hence the AO, treated the credit of loan amount as unexplained cash credit under section 68.
ITAT held as below:
1. The allegation of the revenue that there is no formal agreement, repayment schedule cannot be the basis for treating the credit of loan as deemed income of the assessee.
2. When the identity and credit worthiness of creditor is established, genuineness of transaction is also not in doubt as the party has confirmed and the transaction was carried out through banking channel by way foreign direct remittance. Then, such amount cannot be deemed as unexplained.
3. In view of the above, we hold that the assessee has discharged the onus cast under section 68 of the Act. Therefore, we hereby set aside the finding of the learned CIT(A) and direct the AO to delete the addition made by him.
14/06/2023
Issuing Look Out Circulars without sufficient reasons is an unregulated abuse of power by Banks: Calcutta HC: Case Title: Mannoj Kumar Jain & Anr. Versus Union of India: Case No.: WPA 22748 of 2022
Background: A recent trend, is for banks to issue Look Out Circulars as a recovery mechanism for outstanding monetary dues. The reasoning of the bank is that the person may frustrate the settlement of the dues by not returning to India.
Facts:
1. The petitioners obtained loans for the expansion of their businesses from various banks. The petitioners have settled the claims of all the banks except the respondent bank, Indian Overseas Bank (IOB).
2. The petitioners were prevented from traveling to the United Kingdom by reason of a "look out" circular on the basis of a request made by the Indian Overseas Bank. The petitioner challenged the Look Out Circular issued by the Indian Overseas Bank.
Calcutta HC held as below:
1. The petitioners have not been declared fraudsters, money-launderers, or even economic offenders.
2. The banks have been given untrammelled powers to issue, use, and exploit the lock-in power of a Look Out Circular without sufficient recourse being provided in law to the person at the receiving end of it.
3. The only acceptable logic, albeit with some effort, is that a person may flee the country and not return to repay his or her outstanding loan. This, however, cannot be the rule across the board, and a borrower's credentials and circumstances for making payment must be taken into account.
4. Once a "look out" circular is issued, it remains alive and kicking for almost all time to come. This has dangerous repercussions for the person’s right to freely move across and beyond the country and remain mobile.
5. The Look out circular is hereby quashed and the Writ Court can and should step in to check such unregulated abuse of power by banks where the facts demand relief.
GST Information
For the Edible Oil Industries wherein the refund was restricted from 13th July 2022 (even for the prior period), it is advisable to file the refund application for the credit accumulated till 13th July 2022 on account of inverted duty structure. Maximum it would be that department shall issue a Show Cause Notice and reject the refund application. Remember to take the strongest of strong argument in contesting our claim. After the rejection it is advisable to file and appeal before the Commissioner Appeals stating that the Circular dated 10.11.2022 does not hold water in the eyes of law and is manifestly arbitrary and unreasonable and is also discriminatory to the exten it creates 2 classes of taxpayers for claiming refund. Further the matter is also challenged in the Hon'ble Gujarat High Court in the case of M/s. Louis Dryfus Company India Private Limited vs. Union of India.
Non Reporting of Loan Transactions in Tax Audit Report but reported in Balance Sheet is a clerical error and such error would not result in addition to the return income:: ITAT Ahmedabad in case of DCIT, CIR. 1 (1) (1) Ahmedabad. Versus Aaryavart Infrastructure P. Ltd. decided on 05.06.2023
The ld.CIT(A) found this fact of the impugned transaction not being reported by the tax auditor as of no consequence, because the transaction, he noted was duly reflected in the financial statement of the assessee i.e. balance sheet of the assessee, which was also audited by the same auditor, who had conducted tax audit. Therefore, nonreporting of the transaction in the tax audit report could be an error and had no implication on the fact of receipt of unsecured loans by the assessee from the aforesaid party,
11. In view of the above, we see no reason to interfere in the order of the ld.CIT(A) deleting the addition of Rs. 1,31,50,000/- under section 68 of the Act being unsecured loans taken by the assessee from one M/s.Pushparaj Corporation.
13/06/2023
Merely because husband buys property in the name of the wife, it does not result into a Benami transaction: Calcutta HC: Sekhar Kr Roy v Lila Roy & Anr (FA 109 of 2018)
Facts:
1. One, Mr Sekhar Kr Roy claimed that his father, Sailendra Kumar Roy, since deceased had purchased the suit property by a registered deed of sale in 1969 in ‘benam’ of his wife, Smt. Lila Roy, since deceased.
2. Sailendra died, leaving behind his son Sekhar (“the appellant”), Lila his wife and his daughter Sumita (“the respondents). The appellant stayed in the suit property till 2011 after which he started living apart. He had thereafter approached his mother and sister (“the defendants”) for the partition of the suit property, which was not agreeable to the respondents, leading to this suit.
3. The question before the Calcutta HC was whether mere transfer of money from a husband to his wife for the purchase of property would qualify as a benami transaction.
Hon. Calcutta HC held as below:
1. In the Indian society, if a husband supplies the consideration money for acquiring property in the name of his wife, such fact does not necessarily imply benami transaction. Source of money is, no doubt, an important factor but not a decisive one.
2. Even if it is proved that Sailendra paid the consideration money, the plaintiff must further prove that Sailendra really intended to enjoy the full benefit of the title in him alone.
3. The appellant was unable to bring any evidence on record to lead the Court to infer that his father had a motive to create benami in name of his mother. Thus, the appeal was dismissed and it was held that:
4. As a result, we are inclined to hold that Sekhar has failed to discharge his burden to prove that subject sale transaction is benami transaction.
Deduction U/S 54F can be allowed to the assessee where assessee owns more than one Co owned properties: ITATMumbai: Zainul Abedin Ghaswala: ITA No. No. 545/M/2023
Facts:
1. The assessee’s father late Shri Iqbal Ghaswala along with other five family members had inherited land being 142/148, Ghaswala Estate Jogeshwari (west), on which land, all the six members constructed 6 flats (i.e. one flat each on their own as per their requirements which were occupied by each owner.
2. The assessee claimed to have filed those electricity bills before the Assessing officer coupled with confirmation letters from the owners of the other flats to the effect that none of them had any right/or interest of whatsoever nature in each other’s flats.
3. The AO disregarded the submission of the assessee and held that since the assessee owned six residential house properties though jointly , therefore the conditions mentioned in section 54F of the Income Tax Act are not fulfilled in this case hence, the assessee is not eligible for exemption u/s 54F.
4. As section 54F, where assessee, on date of sale of long term capital asset owns more than one residential house property, Sec 54F exemption cannot be claimed.
ITAT Mumbai held as below:
1. There is no material to show that assessee is exclusively owner of the other five residential properties/flats which are occupied by the other family members.
2. There indeed are different views of non-jurisdictional High Court in this issue and so, one favourable to the assessee has to be followed. Hon’ble Supreme Court in the case of CIT v. Vegetable Products Ltd. 88 ITR 019, has also confirmed this view.
3. Hon’ble Madras High Court judgement in the case of Dr. P.K. Vasanthi Rangarajan v. CIT (2012) 252 CTR 0336, is favourable to the assessee and we would be following the same.
4. So the claim of the assessee U/S 54F is allowed.
12/06/2023
CBDT, vide Notification No. 39/2023 dated 12.06.2023, notifies 348 as Cost Inflation Index for FY 2023-24; The notification is effective from Apr 1, 2024 and shall, accordingly, apply to AY 2024-25 and subsequent DAYs; Earlier, on 10.04.2023, CBDT had notified 348 as provisional Cost Inflation Index for FY 2023-24.
CBDT vide Notification 37/2023, Dated 12.06.2023 amends Rule 44E of the Income Tax Rules, 1962 wherein the applicants seeking advance ruling can furnish signed or digitally signed applications to the Secretary of Board for Advance Rulings by electronic mail. Earlier, the persons who were required to digitally sign their returns of income were mandatorily required to furnish the application for advance ruling under digital signature. Further, Form 34C, 34D, 34DA, 34E and 34EA are also amended accordingly.
CBDT, vide Notification No. 38/2023 dated 12.06.2023 amends the e-Advance Rulings Scheme, 2022 to provide for a reference on point of difference between the Members of the Board for Advance Rulings (BAR) and decision by the rule of majority; By insertion of clause (v) in Para 6(C) of the Scheme,
1. CBDT provides that in case the Members of a BAR differ in opinion on any point or points, then
such BAR shall make a reference to PCCIT (International Taxation),
the PCCIT (International Taxation) shall nominate one Member from any other BAR and
such point or points shall be decided according to the opinion of the majority of the Members
CBDT Notification No. 38/2023, dated 12.06.2023: 2. In the e-advance rulings Scheme, 2022, in paragraph 6, in sub-paragraph (C), for clause (iv), the following clauses shall be substituted, namely:-
the Board for Advance Rulings shall, after considering the response as referred to in clause (iii), and after providing an opportunity of being heard (through video conferencing or video telephony) under subsection (5) of section 245R of the Act on the request of the applicant, subject to the provisions of clause (v), if applicable, pronounce the advance ruling on the question specified in the application and send a copy thereof to the applicant and the authority to whom the reference has been made;
if the Members of a Board for Advance Rulings differ in opinion on any point or points, the Board for Advance Rulings shall refer such point or points to the PCIT (International Taxation), who shall nominate one Member from any other Board for Advance Rulings and such point or points shall be decided according to the opinion of the majority of the Members.
Business profits of a foreign company cannot be taxed unless there exists a PE: Baker Hughes Energy Technologies UK Ltd. Versus ACIT: Case No.: ITA No.521/Del./2023
Facts:
1. The appellant/assessee is a company incorporated in and a tax resident of the United Kingdom (UK). It is a part of the Baker Hughes Group of companies. In this case, the return of income for AY 2020–21 was e-filed on March 31, 2021, declaring a total income of Rs. 83,91,03,650/-, and later on a revised return of income was filed at Rs. 2,35,640.
2. The assessee, along with four other consortium members, was awarded a contract by ONGC. It was contended before the AO that under the contract, the assessee was required to manufacture and supply subsea production system components. AO treated it as a composite contract.
3. The assessee contended that the offshore manufacture and supply of equipment and parts to ONGC is not taxable in India since neither the assessee had a permanent establishment (PE) in India nor could the provisions of Section 44BB be applied to the sale of equipment made from outside India.
4. The AO held that the "consortium member is working on behalf of the assessee company, which forms the PE of the assessee company." The AO held that the assessee was also involved in the survey, installation, and commissioning of the equipment in India, and since the payments were not bifurcated, the entire receipt of the assessee was taxable in India under Section 44BB.
Note: Section 44BB of the Income Tax Act deals with the Income of a foreign company engaged in the business of civil construction or the business of erection of plant or machinery or testing or commissioning in connection with turnkey power projects shall be computed on a presumptive basis.
ITAT Delhi held as under:
1. The AO has not mentioned as to which consortium member constitutes the PE of the assessed in India.
2. As referred in the Hon. SC judgement of E- Funds (2018) 13 SCC 294, the burden of proving the existence of PE lies on the revenue, which has not been discharged.
3. It is a settled proposition that unless Revenue is able to prove that the assessee has a PE in India, its business profits cannot be subject to tax in India.
11/06/2023
Capital expenditure by 54 large CPSEs, key depts rose 93% in April-May
1. Capital expenditure by 54 large central public sector enterprises and five departmental arms, having a capex minimum target of Rs 100 crore, rose 93 per cent year-on-year (YoY) in the April-May period to Rs 1.39 trillion.
2. The National Highways Authority of India (NHAI) and the Railways have started this financial year’s capex cycle on a stronger note.
3. In the first two months of FY24, the 54 CPSEs, along with the departmental arms, achieved 19 per cent of their combined budget target of Rs 7.33 trillion. The central government had increased the capex target by 13.4 per cent in FY24 over the revised target of Rs 6.46 trillion in FY23.
4. In the two months of FY24, the NHAI spent around Rs 29,920 crore against its annual capital expenditure target of Rs 1.62 trillion; Indian Oil Corporation (IOCL) achieved 18.2 per cent of its capex target of Rs 30,395 crore.
5. The Railway Board, excluding Dedicated Freight Corridor Corporation of India (DFCCIL) and Kolkata Metro Rail Corporation (KMRCL), achieved 23.4 per cent of the capex target of Rs 2.44 trillion.
6. India’s largest crude oil and natural gas producer, ONGC, the two months of FY24 spent around Rs 4,880 crore against the annual capex target of Rs 30,125 crore. NTPC managed to achieve 8.6 per cent of its annual target of Rs 22,454 crore.
Source: Business Standard
Will (Before Death of Testator) Or POA cannot Confer Title in Immovable Property: SC
Whether the documents namely the power of attorney, the will, the agreement to sell coupled with possession memo and the receipt of payment of sale consideration would confer any title upon the plaintiff-respondent so as to entitle him to a decree of eviction and mesne profits.
Read More
https://taxguru.in/income-tax/will-death-testator-poa-confer-title-immovable-property-sc.html
10/06/2023
Non residents would be taxed in UAE on income from property:
1. The UAE Ministry of Finance on Monday announced the issuance of Cabinet Decision No. 56 of 2023 on a Non-resident person’s Nexus in the UAE for the purposes of Federal Decree-Law No 47 of 2022 on the Taxation of Corporations and Businesses (The Corporate Tax Law).
2. Foreign companies and other non-resident juridical persons will be subject to UAE Corporate Tax on income derived from real estate and other immovable property located in the UAE and will be required to register in the UAE for Corporate Tax purposes. This applies to both immovable property that is held or used in a business and immovable property that is held for investment purposes in the UAE.
3. Non-resident juridical persons with UAE immovable property will be subject to Corporate Tax on a net-income basis. This allows for relevant expenditure that meets the conditions set out in the Corporate Tax Law to be deducted when calculating taxable income.
Gst - E-Invoice Verifier App by GSTN- Advisory dated 08.06.2023 :
1. The E-Invoice Verifier App developed by GSTN, has been introduced which offers a convenient solution for verifying e-Invoices and other related details, GSTN understands the importance of efficient and accurate e invoice verification, and this app aims to simplify the process for your convenience.
2. E-Invoice Verifier App - Key Features and Benefits:
I. QR Code Verification: The app allows users to scan the QR code on an e-Invoice and authenticate the embedded value within the code. This helps in identifying the accuracy and authenticity of the e-invoice.
il. User-Friendly Interface: The app provides a user-friendly interface with intuitive navigation, making it easy for users to navigate through the app's features and functionalities.
ill. Comprehensive Coverage: The app supports verification of e-Invoices reported across all six IRPs, ensuring comprehensive coverage and convenience.
iv. Non-Login Based: The app operates on a non login basis, meaning users are not required to create an account or provide sensitive personal information to access its functionalities. This simplifies the user experience and makes it more convenient for users.
3. How to use the e-Invoice Verifier App:
1. Download the App: Visit the Google Play Store and search for "E-Invoice QR Code Verifier." Download and install the app on your mobile device free of charge. The iOS version will be available shortly.
it. QR Code Scanning: Utilise the app to scan the QR codes on your e-Invoices. The app will authenticate the information embedded in the code and one can compare it with information printed on the invoice.
4. GSTN emphasizes that the e-Invoice Verifier App does not require any user login or authentication process. Anyone can freely scan QR codes and view the available information.
5. For more detailed information please see the FAQs in the app. This comprehensive FAQ document will provide you with additional guidance on using the app and resolving any queries you may have.
6. GSTN is dedicated to enhancing your experience with the E-Invoice Verifier App and providing a process of seamless -Invoice verification. GSTN is also working towards launching Version 2 with the Search IN functionality, which will further streamline your e-Invoice verification.
09/06/2023
GST officials can initiate action under GST Acts against SEZ units: Case Name : RHC Global Exports Private Limited Vs Union of India (Gujarat High Court).
Two Factor Authentication for e-Way Bill and e-Invoice System will be made mandatory from 15/07/2023 for all the taxpayers with AATO above 100 cr.
The Government of India has taken a crucial step in imposing stock limits on wheat to regulate its distribution and prevent unethical speculation. This decision applies to traders, wholesalers, retailers, big chain retailers, and processors across all states and union territories.
1. According to the new regulations, each entity will have specific stock limits.
2. Traders and wholesalers are restricted to 3000 MT, while retailers are limited to 10 MT per outlet. Big chain retailers are allowed 10 MT per outlet and 3000 MT at all their depots.
The Enforcement Directorate (ED), which is probing money laundering charges over the alleged ?47,000 crore bank fraud involving the erstwhile Bhushan Steel Ltd (BSL), has claimed that several hundreds of crores had been diverted from BSL and its subsidiary, Bhushan Energy Ltd. This was submitted by the agency while seeking custodial interrogation of former BSL managing director Neeraj Singal. He was arrested on Friday and was remanded in ED’s custody by a Delhi court till June 20. Amid mounting debt and allegations of irregularities, BSL had gone into bankruptcy in 2017. Tata Steel acquired the company and the subsidiary out of bankruptcy and renamed it Tata Steel BSL. It has now been merged with Tata Steel.
08/06/2023
The ITAT Mumbai bench has held that co-ownership in more than one residential house will not debar the taxpayer from claiming tax exemption on long-term capital gains. This decision, given in the context of Section 54F of the Income-tax (I-T) Act, will benefit several taxpayers, as typically in large families investments are made in joint names.
The incremental GST of 6% on mobile phones has raked in Rs 42,897 crore over the last three financial years. This amount is topping the nearly Rs 39,000-crore outlay of the production-linked incentive (PLI) scheme for manufacturing of smartphones and making the government scheme self-sustaining.
07/06/2023
The due date for the deposition of advance tax is 15th June 2023. The taxpayers are expected to deposit the advance tax in 4 instalments, the timeline states 15th June for 15%, 15 September for 45% of the advance tax, 75% by 15 December while 100% of the advance tax is to be deposited till 15 March. The tax can be paid through the e-payment method via a net banking facility in the authorized banks. In case the tax not paid on time, the penalty will be charged under section 234B and 234C of income tax.
Equalisation Levy 2016::
Equalisation Levy is a direct tax, which is withheld at the time of payment by the service recipient. The two conditions to be met to be liable to equalisation levy:
1. The payment should be made to a non-resident service provider;
2. The annual payment made to one service provider exceeds Rs. 1,00,000 in one financial year.
Services Covered Under Equalisation Levy:
Currently, not all services are covered under the ambit of equalisation Levy. The following services covered:
1. Online advertisement
2. Any provision for digital advertising space or facilities/ service for the purpose of online advertisement.
Currently, the applicable rate of tax is 6% of the gross consideration to be paid. Due date of furnishing Equalisation Levy Statement (Form-1) is on or before 30th June of Financial Year ended. The last date for filing Form 1 is 30th June 2023 for the financial year 2022-23.
Equalisation Levy 2020::
Under this new equalisation tax, it is essential to include all online merchants who are not residents of India under tax directly. Equalisation levy is charged at the rate of 2% of the consideration receivable or received by an e-commerce operator for e-commerce services provided or supply made or facilitated by it:
1. to a person resident in India, or
2. to a non-resident in certain specified circumstances, which are as follows:
a) sale of advertisement, targeting a customer who is resident in India or a customer who accesses the advertisement through an Internet Protocol (IP) address located in India, and
b) sale of data collected from a person who is resident of India or from a person who uses an IP address located in India
c) to a person who buys goods or services or both using an IP address located in India.
An E-commerce operator is a non-resident who operates, owns or manages a digital or electronic facility or platform for the online provision of services or online sale of goods or both. The threshold for the equalisation levy is set at Rs.2 crores instead of the Rs.1 lakh that was the threshold for the equalisation levy in 2016.
The due date for online filing of form MCA dpt 3 is 30-06-2023. The Companies must disclose any Secured Loan and Unsecured Loan which is outstanding as of March 31st of the financial year.
All Public, Private Limited companies and One Person Company meeting any of the below criteria must file form DPT-3.
a) Onetime Return for disclosure of details of outstanding money or loan received by a company but not considered as deposits in terms of rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014.
b) Return of Deposit
c) Particulars of transactions by a company not considered as deposit as per rule 2 (I) (c) of the Companies (Acceptance of Deposit) Rules, 2014.
d) Return of Deposit and Particulars of transactions by a company not considered as deposit
Import Export Code IEC updation::
Though the Import Export Code is a permanent number allotted by the DGFT, however in order to keep the IEC valid and effective for Export or Import, it must be renewed with updated information before 30th June every year. The failure to update the IEC shall result in the deactivation of the IEC. A deactivated IEC can not be used in international trade and shall create an unnecessary hassle at customs as an active IEC is required for clearance of imported goods or to export. The Importer -Exporter Code (IEC) is a key business identification number which is mandatory for Exports or Imports. No person shall make any import or export except under an IEC Number granted by the DGFT. In case of import or export of services or technology, the IEC shall be required only when the service or technology provider is taking benefits under the Foreign Trade Policy or is dealing with specified services or technologies.
Housing.com Vanishing- In another stunning case of business failure, the lead investor in Rahul Yadav’s new startup saw Rs 280 crore “vanish”. Rahul Yadav, the Indian startup industry’s ex-poster boy, first grabbed headlines with his meteoric rise and fall with Housing.com. He is now accused of splurging on luxuries instead of paying his employees. Yadav’s 4B Networks, which operates Broker Network, is on the verge of an exceptional collapse. As per lead investor InfoEdge, the company has burnt more than Rs 280 crore in less than 18 months. However, over 150 employees have not received their salaries since November 2022. On the other hand, founder Rahul Yadav reportedly moved around in a Mercedes-Maybach and rented a boardroom at Mumbai 5-Star Taj Land’s End for Rs 80,000 per day. He is also accused of borrowing personal loans from long-time employees. Rahul Yadav faces a criminal case filed by one such colleague from whom he borrowed Rs 50 lakh, it was reported. S-DnaIndia
The AAR, Uttarakhand, in the case of M/s. Uttarakhand Public Financial Strengthening Project [Ruling No. 15/2022-23 dated March 27, 2023], ruled that the service provider has to charge GST on the whole amount of the bill including i.e. monthly rental, night charges and fuel cost. Without fuel the motor vehicle cannot operate and without running the act of motor vehicle hire services does not happen, thus, the motor vehicle hire services have the integral component of running/ operating the vehicle to one place to another for transportation. Opined that, the contract entered between the Applicant and the Service providers is a comprehensive contract with the consideration and the reimbursement of expenses, such expenses are nothing but the additional consideration for provision of service.
Facts:
M/s. Uttarakhand Public Financial Strengthening Project (“the Applicant”) received motor vehicle hire service from M/s. Baba Tour & Travel (“Service provider-1”) and M/s. Rajeswari Travel (“Service provider-2”) (cumulatively referred to as “the service providers”).
The service provider- 1 was charging GST @ 5% on the whole amount of bill which includes monthly rental, night charges and fuel on mileage basis, whereas the Service provider- 2 was charging GST @ 5% on monthly rent component of the bill and was not charging GST on night charges and fuel charges.
Income tax laws do not restrict an individual from claiming HRA tax exemption if he/she pays rent to their parents. However, such individuals must have valid proof (Rent Agreement or Rent receipts) in support of that. The rent agreement will be considered legally valid if it has the signatures of witnesses, the landlord and tenant, and is notarized as well.
More than 28,000 govt employees working in J&K, including 8,000 police and paramilitary force personnel, are under the scanner of IT dept for allegedly claiming bogus refunds worth crores of rupees while filing their ITRs. The dept has registered two criminal FIRs against a CA & 404 others.
06/06/2023
The Directorate of Enforcement (ED) seized 18.54 Crores of VIPS Group in connection with FEMA, 1999 in violation by VIPS Group of Companies and M/s Global Affiliate Business managed & controlled by Vinod Khute & his relatives. The investigation under FEMA,1999 initiated against Vinod Khute & others, who is the mastermind of various illegal trade, crypto exchange, and wallet services being operated through VIPS Group of companies and the proceeds were being siphoned off through Hawala to various foreign countries. It was found that M/s Global Affiliate Business has been running illegal & unauthorized multi-level marketing schemes wherein if a person opts for the scheme as a member and refers other consumers/ clients to the application/ website, a commission on his investment/ expense on the application is credited in his account/ wallet. It was found that in this manner, funds to the tune of Rs.125 Crore have been collected from various investors. As per the Investigation, the investment to the tune of Crores of rupees from various clients/ investors had been collected in cash also and the proceeds so collected by M/s Global Affiliate Business had been siphoned off out of the country through Hawala Channels as well as to various shell companies/firms.
The Directorate of Revenue Intelligence (DRI), Mumbai has seized more than 10 kg of gold in 2 separate cases on 3rd and 4th June 2023. In the first case based on specific intelligence, 2 passengers arrived from Sharjah to Mumbai by Air India Express Flight No. IX 252, and were intercepted. During the examination of the said passengers, 8 gold bars of 24 karat having foreign markings weighing 8 kg were found concealed inside their clothes around their waist. Acting swiftly on further intelligence, one more associate of the passengers was apprehended. The gold in bar form weighing 8 kg recovered during examination valued at ?4.94 crore was seized. Three persons have been arrested in the first case.
The Enforcement Directorate (ED) has carried out a string of search operations at 25 different locations across Gujarat, Maharashtra and Karnataka in an alleged GST (Goods and Service Tax) fraud case. In the operation, the central agency has charged Mohammad Ejaj Bomar with money laundering based on a chargesheet filed by Bhavnagar Police in Gujarat. Ejaj allegedly used fake invoices of more than Rs 1102 crore to evade the GST amount of Rs 122 crore. For this purpose, the accused used 461 bogus companies, claimed chargesheet filed by Bavnagar Police. The ED has initiated a money laundering investigation based on FIRs registered by Bhavnagar Police under various sections of the Indian Penal Code (IPC) against Mohammad Ejaj Bomar and others. The central agencies also searched the premises of the persons involved in preparing bogus documents based on which fake firms were constituted to wrongly claim the Input Tax Credit (ITC). The police chargesheet states that the accused used the Aadhar Card of several persons to constitute the shell companies.
A resident of Lathi village in Jaisalmer district was left shocked after receiving a showcause notice from the goods and service tax (GST) department to pay dues of around Rs 4.9 crore at the earliest. The farmer with a monthly income of just Rs 5,000 has lodged a police complaint regarding the same. The notice mentioned that strict action will be taken if tax is unpaid. Mehram Khan, the farmer, received the notice two months ago from the goods and service tax (GST) directorate general Nagpur regional unit of Maharastra informing that the due GST tax is Rs 4,89,66,552 and should be immediately deposited. Khan said that someone has misused his PAN number and has made a firm and not deposited the GST and so he has received the notice. He said that he is an unemployed person and is dependent on farming at present in his village. On investigation he found that his Aadhar card pan card and other documents have been misused and a firm has been made, which has a turnover worth crores.
The GST, e-Invoice System has issued an update regarding the E-invoicing for taxpayers with Average Annual Turnover (“AATO”) between Rs.5 Crore to Rs.10 Crore has been enabled on the website.
Source: https://einvoice1.gst.gov.in/
05/06/2023
The income tax department has detected ‘benami’ deposits of ?50 lakh and above in small saving schemes such as the Kisan Vikas Patra and National Savings Certificate (NSC) in the name of minor children or household help. The department has been sending notices in instances where the deposits are of ?1 crore or more, officials told ET. The Centre has asked post offices to re-initiate the know-your-customer (KYC) process for all existing accounts with deposits of ?10 lakh and more. Based on the information, these accounts will be tagged low risk, high risk, and very high risk.
“We have detected many benami cases where deposits were made above ?50 lakh and no return was filed and on further investigation, documents were traced to people who cannot have such income,” a senior official told ET. “So far, we have sent about 150 notices where deposits are above ?1 crore or higher.” The number of such instances is much higher than this and more notices are going to be issued, the person said. Data analytics is helping the department identify such cases.
Misuse by NRIs, HNIs:
The official cited above said that compliance norms are simpler for small saving schemes, keeping in mind difficulties faced by the lower and middle-income groups. But this has been misused by some non-resident Indians (NRIs), high net-worth individuals (HNIs), and even some trusts, the person said.
Currently, NRIs and Hindu Undivided Families (HUFs) are not allowed to invest in small savings schemes.
In a May 25 master circular, the Department of Posts (DoP) asked post offices to flag and freeze accounts if customers don’t comply with KYC requirements.
Tightened KYC:
The official said such evasion will be difficult going ahead as the Centre recently made reporting norms more stringent for all investments in post offices under Prevention of Money Laundering Act (PMLA) rules. For fresh deposits of ?10 lakh and above, under the tightened norms, proof of source of income, permanent account number (PAN), Aadhaar, and other relevant KYC documents have to be submitted.
The Reserve Bank of India (RBI) has launched the ‘100 days 100 Pays’ Campaign with effect from 1st June 2023. The campaign strives to return the unclaimed deposits in the savings / current accounts. “Unclaimed Deposits’ are balances in savings or current accounts term deposits that have not been used for 10 years. Unclaimed deposits refer to funds that have remained untouched or inactive for a period of ten years or longer. When such deposits exhibit no activity, banks transfer the funds to the “Depositor Education and Awareness” (DEA) Fund, which is maintained by the RBI. According to RBI, the growing volume of unclaimed deposits arise mainly due to the non-closure of savings/current accounts which depositors do not intend to operate anymore or due to not submitting redemption claims with banks for matured fixed deposits. There are also cases of funds belonging to deceased depositors, where the nominees/legal heirs do not come forward to make a claim on the bank(s) concerned. The total amount of unclaimed deposits transferred to the Reserve Bank of India (RBI) by public sector banks (PSBs) was Rs 35,012 crore till February 2023, minister of state for finance Bhagwat Karad said in a written reply to Parliament. Currently, the State Bank of India (SBI) tops the chart of unclaimed deposits worth Rs 8,086 crore followed by Punjab National Bank Rs 5,340 crore, Canara Bank Rs 4,558 crore and Bank of Baroda Rs 3,904 crore.
04/06/2023
SEBI cancels Karvy Stock Broking's registration
The Securities and Exchange Board of India (SEBI) cancelled the certificate of registration of Karvy Stock Broking through an order issued on May 31. The SEBI had banned the stock broking company and its promoters from the market for seven years through its order issued on April 28, 2023. This was done for various violations including misappropriation of clients' securities.
In order to safeguard consumers privacy, the Ministry of Consumer Affairs has come up with an advisory for retailers. Under the new advisory, shopkeepers can no longer compel customers to provide their personal contact details for generating bill of a particular purchase made by them. The Consumer Affairs Ministry has issued an advisory directing retailers not to insist on the personal contact details of customers for delivering certain services, Consumer Affairs Secretary Rohit Kumar Singh said, according to a PTI report. The advisory has been issued following several consumer complaints. Customers have complained about many retailers not providing them services if they refuse to share their contact number, he said. The Consumer Affairs Secretary explained that sellers often say they can’t give customers a bill unless they provide their personal contact details. However, this is considered unfair and goes against the Consumer Protection Act. There is no good reason for retailers to collect this information, and it restricts customers unfairly. The Secretary spoke to reporters and emphasised that this is not right.
03/06/2023
The following nine various modifications have been made to the income tax laws over the past 9 years.
Changes In Income Tax Rules In 2014
In the 2014 Budget, the personal income tax exemption ceiling increased from 2 lakh to 2.5 lakh. And for senior citizens, it was raised from 2.5 lakh to 3 lakh. The Section 80C deduction cap was raised from Rs. 1 lakh to Rs. 1.5 lakh, and the Section 2 lakh deduction cap was raised from Rs. 1.5 lakh to Rs. 2 lakh.
Changes In Income Tax Rules In 2015
For the general public, the maximum deduction for health insurance premiums was increased from Rs 15,000 to Rs 25,000.
The senior citizen health insurance premium deduction cap was raised from Rs 20,000 to Rs 30,000.
The monthly transit allowance exemption was doubled from Rs 800 to Rs 1,600.
An extra deduction of Rs 50,000 for contributions made under Section 80 CCD to the National Pension Scheme (NPS).
The surcharge for income over one crore rupees was raised from 10 percent to 12 percent.
The wealth tax was eliminated
An additional 2 percent surcharge for those who were extremely wealthy and had taxable incomes of more than one crore rupees.
Changes In Income Tax Rules In 2016
Under Section 87A, the tax credit was increased from Rs 2,000 to Rs 5,000 for people with annual incomes up to 5 lakh rupees.
Additionally, the annual cap for the Section 80GG deduction for rent payments was increased from Rs 24,000 to Rs 60,000.
The surcharge for income over one crore rupees was raised from 12 percent to 15 percent.
A 10 percent income tax was also levied by the budget on dividends that exceeded Rs 10 lakh yearly.
Changes In Income Tax Rules In 2017
In the category between Rs 2.5 lakh and Rs 5 lakh, the tax rate was lowered from 10 percent to 5 percent.
The tax rebate under Section 87A for taxpayers with annual incomes up to Rs 3.5 lakh was also decreased by the finance minister from Rs 5,000 to Rs 2,500.
Those with annual taxable incomes between Rs 50 lakh and Rs 1 crore now pay a 10 percent surcharge.
In the category between 2.5 lakh and 5 lakh, the tax rate was lowered from 10 percent to 5 percent.
The tax rebate under Section 87A for taxpayers with annual incomes up to 3.5 lakh was also decreased by the finance minister from Rs 5,000 to Rs 2,500.
Those with annual taxable incomes between Rs 50 lakh and Rs 1 crore now pay a 10 percent surcharge.
The interim budget was welcome news for the middle class during an election year. Those making less than 5 lakh paid no taxes in the end.
The salaried class’s standard deduction was raised from Rs 40,000 to Rs 50,000.
Changes In Income Tax Rules In 2018
New slabs were introduced by the government. Taxpayers had the option of choosing the old tax system with its exemptions and deductions or the new, lower tax rate without such exemptions. The new tax system was optional.
In Budget 2020, new tax slabs were revealed. The old system with its deductions and exemptions was still available to taxpayers, or they may choose the new, lower tax rate without the deductions and exemptions.
Changes In Income Tax Rules In 2022
30 percent of the proceeds from virtual or digital assets are taxed.
The cap on tax deductions for NPS contributions made by state government employees has increased from 10 percent to 14 percent.
Changes In Income Tax Rules In 2023
The income tax laws underwent numerous revisions beginning on April 1, 2023. Some of the key changes that take effect on April 1, 2023, are increasing tax rebate limits, changes to income tax slabs, and the elimination of the LTCG tax benefit on some debt mutual funds.
Extension of the rebate for those subject to the new income tax regime for yearly income up to Rs 7 lakh.
Under the new income tax slab, a standard deduction of Rs 50,000 has also been added.
S-ZeeNews
02/06/2023
The National Informatics Centre (“NIC”) has issued an Update dated May 29, 2023 on the E-Way bill System is provisioned with the following new features for the Enrolled Transporters, Common Enrolled Taxpayers.
De-registration for Transporters: The transporters registered in e-Waybill Portal using Enrolment (based on PAN) and no longer want to continue in e-waybill system can now de- enrol themselves in the e-Waybill System. Once de-enrolled, they will not be able to access the e-Waybill portal. So, any enrolled transporter willing to de-register in EWB system can make use of this facility.
Once de-registered, the Transporter Id cannot be used in e-Waybills. Also, the Part-B details cannot be updated for the de-registered Transporter Id.
Cancellation of Common Enrolment: Some of the taxpayers have done common enrolment but do not want to continue with common enrol Id for whatever reason. Such taxpayers can cancel the same. So, a facility to de-register from common enrolment is provisioned. Taxpayers can make use of this facility to de-register.
Once, the common enrolment Id is cancelled, consequently, it cannot be used to update the transporter details. However, the Part-B details can be updated for the EWBs that are already assigned with common enrolment Id before the cancellation.
A time limit of 1 month will be provided after the cancellation of common enrolment. Subsequently, the login will be blocked and no further activity can be performed in the e- Waybill system.
Once the common enrol id is cancelled, the user can again login using the credentials of his/her GSTIN and generate e-waybills.
2 Factor authentication: In order to secure the e-waybill login access, 2 Factor Authentication (2FA) is enabled and kept optional. However, after couple of weeks, 2FA will be made mandatory. The users operating e-waybill system from multiple locations and with single credential are advised to create sub-users immediately.
Revision in limits for Condonation of delay in filing applications for refund or set off of losses:
1. The CBDT has issued Circular No. 07/2023 dated May 31, 2023 regarding the condonation of delay in filing refund claim and claim of carry forward of losses under Section 119(2)(b) of the Income-tax Act, 1961 (“the IT Act”).
2. Circular No. 09 of 2015 (the Circular) dated June 09, 2015 in F. No.312/22/2015-prescribed comprehensive guidelines on the conditions and procedure to be followed for deciding applications for condonation of delay in filing Returns of Income (RsOI) claiming refund and RsOI claiming carry forward of loss and set- off.
3. Circular 07/2023, has revised the the monetary limits as under:
(i) The Principal Commissioners of Income-tax/Commissioners of Income-tax (Pr. CSIT/CSIT) shall be vested with the powers of acceptance/rejection of such applications/claims if the amount of such claims is not more than Rs.50 lakhs for any one assessment year.
(ii) The Chief Commissioners of Income-tax (CCSIT) shall be vested with the powers of acceptance/rejection of such applications/claims if the amount of such claims exceeds Rs.50 lakhs but is not more than Rs.2 crores for any one assessment year.
(iii) The Principal Chief Commissioners of Income-tax (Pr. CCSIT) shall be vested with the powers of acceptance/rejection of such applications/claims if the amount of such claims exceeds Rs.2 crores but is not more than Rs.3 crores for any one assessment year.
(iv) The applications/claims for amounts exceeding Rs.3 crores shall be considered by the Board.
4. The above revised monetary limits for applications/claims in respect of the competent authorities specified hereinabove shall be applicable to the applications/ claims filed on and after June 01, 2023.
5. The other guidelines prescribed in Circular No. 09 of 2015 dated June 09, 2015 shall remain unchanged.
01/06/2023
Key takeaways from GDP data
* Growth in real GDP during 2022-23 is estimated at 7.2 per cent as compared to 9.1 per cent in 2021-22.
* Q4 GDP estimated at ?43.62 lakh crore, as against ?41.12 lakh crore in Q4 2021-22, showing a growth of 6.1 percent.
* India's manufacturing sector saw a sharp slowdown in growth to 1.3% in FY23 versus 11.1% in the previous fiscal.
* GVA in agriculture, forestry and fishing saw a growth of 4% in FY23, rising from 3.5% in FY22.
* Financial, real estate and professional services recorded a growth of 7.1% versus 4.7% in FY22.
* Construction sector also slowed down to 10% growth in FY23 versus 14.8% in FY22.
* India's per capital national income (net) rises to ?98,374 crore in FY23, as against ?92,583 crore in FY22.
* Imports of capital goods surged by almost 20% in FY23 from a year earlier and domestic production remained good, signalling improved private sector capital formation.
31/05/2023
CBDT Amends Rule 11AA of Income Tax Rules CBDT has issued Notification No. 34/2023-Income Tax, dated May 30, 2023 & introduced amendments to rule 11AA of Income-tax Rules, 1962.
New sub-rule (7) to rule 11AA states that for applications made under clause (iv) of the first proviso to sub-section (5) of section 80G of the Income-tax Act, 1961, provisional approval will be effective from the assessment year relevant to the previous year in which the application is made.
Amended rules, known as Income-tax (7th Amendment) Rules, 2023, will come into force upon their publication in the Official Gazette i.e. 30th May, 2023.
29/05/2023
The Delhi High Court upholds RBI clarification as well as SBI notification that no identification is required for exchange of Rs 2,000 currency notes and has dismissed the Public Interest Litigation (PIL) filed against the Reserve Bank of India (RBI) and State Bank of India (SBI) notifications allowing exchange of 2000 Rupee Currency notes without proof of identity, upholding the impugned notifications. Lawyer Ashwini Kumar Upadhyay had challenged the notifications issued by the Reserve Bank of India and State Bank of India regarding the exchange of Rs. 2000 banknotes without requiring a request slip or identification evidence in a Public Interest Litigation (PIL)
Thereafter the State Bank of India had issued a notice to all branches, stating that no request slip or identification proof is necessary for exchanges up to the limit of Rs. 20,000.
Mr Upadhya , the petitioner argued in the plea that this decision of State Bank of India is arbitrary and contravenes Article 14 of the Indian Constitution. Additionally, it was suggested that to prevent the deposit of money into other individuals’ bank accounts and facilitate the identification of those involved in illicit activities such as holding black money or disproportionate assets, the RBI and SBI should ensure that only Rs. 2000 banknotes are deposited into their respective accounts.
In the hearing last week, Mr Parag P Tripathi, the Senior Advocate representing the RBI, strongly opposed the plea and recommended dismissal of the PIL along with imposition of significant costs. He emphasized that the current situation should not be equated with demonetization, clarifying that it is a statutory exercise. Furthermore, he asserted that the points raised by the opposing counsel, Mr. Upadhyay, do not have any impact on public concerns whatsoever. The Division Bench of Chief Justice Satish Chandra Varma and Justice Subramonium Prasad today dismissed the Public Interest Litigation (PIL), upholding the notifications of RBI and State Bank of India (SBI) allowing the public to exchange/deposit 2000 rupee notes as per existing deposit norms. With RBI taking a stand in the High court court that no identification is required for exchange of Rs 2,000 currency notes, now the doubts about requirement of identification should stand settled.
The CESTAT Kolkata in the matter of KANHAIYA SINGH VISION CLASSES PRIVATE LIMITED VERSUS COMMISSIONER OF CGST & CX, PATNA-I COMMISSIONERATE - 2023 (5) TMI 769 - CESTAT KOLKATA has held that the amount collected by selling study material is not a taxable service under the Finance Act, 1994, hence, no service tax leviable on sale of coaching material.
Facts:
M/s. Kanhaiya Singh Vision Classes Pvt. Ltd. (“the Appellant”) is engaged in providing coaching services to the aspiring students for qualifying the competitive entrance examinations into the engineering/medical institutes and also sells study material.
The Appellant was issued with a Show Cause Notice dated September 24, 2018 (“the SCN”) alleging short payment of service tax on coaching services by artificially bifurcating the consideration received towards coaching services in other categories such as Income from sale of bag, sale of Identity card, sale of prospectus and sale of books.
The Appellant had replied to the SCN by stating that the value of sale of books cannot be included in the value of coaching services as the same is sale of goods and cannot be taxed as per the Notification No. 12/2003-ST dated June 20, 2003.
The Adjudicating authority vide an Order dated March 17, 2021 confirmed the demand of Service tax with equivalent penalty.
Issue:
Whether income from sale of books must be added in the consideration for coaching services?
Held:
The CESTAT, Kolkata in KANHAIYA SINGH VISION CLASSES PRIVATE LIMITED VERSUS COMMISSIONER OF CGST & CX, PATNA-I COMMISSIONERATE - 2023 (5) TMI 769 - CESTAT KOLKATA held as under are:
The Tribunal in various decisions held that the value of books cannot be included in the consideration for coaching services.
Relied upon the judgement of CHATE COACHING CLASSES PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, AURANGABAD - 2012 (6) TMI 721 - CESTAT, MUMBAI “the amount collected by the Appellant selling of study material is not taxable service under the Finance Act, 1994”.
The value of book sales is separately identifiable from the Appellant audited financial statements, and there are documents to show that such sales were made not only to students but also to third parties.
28/05/2023
According to a report in the BBC, a lawyer based out of New York is facing a court hearing after a colleague at his firm used ChatGPT for legal research. The court found out that several legal cases referenced by the lawyer and his firm in an on-going case never existed. The judge termed the incident as an "unprecedented circumstance." Peter LoDuca is the lawyer facing a court hearing and his colleague, who used ChatGPT for the research, is Steven A Schwartz. The BBC report reveals that Mr Schwartz has been an advocate for over 30 years and used OpenAI's tool to look for similar cases in the past. When Mr Schwartz was questioned about the same, he said that he was not aware of the possibility of the AI tool giving out false information. The senior lawyer also expressed regret for relying on the AI chatbot and promised to 'never use AI to supplement his legal research in future without absolute verification of its authenticity.
The government has now made it mandatory for those investing over Rs 10 lakh in post office schemes to provide proof of source of funds. It has also brought all investments in post office schemes under stricter KYC/PMLA compliance rules to prevent misuse for terrorist financing/money laundering activities.
The Department of Posts has directed post office officials to collect income proofs from certain categories of small savings schemes’ investors. The department made this announcement via a circular issued on May 25, 2023. The circular has been issued due to the revision of Know Your Customer (KYC)/Anti Money Laundering (AML)/Combating the Financing of Terrorism (CFT) norms, the department stated.
As per the circular issued, customers are being categorised with the perspective of risk involved. High-risk customers are required to provide proof of money that is being invested apart from the commonly followed KYC norms.
The circular has divided customers on the basis of risk perception as follows:
Low risk– Where the customer opens an account or applies for purchase of certificates or applies for credit of maturity/prematurity value of any existing savings instruments with an amount of up to Rs 50,000 and balances in all accounts and savings certificates does not exceed Rs 50,000.
Medium risk – Where the customer opens account or applies for purchase of certificates or applies for credit of maturity/prematurity value of any existing savings instrument with an amount exceeding Rs 50,000 but up to Rs 10 lakh and balances in all accounts and savings certificates does not exceed Rs 10 lakh
High risk – Where the customer opens an account or applies for purchase of certificates or applies for credit of maturity/prematurity value of any existing savings instrument with an amount exceeding Rs 10 lakh and balance in all accounts and certificates does not exceed Rs 10 lakh.
The accounts relating to Politically Exposed Persons (PEPs) residing outside India shall fall under High-Risk Category. PEPs are those individuals who are or have been entrusted with prominent public functions by a foreign country, including the Heads of States/Governments, senior politicians, senior government or judicial or military officers, senior executives of state-owned corporations and important political party officials.
As per the circular, the customer has to submit a copy of a document showing the source of receipts of funds for making investments. Any of the following documents can be submitted as proof of the source of funds:
Bank/Post Office Account statement, which reflects the source of funds
Any one of the income tax returns filed during the last three financial years, which co-relates the investment in the gross income
Sale deed/Gift deed/Will/Letter of Administration/succession certificate
Any other document which reflects the income/source of fund
Apart from asking for proof of money source for certain investors, all categories of customers/investors (irrespective of their risk categories) are required to produce the following documents to do the investment:
Photograph: Two recent passport size photographs, three in the case of BO. In the case of joint account, photograph of all joint holders should be given
ID proof: Aadhaar and PAN
Address proof: Any one of the following – Aadhaar number or PAN. If these two documents do not mention the present address and any officially valid document such as passport, driving license, Voter’s ID Card, Utility bills (not older than two months) etc.
Do note that the documents must be self-attested by the investor. In the case of a joint account, ID and address proof of all joint depositors are required. For basic savings accounts, the document proving that the depositor is a beneficiary of any government scheme is mandatory.
The circular further specifies that re-KYC must be done depending on the risk of the customer. For high-risk, medium risk and low-risk customers, the re-KYC must be done every two, five and seven years, respectively.
27/05/2023
Gst— Errors & Omissions by Taxpayers to be sanitized:
1. Physical and Documentary Existence at Place of Business -
A. There is No concept of VPOB (Virtual Place of Business) under GST Law. Hence one table space in a business centre should not be used for multiple registrations.
B. If office is shifted permanently please make sure to surrender PPOB (Principal Place of Business) /APOB (Additional Place of Business). If office is shifted temporarily please make sure to add APOB (Additional Place of Business) as well as display requisite information in the earlier POB.
C. Documents u/r 56 of CGST Rules to exist at each PPOB/APOB as per the transactions taking place from there.
D. Ensure to appoint an Authorized Representative for each state and ensure that he/she is present at PPOB/APOB as required.
E. Loading/unloading of vehicles to only happen at PPOB/APOB. They should not happen in an open area which is not registered.
2. “Invoicing without Supply” is an offence under GST even even incase all compliances are done. Especially “Service Providers” need to beware.
3. Both inward as well as outward movement require E-Waybill. Hence E-Waybill reconciliation is to be done with inward as well as outward supplies.
4. Incase Authorised Signatory has changed, please change it on GST Portal.
5. Dos & Don'ts for Stock Keeping under GST – GST proceedings, may result in stock taking at the premises. Regarding stocks, taxpayers make some general mistakes due to which they have to face the wrath of the GST Departments when they invoke Proceedings of accessing the place of business or investigations. It has to be understood that incase a shortage or excess is found by the department at the time of stock taking, then in both these cases GST would be applicable on the value of mismatched stock. Hence the following points are important to note –
A. For All - Do not store stock at a place which is not added in the GST Registration APOB/PPOB.
B. For Manufacturers - Do have a record of not only purchase of Raw Material and closing Stock, but also have records of WIP.
C. For Downstream Products like Scrap - Do not load vehicles on the road or any unauthorized place other than APOB/PPOB.
D. For All - Generate E-Waybill Part-B only after the vehicle is ready for movement.
E. For All - Try to stock lots of material as per your ERP. For example incase one is stocking the same material at different place in different lots, then it is better incase the ERP Stock is also maintained in lots.
F. Ensure Sales Orders are serial numbered - It is seen that many small businesses maintain Customer/Sales Orders on pieces of paper and have no record of serial numbers or orders cancelled or a linking to final invoices made.
S- TMI
26/05/2023
SOP for Scrutiny of Returns for 2019-20 [Instruction 2/2023 dated 26-05-2023
1. SOP for scrutiny of returns for 2017-18 and 2018-19 was interim measure till the development of online scrutiny module made available on ACES-GST application.
2. DG System has developed online module for scrutiny of returns.
3. Selection of returns for scrutiny shall be done by DGRAM who will select GSTIN registered with Central Tax authorities based on identified risk parameters.
4. GSTINs selected for scrutiny for 2019-20 have been made available on the dashboard of proper officer of Central Tax on ACES-GST application. Also following information has been made available for convenience of proper officer:
i.Details of risk parameters involving risk/discrepancies in respect of GSTIN
ii.Amount of tax/discrepancy involved for each risk parameter
5. Risk Parameters: All risk parameters taken into consideration shall be made available on the dashboard. [Indicative List of Parameters has been provided in Annexure B of Instruction 2/2022 dated 22-03-2022]
6. Additional risk parameters may also be considered by proper officer in addition to parameters indicated in Dash board
7. Proper officer shall finalize month wise scrutiny schedule with approval of divisional assistant/deputy commissioner, prioritizing riskier GSTINs having higher risk implications.
8. Principal Commissioner will monitor that schedule identified in Scrutiny Module is adhered by officers under his jurisdiction.
9. Minimum 4 GSTINs to be scrutinized every month involving scrutiny of all the returns pertaining to FY. [Para 4.2]
10. For scrutiny of returns following data to be checked:
i. Various returns and statements furnished by registered person
ii. Data made available through
a.DGRAM
b.ADVAIT
c.GSTN
d.E way Bill Portal
[Para 5.1]
11. No documents/records to be sought from taxpayer for the purpose of scrutiny and proper officer is expected to rely upon only information available on records. [Para 5.3]
12. Minimal Interface between taxpayer and officer is expected for scrutiny. [Para 5.3]
13. Payments made through DRC-03 also to be considered while communicating discrepancy [Para 5.4]
14. ASMT-10 to be communicated on portal only without making any manual communication of ASMT-10 [Para 5.4]
15. Quantification of tax, Interest and other amount payable to be done in ASMT-10, as far as possible [Para 5.4]
16. Specific discrepancy to be communicated and not vague and general {para 5.4]
17. Worksheets and supporting documents of ASMT-10 to be uploaded on portal {Para 5.4]
18. Timelines:
i. Reply of Notice by registered person : With in 30 days or further period permitted by proper officer
ii. Satisfactory Disposal of Notice ASMT-12’ With in 30 days from receipt of reply
iii. Where no reply is furnished, appropriate action u/s 73/74/65/66/67 to be taken in 15 days from expiry of 30 days provided for reply.
iv. Where reply submitted is not satisfactory, appropriate action u/s 73/74/65/66/67 to be taken with in 30 days from receipt of reply.
19. MIS Reports: Monthly Scrutiny progress reports (Summary information on scrutiny for a month) and Scrutiny register providing GSTIN wise details of action taken in respect of scrutiny of returns of allotted GSTINs have been made available on Scrutiny dashboard and requirement of compiling and sending Monthly Scrutiny progress report by CGST zones to DGGST is here by dispensed.
25/05/2023
CBDT notifies enhanced limit of Rs.25 Lac for leave encashment exemption under Sec.10(10AA). The Finance Minister while presenting Budget 2023 has proposed to increase the exemption from Rs 3.00 lacs to Rs 25.00 lacs for employees in private sector. The Notification No. 31/2023 dt. May 24, 2023 comes into effect from Apr 1, 2023.
All trusts approved/ registered under section 10(23C)(iv)/(v)/(vi)/(via) or section 12A/12AA as on 01.04.2021 were required to apply for re-approval by 25.11.2022. Those who failed were covered by the Finance Act, 2023 from 1-4-2023 under the clutches of section 115TD (Dealing with exit tax).
1. Where form no. 10A was not filed by the extended date of 25.11.2022 by the trusts approved/ registered as above then they can now file the same by 30.09.2023. Further, such trusts have furnished form no. 10A after above date seeking provisional registration/approval, the relevant
functionality on the e-filing portal may be used for surrendering the Form No. 10A seeking
provisional registration/approval and such trusts can make a new application in Form No. 10A for registration/ approval within the extended period up to 30.09.2023.
2. Where the new trusts who were provisionally approved/ registered and were required to file form no. 10AB for final approval but failed to file such form by specified period of 6 months from date of commencement of activities and such date has expired then they can file form no. 10AB within the extended period up to 30.09.2023.
3. Where such application is made by the said date and registration/approval is granted then exit tax as per section 115TD as amended by the Finance Act, 2023 from 1-4-2023 will not apply.
4. In cases where the trust had already made an application in Form No. 10AB, and where the Principal Commissioner or Commissioner has passed an order rejecting such application, on or before the issuance of this Circular, solely on account of the fact that the application was furnished after the due date, the trust may furnish a fresh application in Form No. 10AB within the extended time.
5. The due date for furnishing of statement of donation in Form No. 10BD and the certificate of donation in Form No. 10BE in respect of the donations received during the financial year 2022-23 has been extended to 30.06.2023.
6. In case of trusts, funds or institutions seeking provisional approval or provisional registration as referred to above, the said provisional approval or provisional registration shall be effective from the assessment year relevant to the previous year in which the application is made and shall be valid for a period of three assessment years.
7. From the assessment year 2023-24 statement of accumulation in Form No. 10 and Form No. 9A is required to be furnished at least two months prior to the due date of furnishing return of income so that it may be taken into account while auditing the books of account. However, the accumulation/deemed application shall not be denied to a trust as long as the statement of accumulation/deemed application is furnished on or before the due date of furnishing the return as provided in sub-section ( 1) of section 139 of the Act.
8. Form No. 10B and Form No. 10BB (Audit report in case of charitable trusts) requires the auditor to bifurcate certain payments or application in electronic modes and non-electronic modes.
It is clarified that for the purposes of Form No. 10B and Form No. 10BB electronic modes are in addition to the account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account.
In the Public Interest Litigation (PIL) filed before the Delhi High Court regarding the exchange or deposit of Rs. 2000 notes without identity proofs, a Division Bench including the Chief Justice reserved the judgement on May 23rd 2023. The plea has been filed by the Advocate Ashwani Kumar Upadhyay against the notifications issued on 19th May 2023.
The Reserve Bank of India (RBI) has withdrawn Rs 2000 notes from circulation. Individuals holding Rs 2000 notes can now either exchange them for other denomination notes from a bank or deposit the same into their bank accounts. However, if you deposit more than Rs 50,000 in a single transaction, then you have to mandatorily quote your PAN as per income tax rules. Rule 114B of the income tax rules makes it mandatory for an individual to quote his/her PAN if the cash deposit in a single day either with a bank or post office exceeds Rs 50,000 in a single day. However, quoting PAN is not mandatory if the amount deposited does not exceed Rs 50,000 in a single day. Here is an example to understand this. Suppose, you make a cash deposit of Rs 30,000 in Rs 2000 banknotes into your bank account. And 15 days later, you make another cash deposit of Rs 40,000 in Rs 2000 banknotes into that same bank account. As the single transaction in a day does not cross Rs 50,000, you will have to quote PAN while making a cash deposit of Rs 2000 notes. However, if you had made a single cash deposit of Rs 70,000 (Rs 30,000 + Rs 40,000) in a single day, then the bank will ask you to quote your PAN mandatorily at the time of making the cash deposit. The government has made the quoting of PAN or Aadhaar mandatory if the cash deposits or withdrawals in a financial year exceed Rs 20 lakh. The notification was issued by the Central Board of Direct Taxes (CBDT) on May 10, 2022, and the new rules became effective from May 26, 2022. Along with depositing, an individual also has the option to exchange Rs 2,000 notes. However, the RBI has put a limit on the number of notes that can be exchanged. As per the RBI notification, an individual can exchange a maximum of 10 notes or Rs 20,000 at a time. In a media interaction on May 22, 2023, the RBI governor said that banks will follow their own process and rules in case of an exchange of Rs 2,000 notes. However, there is no limit on the amount of deposits that can be made in the bank account. The KYC rules will be applicable in case of deposits. The last date to deposit or exchange Rs 2000 note is September 30, 2023.
24/05/2023
Six important points to ponder over the Rationale behind withdrawal of 2000 Rs currency notes::
On 21 May, MyGovIndia, a citizen engagement platform of the government, clarified that the 2,000 note will continue to be legal tender post-30 September. Indeed, the move to withdraw the 2,000 note brings several issues to the fore.
1. if these notes will continue to be legal tender after the deadline, then why withdraw them? RBI in its 19 May press release had said that the 2000 note was introduced "to meet the currency requirement of the economy in an expeditious manner after the withdrawal of legal tender status of all rs 500 and rs 1000 banknotes." Now more than six-and-a-half years later, the objective of introducing the 2,000 note has been met. This again takes us back to the question: Why replace 500 and 1,000 notes with a 2,000 note? With some planning, new notes of 500 could have been printed in adequate quantities before demonetization and used to replace demonetized ones.
2. as of March 2017, 2,000 notes formed a little over 50% of the total currency in circulation in value terms. This had come down to just 10.8% by March 2023. Over the years, RBI has issued more new currency notes of other denominations and it has gradually withdrawn 2,000 notes from circulation. That led to the total value of 2,000 notes in circulation falling from 6.57 trillion in March 2017 to 3.62 trillion in March 2023. This could have easily continued, and over the next few years, the value of the 2,000 note as a proportion of our total currency would have fallen below an insignificant 5%.
3. the logic offered by those in support of the move is that it will help curb black money on the assumption that people store their unaccounted wealth in currency form. The 2012 White Paper on Black Money had offered some data on this front for a period of six years based on search and seizure operations carried out by the investigative wing of the Central Board of Direct Taxes. On average, currency typically formed less than 5% of the total undisclosed wealth identified. So, very little black wealth is held as currency.
4. such moves damage India's long-term ambition of making the rupee an international reserve currency.
5. currency is still a very important part of India's economic system. As of March 2023, it stood at around 12.3% of our gross domestic product (GDP), around the same level it was before demonetization. Hence, any attempt to take currency out of the economy in one shot is a bad idea.
6. there is this great belief that cash facilitates corruption. It might facilitate petty corruption and some large corruption, but corruption at larger levels doesn't always need cash to be paid domestically. Take the case of Nigeria, which is one of the most corrupt countries in the world. It also has one of the lowest ratios of currency in circulation. Or take the case of the Eurozone, the countries which are members of the EU and use the euro as their currency. Their currency-in-circulation to GDP ratio as of December stood at 12.1%, very similar to India's.
So, why did RBI decide to withdraw the 2,000 note? There is clearly no rational answer for this. (S-Mint)
Advisory’s on display of registration certificates, proper display, maintenance of books of accounts, maintenance of proper records::
Rule 18 of CGST Rules 2017 requires : a Display of Registration Certificate at Prominent Place in
• Principal Place of Business and
• Every additional Place of Business
Display of Registration Number (GSTIN) on name board exhibited at the entry of
• Principal Place of Business and
• Every additional Place of Business
In case of Taxpayer has taken GST Registration for the State (Single Registration):
All places of business in the State should be cover in the Registration either as Principal Place of Business or Additional
Place of Business.
Place of Business includes:
(a) from where the business is ordinarily carried on, and includes a warehouse, a godown or any other place where a taxable person stores his goods, supplies or receives goods or services or both; or
(b) a place where a taxable person maintains his books of account; or
(c) a place where a taxable person is engaged in business through an agent, by whatever name called.
[As defined in section 2(85) of CGST Act'2017]
Every registered person shall keep and maintain true and correct account relating to each place of business and shall be kept at such places of business as specified in the certificate of registration-
• Principal Place of Business and
• Every additional Place of Business.
Every registered person shall keep and maintain a true and correct account of -
(a) production or manufacture of goods..
(b) inward and outward supply of goods or services or both
(c) stock of goods
(d) input tax credit availed
(e) output tax payable and paid.
[Abstract of Sec 35 of CGST Act 2017]
23/05/2023
In a significant development in the GST department’s campaign to combat suspicious and fake registrations, approximately 4,000 firms from Ludhiana have been identified as doubtful by the online system of the Goods and Services Tax Network (GSTN). This number is expected to rise. The campaign was initiated on May 16. Considering the large number of assessees in the Ludhiana district, it will take some time to thoroughly examine all these cases and determine the extent of suspicious registrations, sources said. According to sources, it has been revealed that over 88,000 dealers are currently registered in Ludhiana under GST as per data with the Ludhiana division of the state GST (SGST) department. These dealers are distributed across five different ranges, with range-1 and range-2 accounting for the majority of the total registrations. Sources also said under the ongoing campaign, SGST officials are also been empowered to take action in case of suspicious and fake registration. SGST’s ranges have also started preparing their teams for the physical verification of the dealers tagged as suspicious.
RBI had included GSTN as a financial information provider under the account aggregator framework to facilitate a cash flow-based lending to MSMEs. GST'N and Account Aggregator Linking before July1 2023:
1. To ease credit disbursement friction by helping small firms to authorise lenders to access fin info.
2. It will help lenders use GST returns as financial statement to consider loan eligibility.
3. To help in seamless sharing of account information of taxpayers.
4. The AA system started off with eight of India’s largest banks including the State Bank of India, ICICI Bank, HDFC Bank among others joining the network.
5. Currently, the taxpayer has to physically provide the GST details which is a longer process. Using the account aggregator with a single click and an OTP onboarding, all his GST details are directly downloaded to the lending institution, which means there is total transparency and is straight from the source.
3 months jail for TV Producers for not depositing TDS on time
1. TV production company and its directors Yash Patnaik and Mamta Patnaik have been sentenced to three months imprisonment for delay in depositing Tax Deducted at Source (TDS) of Rs 8.37 crore.
2. The Magistrate Court has held that If the payment is made at a belated stage, then it will be treated as default and appropriate action can be taken under the Income Tax Act. It is also clear that depositing TDS with delay does not absolve criminal liability.
3. In its defence, the firm and its directors had pleaded that when the department issued notice they had responded to the same. It was contended that the firm did not deposit the money due to financial difficulties which was explained to the officer.
4. The Court however held that the accused failed to deduct TDS amount within the stipulated time. The accused might have paid the tax with interest and penalty but after a stipulated period. The sanctioning authority also granted sanction after considering the documents and applying its mind. However, for want of defence of the accused about the reasonable cause, it can safely gather that the accused have defaulted to pay the TDS within the stipulated time.
22/05/2023
A thief cannot be deemed to be an owner and so Sec 69A is not applicable to him: SC : M/s.D.N. SINGH (CIVIL APPEAL NO(S).3738-3739 OF 2023)
Facts:
1. Section 69A of the Income Tax Act provides that where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article which is not recorded in its books of account, it may be deemed to be the income of the assessee for such financial year.
2. The assessee, carries the business of a carriage contractor. The assessee lifted bitumen loaded from various oil companies which were delivered to various divisions of the Road Construction Department of the Government of Bihar.
3. Thereafter, a scam was reported in the media, alleging that the transporters of bitumen were misappropriating the bitumen and were not delivering the whole quantity lifted from oil companies.
4. The AO found that the appellant-assessee had not delivered the entire quantity of bitumen lifted by it from the oil companies. The AO thus passed an order making additions to the assessee’s income by invoking Section 69A.
Hon SC held as below:
1. The bailee, who is a common carrier, is necessarily entrusted with the possession of the goods and it is not an owner of the said goods and so Sec 69A which applies only to the owner cannot be attracted.
2. Recognising a thief as the owner of the property would also mean that the owner of the property would cease to be recognised as the owner, which would indeed be the most startling result.
3. Under Section 69A, the term ‘valuable’ cannot be understood as anything which has any value. Noting that Bitumen was ordinarily sold in bulk and that the price of one kilogram of bitumen was only Rs.5 in the relevant Financial Year under consideration, ‘bitumen’ as such cannot be treated as a ‘valuable article’.
Angle Tax Rules 11UA Update; CBDT proposes changes to Rule 11UA in respect of ANGEL TAX- Also proposes to notify Excluded Entities:
In the Finance Act, 2023, an amendment has been introduced to bring the consideration received from non-residents for issue of shares within the ambit of section 56(2)(viib) of the Income-tax Act, 1961 (the Act), which provides that if such consideration for issue of shares exceeds the Fair Market Value (FMV) of the shares, it shall be chargeable to income-tax under the head ‘Income from other sources’. Subsequent to this amendment, detailed interactions have been held with stakeholders. Based on the inputs, Rule 11UA for valuation of shares for the purposes of section 56(2)(viib) of the Act is proposed to be modified and notification of entities to which the said provision shall not apply is also being issued separately.
Proposed changes in Rule 11 UA:
1. Rule 11UA currently prescribes two valuation methods with respect to valuation of shares namely, Discounted Cash Flow (DCF) and Net Asset Value (NAV) method for resident investors. It is proposed to include 5 more valuation methods, available for non-resident investors, in addition to the DCF and NAV methods of valuation.
2. Further, where any consideration is received by a company for issue of shares, from any non-resident entity notified by the Central Govt, the price of the equity shares corresponding to such consideration may be taken as the FMV of the equity shares for resident and non-resident investors subject to the following:
To the extent the consideration from such FMV does not exceed the aggregate consideration that is received from the notified entity and
The consideration has been received by the company from the notified entity within a period of ninety days of the date of issue of shares which are the subject matter of valuation.
3. On similar lines, price matching for resident and non-resident investors would be available with reference to investment by Venture Capital Funds or Specified Funds.
It is proposed that the valuation report by the Merchant Banker for the purposes of this rule would be acceptable, if it is of a date not more than ninety days prior to the date of issue of shares which are subject matter of valuation.
4. Further, to account for forex fluctuations, bidding processes and variations in other economic indicators, etc. which may affect the valuation of the unquoted equity shares during multiple rounds of investment, it is proposed to provide a safe harbor of 10 % variation in value.
5. The draft Rules on the above lines will be shared for public comments for 10 days, after which these will be notified.
6. Notification for Excluded entities:
It is also proposed to notify certain classes of persons being non-resident investors to whom clause (viib) of sub-section (2) of section 56 of the Act shall not be applicable. This includes :
I) Government and Government related investors such as central banks, sovereign wealth funds, international or multilateral organizations or agencies including entities controlled by the Government or where direct or indirect ownership of the Government is 75% or more.
ii) Banks or Entities involved in Insurance Business where such entity is subject to applicable regulations in the country where it is established or incorporated or is a resident.
iii) Any of the following entities, which is a resident of a certain countries or specified territories having robust regulatory framework:-
a) Entities registered with Securities and Exchange Board of India as Category-I Foreign Portfolio Investors.
b) Endowment Funds associated with a university, hospitals or charities,
c) Pension Funds created or established under the law of the foreign country or specified territory,
d) Broad Based Pooled Investment Vehicle or Fund where the number of investors in such a vehicle or fund is more than 50 and such fund is not a hedge fund or a fund which employs diverse or complex trading strategies.
7. For Investment in Start-ups: It is also proposed to modify Notification No. S.O 1131(E) dated March 05, 2019 so as to provide that the provisions section 56(2)(viib) of the Act shall not apply to consideration received from any person by start-ups covered in para 4 & 5 of Notification dated February 19, 2019 issued by the Ministry of Commerce and Industry in the Department for Promotion of Industry and Internal Trade (DPIIT).
To download latest ICAI Edition Complete GST Bare Act 2023 from the IDTC ICAI Website link is given below https://idtc.icai.org/publications.php
21/05/2023
Madras HC Judgement – The earlier order passed will not stand in the way of the assessing officer making an assessment or curtailing his powers in any way.
Citation - 2023-VIL-279-MAD: Date of Order – 11-04-2023: HIGH COURT OF MADRAS
The petitioner’s bank account was unblocked by the officer (R1) after considering all documents produced by the petitioner. After some time for the same period the notice was received from the officer (R3) on the basis of information received that the suppliers were non-existed or were not conducting business from the place in which registration had been obtained. The petitioner responded to the show cause notice relying on proceedings held before the officer (R1). The submissions made before R1 were reiterated before R3. The officer R3 disagreed with submissions of the petitioner and passed order against the petitioner. The petitioner would strenuously putforth the argument that while R1 has accepted the explanation of the petitioner with regard to the same transactions, it was incorrect for R3 to have arrived at a contrary conclusion holding that the transactions had been conducted with fictitious dealers. The respondents, for their part, would putforth the argument that the petitioner had not established before R3 movement of goods which is a critical and vital ingredient for claim of ITC.
The Hon’ble Court dismissed the writ on following grounds-
True, R3 ought to have made reference to order of R1 dated 16.07.2021 and undoubtedly, this is a flaw in the assessment order. However, in my considered view, it is not a fatal flaw. The power of an assessing officer under Section 73/74 is wide and proceedings for assessment may be initiated in any circumstance where it appears to the proper officer that the claim of ITC by an assessee is incorrect.
The mere fact that an order has been passed under Rule 86A(2) will not stand in the way of the assessing officer making an assessment or curtailing his powers in any way, in such an exercise.
Since the question of 'movement of goods' is one of the fact and the impugned order proceeds on the basis that the facts required to adjudicate this aspect were not provided by the petitioner, I am not inclined to intervene in the impugned order, which is confirmed. This writ petition is dismissed.
20/05/2023
Will Rs 2000 note be a namesake legal tender after 30th September?
1. The Rs.2,000 denomination banknote was introduced in November 2016 under Section 24(1) of RBI Act, 1934
2. The Reserve Bank of India has now advised banks to stop issuing Rs.2,000 denomination banknotes with immediate effect.
3. The RBI has asked people to deposit the Rs 2,000 banknotes into their accounts and/or exchange them into banknotes of other denominations at any bank branch. Exchange facility for Rs 2,000 bank notes up to Rs 20,000 at a time would be available from May 23.
4. The RBI has asked banks and designated RBI offices to provide deposit and/or exchange facility for Rs 2,000 notes until September 30, 2023.
5. Thus banks will not accept Rs 2000 notes from 1st October, 2023. The RBI says that the notes would remain legal tender. However, without banks accepting the notes, public too will not accept them.
6. So, unlike 2016 demonetisation which made keeping old Rs 500 and Rs 1000 notes illegal, keeping Rs 2000 notes shall not be illegal. However without public accepting it as a means of payment, the notes are expected to be namesake legal tender.
19/05/2023
The finance ministry clarified on Thursday that for employees who are using their credit cards while on business-related trips abroad, the spending will be outside the $250.000 annual limit under the Liberalised Remittance Scheme (LRS), in an effort to clear up any confusion regarding tax collected at source (TCS) on overseas spending, including through credit cards. Additionally, purchases done while in India from international e-commerce sites or transactions made on platforms like Netflix would not be counted. A day after notifying the public that LRS will include credit card transactions, a decision that was made by finance minister Nirmala Sitharaman after the passing of the budget in Parliament, the ministry released two sets of comprehensive FAQs. The new laws will become effective in July.
Understanding 20% TCS on International Credit Cards:
1. The Finance Ministry on 16th May, notified the Foreign Exchange Management (Current Account Transactions) (Amendment) Rules, 2023, to include international credit card payments in the LRS. Effectively, any remittance beyond $2.5 lakh or its equivalent in foreign currency would require approval from the RBI.
2. According to the notification, the Finance Ministry, in consultation with the RBI, has omitted Rule 7 of the Foreign Exchange Management (Current Account Transactions) Rules, 2000, thus effectively including Forex spending through international credit cards under the LRS.
3. Earlier, the usage of international credit cards (ICCs) for making payments for fulfilling expenses during travel outside India was not included in the LRS limit.
4. As per Section 206C of the Income Tax Act, 1961 tax collection at source (TCS) is applicable on foreign remittance under LRS. Finance Act 2023 increased the TCS Rate to 20% with effect from 1st July 2023.
5. This effectively means that TCS will be applicable on usage of international credit cards with effect from 16th May 2023. Upto 30th June 2023, the TCS rate shall be 5% and from 1st July, 2023, the TCS rate shall be 20%.
Will GAAR stand the test of the Constitutional scrutiny:
1. General Anti-avoidance Rule (GAAR) is a concept which generally empowers the Revenue Authority in a country to deny tax benefit of transactions or arrangements which do not have any commercial substance and the only purpose of such a transaction is achieving the tax benefit.
2. The GAAR will not apply to the transactions when the taxpayer has one or more bona fide ways of doing a transaction and he selects the manner he wants.
3. The provisions are based on the doctrine of “substance over form” which means the authorities will look into its actual substance. This doctrine is highly subjective and uncertain. The Bombay High Court in Provident Investment Co. Ltd. (1953 SCC OnLine Bom 35) has observed that: To look to the substance of the matter and ignore the legal position is to substitute the “uncertain and crooked cord of discretion” for the “golden and straight mete wand of the law”.
4. GAAR is a well-established law that, as stated in Section 90(2) of the Income Tax Act and upheld by the most recent landmark decision of the Supreme Court in Engg. Analysis Centre of Excellence (P) Ltd. v. CIT, the more advantageous provisions or articles of the DTAAs will prevail over the inconsistent provisions contained in the Income Tax Act.
5. To overcome Section 90(2) the legislature has inserted another sub-section (2-A) in the said section which states, “Notwithstanding anything contained in sub-section (2), the provisions of GAAR shall apply to the assessee even if such provisions are not beneficial to him.
6. Article 253 of the Constitution of India, “gives power to Parliament to make any law for the whole or any part of the territory of India for implementing any treaty, agreement, or convention with any other country or countries or any decision made at any international conference, association, or other body. DTAA have been enacted by exercising powers under Article 253.
7. GAAR is an instance of the exercise of powers under Article 246. The High Court of Andhra Pradesh, in Sanofi Pasteur Holding SA v. Deptt. of Revenue and held that: Once a law has been enacted under Article 253, every other law is subject to that law and a law made under Article 253 cannot be amended by a subsequent statute, which has been ordinarily made under the powers conferred under Article 246.
8. It is upon the Courts to interpret the provisions and test them on constitutional parameters but till then adequate safeguards and guidelines must be provided.
The Interior Ministry of Iraq issued a ban on U.S. dollar transactions across the country. Iraq is one among the 24 countries that have shown interest to join the BRICS alliance and accept the new currency for global trade. The Iraqi government banned entities from initiating business transactions with the U.S. dollar early this week. Iraq aims to control the fluctuating black market exchange rate, that has been plaguing the country for long enough. The development is also designed to strengthen the usage of the Iraqi Dinar in the nations’ Forex markets. The ministry aims to lower the difference between the official exchange rate offered by the government and the exchange rate that’s thriving in the black markets. The move will reduce dependency on the U.S. dollar and bolster its native currency the Iraqi Dinar. According to the latest report, 25 countries are ready to join BRICS and accept the new currency for international trade. The countries that have shown interest to join the BRICS alliance are Afghanistan, Algeria, Argentina, Bahrain, Bangladesh, Belarus, Egypt, Indonesia, Iran, Kazakhstan, Mexico, Nicaragua, Nigeria, Pakistan, Saudi Arabia, Senegal, Sudan, Syria, the United Arab Emirates, Thailand, Tunisia, Turkey, Uruguay, Venezuela, and Zimbabwe. BRICS comprises five countries Brazil, Russia, India, China, and South Africa. Therefore, a total of 30 countries are now participating to dethrone the U.S. dollar from its global reserve status. If these many countries ditch the dollar and begin cross-border transactions with a new currency, the USD could be hit. The dollar could weaken on a global scale and find no means to fund its deficit. The soon-to-be-released BRICS currency could have the power to eliminate the dollar’s dominance internationally.
The countries that are interested to join BRICS are also oil-rich nations. Therefore, the alliance could force European countries to pay with the new currency for oil and not the dollar.
18/05/2023
A handful of countries around the world are buying massive amounts of gold to end reliance on the U.S. dollar. Several nations are coordinating with each other and finding new ways to settle transactions without paying with the USD. Saudi Arabia and China are talking directly and determining whether to settle cross-border payments with their native currency. China has convinced many nations to pay with the Chinese Yuan instead of the U.S. dollar. In addition, developing nations are diversifying their reserves with gold along with the U.S. dollar and other foreign currencies. However, gold accumulation has spiked since 2022 and most Central Banks are welcoming the move. Central Banks of India, China, Russia, and Brazil, among other countries, are on a gold-buying spree. The World Gold Council published a report saying that China purchased 102 tonnes of gold, while Russia purchased 31.1 tonnes. India added 2.8 tonnes to its gold reserves in 2023 alone. India accumulated gold for several months and might add more by the end of the year. Therefore, if BRICS launches a new currency in August, there is a high chance that the reserves could be backed by gold.
UAE personal taxation update:
1. The UAE Ministry of Finance has announced the issuance of UAE Cabinet Decision No. (49) of 2023 on the treatment of resident and non-resident individuals undertaking a business or business activity, for the Corporate Tax Law purposes.
2. His Excellency Younis Haji Al Khouri, Undersecretary of the Ministry of Finance, said: "The new Cabinet Decision demonstrates the UAE's commitment to maintaining a clear and competitive tax framework for both local and foreign individual investors. By simplifying the Corporate Tax system, the UAE continues to foster an attractive business environment that supports the growth of small businesses, startups, and the overall economy."
3. The decision aims to clarify the application of the Corporate Tax regime for natural persons ('individuals' in this context) and ensure that only business or business-related activity income is taxed, if the turnover form business activity is more than AED 1 M.
4. Personal income notably from employment, investments and real-estate (without licensing requirements) shall not be subject to Corporate tax.
European Union states on Tuesday gave the final nod to the world's first comprehensive set of rules to regulate cryptoassets on Tuesday, piling pressure on countries such as Britain and the United States to play catch up. An EU finance minister meeting in Brussels approved rules that were thrashed out with the European Parliament, which gave its approval in April. The rules are expected to be rolled out from 2024. The rules require firms that want to issue, trade and safeguard cryptoassets, tokenised assets and stablecoins in the 27 country bloc to obtain a licence. They agreed on a requirement that from January 2026 service providers obtain the name of senders and beneficiaries in cryptoassets, regardless of the amount being transferred. There was also agreement on amending rules on how member countries cooperate with each other in taxation to cover transactions in crypto-assets, and on exchanging information on advance tax rulings for the wealthiest individuals.
17/05/2023
Hon'ble Karnataka High Court has given definition to what is game of skill and what is game of chance. Gameskraft Technologies (P.) Ltd.
Vs. Directorate General of Goods Services Tax Intelligence - [2023]
Judgement ::
The main question for consideration in the petition was, whether offline/online games such as Rummy would tantamount to ‘gambling or betting’ as contemplated in Entry 6 of Schedule III of the Goods and Services Act, 2017.
The Honorable High Court noted that there is a distinct difference between games of skill and games of chance. The Court noted that a game of skill whether played with stakes or without stakes is not gambling and games such as rummy, etc. whether played online or physical, with or without stakes would be games of skill and test of predominance would apply. The taxation of games of skill is outside the scope of the term “supply” in view of Section 7(2) of the CGST Act, 2017 read with Schedule III of the Act. Therefore, it was held that Online/Electronic/Digital Rummy game and other Online/Electronic played on the petitioner’s platform would not be taxable as ‘Betting’ and ‘Gambling’ and the Court also set aside the levy.
Payment by BCCI for termination of agreement with CSA is not taxable in India: ITAT Mumbai
ITA no.5492/Mum./2017
(Assessment Year : 2016–17)
ITA no.5493/Mum./2017
(Assessment Year : 2016–17)
The Board of Control for Cricket in India
Facts:
1. In the year 2008, the assessee commenced the conduct of a cricket tournament, namely, the Champions League T20 (CLT20).
2. The participants in the CLT20 Tournament included the winners and/or runners-up of the domestic 20-over leagues in India, Australia, South Africa, etc.
3. The entire CLT20 Tournament was conducted by the assessee, and all the agreements, including the media/broadcasting rights agreement, in this regard were entered into by the assessee.
4. The assessee entered into an arrangement with CSA to ensure that its winning or runner-up teams involved in domestic Twenty-20 Cricket competition administered by CSA participate in the CLT20 Tournament organized by the assessee each year. The assessee paid annual participation fees to CSA and deducted the TDS.
5. The assessee entered into an agreement to revoke (terminate) the agreement with CSA and paid the necessary termination fees. The assessee was of the view that the payment is not taxable in India and hence no TDS needs to be deducted.
ITAT Mumbai held as under:
1. Payment to CSA is not just for premature termination of arrangement with the assessee, but also for non compete clause in the termination agreement.
2. Payment to CSA is not arising from any operations carried out in India and thus Sec 9(1) of the Income Tax Act is not applicable.
3. The revenue also has not been able to prove that the assessee was the agent of CSA, as required by Article 5(5).
4. The payment to CSA is for the termination of the arrangement, which was a profit-making apparatus, and thus is in the nature of a capital receipt and hence not taxable.
Importance of Rule 25 during All India GST drive.
Read@ https://taxonation.com/show-detail-article/87792/importance-of-rule-25-during-all-india-gst-drive
16/05/2023
Netflix under I-T scanner, facing tax liability in India for streaming services income:
1. India is taking steps to impose a tax on the income generated by Netflix in the country, according to an Economic Times report.
2. The tax authorities have reportedly attributed an income of approximately Rs 55.25 crore ($6.73 million) to Netflix's permanent establishment in India in the assessment year 2021-22, citing a draft order.
3. This is the first instance in which India will tax foreign digital companies that provide electronic commerce services to customers.
4. The reasoning behind this move by tax officials is that Netflix has stationed some of its employees and infrastructure from the parent entity in India to provide support for its streaming services.
5. This has led to the establishment of a permanent presence in India, which in turn creates a liability for taxes.
6. The move is part of India's efforts to regulate the digital economy and ensure that foreign companies pay taxes on the revenue they earn in the country.
7. The Indian government has been discussing the introduction of a digital tax for some time now, and this action against Netflix could be seen as a test case for future taxation of other foreign digital companies.
Banks to launch 100 days campaign to trace, settle unclaimed deposits: RBI
1. RBI has announced the setting up of a centralised web portal for public to search unclaimed deposits across multiple banks.
2. A special 100 days campaign will be launched under which banks can trace and settle their top 100 deposits in every district of the country.
3. The banks will commence the campaign from June 1, 2023.
4. Balances in savings/current accounts which are not operated for 10 years, or term deposits not claimed within 10 years from date of maturity are classified as "unclaimed deposits".
5. These amounts are transferred by banks to "Depositor Education and Awareness" (DEA) Fund maintained by the Reserve Bank of India.
6. The issues related to unclaimed deposits were also discussed during the meeting of the high-powered Financial Stability and Development Council (FSDC) headed by the finance minister.
15/05/2023
Fraudulent A/cs: Supreme Court rejects SBI plea on ruling applicability : Rejecting the State Bank of India's (SBI) plea, the Supreme Court on Friday refused to clarify that its judgement, which makes it mandatory for banks to accord an opportunity of personal hearing to a borrower before classifying his loan account as fraudulent, will apply prospectively. The bank wanted the apex court to clarify that the March 27 judgment will apply only prospectively so that it does not impact its past decisions. However, the apex court clarified that borrowers should be heard by banks before such classification as per the Reserve Bank of India's July 2016 circular did not mean that they should be personally heard. - S-et
Urban co-op banks want RBI to permit them to undertake one-time settlement of bad loans : Urban co-operative banks (UCBs) have requested the Reserve Bank of India to allow them to do one-time settlement (OTS) of bad loans along the lines of OTS available for commercial banks. UCBs emphasised that since the 2020 amendment to the Banking Regulation (BR) Act has addressed the vexing issue of dual regulatory control, the Central bank is empowered to permit them to undertake OTS for recovery from non-performing assets (NPAs), said Jyotindra Mehta, President, National Federation of Urban Co-operative Banks and Credit Societies (NAFCUB). Under dual regulatory control, the Registrar of Co-operative Societies/Central Registrar of Co-operative Societies were empowered to look after UCBs’ incorporation, registration, management, recovery, audit, supersession of the Board of Directors and liquidation. - S-bl
Star Health to open 1,000 sales offices in Rural India this fiscal: MD & CEO Anand Roy : Star Health and Allied Insurance Company Ltd (Star Health), a leading standalone private health insurer, plans to set up 1,000 new sales offices this fiscal as part of its overall efforts to deepen its penetration in rural India, Anand Roy, Chief Executive Officer and Managing Director said. This company has also now decided to ramp up its “wellness” related offerings in the coming days and treat it as a focus area. “By integrating wellness into our insurance offerings, Star Health will empower our policyholders to take charge of their health and proactively manage their well-being”, Roy told businessline in an interview in the capital. - S-bl
Microfin lenders mull dedicated special-purpose funding body : Microfinance lenders are contemplating forming a dedicated funding institution in quest of long term and steady flow of funds to the sector, which often faces gaps in funding especially at difficult times when it needs them the most. The small and medium-sized microfinance lenders more than often struggle to mobilise funds while banks are generally more liberal in opening their purse strings for the bigger NBFC-MFIs.The dedicated special-purpose funding body can address this gap, sector leaders said. S-et
14/05/2023
Exim Bank to raise up to $4 billion this year : Export lender Exim Bank plans to raise $3.5 billion to $4 billion this year to fund its government-supported business, managing director Harsha Bangari said. The bank reported a 110% jump in net profit at ?1,556 crore for 2022-23."Our foreign currency resources are mainly used to fund policy business (issuing lines of credit through government). We are looking at raising $3.5 to $4 billion this year," Bangari said in a statement announcing the bank's annual results. The bank raised aggregate resources of ?52,156 crore, including foreign currency resources of $3.47 billion during FY23. It opened international markets for Indian issuers with a benchmark-sized sustainability bond of $1 billion in January 2023 under its ESG (environmental, social and governance) framework, Bangari said. - S-et
NPCI plans more tie-ups to strengthen global acceptability of RuPay debit cards : National Payments Corporation of India (NPCI) is exploring options for further tie-ups to strengthen the global acceptability of RuPay debit cards. Currently, RuPay cards are accepted at the points of sale (PoS) machine powered by Discover of the US, Diners Club, JCB of Japan, Pulse and Union Pay of China.This needs to be strengthened, and NPCI is working in this direction so that users of RuPay cards are at par with those using Visa or Mastercard, sources said. In March 2012, RuPay went global by tying up with Discover Financial Services to bring international services to Indians. - S-et
Mcap of 8 of top 10 valued firms soars ?1.26 lakh crore; Reliance, Hindustan Unilever shine : Eight of the top 10 valued firms together added ?1,26,579.48 crore in market valuation last week, with Reliance Industries and Hindustan Unilever emerging as the biggest gainers. Last week, the BSE benchmark jumped 973.61 points or 1.59 per cent.Only ITC and Infosys faced erosion in their valuation, while Reliance Industries, Tata Consultancy Services (TCS), HDFC Bank, ICICI Bank, Hindustan Unilever, State Bank of India, HDFC and Bharti Airtel were the gainers.The market valuation of Reliance Industries jumped ?28,956.79 crore to ?16,80,644.12 crore. Hindustan Unilever's valuation rallied ?28,759 crore to ?6,16,391.77 crore. The market capitalisation (mcap) of HDFC Bank climbed ?23,590.05 crore to ?9,31,095.12 crore and that of TCS zoomed ?15,697.33 crore to ?11,97,881.94 crore.The mcap of HDFC surged ?13,893.03 crore to ?5,09,434.44 crore and that of ICICI Bank soared ?11,946.89 crore to ?6,59,479.70 crore. Bharti Airtel's valuation moved up by ?2,174.58 crore to ?4,41,327.80 crore and that of State Bank of India gained ?1,561.81 crore to ?5,15,931.82 crore. - S-bl
13/05/2023
The registered persons to take following precautions for the Gst special drive against fake registrations and fraudulent Input claims etc :
1. Kindly ensure that on one premise there should not be more than one registration unless it is clearly demarcated place for each of the registrations.
2. Documents required for demonstrating registration eligibility at the time of inspection- As applicable: – Latest electricity Bill Consent Letter/NOC Municipal Khata Receipt or Property Tax Receipt, Rent agreement should be valid, if expired then renew the agreement Aadhar Card and PAN. All above documents should be available in original.
3. Authorized signatory as updated on GST portal should be signing the Invoices.
4. The stock and sale/purchase invoices alongwith other documents if found at the registered place of business, then it is assumed that it pertains to registered person and accordingly it shall be dealt with.
5. Display of RC and GSTIN: Every registered person shall display his certificate of registration in a prominent location at his principal place of business and at every additional place or places of business.
6. Also, every registered person shall display his GSTIN on the name board exhibited at the entry of his principal place of business and at every additional place or places of business. If not followed, penalty of Rs. 50,000/- may be imposed.
7. Books of Accounts: Every registered person shall keep the books of account as specified in Section 35 read with Rule 56 at the principal place of business and books of account relating to additional place of business mentioned in his certificate of registration and such books of account shall include any electronic form of data stored on any electronic device. For details about Generation and maintenance of electronic records, refer Rule 57. Every registered person required to keep and maintain books of account or other records in accordance with the provisions of sub-section (1) of section 35 shall retain them until the expiry of seventy two months from the due date of furnishing of annual return for the year pertaining to such accounts and records.
Attention All Gst registered dealers : Gst Department All India special checking drive spanning two months :
If you have GST Number, then you just need to make sure that you have done all these things:
1. Sign Board: Name, Address and GSTIN must be displayed on sign board
2. GST RC: You must have GST Registration Certificate displayed in your premises.
3. Place of Business: Address of business must be same as in your GST RC.
4. Proof of Business: You must have valid ownership of business place. If your place is rented then you must have valid Rent Agreement.
5. Invoices: You must have all relevant purchase, sales invoice on your premises.
E Invoice will impact you even if your turnover is less than Rs. 5 Crores— The penal impact for not generating E Invoice on sellers is as follows :
1. Section 122(1): Rs.20,000 per invoice Penalty for issuing invoice in violation to provisions of act
2. Section 122(3): Rs.50,000 penalty per invoice in violation to provisions of act
3. Section 129: 200% of tax charged; If goods are transported without e-invoice
The above penalties are prescribed for sellers who are liable to issue E Invoice but are not issuing E Invoice. With effect from 01st August 2023, any person who purchases from a supplier whose turnover exceeds Rs.5 Crores in any financial year, must make sure that the supplier issues E Invoice for the purchases made from him.
If the supplier issues any invoice other than E invoice then such invoice is not an invoice as per Rule 48(s) of the CGST Rules, 2017.
Section 16(z) (a) mandates possession oftax invoice for availing input tax credit.
"If any invoice other than E Invoice is received from a supplier, who has to generate E-Invoice, the input tax credit on such supply cannot be availed."
Precaution to be taken :
Whether a supplier is liable to generate E invoice or not can be checked in ‘’https://einvoicer.gst.gov.in/Others/GSTINsGeneratingIRN"
If your supplier's GSTIN is covered in the list in the link mentioned above, make sure he gives E Invoices for all the supplies, Else the Input tax credit on such supplies cannot be availed.
The above list contains list of GSTINs whose aggregate turnover exceeds Rs.10 Crores. From 01st August 2023 the list will be updated to include tax payers whose turnover exceeds 5 Crores.
The Karnataka High Court on Thursday quashed a show cause notice issued by the Directorate General of GST Intelligence (DGGI) to online gaming platform Gameskraft Technologies despite a court stay on a previous tax demand of ?21,000 crore. The GST authorities had made the tax demand on September 8 last year. The company challenged it before the court which stayed the demand notice on September 23, observing that the case involved several contentious issues. The company again approached the court after the DGGI sent a show-cause notice on the same day the court issued the interim stay to the tax demand intimation. The company, in its petition before Justice SR Krishna Kumar, argued that the claims made by the GST authorities in the show-cause notice were exactly the same as those in the earlier tax demand intimation notice that Shad been stayed. The petition also argued that the taxability of online gaming was a subject the GST Council had been seized of for the past three years. The company claimed that the entire case of the GST authorities had been built on the “erroneous surmise that the activities undertaken by Gameskraft were an actionable claim and not a service”. Gameskraft group general counsel Joyjyoti Misra called the judgement a “clear vindication” of the company’s business model.
12/05/2023
RBI has informed all financial institutions including banks and NBFCs to treat informal micro enterprises (IMEs) not covered under the GST regime or exempted from the CGST Act, 2017, but having the Udyam Assist Certificate (UAC) as micro-enterprises for classification under the priority sector lending (PSL) norms.
The Ministry of corporate affairs has introduced fresh conditions for companies that wish to de-register with the RoC. According to the changes, a firm cannot file for removal of names unless it has filed overdue financial statements and overdue annual returns up to the end of the financial year in which it ceased to carry out its business operations. Further, in case a company intends to file the application after the action has been initiated by the Registrar, it will have to file all pending financial statements and all pending annual returns prior to this.
11/05/2023
GST Department is starting a Special All-India Drive against fake GST registrations. Summary of this is as follows:
1. Duration: 16th May - 15th July 2023
2. Target: Suspicious GSTINs identified through software like BIFA, ADVAIT, etc.
3. Action: Physical verification by tax authorities
4. Home preparation:
Keep documents like GST registration, invoices, purchase bills, e-way bills, and stock records ready, Maintain accurate records, Be transparent in your transactions, Cooperate with tax authorities during verification.
The special drive by the Central Board of Indirect Taxes and Customs (CBIC) is aimed at weeding out fake ITC claims by using forged GST registration. The exercise will be conducted by all central and state tax administrations and will continue till July 15.
1. The list of suspected entities has been prepared based on the CBIC’s data analytics, along with information and data from intelligence agencies and the income-tax department, the official said.
2. Suspicious GSTINs are being shared with the tax administration concerned for initiating a verification drive and taking necessary action subsequently.
3. The systems analysed various risk parameters, including corporate tax returns filed by businesses with the I-T department and GST registration data, to identify businesses and traders and even masterminds who are expected to take GST registration but have not done so, the official explained.
4. Currently, there are 13.9 million taxpayers registered under the Goods and Services Tax (GST) regime. The National Coordination Meeting of the State and Central GST officers on April 24 discussed the issue of unscrupulous elements misusing the identity of other persons to obtain fake/bogus registration under GST.
5. If, after detailed verification, it is found that the taxpayer is non-existent and fictitious, then the tax officer may immediately initiate action for suspension and cancellation of the registration. Those who are end-beneficiaries, their assets could be seized as part of the recovery process under the CGST Act.
The DGGI has imposed a tax liability of Rs 497 crore on Piyush Jain and his three firms. Jain was arrested in December 2021 after Rs 207 crore was recovered following a 120-hour raid on his premises. Piyush Jain came under the scanner after over Rs 200 crore in cash was seized from his premises during raids by central agencies in 2021. The DGGI has now imposed a tax liability of Rs 497 crore on Piyush Jain and his three firms, including M/s Odocham Industries, M/s Flora Naturale, and M/s Odosanth Inc.
It is mandatory to link PPF account holders with Aadhaar:
1. The Finance Ministry has made it mandatory for all types of small savings schemes and post office scheme investors to link Aadhaar. According to the ministry, if the PPF investor has opened the account before March 31, 2023 and has not submitted his Aadhaar number to the accounts office, he shall submit the Aadhaar within a period of six months with effect from April 1, 2023. The period of six months will end on 30 September 2023. Investors can also submit PAN along with Aadhaar.
2 What if PPF account is not linked with Aadhaar?
According to the instructions of the Ministry of Finance, if the Aadhaar number is not submitted to the post office where the PPF account is opened and the PPF account is not linked, then the account will be frozen. In such a situation, the investor may have to face many problems like-
The amount of interest payable will not be credited to the PPF account holder’s account.
Investor will not be able to deposit money in his PPF accounts.
The maturity amount will not be transferred to the bank account specified by the investor
10/05/2023
ED raids Mannapuram Finance in Kerala on allegations of flouting RBI rules. The Enforcement Directorate (ED) is conducting raids at Kerala's Mannapuram Finance in connection with allegations that the non-banking financial company (NBFC) collected funds from the public without the Reserve Bank of India's approval.
Tax teams at large companies spend around 70 per cent time on an average on tax compliance and wants cross-utilisation of data collected by various government agencies to cut down on reporting requirements, a Deloitte survey said on Tuesday. A big challenge faced by organisations includes TDS compliance, the survey said, adding simplifying reporting under tax regulations would make reconciliations quicker and more efficient. The disproportionate amount of time spent by tax teams on tax compliance, more so in larger organisations, is an area of concern and needs to be addressed by way of discussion between the tax administration and taxpayers,” said the Deloitte survey on ‘Income-tax digitalisation in India’. Sixty-four per cent of respondents from companies with a turnover of less than Rs500 crore suggested streamlining TDS/TCS compliance with the help of technology, the survey said. There is a big burden of compliance and reporting that takes away most of their time.
More than 500 million cyberattacks were blocked in India out of 1 billion global attacks, representing a sharp increase of over 29 per cent in the number of cyberattacks in Q1, 2023, compared to Q4, 2022, (829 million attacks), globally, a new report showed on Wednesday. According to the application security SaaS firm Indusface, on average the BFSI (Banking, Financial Services & Insurance) sector faced 38 per cent more attacks per application compared to the industry average, with over 9,73,000 attacks per website.
09/05/2023
Foreign Tax & Tax Research Division has issued a Clarification on FAQ issued by US IRS for FATCA Reportable Accounts:
1. The Indian Reporting Financial Institutions (RFIs) should ensure that the U.S. TIN is reported in respect of all U.S. Reportable accounts.
2. However, if the U.S. TIN is not obtained, the RFI may populate the TIN field with specified codes in scenarios mentioned in the FAQ 6 (reporting) of U.S. IRS.
3. It is to be noted that in all such cases where TIN has not been obtained, the U.S. IRS system will still generate an error notification to indicate that the entry is invalid when one of the above-mentioned codes are used.
4. Further, reporting for calendar year 2022 (due by September 30, 2023) is considered to be a transition year, and to be eligible for relief, RFIs must either use the TIN codes specified in the clarification issued in reference to the above subject on 31 January 2022 or the updated TIN Preexisting entity account held by a passive NFFE with one or more codes mentioned in the FAQ6 above.
5. For subsequent years, RFIs will have to follow the updated TIN codes referred in FAQ6.
Circular No: F. No. 500/107/2015-FT&TR-III
Russian FM says that it has billions of Rupees in Indian Banks, it cannot use:
1. Russian foreign minister Sergei Lavrov, while answering a reporter’s question during his press conference in Goa on Friday, May 5, 2023, bluntly implied that in its dealings with Russia, India wants to eat the cake and have it too.
2. India, which has been lapping up cheap Russian oil for domestic consumption as well as export as refined commodities, hasn’t been compensating Russia for its oil imports.
3. Lavrov pointed out that Russia has accumulated billions of rupees in Indian banks that Russia cannot use
4. India and Russia have been exploring options for settling their trade in rupees or rubles since the start of the Russian Special Operation (SMO) in Ukraine in February 2022, but they have made little headway even after more than a year.
5. India’s imports from Russia far exceed its exports. As a result, Indian rupee payments to Russian bank Vostro accounts in Indian banks are of no use to Russia.
6. The obvious solution is for India to step up its exports to Russia. Unfortunately, Indian exports are severely constrained by the lackluster quality of Indian goods. Also, Russia is a resource-rich country, so India doesn’t have the option to export commodities to Russia.
7. India could pay the accumulated billions of rupees to Russia by converting them to a currency like the Chinese Yuan, however, that would entail bearing the cost of conversion. China’s massive trade surplus with India makes the rupee particularly weak against the Yuan.
The department of Goa state tax is working to increase the tax base in Goa to boost tax collections and plug leakages, reports Newton Sequeira. The department is focused on data gathering, enforcement, and surprise inspections to achieve the goals. Goa’s monthly tax mopup has increased by 20% over the past few months due to higher economic output and better tax compliance. The department has done a lot of data collection from other departments. We have increased enforcement and our officers are conducting surprise inspections,” said GST commissioner Sarpreet Singh Gill. Goa raked in Rs 515 crore and Rs 620 crore in March and April respectively in GST collections, recording on average a 32% year-on-year increase in tax collections. Gill said that the “positive steps” taken by the department to encourage tax payment have helped improve revenue collection, pushing Goa to outpace other states in GST growth in percentage terms. Most of Goa’s tax collection comes from the tourism industry and the services sector. Fuel and alcohol remain out of the GST regime.
07/05/2023
Taxation of Crypto:
1. Section 2(47A) has been inserted in the Income Tax Act, 1961 which refers the cryptocurrency and NFTs as Virtual Digital Assets (VDAs).
2. VDA means any information or code or number or token, other than any fiat currency, generated through any cryptographic means. In short, it means all types of crypto assets, including NFTs, tokens, and cryptocurrencies but it doesn’t not include gift cards or vouchers.
3. As per Sec 115BBH, Profits earned by trading in cryptocurrency is taxable at 30%.
4. As per Section 194S, TDS shall be deducted at 1% if the value of transactions exceeds Rs. 50,000 in a financial year.
5. The buyer shall be responsible to deduct TDS and deposit it with the Government or the trading platform shall be responsible to collect the TDS.
6. No setoff of losses is available in case of trading in VDAs. There’s no provision of deduction of costs or expenditure.
7. Amendment has been made in the Schedule III of the Companies Act. Now, every company has to disclose its gains and losses in virtual currencies. Also, the value of VDAs as on the date of Balance Sheet shall be disclosed.
UAE New Tax Residency Rules:
1. On September 2nd, 2022, the UAE government issued the Cabinet Decision No. 85 of 2022, determining tax residency in the country.
2. Definition of a Juristic Person: A juristic person is a non-human legal entity which is capable of suing and being sued. Examples of juristic persons in the UAE include Limited Liability Companies, public joint stock companies, foundations etc.
3. Clarification on personal and economic interests: UAE shall be the state where the personal and economic interests are the closest or of the greatest significance to the individual.
4. As per Article 3 of the Cabinet Decision, a legal or juristic person is to be considered a tax resident if:
It is established, formed or recognized according to the legislation in force in the country (does not apply to a branch registered by a foreign juristic person), or It is a tax resident as under the prevailing tax law in the country
5. A natural person will be considered a tax resident under Article 4 if:
They have their usual or primary place of residence and the center of financial and personal interests in the UAE, or They were physically present in the UAE for 183 days or more during a consecutive 12-month period, or
They were physically present in the UAE for 90 days or more during a consecutive 12-month period, and they are either a UAE national, or have a valid residence permit in the UAE, or are a GCC national, as well as
Having permanent residence in the country
Carrying out employment or business in the country
6. The new Corporate Tax regime: Juristic persons falling under the ambit of UAE Tax Residency may be liable to the new Corporate Tax to be introduced from June 1, 2023 onwards, i.e., under Federal Decree Law No. 47 of 2022 on the Taxation of Corporations and Businesses.
7. International Agreements: Under a special case where an international agreement, i.e. a tax treaty determines tax residency conditions for a tax resident in the UAE, the provisions of such treaty will continue to apply, following Article 6 of the Cabinet Decision. Thus for example, where Article 4 of the India- UAE Double Taxation Avoidance Agreement provides that an individual shall be regarded as a resident of UAE, if he is present in UAE for atleast 183 days in a calendar year, such a condition, shall take overrule the cabinet decision mentioned above.
U.S. Could Run Out of Cash by June 1, Yellen Warns:
1. Treasury Secretary Janet L. Yellen said on Monday that the United States could run out of money to pay its bills by June 1 if Congress does not raise or suspend the debt ceiling.
2. What is the debt ceiling? The debt ceiling, also called the debt limit, is a cap on the total amount of money that the federal government is authorized to borrow via U.S. Treasury securities, such as bills and savings bonds, to fulfill its financial obligations.
3. The US hit its technical debt limit on Jan. 19. The Treasury Department will now begin using “extraordinary measures” to continue paying the government’s obligations. These measures are essentially fiscal accounting tools that curb certain government investments so that the bills continue to be paid. Those options could be exhausted by June.
4. The Congressional Budget Office also warned that time was running out more quickly than previously thought. The budget office said tax receipts from income payments that were processed in April were smaller than it had anticipated and that future tax payments were unlikely to have much impact.
Gst:: Deferment of Implementation of Time Limit on Reporting Old e-Invoices: It is to inform you that it has been decided by the competent authority to defer the imposition of time limit of 7 days on reporting old e-invoices on the e-invoice IP portals for taxpayers with aggregate turnover greater than or equal to 100 crores by three months.
06/05/2023
Why did Axis Bank declare a loss in Q4 2023?
1. Private sector lender, Axis Bank reported a net loss of Rs 5,728. 42 crore in Q4FY23 compared to a profit of Rs 4,117.77 crore a year ago same quarter, owing to the purchasing cost of Citi Bank's India consumer division during the quarter.
2. The huge loss came in on account of one-time non-recurring items aggregating to Rs 12,490 crore comprising full amortisation ie write off of intangibles and goodwill, which was equal to the value of purchase consideration paid on the acquisition of Citibank India consumer business.
3. The exceptional items amounting to Rs 12,490 comprised of (i) Full amortisation of intangibles and goodwill which is equal to the value of purchase consideration paid/payable on the acquisition of Citibank India Consumer Business; (ii) The impact of policy harmonization on operating expenses and provisions; and (iii) One-time stamp duty on the acquisition.
4. The bank said that it has made prudent accounting choices in amortising the intangibles and goodwill on account of Citibank acquisition.
5. The profit excluding the impact of exceptional items would have been Rs 6,625.29 crore for the quarter, a massive 61 percent growth against the reported profit of Rs 4,117.77 crore in the corresponding period last fiscal.
For e- filing of Form 10F, PAN would be required to be obtained by Non Residents
1. Form 10F is required to be ?le by a non-resident taxpayer as per section 90(5) and section 90A (5) of Income Tax Act 1961, to claim the relief under applicable double taxation avoidance agreement.
2. As per noti?cation No. 3/2022 dated 16 July 2022 it is mandatory for all the non-residents to ?le the form 10F electronically who want to avail the bene?t double taxation avoidance agreement.
3. To address genuine hardship, the CBDT had allowed non-residents who are not required to have a PAN under the Income-tax Act, 1961 to manually file Form 10F till 30-09-2023.
4. An important requirement for e- filing of Form 10F is PAN number. Non-residents not having a PAN in India, would need to obtain a PAN number, thus increasing the compliances.
5. The Income Tax department shall be able to trace all the payments to non-residents through their PAN number. In case of non-compliance by non-residents with respect to the taxable income earned from India, the Tax department may send notices to such non-residents and compel them to do compliance in India.
05/05/2023
CBIC Gst instructions on nailing on fake registrations, fraudulent Input tax credits, fake supplies of goods and services :
Instruction No. 01/2023-GST, F. No. CBIC- 20/16/05/2023-GST, Dated 04th May, 2023
Government of India, Ministry of Finance, Department of Revenue, Central Board Indirect Taxes & Customs, GST Policy Wing
To,
All the Principal Chief Commissioners / Chief Commissioners / Principal Commissioners /Commissioners of Central Tax
All the Principal Directors General/ Directors General of Central Tax
Subject: Guidelines for Special All-India Drive against fake registrations-regarding
1. During the National Co-ordination Meeting of the State and Central GST officers held at New Delhi on 24th April 2023, the issue of unscrupulous elements misusing the identity of other persons to obtain fake/ bogus registration under GST, with an intention to defraud the Government exchequer, was deliberated. Such fake/ non-genuine registrations are being used to fraudulently pass on input tax credit to unscrupulous recipients by issuing invoices without any underlying supply of goods or services or both. This menace of fake registrations and issuance of bogus invoices for passing of fake ITC has become a serious problem, wherein fraudulent people engage in dubious and complex transactions, causing revenue loss to the government.
2. Various modus operandi of obtaining such fake registrations have been detected by Central and State Tax administrations. In some cases, forged documents, such as forged electricity bills, property tax receipts, rent agreements, etc. are being used as proof of principal place of business to obtain GST registration. In one of such recent cases detected by Gujarat State Tax authorities, it has been found that a few fraudsters have obtained fake GST registrations on the basis of PAN and Aadhaar number of persons from economically weaker sections without their knowledge. It was revealed that phone number on the Aadhaar cards of these persons were got fraudulently modified at the nearest Aadhaar Seva Centre, by taking these persons to the said Aadhaar Seva Centre by giving a nominal cash amount under guise of a government scheme and getting their Aadhaar Cards linked to a dummy mobile number by using their thumb impression.
3. In the National Co-ordination Meeting on 24th April 2023, it was discussed that while various system based and policy measures are being taken to address this problem of fake registration and fake input tax credit, there is a need of concerted and coordinated action on a mission mode by Central and State tax authorities to tackle this menace in a more systematic manner. It was agreed that a nation-wide effort in the form of a Special Drive should be launched on All-India basis to detect such suspicious/ fake registrations and to conduct requisite verification for timely remedial action to prevent any further revenue loss to the Government. It was decided that common guidelines may be issued to ensure uniformity in the action by the field formations and for effective coordination and monitoring of the action taken during this Special Drive. Accordingly, the following guidelines are issued for such concerted action on fake dealers/ fake billers in a mission mode:-^
(i) Period of Special Drive: A Special All-India Drive may be launched by all Central and State Tax administrations during the period 16th May 2023 to 15th July 2023 to detect suspicious / fake GSTINs and to conduct requisite verification and further remedial action to weed out these fake billers from the GST eco-system and to safeguard Government revenue.
(ii) Identification of fraudulent GSTINs: Based on detailed data analytics and risk parameters, GSTN will identify such fraudulent GSTINs for State and Central Tax authorities. GSTN will share the details of such identified suspicious GSTINs, jurisdiction wise, with the concerned State/ Central Tax administration (through DGARM in case of Central Tax authorities) for initiating verification drive and conducting necessary action subsequently.
Besides, field formations may also supplement this list by data analysis at their own end using various available analytical tools like BIFA, ADVAIT, NIC Prime, E-Way analytics, etc, as well as through human intelligence, Aadhar database, other local learnings and the experience gained through the past detections and modus operandi alerts. GSTN may separately provide a note to the field formations, regarding the tools available in BIFA which may be useful during this drive.
(iii) Information Sharing Mechanism: Successful implementation of the Special Drive would require close coordination amongst the State Tax administrations, and between State and Central tax administrations. For this purpose, a nodal officer shall be appointed immediately by each of the Zonal CGST Zone and State to ensure seamless flow of data and for coordination with GSTN/ DGARM and other Tax administrations. The name, designation, phone number/ mobile number and E-mail Id of such Nodal officer(s) appointed by CGST Zones and States must be shared by the concerned tax authority with GST Council Secretariat within three days of issuance of this letter. GST Council Secretariat will compile the list of the Nodal officers after procuring the details from all the tax administrations and will make the compiled list available to all the tax administrations, as well as GSTN and DGARM immediately.
The Nodal officer of the State/ CGST Zone will ensure that the data received from GSTN/ DGARM/ other tax administrations is made available to the concerned jurisdictional formation within two days positively. The Nodal officer shall also ensure that any cooperation required by other jurisdictions under his control is promptly provided.
(iv) Action to be taken by field formations: On receipt of data from GSTN/DGARM through the Nodal Officer, a time bound exercise of verification of the suspicious GSTINs shall be undertaken by the concerned jurisdictional tax officer(s). If, after detailed verification, it is found that the taxpayer is non-existent and fictitious, then the tax officer may immediately initiate action for suspension and cancellation of the registration of the said taxpayer in accordance with the provisions of section 29 of CGST Act, read with the rules thereof.
Further, the matter may also be examined for blocking of input tax credit in Electronic Credit Ledger as per the provisions of Rule 86A of CGST Rules without any delay. Additionally, the details of the recipients to whom the input tax credit has been passed by such non-existing taxpayer may be identified through the details furnished in FORM GSTR-1 by the said taxpayer. Where the recipient GSTIN pertains to the jurisdiction of the said tax authority itself, suitable action may be initiated for demand and recovery of the input tax credit wrongly availed by such recipient on the basis of invoice issued by the said non-existing supplier, without underlying supply of goods or services or both. In cases, where the recipient GSTIN pertains to a different tax jurisdiction, the details of the case along with the relevant documents/ evidences, may be sent to the concerned tax authority, as early as possible, in the format enclosed as Annexure-B, through the Nodal Officer referred in para (ii) above.
Action may also be taken to identify the masterminds/ beneficiaries behind such fake GSTIN for further action, where ever required, and also for recovery of Government dues and/ or provisional attachment of property/ bank accounts, etc. as per provisions of section 83 of CGST Act. Further, during the investigation/ verification, if any linked suspicious GSTIN is detected, similar action may be taken/ initiated in respect of the same.
(v) Feedback and Reporting Mechanism: An action taken report will be provided by each of the State as well as CGST Zones to GST Council Secretariat on weekly basis on the first working day after completion of the week in the format enclosed as Annexure-A. If any novel modus operandi is detected during the verification/ investigation, the same may also be indicated in the said action taken report. On conclusion of the drive, GSTIN-wise feedback on the result of verification of the shared suspicious GSTINs, will be provided by the field formations to GSTN/ DGARM, as per the format enclosed in Annexure-C.
(vi) National Coordination Committee: A National Coordination Committee headed by Member [GST], CBIC and including Principal Chief Commissioners/ Chief Commissioners Delhi and Bhopal CGST Zones and Chief Commissioners/ Commissioners of State Tax of Gujarat, West Bengal and Telangana shall monitor the progress of this special drive. National Coordination Committee will meet periodically for this purpose. GST Council Secretariat will act as the secretariat of this National Coordination Committee. The Committee will also be assisted by GSTN and Principal Commissioner, GST Policy Wing, CBIC.
4. GST Council Secretariat will compile the reports received from various formations and make it available to the National Coordination Committee immediately. The unique modus operandi found during this special drive will be compiled by GST Council Secretariat and presented before National Coordination Committee, which will be subsequently shared with Central and State Tax administrations across the country.
5. These guidelines are being issued as per the decision of the National Coordination Committee.
6. Difficulties, if any, in implementation of these instructions may be informed to the Board (gst-cbec@gov.in).
Sanjay Mangal
Principal Commissioner (GST)
04/05/2023
Amnesty Scheme in GST 2023
1- RP fails to file GSTR-4 for the period FY 2017-18 to 2021-22 but furnish in 01-04-2023 to 30-06-2023 late fees max to Rs. 250/- CGST and Rs. 250/- SGST.
2- RP, whose registration has been cancelled on or before 31-12-2022 and failed to apply for revocation of cancellation within time period may apply for revocation upto 30-06-2023 after filing of all returns.
3- RP, who failed to furnish return within 30 days of order u/s 62. The order shall be withdrawn if furnish the return by 30-06-2023 and taxes and interest paid.
4- RP fails to file GSTR-9 for the period FY 2017-18 to 2021-22 but furnish in 01-04-2023 to 30-06-2023 late fees max to Rs. 10,000/- per act.
5- Late fee for filling of Final Return GSTR 10 is capped at ?1,000/- if filled before 30/06/2023.
Government launches Vivad se Vishwas scheme for relief to MSMEs for COVID-19 period, as announced in the Union Budget 2023-24
In cases of failure by MSMEs to execute contracts during the COVID period, 95% of the forfeited amount relating to Bid Security or Performance Security or Liquidated Damages deducted or Risk Purchase amount realized shall be returned to MSMEs by Government and Government undertakings. This will provide relief to MSMEs”.
The last date for submission of claims is 30.06.2023.
The Government of India has introduced a new rule for businesses with turnover above 100 crores from May 1st 2023. The Goods and Services Tax Network (GSTN) has stated businesses have to upload their electronic invoices on Invoice Registration Portal (IRP) within 7 days of the issue of such invoices.
03/05/2023
Goods and Services Tax (GST) officers are harnessing the power of data analytics to ascertain if GST is being paid through the entire eupply chain in any given sector, an official privy to the development told PTI.
The Centre had reported that it has detected GST evasion of more than Rs 1 lakh crore in the previous fiscal, prompting the Directorate General of GST Intelligence (DGGI) to step up efforts to nip evasive measures in the bud in a bid to improve tax compliance.
The official told PTI: ”We are using ’end-to-end’ analytics for a sector and ’gap analysis’ of the taxes paid in a supply chain to ascertain if the entire value chain is paying adequate GST or if there is a missing link.”
As per the PTI report, the data analysis includes comparisons of the tax payment profile of a particular sector vis-à-vis the erstwhile excise and service tax regime.
”Now that GST system has stabilised, the effort is to further streamline it. We want to ascertain if all the sectors which are covered under GST are paying their due share of taxes,” an official was quoted as saying.
After the analysis, if the department finds that some changes are required in law or tariffs to check evasion by increasing compliance, then it would be presented before the Council for approval.
If a sub-part of any sector is not paying taxes in the value chain and there is a case of evasion, enforcement action could be taken, the official said.
”Data analytics is a time taking process, but this is required to check GST evasion at the manufacturing stage itself. It will help increase revenue collection while ensuring that compliance improves,” the official added.
GST evasion detection by tax officers almost doubled year-on-year to over Rs 1.01 lakh crore in FY23, while Rs 21,000 crore was recovered by the DGGI.
The total number of GST evasion cases too had gone up — 14,000 cases were detected in 2022-23, up from 12,574 in 2021-22 and 12,596 in 2020-21.
As per the PTI report, the defaulters adopt various tactics such as short payment of tax by undervaluing taxable goods and services, wrong availment of exemption notifications, wrong availment of the input tax credit, non-payment of tax on supply of taxable goods and services (clandestine removal), and fraudulent availment of the input tax credit on the basis of invoices from fake firms.
In a reply to the Lok Sabha last month, the Finance Ministry had said said total GST evasion detected between July 2017 to February 2023 was close to Rs 3.08 lakh crore, of which over Rs 1.03 lakh crore was recovered. GST authorities arrested 1,402 persons for evading taxes in the last five-and-a-half years till February 2023.
02/05/2023
The government plans to introduce a national retail trade policy and an accident insurance scheme in the near future aimed at providing support to domestic traders who are registered under GST, an official said. As per a report by PTI, the official said the proposed policy would help provide better infrastructure and more credit to the traders. The proposed national retail trade policy in India may include measures such as ensuring convenient and prompt access to reasonably-priced credit, promoting the modernization and digitization of retail trade, providing modern infrastructure support for distribution chains, encouraging skill development and enhancing labour productivity. Additionally, the policy could establish an effective mechanism for consultation and grievance redressal.
India ranks as the fifth-largest global destination for retail, and both the Commerce and Industry Ministry and the Department of Financial Services are collaborating to create an insurance scheme for all retail traders registered under the Goods and Services Tax (GST) system. The government is trying to do policy changes not only in e-commerce but is also bringing a national retail trade policy for physical traders which will be introducing ease of doing business, providing better infrastructural facilities, providing more credit and all sorts of benefits to traders,” the official added. As part of the proposed national retail trade policy, a streamlined single window clearance mechanism for traders could be established, along with the implementation of a centralized computerized inspection management system.
30/04/2023
Calcutta HC order on inordinate delay to approach writ court.
The writ petition suffers from gross and inordinate delay which is made even more stark by the lack of reasons for explaining the delay.
The effect of delay in a discretionary jurisdiction exercised by this Court under Article 226 of the Constitution of India was dealt with by the Supreme Court in State of Maharashtra vs. Digambar; (1995) 4 SCC 683 and Express Publications (Madurai) Limited vs. Union of India; (2004) 11 SCC 526.
The above can be useful in other laws like gst, custom laws etc
Read More
https://taxguru.in/income-tax/calcutta-hc-order-inordinate-delay-approach-writ-court.html
28/04/2023
The Ministry of Consumer Affairs (MCA) has set up a committee to come up with a Right to Repair framework. The framework is significant as it will give consumers a chance to repair their products at an optimal cost instead of buying new products altogether. The good news is that the Indian government has implemented the "Right to Repair" law.
1. Under this law, it is mandatory for manufacturers to share their product details with customers so that they can either repair them by themselves or by third parties, rather than depending on the original manufacturers.
2. The important sectors for the initial focus of the framework are farming equipment, mobile phones & tablets, consumer durables, automobiles & automobile equipment.
3. This portal has consolidated list of consumer care contact details of all major consumer products manufacturers for your quick viewing.
https://righttorepairindia.gov.in/
4. India generated an estimated 16,01,155.36 tonnes of e-waste in FY22, as per a response to the Rajya Sabha in February by the Ministry of Environment, Forest and Climate Change. According to the response, only 527,131.57 tonnes (or about 33 percent) was collected, dismantled and recycled, which means 67 percent e-waste that is dumped in the country remains unprocessed.
5. A large portion of India’s e-waste is handled by the unorganised sector, and the country produces the most amount of e-waste in the world, following China and the US.
6. The website shows that there are 15 companies that have come on board as of April 26. These include Samsung India, Hero MotoCorp, boAt, Havells, HP, Microtek, LG, Oppo, Luminous, Panasonic and TAFE Motors and Tractors.
7. For companies, Right to Repair would mean that they have to adapt to new standards of both manufacturing and design. It would mean that they have to share repair information and manuals, and make diagnostic tools and service parts more accessible to consumers and third-party repairers. They would also have to redesign their products in order to make them more repair-friendly.
8. With the rise of electronic waste in India, the right to repair is becoming more crucial than ever. The unified portal has already onboarded leading brands, and the government is taking measures to encourage more companies to join.
9. The right to repair will not only benefit consumers but also contribute to a circular economy and reduce e-waste.
Singapore raised levies on private property purchases in a surprise move late on Wednesday night to cool the market, including a doubling of stamp duties for foreigners to an eye-watering 60%. A foreign buyer pulled out of a purchase of a S$10 million ($7.50 million) luxury condominium along Singapore's Orchard Road shopping belt, while another interested buyer who already transferred funds into Singapore is also holding off. The door is now closed (to foreign buyers)," It could mean a few million dollars more in duties for some buyers." Ever since a run on purchases in 2018, the government has timed announcements of any tightening moves closer to midnight. The new rates came into effect on Thursday. The hike in duties is one of the harshest tightening moves in the market in a long time and comes after a rush of foreigners back into Singapore's property market in recent years. Policymakers are growing concerned that foreign investors increasingly see Singapore property as a hot asset class, squeezing out locals.
National development minister Desmond Lee said without "early pre-emptive measures, we may see investment numbers, both by locals and by foreigners grow, and that will add stress to Singaporeans who are looking to buy residential property". While taxes were also increased for local buyers of second and subsequent properties, analysts expect the largest impact to be felt by foreign buyers of luxury properties. The government said the new rates would impact about 10% of private property transactions.
Christine Sun, the senior vice president of research & analytics at OrangeTee & Tie, called it a "freezing measure" for foreign buyers. Stamp duties for foreigners were last raised to 30% from 20% in December 2021, causing a dip of 16.5% in condominiums bought by foreigners in 2022.
With the new Foreign Trade Policy, which was announced on March 31, the government is attempting to address the issues faced by MSMEs and help them access the global market. The government strives to increase MSMEs’ export contribution to $2 trillion by 2030.
Salient features:
1. The government plans to take forward the Districts as Export Hubs initiative under which each district will become a unique export hub.
2. The policy aims to decentralise export promotion and give states the freedom to build institutional processes at both the state and the district levels.
3. District-level promotional events, such as buyer-seller meets, trade fairs, and workshops, will be held to considerably boost the discoverability of products.
4. Focus on logistics Under Foreign Trade Policy 2023, the government plans to focus on eliminating constraints in infrastructure and logistics, which are hindering exports. DGFT's regional authorities will be responsible for identifying logistical requirements in districts across every stage of the value chain—from the producer to the export destination. The focus will be on developing logistics, export connectivity, and other export-oriented ecosystems at the district level.
5. Consignment value The new trade policy proposes to increase the per-consignment value limit for exports made using courier services, from Rs 5 lakh to Rs 10 lakh.
6. Collaboration with foreign post offices - This is expected to enhance cross-border ecommerce and help MSMEs in the hinterland and land-locked regions reach worldwide markets. Under this collaboration, an exporter can drop off shipments at any nearby post office. The Department of Post will then transport the export parcels to a foreign post office for customs clearance.
27/04/2023
The Finance Minister chaired a periodic review meeting with CBDT to review the impact of various initiatives. Introducing new data sources in SFT has led to an 1118% increase in reported information. Further, FM was also apprised of the fact that the Personal Income Tax to GDP ratio has been steadily increasing from 2.11 in F.Y. 2014-15 to 2.94 in F.Y. 2021-22. Introduction of new data sources in Statement of Financial Transactions (SFT) has resulted in addition of information of about 30 million persons. CBDT apprised the finance minister of the development as part of a review meeting. The Income Tax Department is working on the guidelines for applicability of the "angel tax" provisions which were extended to foreign investors effective April 1. The idea is to provide clarity on valuation and the exemption norms.
According to sources, GST collection in the month of April 2023 are expected to break all previous records. More than 9 crore E-way bill generation has been registered in the month of March, which is the highest ever. Also, due to strictness in compliance and being the last month of the financial year, the expectation of bumper collection has increased. Record 1.67 lakh crore collection recorded in April last year and at that time around 7.81 crore E-way bills were generated in March. The Indian government had seen a collection of Rs 1,60,122 crore as gross GST (goods and services tax) revenue for the month of March 2023. Sales of passenger vehicles in India grew 26.7 per cent in 2022-23, the auto industry body data has showed. In 2022-23, sales of cars from manufacturers to dealers were 38,90,114 units as against 30,69,523 units in the previous financial year.
World military spending reaches all-time high of $2.24 trillion:
1. World military spending reached an all-time high of $2.24 trillion in 2022, according to a leading defence think tank, Stockholm International Peace Research Institute (SIPRI). Global spending rose for the eighth consecutive year.
2. The United States remained the world’s largest military spender — up 0.7 percent to $877bn in 2022 — which was 39 percent of total global military spending.
3. China remained the world’s second-largest military spender, allocating an estimated $292bn in 2022. This was 4.2 percent more than in 2021 and represents the 28th consecutive annual increase.
4. Russian military spending grew by an estimated 9.2 per cent in 2022, to about $86.4bn, according to SIPRI. It is the third largest military spender. Spending is equivalent to 4.1 per cent of Russia’s 2022 GDP, up from 3.7 percent in 2021.
5. India’s military spending of $81.4 billion was the fourth highest in the world. It was 6% more than in 2021 and up by 47% from 2013. The increase in India’s spending shows the effects of its border tensions with China and Pakistan.
6. Saudi Arabia was in fifth place. The five countries accounted for 63% of the world’s military spending.
7. The outbreak of war in Ukraine has triggered the steepest increase in military expenditure in Europe in three decades. The spending by central and western European states reached $345bn in 2022, a sum that in real terms surpasses that of 1989, the last year of the cold war. Their defence expenditure is 30% higher than a decade ago.
8. Many former Eastern bloc states in Europe have more than doubled their military spending since 2014, the year when Russia annexed Crimea.
9. The think tank lamented that countries across the world except for some African countries are bolstering military strength in response to a deteriorating security environment, which they do not foresee improving in the near future.
Source: SIPRI
The Goods and Services Tax Network (“GSTN”) has added 2 new banks Induslnd Bank Limited and South Indian Bank Limited, bringing the total number of banks accepting GST payments to 23. Here is the list of all the Banks:
Axis Bank
Bank of Baroda
Bank of India
Bank of Maharashtra
Canara Bank
Central Bank of India
City Union Bank
Federal Bank
HDFC Bank
ICICI Bank Limited
IDBI Bank
Indian Bank
Indian Overseas Bank
Induslnd Bank Limited
Jammu and Kashmir Bank Limited
Karur Vysya Bank
Kotak Mahindra Bank Limited
Punjab and Sind Bank
Punjab National Bank
State Bank of India
South Indian Bank Limited
UCO Bank
Union Bank of India
The Supreme Court held that the income tax authorities cannot add to a taxpayer's income under Section 153A of the Income Tax Act if no incriminating evidence is found during a search. The court, however, left the scope for the authorities to re-open the cases of tax violation if any incriminating evidence emerges later. Section 153A of the I-T Act specifies a process to determine the income of the searched individual. It aims to bring undisclosed income under the tax. The cases can be reopened under Section 147/148. According to the report, a division bench of justices MR Shah and Sudhanshu Dhulia said that if no incriminating evidence is found during the search, the Assessing Officer (AO) cannot assess other material which relates to already completed assessments.
Assessments cannot be made U/S 153A in case no incriminating evidence is found during search:
PCIT Vs. Abhisar Buildwell P. Ltd. (Supreme Court); Civil Appeal No. 6580 Of 2021
Introduction:
Core issue involved in the appeals is the scope of assessment u/s 153A. question posed for consideration is, as to whether in respect of completed assessments/unabated assessments, whether the jurisdiction of AO to make assessment is confined to incriminating material found during the course of search u/s 132 or requisition u/s 132A or not
Observations of the Hon Supreme Court on the issue:
1. In case of search u/s 132 or requisition u/s 132A, the AO assumes the jurisdiction for block assessment u/s 153A.
2. All pending assessments/reassessments shall stand abated.
3. In case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns.
4. In case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments.
5. In respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search u/s 132 or requisition under Section 132A.
6. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers u/s 147/148, subject to fulfilment of the conditions as envisaged/mentioned u/s 147/148 and those powers are saved.
26/04/2023
Confiscated goods cannot be claimed as a trading loss incidental to business: SC
The Commissioner of Income Tax Jaipur Versus Prakash Chand Lunia (D) Thr.Lrs. & Anr.
(Civil Appeal Nos. 7689-90 of 2023)
Facts:
1. The Director of Revenue Intelligence set out a search at the business premises of the Respondent/assessee. The recovery yielded silver slabs/silver ingots. The assessee was in the business of making jewellery.
2. The Collector of Customs vide order dated 18.12.1990 ordered confiscation of goods and imposed penalty. It was done on the premise that the goods were smuggled by the assessee.
3. A claim was made by the assessee that the loss on account of confiscation would be allowable as trading loss being incidental to the business, and hence, deductible. This argument was duly rejected by the AO as he did not own the silver. The AO made the addition U/S 69A.
4. The plea of ownership was given up by the Respondent/assessee before the High Court, and therefore, the decision of the assessing officer in bringing the loss suffered under Section 69A of the Income Tax Act, 1961.
Hon SC held as below:
1. The word ‘any expenditure’ mentioned in Section 37 of the Income Tax Act (deals with allowability of expenses) takes in its sweep loss occasioned in the course of business, being incidental to it.
2. As a consequence, any loss incurred by way of an expenditure by an assessee for any purpose which is an offence or which is prohibited by law is not deductible in terms of Explanation 1 to Section 37 of the Act.
3. A penalty or a confiscation is a proceeding in rem, and therefore, a loss in pursuance to the same is not available for deduction regardless of the nature of business, as a penalty or confiscation cannot be said to be incidental to any business.
4. So the loss on account of confiscation of undisclosed silver cannot be allowed as a deduction.
https://taxonation.com/show-detail-news/1036602/sc-order-on-any-loss-incurred-by-way-of-an-expenditure-by-an-assessee-for-any-purpose-which-is-an-offence-or-which-is-prohibited-by-law-is-not-deductible-in-terms-of-explanation-1-to-section-37-of-the-act
In a significant ruling, Calcutta High Court has said that ‘recipient of service’ is entitled to file Advance Ruling application under GST. Many Authority for Advance Rulings (AARs) have so far ruled that only the service provider can seek advance ruling. The appellants clearly fall within the definition of “applicant” as defined under Section 95(c) of the (GST) Act, therefore, we are of the view that the application filed by the appellants before the AAR has to be decided on merits,” a division bench of the High Court comprising Acting Chief Justice TS Sivagnanam and Justice Hiranmay Bhattacharyya said in an order pronounced on April 21. The appellant Anmol Industries entered into a 30-year leasing agreement with the Shyama PrasadMookerjee Port, Kolkata (SMPK) for a piece of land which will be used for setting up commercial office complex. It has been agreed that the Anmol Industries will pay over ?39 crore SMPK as upfront lease premium. It was also said that the allotment letter further seeks to charge GST at 18 per cent on the payment. As the appellant was of the view that upfront lease premium is exempt from GST, it moved to West Bengal AAR to seek advance ruling on whether exemption would be available.
Goods and Services Tax Network (“GSTN”) has issued an Advisory dated April 24, 2023, on Bank Account Validation. It is informed that the functionality for bank account validation is now integrated with the GST System.
25/04/2023
In an ongoing scam, scammers are taking advantage of the ongoing Income Tax Return completion process and are targeting Indian account holders through tax-time smishing campaigns. They are sending fraudulent text messages to bank account holders that appear to be from popular Indian banks, with the aim of tricking users into giving away their personal information. According to a report of Sophos, cited by TOI, scammers are sending fake text messages claiming that the recipient’s bank account will be blocked and are asking them to update their PAN and AADHAR card information on their accounts. These Text messages also include a link to download an Android Package (APK) file. If installed with the app linked with an APK file, the app looks similar to the real bank application and users are then tricked to enter their banking details in the fake app to steal money. This not only abuses recipients but the bank brands. The APK then tries to acquire the recipient’s login, password, debit card number, and ATM pin,” the report reveals. While fake bank SMS scams have happened before, it is important to be cautious this time as people may mistake them for real SMS while checking their account details through online banking or banking apps during the income tax return filing period.
What is tax-time smishing scam::
In cases of tax time smishing scams, scammers targets people during the income tax return filing period. Scammers send fake text messages claiming to be from the recipient’s bank and include a link to download a malicious Android Package (APK) file. Once installed, the APK opens fake bank login pages that look like real ones. If the recipient enters any personal information on these pages, the data is sent to a remote server owned by the attackers instead of the bank. The malicious APK also has the ability to read incoming SMS texts, possibly to extract OTP codes issued by the bank.
So how to prevent falling for these fake SMSs? How to be safe from tax-time smishing scam::
Be cautious of text messages claiming to be from your bank and asking for personal or financial information. The banks will never contact you through text messages, messaging apps, or social media to share details.
Be vigilant when receiving unsolicited text messages or attachments and verify the sender’s identity before opening or downloading any files.
If you receive an unexpected message “from your bank” or other service provider, reach out directly to the bank officials by phone or through the provider’s legitimate, secured website or apps or by visiting the nearest branch.
If you have received such SMS, you can report the scams by sending the email or a copy of the text/SMS as an attachment to phishing@irs.gov.
The government is expected to announce a national retail trade policy and an accident insurance scheme soon with a view to supporting GST- registered domestic traders, an official said. The official said the proposed policy would help provide better infrastructure and more credit to the traders. It may include provisions related to ensuring easy and quick access to affordable credit, facilitating modernization and digitisation of retail trade; modern infrastructural support for subjects like distribution chain; promotion of skill development and improving labour productivity, and providing an effective consultative and grievance redressal mechanism. India is the world’s fifth largest global destination in the retail space. The commerce and industry ministry along with the department of financial services is also working on framing an insurance scheme for all the GST-registered retail traders. “The government is trying to do policy changes not only in ecommerce but is also bringing a national retail trade policy for physical traders which will be introducing ease of doing business, providing better infrastructural facilities, providing more credit and all sorts of benefits to traders,” the official added. Under the proposed policy, a single window clearance mechanism for traders may be developed, besides a centralised and computerized inspection management system. Commenting on the development, Confederation of All India Traders (CAIT) said the retail trade policy will certainly help the sector widen their business as it will have definite parameters and fundamentals within which the retail trade would be conducted. S-ET
SBI opens exclusive branch for start-ups : State Bank of India (SBI) on Monday opened a specialised branch for start-ups at Bandra Kurla Complex in Mumbai. The branch will provide all banking services required by start-ups under one roof.With the opening of this specialised branch, India’s largest bank now has four such branches. The other three branches are located at Bengaluru, Chennai and Gurugram.Mumbai houses the second highest number of unicorns in the nation after Bengaluru, SBI said in a statement. Dinesh Kumar Khara, Chairman, said the primary aim of this branch is to provide end-to-end support to start-ups at every stage of their journey, starting from the formation of the entity till their IPOs and FPOs. - Business Line
RBI imposes Rs 44 lakh penalty on 4 co-op banks : The Reserve Bank has imposed penalties totalling Rs 44 lakh on four cooperative banks, including a Rs 16 lakh penalty on Chennai-based The Tamil Nadu State Apex Co-operative Bank, for contravention of various norms. A penalty of Rs 13 lakh has been imposed on Bombay Mercantile Co-operative Bank as it failed to transfer eligible amount to Depositor Education and Awareness Fund (DEAF) within the prescribed period and transferred the same with delay, RBI said in a release on Monday. In a separate release, the central bank said a penalty of Rs 13 crore has been imposed on Janata Sahakari Bank, Pune for non-compliance with directions on 'Interest Rate on Deposits'. - Economic Times
RBI imposes monetary penalty on Baran Nagrik Sahkari Bank for rule violations : The Reserve Bank of India (RBI) on April 24 said that it has imposed a monetary penalty of Rs 2 lakh on Baran Nagrik Sahkari Bank for rule violations. The inspection report showed that the bank was not in compliance with RBI directions prohibiting the grant of loans/advances/any other financial accommodation to relatives of its directors and not reporting the same in the OSS-6 return to RBI, the release said. - moneycontrol.
24/04/2023
MAS clears merger of HDFC Investments with HDFC Bank : HDFC Bank on Monday said Monetary Authority of Singapore (MAS) has given an approval for merger of HDFC Investments and HDFC Holdings with parent HDFC Ltd. As part of a composite scheme of amalgamation, Griha Pte, a wholly-owned subsidiary of HDFC Investments and a foreign step-down subsidiary of HDFC Ltd, received approval for the merger with HDFC Bank. MAS vide its e-mail dated April 24, 2023 to Griha Pte, granted its approval for acquisition of shares in Griha Pte by HDFC Bank, which would result in the bank acquiring 20 per cent or more of the issued share capital of Griha Pte. The proposed amalgamation is subject to receipt of final approvals from the Securities and Exchange Board of India (Sebi) in respect of change in control of certain subsidiaries of HDFC Ltd. - economic time
IndusInd Bank posts highest ever quarterly consolidated PAT of ?2,043 crore : IndusInd Bank’s quarterly net profit crossed the ?2,000 crore mark for the first time in Q4, with the private sector lender posting a profit after tax of Rs 2,043 crore, higher by 46 per cent YoY and 4 per cent QoQ. The consolidated results include the earnings of wholly-owned subsidiary Bharat Financial. Net interest income (NII) grew 17 per cent YoY to ?4,669 crore. The NIM for the quarter was 4.3 per cent, flat from the previous quarter and slightly higher than 4.2 per cent a year ago. NII for FY23 was Rs 17,592 crore, up 17 per cent from the previous year. Net profit for FY23 was ?7,443 crore, up 55 per cent on year. Advances as of March 31, 2023 were ?2.9 lakh crore, an increase of 21 per cent YoY. - Business Line
IndusInd Bank to apply for insurance licence : IndusInd Bank is set to approach the IRDAI to seek licence to operate in the insurance industry. In a press conference held to discuss March FY23 quarter results, Sumant Kathpalia, MD & CEO, IndusInd Bank, said the bank will apply for the licence. “I think it’s a process which may take one–two years,” he said. When asked what sort of synergies he envisages with insurance operation, Kathpalia sounded optimistic about the non-life business. “We have CV business where we are among the top three players in any category which you talk. (So) it makes immense sense for us to get into non-life business. We love these businesses because they complement our core businesses in the banking sector,” he explained. - Business Line
IndusInd Bank to re-appoint Sumant Kathpalia as MD & CEO effective March 24 : IndusInd Bank on April 24 informed the stock exchanges that its board has decided to re-appoint Sumant Kathpalia as the lender's managing director and chief executive officer for two more years. The second tenure of Kathpalia will come into effect from March 24, 2023, contingent to the approval of shareholders, the bank said in a regulatory filing. "...the Board of Directors of the bank, at its meeting held today has decided to seek approval of shareholders of the bank by means of an ordinary resolution through postal ballot for re-appointment of Mr. Sumant Kathpalia as a managing director and chief executive officer (MD & CEO) of IndusInd Bank Limited for a period of two years with effect from March 24, 2023 upto March 23, 2025," the filing stated. - moneycontrol.
Credit growth likely to moderate to 10 pc in FY24: Report : The credit growth momentum is waning in the country and the crucial non-food loans growth is expected to slip to 10 per cent in FY24 from more than 15 per cent in FY23, a Japanese brokerage said on Monday. Ebbing inflationary pressures, especially on the wholesale side which tends to lower working capital needs, and a likely moderation in GDP growth to 5.3 per cent in FY24 were cited as the primary reasons for the lower bank credit growth expectation by Nomura. - financial express
23/04/2023
US bank deposits fall $76.2 billion, led by large institutions : US bank deposits fell last week, indicating the financial system remains fragile after a string of bank failures. Deposits decreased by $76.2 billion in the week ended April 12, according to seasonally adjusted data from the Federal Reserve out Friday. The drop was mostly at large and foreign institutions, but they also fell at small banks. Meantime, commercial bank lending rose $13.8 billion in the period after increasing $10.2 billion in the prior week on a seasonally adjusted basis. On an unadjusted basis, loans and leases fell $9.3 billion. - Live Mint
Alphabet-backed fintech Aye Finance logs 56% growth in AUM in 2022-23 : Aye Finance, a new age non banking finance company, has said that its loan book grew 56 per cent in 2022-23 to touch ?2,700 crore as of March 31 this year. This fintech lender, which is focused on providing unsecured small-ticket business loans to micro enterprises segment, has recorded net profit of ?60 crore on revenue of ?630 crore for the fiscal year ended March 31, 2023. It has added 1 lakh active customers for the fiscal year to take the overall customer base to 3 lakh micro enterprises. - Business Line
22/04/2023
Delhi Tribunal Order dated 19/04/2023 in the case of M/s. Rohan Tooling Solutions Pvt Ltd. Total Bogus Purchase can not be held as income only the Gross Profit shall be held as income.
The Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2023
The Ministry of Corporate Affairs (MCA) vide its notification dated 17th April, 2023 has notified the “Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2023” which shall come into force with effect from 1st May, 2023. The amendments inter alia provide below mentioned changes:
1. An application for removal of name of company under section 248(2) shall be made to Registrar, Center for processing Accelerated Corporate Exit in Form No. STK-2 along with fee of Rupees 10,000. [Substituted rule 4(1)]
2. According to the amendment now the application in Form STK-2 shall not be accompanied by a copy of the special resolution duly certified by each of the directors of the company or consent of seventy-five per cent of the members of the company in terms of paid-up share capital as on the date of application. [Omitted clause iv of rule 4(3)]
3. The Registrar, Center for Processing Accelerated Corporate Exit established under section 396(1) shall be the Registrar of Companies for the purpose of exercising functional jurisdiction of processing and disposal of applications made in Form no. STK-2 and all matters related thereto under section 248 having territorial jurisdiction all over India. (Inserted sub-rule 3A to rule 4)
4. Further, Form No. STK-2, STK-6 and STK-7 are substituted.
RBI Working Paper No.05/2023: Reading Consumers’ Minds - An ATnalysis of Inflation Expectations
he Reserve Bank of India placed on its website a Working Paper titled, “Reading Consumers’ Minds: An Analysis of Inflation Expectations” under the Reserve Bank of India Working Paper Series. A novel approach is proposed in this paper to verify
this by simulating heterogeneous population consumption baskets and estimating the mean inflation by sampling the baskets. The estimated mean inflation using a random approach fails to display closeness with the survey numbers. Therefore, the paper proposes alternative logical methods for designing basket compositions and identifies the most suited method using which the estimated expectations are found to be close to and well-correlated with the survey numbers.
The Income Tax Department has notified that Form 10 pertaining to the statement which is required to be furnished for the purposes of exercising option under Explanation 3 to the third proviso to clause (23C) of section 10 or section 11 of the Income Tax Act, as was notified vide Income-tax (25th Amendment) Rules, 2022, is now available for filing: vide notification dated 21.4.2023
The Labour Department of Delhi has issued a notification for revision of rates in minimum wages in the specified Scheduled Employments for the following category of workers with effect from April 2023, namely:
1. Un-skilled
2. Semi-skilled
3. Skilled
4. Clerical and Supervisory Staff.
Vide notification dated 20.4.2023 vide Notification No: (142)/02/MW/VII/Part file/429-443
The Employees' Provident Fund Organisation (EPFO) has issued a circular for extension of mandatory seeding of Aadhar for filing of ECR till March 2024, with respect to certain establishments i.e. Beedi making, Building and Construction and Plantation Industries (Tea, Coffee, Cardamom, Pepper, Jute, Rubber, Cinchona, Cashewnuts, etc.) and for North Eastern Region comprising of State of Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland & Tripura vide notification dated 18.4.2023 vide Notification No: BKG-27/5/2021-BKG/E-38791
The Employees' State Insurance Corporation (ESIC) has issued a circular with respect to the seeding and authentication of Aadhar of newly Insured Persons(IP), wherein the employer can seed an Aadhaar Number while registering an Employee. After authentication of Aadhaar, the personal details of the employee will get auto-populated in the system vide notification dated 17.4.2023 vide Labour
Rule ACT: ESI Act
21/04/2023
Handbook on statement of Donations Received: https://drive.google.com/file/d/1ysY0AFaHciZPF_OXPKCWTDpLcpbV3iYy/view?usp=share_link
Handbook on Disallowance of Expenses under the Head Income from Business and Profession:
https://drive.google.com/file/d/1VTy-j0hEdnmMcO0oCoGK18OuGkom1kKa/view?usp=share_link
Handbook on Estimated Income Scheme under Income Tax Act, 1961:
https://drive.google.com/file/d/1zB6ZSgYxvQmwT4lDiORuT3lYe1LK76rc/view?usp=share_link
Handbook on FAQ's on House Property under Income-tax Act, 1961:
https://drive.google.com/file/d/1g7RwCCT3NHpokmHn5wpuRB46g_izIkQv/view?usp=share_link
Guidance Note on Tax Audit under Section 44AB of the Income-tax Act, 1961 AY 2022-23:
https://drive.google.com/file/d/1RFturAyJA86t57quv831D3Xt4oz2liYT/view?usp=share_link
Handbook on Taxation of Virtual Digital Assets:
https://drive.google.com/file/d/1nud6FT4JIph2bdfc4xnwvwSdr5001Q_n/view?usp=share_link
Handbook on Taxation of Private Trust of Income-tax Act, 1961:
https://drive.google.com/file/d/10df-yThCb2WsMWM7j3q132nK6ixVGo4J/view?usp=share_link
Handbook on Income Tax - Tax Collection at Source:
https://drive.google.com/file/d/1Qpz9j7HmmVcQ6jgb1IRc4u1CoKhJToEc/view?usp=share_link
Technical Guide on Audit of Charitable Institutions under Section 12A of the Income Tax Act, 1961:
https://drive.google.com/file/d/15dBS1eFgoAho-3KYAtO1WrhotsOTkg3v/view?usp=share_link
Treatise on Report on Income Tax Dues:
https://drive.google.com/file/d/1dv-GYBGBDTN5WHREx5AI05DPdai2j9Xp/view?usp=share_link
Treatise on Section 194-R under Income-tax Act, 1961:
https://drive.google.com/file/d/1ag7eqG_CckYtS4IYGLjLXzCQF58mje6k/view?usp=share_link
20/04/2023
Sonia Verma v.ITO [2023] 149 taxmann.com 21 (Chandigarh - Trib.)
9. Before..... Considering the predicament of the present assessee and noticing near similar difficulties experienced by a sizeable number of marginal taxpayers lacking proper advice, appropriate exposure I believe that I would be failing in my duty in not highlighting again the urgent need and requirement for the Tax Administration to take necessary steps on a war-footing in disseminating relevant information to the public at large i.e. inform them on acceptable ways of transacting and the need to maintain financial trail of your documents etc. I find that it is necessary to address this urgent need of the times emphasizing that still more efforts need to be made by the tax authorities to disseminate this information. It is necessary to create awareness in the public domain of the various legal requirements which even small taxpayers need to be aware of. The tax authorities have sufficient funds for disseminating information to the public in order to ensure tax compliances. Not limiting these efforts to the population attending Conferences and mega events in 5 Star Hotels the efforts could also be focused on disseminating relevant information to the fringe taxpayers also who constitute a sizeable population of the Indian economy. Due to possible sudden spurt in their small businesses enabled by the developmental economic forces in the country or one-time event of sale of agricultural/ancestral property etc., the consequent sudden deposits in their bank accounts necessarily triggers attention of the tax administration. This event should not be the start of problems in interactions with the tax administration. Since the importance of maintaining financial trail of documents is not understood and for want of proper information, I have seen this population often left flailing like fish out of water, it needs to be addressed. The relevance and importance of maintaining a financial trail of documents etc. it is my opinion needs to be urgently publicized to the affected population. The receipt of money catapults them in unknown territories of tax administration. The Assessing Officer too busy to meet his own targets may not be sufficiently equipped alone to help these hapless people to be tax compliant. It is my humble opinion that the mindset of the entire tax administration has to change. The journey from colonial times tax collectors as authoritarian figures to people friendly tax administration must start. As an economy India is moving as a juggernaut towards 7 trillion dollars. For achieving this laudable aim, we necessarily need to financially empower and enable all citizens to be ready for this change. The drag on the system by ill equipped vulnerable citizens needs to be addressed on a priority as in the absence of any support, they can fall prey to alienating and divisive forces and could tragically wrongly trust the dubious manipulators of the system instead of placing reliance on the good advice and offices of systematic supportive tax administration of the country. Hence, in my opinion disseminating financial literacy information for ensuring compliances to the citizens cannot be postponed any further as in the absence of relevant information, the public at large comprising of small taxpayers are left floundering hopelessly in the sea of confusion due to administrative obduracy which fails to provide these people sound helpful advice/assistance and thus by default creating in them a sense of alienation with the Indian polity on account of the administrative apathy. The risks of resultant push of this population inadvertently towards dishonest means of only being seen to be compliant in sheer numbers and percentages should not be overlooked. This population in terms of total financial contribution to the financial kitty of the country may not be contributing much, however, the impact on the socio-economic system of the country by this human population in sheer numbers as they constitute a sizeable part of the fabric of the country should not be taken lightly and can no longer be ignored. A country moving towards 7 trillion aspirations cannot afford to ignore the foundational bedrock requirements of these ambitions. The needs of the changing times have to be met. The preparations for the change cannot be postponed. The necessity of creating and enabling the creation within the country high ethical standards with the highest possible compliances and an environment of fair functioning of the country cannot be ignored. This ground work needs to be done now. These marginal taxpayers providing the impetus to the Indian economic juggernaut need also to be taken on board and cannot be ignored. Their one and only exposure to the bureaucracy should not be one of pain and alienation. In fact, sound advice and help should be made available to them to ensure that they stay within the bounds of law.
10. Accordingly, highlighting the suggestions in para 9 Registry is directed to forward a copy of this order to the Chairman, CBDT for information and appropriate action, if deemed fit.
19/04/2023
Conditions for Section 74 of Gst act :: DIAMOND STEEL ALLAHABAD HIGH COURT
15. For taking recourse to Section 74, it is essential that along with search and seizure report, certain specific averment is made with regard to the supply of goods and the non-payment of tax coupled with the fact that the same should be by reasons of fraud, willful misstatement or suppression of facts and an intent to evade the tax. The adjudicating authority clearly erred in assessing and quantifying the demand and levying the penalty by taking recourse to some guidelines issued by the Income Tax Authorities which is impermissible while determining the tax liability under Section 74. The order of the appellate authority is even further bad in law as it discloses no reason, whatsoever for assessing the tax and quantifying the liability. While on the one hand, the appellate authority disapproved the manner in which the adjudicating authority had assessed and quantified the demand of tax and penalty, in the same breath, he proceeds to quantify the tax and imposed penalty without disclosing any reasons whatsoever.
16. On the perusal of the adjudicating authority’s order as well as the appellate order, the manner in which the demand has been raised and quantified is not in consonance with the mandate of Section 74 and thus on the ground alone, impugned appellate orders as well as the adjudicating authority’s orders are liable to be quashed.
Condition need to be fulfilled by Revenue before issue SCN U/s 74
1) reason for invoking Section 74 should be clear in SCN itself
2) Provision of IT Act for the profit etc should be considered in case of any evasion allegation
3) relied upon docs should be supplied to the taxpayer with SCN
17/04/2023
New TDS rules from 1st April, 2023: Union Budget 2023 proposed several changes in Tax Deducted at Source (TDS) rules that will come into effect from the new financial year starting 1st April, 2023. In its “Highlights of Finance Bill, 2023”, the Income Tax Department recently shared the list of such TDS rules that were proposed to change in Budget 2023.
1. TDS on winning from online gaming has been proposed without any threshold benefit. The tax will be deducted either upon withdrawal or at the end of the financial year.
2. The exemption from TDS available on interest payments on listed debenture has been proposed to be removed.
3. If the recipient of EPF withdrawal does not provide his PAN, then TDS on the withdrawal will be 20%, instead of the maximum marginal rate.
4. Sections 206AB and 206CCA have been amended to exclude certain persons from the scope who are not required to file a return of income and are notified by the government.
5. For certain income paid to non-residents or foreign companies, TDS will be deducted at a rate of 20% or the rate specified in a tax treaty, whichever is lower. This relief will be available if the payee provides a tax residency certificate.
6. Section 155 has been amended to solve a TDS mismatch problem. “When a taxpayer reports income using the accrual method, it may be taxed before the TDS is deducted. It causes a TDS mismatch and prevents the taxpayer from claiming TDS credit. The amendment in section 155 allows taxpayers to apply to the assessing Officer within two years of the financial year in which the tax was withheld,” the Income Tax Department says.
Some Important Points about Old and New Tax Slabs: One has to choose old or new tax slab while filing Income Tax return form but plan accordingly beforehand(if you want to save). From Apr 1 2023, Default tax regime is the New Tax Regime. Before that default regime used to be the is old Tax Regime.
1. You can choose between the new and old tax regime in every financial year provided you do not have business income.
2. Form 10IE is a declaration for choosing the ‘New Tax Regime’ (till AY 2023-24) After that this is default. The taxpayers must furnish Form 10IE before filing the income tax return of the relevant assessment year.
3. old tax slabs are linked to the age of the taxpayers. There is relaxation available to senior (>=60 years) and very senior citizens (>=80 years). The new tax slabs are the same for everyone, irrespective of the taxpayer age.
4. A taxpayer opting for the new tax regime will have to forgo all the commonly available tax-breaks such as those available under sections 80C, 80D etc except for section 80CCD (2), i.e., employer’s contribution to NPS.
5. you can choose between the new and old tax regime in every financial year provided you do not have business income. You have to choose this while filing Income Tax return form.
6. cess at the rate of 4 per cent and surcharge, applicable as per your income level, is still payable in the new tax regime.
7. The around 5.8 crore people who filed returns for fiscal year 2018-19, 5.3 crore claimed I-T deductions of less than Rs 2 lakh, including deduction under section 80C of the I-T Act (for PF, PPF, life insurance premium), section 80D (mediclaim insurance), section 80CCD(1B) (additional deduction for NPS), deduction for housing loan interest and standard deduction.
Only 3.77 lakh taxpayers have claimed deductions exceeding Rs 4 lakh.
This may result in loss of ?40,000cr for Govt.
Pension is not a bounty. It is a measure of socio-economic justice. The [reason] behind granting of pension is the inability to provide for oneself due to old age. This can be withheld, curtailed or taken away only in accordance with law:: The Karnataka high court has slapped a fine of Rs 1 lakh on some central and state government officials for withholding a 102-year-old freedom fighter's pension and forcing him to litigate over the matter thrice. Along with the fine, the court has ordered a payment of Rs 3,71,280 in arrears, with a 6% interest. The dues will have to be paid within two weeks, the court ruled.
Freedom fighter H Nagabhushana Rao's pension under the Gaurava Dhana scheme was withheld from November 1, 2017, to December 24, 2018, over non-production of a mandatory Life Certificate. He was 97 then. Even after the pension was restored, the arrears were not paid despite two HC orders to release the dues. Justice M Nagaprasanna castigated the officials for apathy and holding the bank concerned responsible for dereliction of duty towards the petitioner. The officers have displayed apathy towards the petitioner by not taking the Life Certificate from him as, by then, the petitioner was 97 years old and was already a recipient of the pension for a long time. The bank ought to have visited the petitioner and collected the Life Certificate and regulated pension." The court clarified that in cases where pensioners are unable to visit the bank for documentation, it is the duty of the bank officials to visit them, obtain their Life Certificates and update the details in the bank's system.
16/04/2023
The Union Finance Minister has announced the revamping of Credit Guarantee Scheme for Micro & Small Enterprises with effect from 01.04.2023, with an infusion of Rs. 9,000 crore to the corpus to enable additional collateral-free guaranteed credit of Rs. 2 lakh crore and the reduction in the cost of the credit by about 1 per cent. The below-stated significant steps have been undertaken to this effect:
1. The corpus of Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE) has been infused with a sum of Rs. 8,000 crore on 30.03.2023
2. CGTMSE has issued guidelines regarding reduction of annual guarantee fee for loans upto Rs. 1 crore from a peak rate of 2% per annum to as low as 0.37% per annum. This will reduce the overall cost of credit to the Micro & Small Enterprises to a great extent
3. The limit on ceiling for guarantees has been enhanced from Rs. 2 crore to Rs. 5 crore
4. For settlement of claims in respect of guarantees for loan outstanding upto Rs. 10 lakh, initiation of legal proceedings will no longer be required
5. CGTMSE created a new landmark by touching the milestone figure of approving guarantees worth Rs. 1 lakh crore during FY 2022 - 23.
Highest direct tax buoyancy in 15 years recorded in FY22 : CBDT
1. The CBDT has said that direct tax buoyancy was at a record high of 2.52 in FY22, the highest in the last 15 years.
2. Tax buoyancy refers to the responsiveness of tax revenue receipts to changes in national income. A tax buoyancy greater than 1 signifies that tax revenues grow at a faster rate than the growth in national income.
3. The net direct tax collections have risen by an impressive 121% from Rs. 6.38 trillion in FY14 to Rs. 14 trillion in the 2021-22 fiscal year. The growth is 160% if the period between FY14 to FY23 is taken into account.
4. The gross direct tax collections also showed an impressive growth of over 126.73% in FY 2021-22, reaching Rs. 16 trillion from Gross Direct Tax Collections of Rs. 7 trillion in FY 2013-14.
5. Moreover, the gross direct tax collections have increased by over 172.83% in FY 2022-23, reaching Rs. 19 trillion (provisional) from Gross Direct Tax Collections of Rs. 7 trillion in FY 2013-14.
6. The direct tax to GDP ratio rose from 5.62% in FY 2013-14 to 5.97% in FY 2021-22. Furthermore, the cost of collection has decreased from 0.57% of total collection in FY 2013-14 to 0.53% of total collection in FY 2021-22.
Maharashtra continues to report the highest GST collection in the country, accounting for almost 15% of the national figure in 2022-23. Its GST kitty is also growing the fastest, with its compound annual growth rate (CAGR) between 2018-19 and 2022-23, outstripping all other states. The latest data shows that Maharashtra’s GST collection for the financial year 2022-23 was Rs 2.7 lakh crore. This is more than twice the collection of Karnataka which reported 1.2 lakh crore, the second highest GST collection in the country. Gujarat was placed third with Rs 1.1 lakh crore while Tamil Nadu reported Rs 1 lakh crore. The state CAGR between 2018-19 and 2022-23 was 12.3%, which is higher than that of Karnataka which is at 11.8% and Gujarat at 11.7%. The state’s growth rate was much higher than the national CAGR which stood 11.3%. The state’s e-way bill generations are also the highest in the country. The state’s e-away bills for 2022-23 amounted to 15 crore, which was a 27% rise from the previous year. By comparison, e-way bills for Gujarat amounted to 11.2 crore, which was a 19% rise from the previous year.
15/04/2023
Notices being sent to those who have claimed deduction in respect of donation to political parties:
1. Donation to political parties is fully tax deductible u/s 80GGB/80GGC of the Income Tax Act. Recognised political parties do not pay any tax on donations, since it is exempt u/s 13A of the Act.
2. The Income Tax Department conducted search operations under section 132 of the Act on September 7, 2022. In this search, a total of 23 Registered Unrecognized Political Parties, 35 bogus intermediary entities and 3 major exit providers were covered which was combinedly called as RUPP group of Ahmedabad.
3. During the course of search action, large number of incriminating documents related to bogus donation receipts, diaries containing details of commission charged, loose papers containing vital information and WhatsApp chats in the mobile phones of the office bearers of the RUPPs and their key handlers confirming the allegations, were found.
4. The modus operandi detected in the course of the ongoing search operation revealed that the donation is received through cheque/RTGS/NEFT in the RUPP’s bank account. This money is then re-routed through various layers, and returned to the original donors, primarily in the form of cash, in lieu of some commission that ranges from 3.5% to 5%.
5. So now, in the last 2 weeks of March 2023, the Income Tax department has issued several notices to taxpayers who have claimed deduction under section 80GGB and 80GGC.
Tip- The taxpayers who have received notices should raise the validity of cash movement and also examine the evidences extracted from political parties.
Summary of the adverse order passed by NFRA regarding statutory audit performed by the auditors of CCD:
Pursuant to Securities and Exchange Board of India sharing in April 2022 its investigation regarding diversion of funds worth Rs 3,535 crores from seven subsidiary companies of Coffee Day Enterprises Limited (CDEL), a listed company, to Mysore Amalgamated Coffee Estate Limited (MACEL), an entity owned and controlled by the promoters ofCDEL, National Financial Reporting Authority (NFRA) initiated investigations into the professional conduct ofthe statutory auditors under Section 132(4) ofthe Companies Act 2013. Following is the summary of the order passed by the NFRA:
1. NFRA's investigations inter-alia revealed that the CDGL's Auditors for the FY 2018-19 failed to meet the relevant requirements ofthe Standards on Auditing ('SA' hereafter) and provisions ofthe Companies Act 2013 and also demonstrated a serious lack of competence.
2. The auditors failed to evaluate their potential conflict of interest and failed to maintain their independence from CDGL by having audit and non-audit relationships with a large number of Coffee Day Group companies and the promoters' family members.
3. The auditors made an attempt to deceive NFRA by adding more documents to as well as altering the documents in their audit file which amounted to tampering with the Audit File. Objection was also raised about editable excel files.
4. The auditors failed to exercise professional judgement & skepticism during audit of the transactions of Rs 6,958.91 crores entered fraudulently with MACEL, which were also not disclosed in the Related Party Disclosures in their entirety.
5. The auditors failed to report understatement of loan by Rs 222.50 crores fraudulently given to MACEL and evergreening ofloans through structured circulation offunds among group companies; failed to report fraudulent diversion ofRs 130.55 crores to a related party M/s Classic Coffee Curing Works.
6. The auditors performed audit in a perfunctory manner resulting in non-reporting of misstatement of Rs 132.37 crores in the consolidated financial statements.
7. The auditors failed to perform appropriate audit procedure to identify misstatement ofRs 69.77 crores in related party disclosure relating to purchase ofcoffee beans from MACEL. Thus, total material and pervasive misstatements amounted to Rs 7514.10 crores and in spite of that they falsely reported that the Financial Statements of CDGL for the FY 2018-19 gave a true and fair view.
8. They also falsely reported that CDGL had an effective Internal Financial Control over Financial Reporting despite the complete absence ofthe same in CDGL.
A court in Dubai has ordered KPMG Lower Gulf to pay more than $231mn to a group of investors who claim they lost money because of poor-quality audit work by the firm on a fund they were invested in. The judgment, issued late last month, found that the Big Four firm breached international auditing standards by approving the financial statements of an infrastructure fund managed by collapsed private equity firm Abraaj Group. The award is one of the largest ever against an accounting firm and exceeds KPMG Lower Gulf’s revenues of $210mn in its most recent financial year. KPMG Lower Gulf said in a statement that it believed it had strong grounds to appeal and had taken the case to the court of cassation, or supreme court. KPMG has not disclosed whether the award would be covered by insurance or if its international network would step in to help with the costs. S- ft.com
13/04/2023
CBDT clarification on TDS on Salaries in light of new default tax regime introduced in Finance Act 2023:
1. The new tax regime U/S 115 BAC of Income Tax Act is the default tax regime. However, under sub-section (6) of section 115BAC of the Act, a person may exercise an option to opt out ofthis tax regime. A person not having income from business or profession can exercise this option every year.
2. In order to avoid the genuine hardship in such cases, the Board, in exercise of powers conferred under section 119 of the Act, hereby directs that a deductor, being an employer, shall seek information from each of its employees having income under section 192 of the Act regarding their intended tax regime and each such employee shall intimate the same to the deductor, being his employer, regarding his intended tax regime for each year and upon intimation, the deductor shall compute his total income, and deduct tax at source thereon according to the option exercised.
3. If intimation is not made by the employee, it shall be presumed that the employee continues to be in the default tax regime and has not exercised the option to opt out of the new tax regime.
4. Accordingly, in such a case, the employer shall deduct tax at source, on income under section 192 of the Act, in accordance with the rates provided under sub-section (lA) of section 115BAC of the Act.
5. It is also clarified that the intimation would not amount to exercising option in terms of sub-section (6) of section 115BAC of the Act and the person shall be required to do so separately in accordance with the provisions ofthe sub-section.
CBDT Circular: 04 of 2023
Gstn Advisory on 12.4.2023:: Time limit for Reporting Invoices on the IRP Portal
1. It is to inform you that it has been decided by the Government to impose a time limit on reporting old invoices on the e-invoice IRP portals for taxpayers with AATO greater than or equal to 100 crores.
2. To ensure timely compliance, taxpayers in this category will not be allowed to report invoices older than 7 days on the date of reporting.
3. Please note that this restriction will only apply to the document type invoice, and there will be no time restriction on reporting debit/credit notes.
4. For example, if an invoice has a date of April 1, 2023, it cannot be reported after April 8, 2023. The validation system built into the invoice registration portal will disallow the user from reporting the invoice after the 7-day window. Hence, it is essential for taxpayers to ensure that they report the invoice within the 7-day window provided by the new time limit.
5. It is further to clarify that there will be no such reporting restriction on taxpayers with AATO less than 100 crores, as of now.
6. In order to provide sufficient time for taxpayers to comply with this requirement, which may require changes to your systems, we propose to implement it from 01.05.2023 onwards.
Documents for which E-Invoice is required to be generated:
1. Invoices
2. Credit Notes
3. Debit Notes
Supplies for which e invoice need to be generated::
1. B2B Supplies
2. Supplies to SEZs (with/without payment)
3. Exports (with/without payment)
4. Deemed Exports
5. Not applicable for B2C Supplies
12/04/2023
Most important amendments made in the Competition Act:
1. The amendment seeks to reduce the maximum time limit for approval of combinations from 210 days to 150 days.As a result, Competition Commission of India (CCI) would have a maximum of 150 days from the date of notice of the combination to approve the combination or to pass an order.
2. The amendment states that the value of any transaction involving the acquisition of control, shares, voting rights, or assets of an enterprise, merger, or amalgamation that exceeds Rs. 2000 crore requires CCI approval.
3. The Bill amends the definition of "turnover" to include global turnover derived from all products and services by a person or an enterprise. The amendment allows for the imposition of penalties for competition law violations based on a company's global turnover, rather than just its turnover in India.
4. A Green Channel route will be introduced for certain combinations which shall be eligible for deemed approval in a trust-based framework, upon the filing of a combination notice.
5. The amendment has introduced a Settlement and Commitments framework so that in cases of abuse of dominance and anti-competitive agreements (except for horizontal agreements), third parties can claim compensation, if aggrieved.
CBDT notified the Cost Inflation Index for Financial Year 2023-24 is 348.
The Goods and Services Tax (GST) are set to issue show cause notices to insurance companies, banks, lenders ..etc. According to the reports 29 insurance companies, 5 Non-Banking Financial Companies (NBFCs) and more than 100 vendors were included by the authorities. The entities were involved in paying for fraudulent services to allow the insurers to pay a bank commission that was higher than what was allowed by law, which is why the notice was issued. The GST official claimed that it was discovered that no personnel hired at banks or NBFCs were given any employment by insurance companies. They, however, offered ITC for the personnel that were deployed and employed by other businesses. The insurance companies willingly refunded Rs 800 crore of the ITC that had been falsely claimed during the probe, although the GST authorities are still looking into the matter because it is anticipated that there may be many thousand crores at stake.
11/04/2023
SC order- no penalty u/s 271C on belated tds payment where only intt is charged u/s 201(1A): an important SC ruling
US Technology International Pvt ltd Vs Commissioner of Income-tax (Supreme Court)
Date-10th April 2023
Civil Appeal No. 7934 of 2011
Sub- Whether penalty can be levied u/s 271C for mere delayed payment of TDS when interest is dis-charged u/s 201(1A)?
The Supreme Court in this case was considering whether the appellant was liable for penalty u/s 271C even though there was mere delay in payment as the provisions of Section 271C dealt with penalty for failure to deduct the tax and not delayed payment of tax.
The court accepting the arguments of the Appellant’s AR that the penal provisions are to be construed strictly and have to be read as they are.
The court also noted that the consequences of non payment/belated remittances/payment of the TDS are specially provided in Section 201(1A) of the Act. It was also noted that prosecution is provided in case of failure to pay the tds u/s 276B.
Finally taking note of CBDT Circular NO 551 dated 23-1-1998, the court allowed the SLP by holding that in case where there was only delayed payment of tax, there was no question of levy of any penalty.
It is specifically observed and held that on mere belated remitting the TDS after deducting the same by the concerned person/assessee, no penalty shall be leviable under Section 271C of the Income Tax Act.
On true interpretation of Section 271C, there shall not be any penalty leviable under Section 271C on mere delay in remittance of the TDS after deducting the same by the concerned assessee.
As observed hereinabove, the consequences on non payment/belated remittance of the TDS would be under Section 201(1A) and Section 276B of the Act, 1961.
This judgement is a welcome judgement in relation to TDS.
SC ruling on determining management and control for residency of a company. Control and management’ signifies, in the present context, the controlling and directive power, ‘the head and brain’ as it is sometimes called, and ‘situated’ implies the functioning of such power at a particular place with some degree of permanence…
This judgement of other academic in nature but will be important from the following angles:-
1. Determination of the residence of a Company based on the test of situation of control and management of a company.
2. Jurisdiction to issue notice u/s 148 of the Income-tax Act, 1961
3. The functions that a Professional is expected to perform in discharge of his professional services.
Read More
https://taxguru.in/income-tax/sc-ruling-determining-management-control-residency-company.html
The Ministry of MSME: GoI has enhanced the ceiling of coverage from Rs 200 lakh to Rs 500 lakh per borrower for availing credit guarantee for CGTMSE for Micro and Small Enterprises (MSEs) on 31 March 2023. The extent of coverage is for MSEs including trading activity.
Micro Enterprise : Max extent of Guarantee Coverage: 85% (upto ? 5 lakh), 75% (? 5 lakh to ? 500 lakh),
MSEs located in NER 75% (incl. Sikkim, UT of Jammu & Kashmir & UT of Ladakh) : 80% (upto ? 50 lakh), 75% (? 50 lakh to ? 500 lakh),
Women entrepreneurs / SC/ST entrepreneurs / Person with Disability (PwD)/ MSE promoted by Agniveers / MSEs situated in Aspirational District/ ZED certified MSEs: 85% (upto ? 500 lakh), All other category of borrowers 75% (upto ? 500 lakh),
CGTMSE Charges (in addition to the interest by the bank)
Slab Standard Rate (pa)
0-10 lakh 0.37
10-50 lakh 0.55
Above 50-1 crore 0.60
Above 1-2 crore 1.20
Above 2-5 crore 1.35
Almost all Public Sector banks, Private banks provide CGTMSE as MLIs (Member lending Institutions).
10/04/2023
The government is building a ChatGPT-like chatbot helpline that can be used to manage grievances of disgruntled consumers, according to people aware of the developments. Moreover, the aim is to construct the tool in such a manner that consumers could converse with it through audio messages in multiple Indian languages. To be sure, this chatbot being built is separate from another one launched last month for consumer complaints last which is not really conversational. This is because it doesn’t allow the user to just put in details like a usual conversation, but rather asks him to select from a list of options in a step-by-step manner, starting with state, city, industry, brand, issue, product value etc. Sources say that while the language translation part of the new tool being built will be taken care of by the government’s Bhashini platform, the challenge is to find a large language model (LLM) that can efficiently understand issues related to consumer grievances. When you interact with a conversational AI chatbot, LLMs help process your prompts. They help the AI understand your text, break down the meanings of your words, and establish context to generate a response.
Union Bank becomes first to open special vostro account for India-Malaysia trade settlement in rupee : Public sector lender, Union Bank of India becomes the first bank in the country to open a Special Rupee Vostro Account through its corresponding bank in Malaysia i.e. India International Bank of Malaysia. This means that trade between India and Malaysia can now be settled in the Indian rupee, in addition to the current modes of settlement in other currencies. Union Bank's this move is in line with RBI's direction in July last year to allow the settlement of international trade in Indian Rupees - Live Mint
Bank of India (BOI) hikes FD rates, non-senior citizens can get up to 7.15% on this tenor : The public sector lender Bank of India (BOI) has hiked interest rates on fixed deposits (FDs) of less than ?2 Cr. The bank presently offers interest rates ranging from 3.00% to 6.00% on deposits that mature in 7 days to 10 years. After the modification, the bank raised interest rates on "Shubh Arambh Deposits," special term deposits with a duration of 501 days, for deposits under ?2 crore. The new rates will take effect on April 1, 2023, according to a press statement from the Bank of India. When it comes to the "Shubh Arambh Deposits" programme, BOI gives an interest rate of 7.65% for additional senior citizen customers, 7.15% for regular customers, and 7.8% under a special, time-limited programme for super senior citizen customers. - Live Mint:
09/04/2023
Reducing high-cost bulk deposits paid off: BoM MD : From a bank identified by RBI for prompt corrective action as losses touched Rs 5,800 crore to emerging as the top PSU bank in terms of credit growth, Bank of Maharashtra has scripted a successful turnaround story. MD and CEO AS Rajeev, who has led the bank’s turnaround, says its total business grew by 15.77% in the nine months of FY23 to reach Rs 3.65 trillion. The target now is to reach the Rs five-trillion- mark in FY24, he tells Geeta Nair. After exiting prompt corrective action, our main goal was to calibrate our business mix, that is, improving the RAM-to-corporate credit ratio. Since then we have been constantly improving the same and aim to make it to 60:40. The share of RAM advances had touched 63.15% in March 2020 and in December 2022 it was at 57.65%. In retail loans, we are offering bottomed-out pricing with innovative products catering to new-age customers. We made structural changes to add fillip to RAM, set up housing finance branches, gold loan vertical at the head office along with Gold Loan Points at branches. We are setting up local central processing cells for quick disposal of RAM proposals. - financial express
RBI may allow HDFC Ltd to carry forward pre-merger bonds : India’s largest mortgager, HDFC Limited, has started work on yet another round of massive bond sale. Highly placed sources tell businessline that the housing financier may raise up to ?50,000 crore by way of bonds in what could be the last tranche of bond issuance ahead of the merger. The issue is likely to conclude by May and with this, the lender would have concluded ?1.32-lakh crore of bond issuances ahead of the merger. In February, it had raised ?25,000 crore of 10-year bonds and on March 27, the boards approved ?57,000 crore of bond issuance. - Business Line
RBL Bank revises interest rates on savings accounts, get up to 7% effective from April 5 : RBL Bank has announced an interest rate revision on savings bank deposits. After the modification, the bank is now permitting savings accounts to earn up to 7.00% in interest. According to the bank's official website, the new savings account interest rates will take effect on April 5, 2023. The bank now offers an interest rate of 4.25% on savings accounts with a daily balance of up to Rs. 1 lakh, and RBL Bank now offers an interest rate of 5.50% on savings accounts with a daily balance of over Rs. 1 lakh and up to Rs. 10 lakh. For savings accounts having a daily balance of more than Rs. 10 lakh but less than Rs. 25 lakh, RBL Bank is giving an interest rate of 6.00%, and for accounts with a daily balance of more than Rs. 25 lakh but less than Rs. 7.5 Crore, it is offering an interest rate of 7.00%. - Live Mint
07/04/2023
Govt may consider 0.3% fee to maintain UPI payment system & ensure financial viability: Report : The government may consider a 0.3 per cent uniform digital payment facilitation fee to fund the infrastructure required for such transactions and also to ensure financial viability of the UPI payment system, suggested a study by IIT Bombay. The facilitation fee of 0.3 per cent can generate around Rs 5,000 crore in 2023-24, said the study titled ‘Charges for PPI-based UPI payments–The Deception’.The study, which analyses the impact of the decision of the National Payments Corporation of India (NPCI) to introduce interchange fee on payments through mobile wallets, argued that the payments received by merchants should remain ‘unpolluted’ whether they are from UPI directly or through prepaid e-wallets. - fnancial express
UPI trades up 82% in FY23, March transactions at record high of 870 crore : Payments transactions via the UPI (Unified Payments Interface) network surged 82.2 per cent in FY23 to a total of 8,376 crore transactions aggregating ?139 lakh crore, 65.3 per cent higher compared with FY22, according to data by the National Payments Corporation of India (NPCI). In comparison, FY22 had seen a total of 4,597 crore UPI transactions aggregating ?84 lakh crore. During the calendar year 2022, the platform had processed around 7,404 crore transactions worth ?126 lakh crore. UPI transactions also ended FY23 at a record high with the number of transactions in March rising 60 per cent YoY to 870 crore and the transaction value rising 46 per cent to ?14.05 lakh crore. In March 2022, the platform had processed 5,406 transactions worth ?9.6 lakh crore. - Business Line
MPC may hike policy rate by 25 bps in first meet of FY24 : Against the global balancing act between hiking interest rates, withdrawing systemic liquidity and the series of recent bank failures, the Reserve Bank of India’s Monetary Policy Committee (MPC) is likely to raise the policy rate by another 25 bps in its first bi-monthly monetary policy for FY24, taking cognizance of the contagion impact on the Indian economy. Weaker-than-expected global growth, supply side shocks to global commodity and domestic food prices, consistently high CPI inflation and tightening of financial conditions warrant the need for another hike be - Business Line
06/04/2023
IRDAI approves two new life insurance companies : The Insurance Regulatory and Development Authority of India (IRDAI) has approved two new life insurance companies.. “In the 121st meeting of Insurance Regulatory and Development Authority of India two new entities namely Acko Life Insurance Ltd. and Credit Access Life Insurance Ltd. were granted certificate of registration to commence life insurance business,” the regulator said in a release. With these two additions, the total number of life insurers operating in India have gone up to 25, which had remained stagnant since 2011, when the certificate of registration was last granted to a life insurer “This comes after the grant of registration to a general insurer in the Authority’s 120th meeting held in November 2022; marking addition of a total three new insurers in the financial year 2022-23,” IRDAI said. - Busines Line
IRDAI names LIC, GIC Re and New India Assurance as domestic systemically important insurers : The Life Insurance Corporation (LIC), GIC Re. and New India Assurance continue to be identified as Domestic Systemically Important Insurers (D-SIIs), the insurance regulator said. D-SIIs are being subjected to enhanced regulatory supervision, the.Insurance Regulatory and Development Authority of India (IRDAI) said in a statement on Friday. Domestic Systemically Important Insurers (D-SIIs) refer to insurers of such size, market importance, and domestic and global interconnectedness, whose distress or failure would cause a significant dislocation in the domestic financial system. “Therefore, the continued functioning of D-SIIs is critical for the uninterrupted availability of insurance services to the national economy,” the regulator said. - Business Line
04/04/2023
GST collections in March jump 13% to Rs 1.6 lakh crore : India’s monthly goods and services tax (GST) collections hit the second highest ever in March, rising 13% from a year earlier to `1.6 lakh crore, suggesting economic strength despite several headwinds. The total gross collection for FY23 was Rs 18.10 lakh crore, an average Rs 1.51 lakh a month and up 22% from FY22, data released on Saturday showed. “Monthly GST collections for the month of March being the second highest of all time, coupled with 22% higher GST collections for FY22-23 over last year point towards the growing trajectory of the Indian economy,” said Abhishek Jain, partner, indirect tax, KPMG in India. GST collections hit a record Rs 1.68 lakh crore in April last year. - economic times
NCLT approves Adani Ports and SEZ’s takeover of Karaikal Port : National company law tribunal has approved Adani Ports and Special Economic Zone Limited’s Rs. 1485 crore offer for Karaikal Port Limited which was made under the insolvency and bankruptcy code (IBC) process as per a court order the contents of which ET has reviewed. Adani Ports and Special Economic Zone was pitted against Vedanta Limited, JSW Infra, a consortium of RKG Fund and Sagacious Capital and Jindal Power all of whom had submitted expressions of interest to acquire Karaikal Port. - economic times
03/04/2023
Mcap of nine of 10 most valued firms jumps Rs 2.34 lakh cr last week : Nine of the top 10 valued firms together added Rs 2,34,097.42 crore in market valuation amid a positive trend in equities last week, with Reliance Industries emerging as the biggest gainer. The 30-share BSE benchmark jumped 1,464.42 points or 2.54 per cent in a holiday-shortened last week. Equity markets were closed on Thursday on account of 'Ram Navami'. The market valuation of Reliance Industries zoomed Rs 86,317.26 crore to Rs 15,77,092.66 crore, the most among the top-10 firms. Tata Consultancy Services (TCS) added Rs 30,864.1 crore, taking its valuation to Rs 11,73,018.69 crore. HDFC Bank's market valuation rallied Rs 26,782.76 crore to Rs 8,98,199.09 crore and that of Infosys surged Rs 19,601.95 crore to Rs 5,92,289.92 crore. The market capitalisation (mcap) of Hindustan Unilever climbed Rs 18,385.55 crore to Rs 6,01,201.66 crore and that of ICICI Bank advanced Rs 17,644.35 crore to Rs 6,12,532.60 crore. - economic times
MFI loan collections improve in October-December qtr : The loan collections of microfinance companies has improved across most loan buckets in October-December, a recent report by CRIF High Mark showed. ortfolio at risk for 30 days past due bucket improved to 3.8% as on December 31 from 9.2% a year ago. Portfolio at risk for 90 days past due improved to 2% as on December 31 from 3.7% a year ago. However, portfolio at risk in the 180 days past due segment deteriorated to 10% as on December 31 from 9.3% a year ago. - Finanial Express
01/04/2023
Highlights of Gst revenue collection for March 2023; Rs.1,60,122 crore gross GST revenue collected for March 2023.
1. It is for the fourth time, in the current financial year that the gross GST collection has crossed rs. 1.5 lakh crore mark registering second highest collection since implementation of GST.
2. This month witnessed the highest IGST collection ever.
3. Second highest collection ever, next only to the collection in April 2022
4. Monthly GST revenues more than rs 1.4 lakh crore for 12 months in a row, with rs 1.6 lakh crore crossed for the 2nd time since inception of GST
5. GST revenues clock 13% growth Year-on-Year
6. Total gross collection for 2022-23 stands at rs 18.10 lakh crore; average gross monthly collection for the full year is rs 1.51 lakh crore
7. Gross revenues in 2022-23 were 22% higher than that last year.
Summary of GST Central Tax Notifications issued on 31st March’ 2023.
Notification No. 02/2023–CENTRAL TAX:
1. Late fees for belatedly filing of GSTR-4 for for the quarters from July, 2017 to March 2019 or for the Financial years from 2019-20 to 2021-22 has been capped to Rs.500/
2. Also, shall stand completely waived where the central tax payable in the said return is nil.
Notification No. 03/2023–CENTRAL TAX:
1. Special procedure for revocation of cancellation of registration.
2. If Cancelled on or before the 31/12/2022 - To be applied within 30/06/2023.
3. Revocation to be filed only after filing all returns along with payment of tax along with any amount payable towards interest, penalty and late fees in respect of such returns,
up to the effective date of cancellation of registration.
4. No further extension of time period for filing application.
5. Also, an opportunity for persons whose appeal against the order of cancellation of
registration or the order rejecting application for revocation of cancellation of registration has been rejected on the ground of failure to adhere to the time limit specified under the law for application of revocation.
Notification No. 04/2023–CENTRAL TAX:
1 . CGST (Amendment) Rules, 2023 - Effective from 26/12/2022.
2. Sub-rule (4A) - Explains Authentication of Aadhaar during registration and the date of application in such cases would be the date of authentication of the Aadhaar number, or fifteen days from the submission of the application in Part B of FORM GST REG-01 under sub-rule (4), whichever is earlier.
3. Biometric-based Aadhaar authentication and taking photograph of the applicant is amended and inserted as a proviso to the said rule.
Notification No. 05/2023–CENTRAL TAX:
1. Sub-rule (4B) amended giving effect to Sub-rule (4A) Proviso
2. for and words – “provisions of “, the words – “proviso to”, shall be substituted”
3. As of now, Biometric-based Aadhaar authentication and taking photograph of the
applicant along with the verification of the original copy of the documents to be uploaded with the application in FORM GST REG-01 through one of the notified Facilitation Centres is applicable only to the state of Gujarat. (As explained in No. 27/2022-Central Tax).
Notification No. 06/2023–CENTRAL TAX:
1. Order under section 62 - Best Judgement assessment by the proper officer passed on or before 28th February’ 2023, the said order shall be withdrawn if the registered person –
furnishes the said return on or before the 30/6/2023;
and after payment of interest due under sub-section (1) of section 50 of the said Act
and the late fee payable under section 47 of the said Act.
2. Irrespective of whether or not an appeal had been filed against such assessment order
or whether or not the appeal, if any, filed against the said assessment order has been decided.
Notification No. 07/2023–CENTRAL TAX:
1. The late fees under section 47 has been capped at Rs.20,000/- for belated filing of
Annual returns (GSTR-9) for Financial years 2017-2018 to 2021-2022, provided filed
during the period 1st April' 2023 to 30th June' 2023.
2. Late fee revision for F.Y 2022-23 onwards has been made to –
Agg. Annual T/O
Up to 5 Cr.: Rs.50/- per day up to maximum of 0.04% of T/o in State or UT
More than 5 Cr. Up to 20 Cr. : Rs.100/- per day up to maximum of 0.04% of T/o in State or UT.
More than 20 Cr. : Rs.200/- per day up to maximum of 0.5% of T/o in State or UT.
Notification No 09/2023 CT:
TIME LIMITS FOR ISSUANCE OF ORDER U/S 73 of CGST ACT EXTENDED
Year 2017-18 upto 31.12.2023
Year 2018-19 upto 31.03.2024
Year 2019-20 upto 30.06.2024
So, due date for issuance of SCN u/s 73
2017-18 -30.09.2023
2018-19- 31.12.2023
2019-20-31.03.2024
From changes in the income tax slabs to no long-term capital gains (LTCG) benefits on debt mutual funds, here are some of the major changes coming into effect from April 1, 2023:
1. Changes in income tax slabs
Finance Minister Sitharaman, while presenting the Union Budget, announced that the tax rebate limit under the new tax regime has been increased from Rs 5 lakh to Rs 7 lakh. She also said that the new regime will become the default regime if the taxpayer does not state under which regime they will submit their income tax returns. From April 1, new income tax rates will come into effect which ranges from 0 to 30 per cent.
For individuals earning a yearly salary up to Rs 3 lakh, tax is nil;
for a salary between Rs 3 lakh and Rs 6 lakh, tax is 5 per cent;
for Rs 6 lakh and Rs 9 lakh, 10 per cent;
for Rs 9 lakh to Rs 12 lakh, tax is 15 per cent;
Rs 12 lakh to Rs 15 lakh, tax is 20 per cent,
while for individuals earning above 15 lakh, tax is 30 per cent.
The standard deduction limit of Rs 50,000 under the old regime has been kept unchanged and extended to the new regime.
2. Encashment limit of leave travel allowance:
From April 1, the encashment of leave travel allowance (LTA) for non-government employees has been increased to Rs 25 lakh per annum. The limit for the same was Rs 3 lakh since 2002.
3. No LTCG tax benefits on debt mutual funds:
The indexation benefits on LTCG on debt mutual funds will be gone from April 1, 2023. From the new financial year, debt mutual funds (MFs) will be taxed at income tax rates as per an individual’s income. The changes were introduced by the government in the Finance Bill 2023 which has been passed earlier this week. From April 1, all gains from debt MFs, which have less than 35 per cent exposure to equity, would be treated as short-term capital gains and taxed as per the investor’s income tax slab.
4. Market Linked Debentures:
Investments in Market Linked Debentures (MLDs) from April 1 will be considered as short term capital assets.
5. Changes in proceeds from life insurance premium:
From April 1, proceeds from life insurance premiums over the annual premium of Rs 5 lakh will be taxable. The rule does not apply to ULIP (Unit Linked Insurance Plan).
6. Changes in Senior Citizen Savings Scheme:
The government has raised the maximum deposit limit for the Senior Citizen Savings Scheme (SCSS) to Rs 30 lakh from Rs 15 lakh. Under the new rules, the monthly income scheme’s maximum deposit limit for single accounts has also been raised to Rs 9 lakh from Rs 4.5 lakh. For combined accounts, the limit has been increased from Rs 7.5 lakh to 15 lakh.
7. No capital gain tax on physical gold conversion to e-gold receipt:
Sitharaman, while presenting the Budget, also announced that from April 1, the conversion of physical gold to an Electronic Gold Receipt (EGR) and vice versa, will attract no capital tax.
Key Highlights of Foreign Trade Policy 2023
1. It is Foreign Trade Policy 2023 (and not 2023-28). There is no end date for the policy.
2. The FTP would be dynamic and would be changed on need based
3. No Incentive (MEIS/SEIS) but only remission (like RoDTEP) would continue (which is WTO compliant)
4. Advance Authorization/DFIA/EPCG would continue
5. 1 day approval for approval (AA, EPCG), revalidation and extension of export obligations. (instead of 3 days to 1 months time).
6. Lower fees for MSME for application for some scheme.
7. Lower Threshold limits for Star Exports house
8. INR Trading to continue
9. Focus on Merchant Trading (buying from third country and selling to third country without touching the boarders). (However, RBI FEMA regulations should be relaxed. This needs to be seen).
10. 4 additional towns of excellence (apart from earlier 39 towns of excellence)
11. Sectors like Textile/Dairy/Green sectors is focused.
12. Special Advance authorization for certain sectors.
13. Self-ratification for 2 star export house for input output norms.
14. Boost to E-commerce. Courier exports limits increase from Rs. 5 lakhs to Rs. 10 lakhs.
15. There should be E-commerce Export hub and training for small E-commerce exporters. Tech support for E-commerce to linking with Banks for financing
16. District Export Promotions committee to facilitate exports headed by DC of the district coordinated by the Regional Office of DGFT.
17. Amnesty scheme for default of Advance authorization/EPCG. Interest limited to 100% of Basic Customs Duty and No interest on Additional Customs Duty and SAD
31/03/2023
With the recent passing of the Finance Bill, 2023, certain categories of non-equity mutual funds, including debt funds and exchange-traded funds, international funds, gold funds, and hybrid funds, are now going to be taxed at your income-tax rates starting from April 1, 2023.
1 That means long-term capital gains tax benefits, along with indexation benefits, are gone !
2. In other words, say goodbye to any tax advantages debt funds once had.
3. The three-year holding period previously allowed for a flat 20% tax rate (with indexation) is no longer applicable, and any capital gains will now be taxed at an individual’s income tax slab rate.
4. It looks like bank FDs and good-quality bonds might be making a comeback as some investors may begin to see debt mutual funds as less attractive.
5. However, there is a silver lining: any investments made until March 31, 2023, will be grand-fathered.
An advisory has been issued on March 22nd, 2023 that defines the reporting of HSN codes in e-Invoice on IRPs portal in GST. It states that every entity having Annual Aggregate Turnover of more than 5 crores in any previous financial year needs to ensure that they report a minimum of six-digit valid HSN code for their outward supplies. They have also suggested that in cases where a valid 6-digit code is not available, a valid 8-digit code should be used instead of artificially creating a 6-digit code. The requirement has already been implemented in the GST system and it is currently in the phase of getting implemented at IRPs portal.
30/03/2023
The Companies (Audit and Auditor) Rules, 2014 (Audit Rules) have been correspondingly amended wherein auditors are now required to report, as part of the auditors report (in the section Report on Other Legal and Regulatory Requirements, as to whether,
(a) the accounting software used by the company being audited has the feature of recording audit trail (edit logs),
(b) the audit trail feature was operational throughout the financial year and had not been tampered with and
(c) such audit trails have been retained for the period as statutorily prescribed.
The MCA has notified that the aforesaid amendments will be effective from April 1, 2023, which implies that the accounting software employed by companies will need to be compliant with the Accounts Rules from FY 2023-24 onwards. The requirement was initially made applicable for the financial year commencing on or after the 1st day of April 2021, however the applicability was deferred to the financial year commencing on or after April 1, 2022 and thereafter to April 1, 2023.
These are applicable to all the companies registered under the Companies Act, 2013. The reporting requirements for the auditors have been prescribed for the audit of financial statements prepared under the Act. Accordingly, auditors of all classes of companies including section 8 companies would be required to report on these matters. As per Companies (Registration of Foreign Companies) Rules, 2014 the provisions of Audit and Auditors (i.e., Chapter X of the 2013 Act) and Rules made there under apply, mutatis mutandis, to a foreign company as defined in Companies Act, 2013.
The term audit trail can be defined as a chronological sequence of the history of a particular transaction, tracking who created/changed a record, what record, what time etc. Audit trails amongst others may help in investigating frauds, system breaches etc. and can be considered an essential tool of monitoring for organisations.
The companies would need to ensure that the audit trail captures changes to each and every transaction; changes that need to be captured may include the following: when changes were made, who made those changes, what data was changed.
The management will be responsible for compliance with the requirement of the rules including to:
1. identify the records and transactions that constitute books of account under section 2(13) of the Act;
2. identify the software i.e., IT environment (including applications, web portals, databases; Interfaces, or any other IT component used for processing and or storing data for the creation and maintenance books of accounts
3. ensure such software have the audit trail feature;
4. ensure that the audit trail captures changes to each and every transaction recorded in the books of account;
5. ensure that the audit trail feature is always enabled (not disabled);
ensure that the audit trail is appropriately protected from any modification;
6. ensure that the audit trail is retained as per statutory record retention requirements.
7. ensure that controls over maintenance and monitoring of the audit trail and its feature are designed and operating effectively throughout the period of reporting.
Considering the amendment has been made to the Rules, the non-compliance with the mandatory provisions would imply contravention with the provisions of the Companies Act, 2013. Further, based on procedures performed the auditor may evaluate the reporting implications in case of non-compliance and consider the requirements specified in Standards on Auditing 250, Consideration of Laws, and Regulations in an Audit of Financial Statements. In respect of the audit trail following could be the expected scenarios:
1. Management may maintain an adequate audit trail as required by the law.
2. Management may not have identified all records/transactions for which an audit trail should be maintained.
3. The accounting software does not have the feature to maintain an audit trail, or it was not enabled throughout the audit period.
Section 128(5) of the Act requires books of accounts to be preserved by the companies for a minimum period of eight years.
The auditor will be required to obtain written representations from management acknowledging managements responsibility for establishing and maintaining adequate controls for identifying, maintaining, controlling, and monitoring of audit trails as per the requirements on a consistent basis.
companies are required to keep back-up of books of account and other relevant books and papers maintained in electronic mode (including at a place outside India) in servers physically located in India on daily basis, instead of periodic basis.
IT-Department provides an exemption for non-residents without PAN to use electronic Form 10F filing: The income tax department has given non-residents who do not have PANs and are not required to have them under the requirements of the Income-tax Act, 1961, a partial reprieve from having to manually file Form 10F until the end of March 2023. The same has now been extended till September 30, 2023. Due to the practical difficulties in enforcing compliance with the aforementioned notification, the competent authority exempted non-resident (NR) taxpayers who did not have a PAN and were not required to have one under the applicable provisions of the Income-tax Act of 1961 read with the Income-tax Rules of 1962 from the requirement to electronically file Form 10F until the end of March 2023.
Nomination for Mutual Fund Unit Holders – Extension of timelines: SEBI vide Circular no. SEBI/HO/IMD/IMD-I POD1/P/CIR/2023/47 dated 28th March, 2023 extended deadline for mutual funds investors to specify nominee details to 30th September, 2023. Earlier the deadline was 31st March, 2023. It is now compulsory for the new mutual fund unit holders to submit either the nomination form or declare that they are opting out of the nomination.
29/03/2023
Govt extends deadline for linking of Aadhaar to Voter ID to March 31 2024 vide Notification dated :21.03.2023.
The Finance Bill, 2023, was passed in Parliament on 24 March, with 64 additional amendments. Of these, 34 pertain to the Income Tax Act and the remaining to indirect tax laws like the customs and goods and services tax (GST).
1. The first important amendment is in respect of taxability of any gains or profits arising on transfer, redemption or maturity of debt mutual funds. The Finance Bill initially introduced on 1 February, proposed to insert a new section 50AA providing for the taxability of any gain on transfer, redemption or maturity of market linked debenture (MLD) on or after 1 April, as a short-term capital gain, irrespective of the period of holding.
2. Now, the coverage of section 50AA has been further expanded to include the units of specified mutual funds, wherein not more than 35% of the total proceeds are invested in equity shares of domestic companies or, in other words, debt mutual funds, acquired on or after 1 April. Thus, any gain or income arising on transfer, redemption or maturity of a unit of debt mutual funds, acquired on or after 1 April, will also be considered as short-term capital gains, and taxable at the applicable slab rate of the investor, irrespective of the period of holding. Indexation benefit is also not available in case of short-term capital gain.
Presently, the units of debt mutual funds held for more than three years are taxable as long-term capital gains and are taxable at 20% plus applicable surcharge and cess, along with the indexation benefit.
3. provision of ‘marginal relief’ in the new personal tax regime. The marginal relief in respect of taxpayers having their annual gross total incomes of ?7,00,005 and up to ?7,29,000, and opting for the new tax regime, has now been provided such that, at the income levels between ?7,00,005 and upto ?7,29,000, the income tax payable will get restricted to the amount of income which exceeds ?7,00,000 only, and not higher than that.
4. The initial Finance Bill 2023 has inserted a new section 56(2)(xii) to tax the distribution of the ‘specified sum’ in the form of interest, dividend and rental income and repayment of debt by InvITs and reits to the unit holders, as income from other sources, at their respective tax slab rates. further clarity on the taxability of distribution of income by Reit (real estate investment trust) and InvIT (infrastructure investment trust) to unit holders. Now, a specific formula has also been prescribed to compute the ‘specified sum’, wherein the specified sum = A-B-C.
A is the cumulative distributions made to the unit holders, other than distributions covered under the provisions of section 10(23FC)/ 10(23FCA) and not chargeable to tax under Section 115UA(2); B is the Issue price (cost of acquisition) and C is the amount already taxed in any of the previous years.
Further, it has also been provided that if B+C is greater than A, then the specified sum will be nil.
5. On the indirect tax front, the existing section 109 of the Central GST, or CGST, Act has been substituted to provide for the Constitution of GST appellate tribunals with establishment of the principal bench in New Delhi and various state benches.
28/03/2023
AMENDMENTS W.R.T. GST IN THE FINANCE BILL, 2023 PASSED BY LOK SABHA
1. No need to take registration for the Specified category of persons exempted from obtaining GST registration.
2. Time limit of 30 days withdrawn for moving application for Revocation of Cancellation of GST Registration.
3. Period to furnish Form GSTR 3B or Form GSTR 10 (Final Return) increased from 30 days to 60 days under Best
Judgment Assessment.
4. Constitution of GST Appellate Tribunal (GSTAT) and
Benches thereof.
5. Place of supply of services of transportation of goods, other than by way of mail or courier to be the location of the recipient of services.
6. Maximum rate at which GST Compensation Cess may be collected.
Finance Bill cleared in Lok Sabha with 60 amendments, including taxation of mutual fund gains.
1. Angel tax deferred to 1st April 2024: No, in the original proposal as well it was to come into effect from 1st April 2024, ie For Assessment year 2024-25 (FY 2023- 24). There is no change in it. However, all concerns raised by stakeholders in implementation of this proposal would be addressed. The draft rules related to valuation shall be shared with the stakeholders for their inputs in the next month itself, viz April. Exclusions, as already provided to domestic Venture Capital Funds etc, shall also be considered for similar overseas entities.
2. Taxation on debt mutual funds: It is proposed to tax the income from debt mutual funds at an applicable rate since it is of the nature of interest income. An arbitrage is being created right now where interest income from debt mutual funds (where not more than 35% invested in shares in a domestic company) is not distributed and converted into long term capital gains of 20% (with indexation). In some cases it comes to even less than 10% due to indexation. Thus many taxpayers are able to reduce their tax liability through this arbitrage. This is sought to be addressed.
3. Changes in REIT/InvIT: Finance Bill proposed to tax distribution from business trust which has income from other sources at applicable rate. This is now proposed to be treated as return of capital i.e. reduction from cost of acquisition, till the cost at which the unit was issued. However, any amount in excess of the issue price would be taxable as income. Thus, the change would benefit the unit holders vis a vis the earlier proposal.
4. Any change to the 7L limit: No there is no change. Only marginal relief is proposed to be provided. Currently if a taxpayer has income of 7 L s/he pays no tax but if s/he has income of 7,00,100 s/he pays tax of 25,010. Thus additional income of Rs 100 leads to tax of Rs 25,010. Hence, marginal relief is proposed that the tax that one pays should not be more than the income that exceeds 7L (Rs 100 in this case).
5. LRS 20% TCS (applicability to IFSC): At present there is TCS on LRS if it is remitted out of India. Hence, when money is remitted by residents to Gift City there is no TCS. To bring parity in treatment it is proposed that TCS shall apply to all LRS even if within India.
6. In a relief to REITs and InVITs, the Finance Bill on Friday proposed to treat distribution from business as return of capital. While presenting the Union Budget on February 1, the government had proposed to tax income distributed by business trusts like REITs and InVITs in the form of debt repayments at the hands of unitholders.
7. Government has doubled the withholding tax rate on royalties and fees for technical services earned by non-resident companies to 20% from 10%. The change has been brought about through the amendments made to the Finance Bill, 2023 by the finance minister.
27/03/2023
Circular No. 191/03/2023-GST Dated 27.03.2023: Clarification regarding GST rate and classification of ‘Rab’ Based on the recommendation of the GST council in its 49th meeting, held on 18th February, 2023, with effect from the 1st March, 2023, 5% GST rate has been notified on Rab, when sold in pre- packaged and labelled, and Nil GST, when sold in other than pre- packaged and labelled. Further, as per the recommendation of the GST Council in the above-said meeting, in view of the prevailing divergent interpretations and genuine doubts regarding the applicability of GST rate on Rab, the issue for past period is hereby regularized on “as is” basis.
India's International Financial Services Centre (IFSC) at GIFT City could become more attractive to investors with a slew of tax incentives brought in through the amendments to the Finance Bill, 2023 including extending a 100% tax holiday available to non-residents for income from portfolio of securities in accounts in offshore banking units for a full 10-year period.
Long term capital gains in international mutual funds to be taxed as per the investor tax slabs. Presently, international mutual funds, for the purpose of taxation are treated as debt funds. Now, as the taxation of debt fund is going to change, so will the taxation of international fund as per the Finance Bill, 2023 tabled by Union Finance Minister Nirmala Sitharaman and later passed by the Lok Sabha on Friday.
In an international mutual fund, the short-term gains arising within three years are taxed at the investor’s applicable tax slab while long-term gains are taxed at 20 per cent after indexation benefits, or at 10% without indexation.
India, which has the third-largest startup ecosystem in the world, is home to 6 of the world's top 100 unicorns list includes BYJU’s, Swiggy, OYO Rooms, Dream11, Razorpay, and Ola Cabs.
26/03/2023
The MSME ministry currently doesn't have any proposal to implement a rating system for monitoring MSMEs. In a written reply to a question on whether the government has any proposal for the MSME rating system, the minister of state in the MSME ministry Bhanu Pratap Singh Verma informed Lok Sabha.
GST Network has issued an advisory for the taxpayer wishing to register as “One Person Company” in GST dated March 21, 2023. Some issues have been raised by the persons registering as ‘One Person Company’ while they take GST registration. Upon analysis, it has been noticed that the option of choosing One Person Company is not there in form notified by CGST/SGST Acts and hence not available on the GSTN portal also. As a workaround, it is advised that in the ‘Part B’ of GST Registration Form ‘REG-01’, applicant may select (Constitution of Business under ‘Business Details’ tab using dropdown list) option “Others”, if the taxpayer wants to register for GST as “One Person Company”. After selecting the option as “Others”, the applicant shall also mention “One Person Company” in the text field and follow the steps for a normal registration application to complete the process.
Important things from GST Aspect to remember this March 2023 ending: 1) Billing Series: New billing series for FY 23-24 w.e.f. 1st April 2023 should be started.
2) E-Invoicing: Businesses with an annual aggregate turnover of more than Rs.10 crore, as calculated in any preceding financial year from 2017-18 up to 2022-23, must begin generating e-invoices from 1st April 2023.
3) Letter of Undertaking (LUT): All the exporters or who supplies goods or services to SEZ without payment of GST should apply for LUT in form GST RFD 11 for FY 2023-24.
4) Composition Scheme: Small taxpayer having turnover less than 1.5 crore should calculate tax liability under composition scheme and normal option, and accordingly may opt for the option which is beneficial to them considering all the conditions.
5) Quarterly Return Monthly Payment (QRMP) Scheme: Taxpayers having Turnover below Rs 5 Crores shall have an option to select the frequency of GST return i.e., QRMP Scheme filing for FY 2023-24 till 30th April 2023.
6) Reconciliation of turnover between GSTR1 and GSTR 3B and books: Prepare and reconcile the turnover as reported in GSTR 1/GSTR 3B with books of accounts for FY 2022-23.
7) Reconciliation of Outward liability between GSTR 1 and GSTR 3B and books: Compile and reconcile the amount of taxes paid in GSTR 1 and GSTR 3B filed during the FY 2022-23 with books of accounts and pay the tax if there is any shortfall vide filing DRC 03 to avoid the litigation and penalty.
8) Reconciliation of ITC between books and GSTR 3B and GSTR 2B: Prepare the yearly reconciliation of ITC accounted in books and ITC availed in GSTR 3B during the FY 2022-23 and reconcile the same with GSTR 2B. If transactions are not populated in GSTR 2B, the taxpayer should follow up with suppliers to furnish/report transactions in their GSTR 1 with payment of taxes in GSTR 3B. Further if ITC has been availed and the transactions not reflected in GSTR 2B then ITC should be reversed.
Instant Finance Updates -Telegram Channel
9) Reversal of ineligible ITC: Identify the ineligible ITC u/r 42,43, etc. (Blocked credit/ ITC on exempt supplies) already availed in GSTR 3B of the FY 2022-23 and reverse/pay the same along with interest thereon to avoid the litigation and demand of interest & penalty in future. Further, note that no interest leviable on reversal of wrongly availed credit but not utilized.
10) Reversal of ITC if Payment not done to suppliers within 180 days: Prepare and Review that any payment to suppliers is not pending beyond 180 days from the date of issuance of supplier's invoice to avoid reversal of ITC u/s 16(2).
11) Payment of RCM: Taxpayer should check and rework RCM liability as per books of accounts with RCM paid in GSTR 3B. Further, RCM as per GSTR 2B should be checked.
25/03/2023
Negative Values in Table 4 of GSTR-3B:
1- NN 14/2022 – CT has notified few changes in Table 4 of Form GSTR-3B for enabling taxpayers to report correct information regarding ITC availed, ITC reversal and ineligible ITC in Table 4 of GSTR-3B.
2- The net ITC is to be reported in Table 4(A) and ITC reversal, if any, is to be reported in Table 4(B) of GSTR-3B.
3- Currently in GSTR-3B, CN is being auto-populated in Table 4B(2), as ITC reversal. Now in view of the said changes, the impact of credit notes are also to be accounted on net off basis in Table 4(A) of GSTR-3B only.
4- The impact of credit note & their amendments will now be auto-populated in Table 4(A) instead of Table 4(B) of GSTR-3B .
5- In case the value of credit notes becomes higher than sum of invoices and debit notes put together, then the net ITC would become negative and the taxpayers will be allowed to report negative values in Table-4A.
6- Taxpayer can now enter negative values in Table 4D(2) of GSTR-3B.
24/03/2023
FY 24 Budget amendment Is proposing that any capital gain made on investments made after April 1, 2023 in Non Equity MFs ( Funds which have more than 36 % investment in debt ) will not be eligible for Long Term Capital Gains benefits. Gains from Debt MFs on investments made after April 1,2023 will only have Short Term Capital Gains taxable at slab rates as applicable irrespective of the holding period. Please note all investments made before March 31,2023 will continue to enjoy LTCG and Indexation benefits. We recommend clients to fill Fixed Income Investment allocation before March 31,2023 to take advantage of LTCG and Indexation. Existing Investments in fixed income fund should be continued as Long as possible as it will attract concessional LTCG tax rate. This proposal will need to be approved by the Parliament today 24th March 2023 for becoming law. This is our initial impression based on the draft amendments circulated. We will keep you informed as more details will be available.
The Central Government has given the extension by declaring the services of the industry engaged in food stuffs to be a public utility service for a further period of six months with effect from 28th February, 2023.
The Central Government had earlier declared the Food stuffs industry to be public utility service for the purposes of the Industrial Disputes Act, 1947 for a period of six months with effect from 28th August, 2022 vide notification of the Government of India in the Ministry of Labour and Employment number S.O. 4050(E), dated the 30th August, 2022.
RBI asks banks to keep branches open till March 31 for annual closing : The Reserve Bank of India (RBI) on Tuesday directed banks to keep their branches open till working hours of March 31, 2023, a press release stated. With the financial year 2022-23 ending, the annual closing of accounts is scheduled for March 31. In a note to all agency banks, the RBI said that all government transactions done by agency banks for 2022-23 must be accounted for within the same financial year. "Accordingly, all agency banks should keep their designated branches open for over the counter transactions related to government transactions upto the normal working hours on March 31, 2023," stated the RBI notification. - economic times.
Bank of Baroda-backed IndiaFirst Life Insurance gets Sebi green light to IPO : Bank of Baroda-promoted IndiaFirst Life Insurance Company has received the approval from capital market regulator Sebi to float a public issue. The IPO will comprise fresh issuance of shares worth Rs 500 crore, and an offer-for-sale of 14.12 crore equity shares by selling shareholders. Promoters Bank of Baroda and Carmel Point Investments India are going to offload 8.9 crore equity shares and 3.92 crore shares, respectively, through an offer-for-sale. Public shareholder Union Bank of India is also going to sell 1.3 crore shares through the OFS. The life insurance company is expected to raise Rs 100 crore from the pre-IPO placement, before the filing of red herring prospectus with the ROC. If the said pre-IPO placement is undertaken, then accordingly the issue size may get reduced. - moneycontrol.
23/03/2023
IDFC to complete merger with IDFC First Bank by March-end : IDFC Limited said that it has completed all stages of ‘Corporate Simplifications.’ The next step is the amalgamation with IDFC First Bank, which is expected to be completed by the end of FY23. “We propose to complete aforesaid Amalgamation during the financial year barring unforeseen circumstances,” IDFC informed the exchanges. Towards this step, the board of IDFC and IDFC Financial Holding, at their respective meetings on March 18, approved the appointment of Chartered Accountant SSPA & Co. as a registered valuer for recommendation of fair share exchange ratio. - business line
IDFC hires Axis Capital for fair opinion on share exchange ratio for merger with IDFC First : IDFC Ltd and IDFC Financial Holding Company Ltd on March 21 said they have appointed Axis Capital Ltd for the fairness opinion on share exchange ratio for merger with the bank. They have completed all stages of corporate simplifications. “The next step is the amalgamation with IDFC First Bank Limited,” the company said in an exchange filing. "We propose to complete the amalgamation in this financial year, barring unforeseen circumstances." - moneycontrol.
Indian banks can endure global banking turmoil fallout-S&P : Indian lenders are capable of enduring any potential contagion effects emanating from the U.S. banking turmoil and UBS's recent takeover of embattled Swiss lender Credit Suisse given their manageable exposures to their global counterparts, S&P Global Ratings said on Tuesday. "Strong funding profiles, a high savings rate, and government support are among the factors that bolster the financial institutions we rate," the rating agency said. S&P also said Indian banks had sufficient buffers to withstand losses on their sizable government securities portfolio due to rising interest rates. The Reserve Bank of India has increased the policy repo rate by 250 basis points since May last year.Analysts have said that Indian banks are now in a better position to withstand stress given their current capital levels and healthy asset quality. - economic times
Outward remittances under RBI's LRS in April-January surpass FY22 : Aided by international travel, outward remittances under the Reserve Bank of India’s (RBI’s) liberalised remittance scheme (LRS) during the April-January period of FY23 has already surpassed the FY22 figure, which was the highest ever in any financial year. According to data released by the Reserve Bank of India (RBI), in its monthly bulletin for March, outward remittances under the scheme stood at $22.08 billion during the April–January period.In January 2023 alone, the amount remitted overseas totalled $2.72 billion. This is the highest amount remitted under the scheme in a month during the current financial year. In FY22, Indians had remitted a little over $19.61 billion overseas under RBI’s LRS scheme, which is an all-time high. - Business Standard.
22/03/2023
Credit Suisse's discounted sale a signal for all bankers: Kotak : Asia's richest banker Uday Kotak Monday pointed to Credit Suisse's garage-sale valuations - a $3-billion takeover of a $600-billion balance sheet - to warn his counterparts about building size without rigorous risk assessment, underscoring the enduring salience of prudence in the global lending industry that has seen rates climb 5 percentage points in the US in about a year. "Credit Suisse sold to UBS for $3 billion, (a) 60% discount to stock value at Friday closing," Uday Kotak tweeted. "(About) $600-bn balance sheet sold for $3-bn equity value. (About) $17 bn of AT1 bonds written off. A signal for all bankers and stakeholders - when risk-return matrix is overtaken by obsession with size." - economic times.
Increase in banknotes in circulation: Union finance minister Nirmala Sitharaman stated:“ As per Annual Reports of the Reserve Bank of India (RBI), the total value of ?500 and ?2000 denomination banknotes in circulation as on end-March 2017 and as on end-March 2022 was ?9.512 lakh crore and ?27.057 lakh crore.” She further said that “no instructions have been given to banks for not filling ?2000 notes in Automated Teller Machines (ATMs)” and added that “banks make their own assessment of amount and denominational requirement for ATMs on the basis of past usage, consumer requirement, seasonal trend, etc. The minister further said that “as per RBI Annual Reports, the indent for supply of ?2000 denomination banknotes has not been placed from 2019-20 onwards.”
Increase in Smuggling: The total number of cases were 4,784 in 2019-20. They then dipped to 2,032 in 2020-21 before inching up to 2,236 in 2021-22. In 2022-23 (up to February 2023), the number has already reached 4,151. The data indicated that most gold smuggling is detected at the airports. The statement said that while smuggling of gold has increased, that of silver has dropped sharply. silver.”The minister further said, “The involvement of cabin crew/ airport staff has been noticed in some cases of attempted smuggling of gold” and that “action is taken against such persons in accordance with law.”The data provided by the finance ministry revealed that when it came to “the sources where gold smuggling was identified”, there has been a marked increase in both the number of cases and the quantity of gold that has been seized.
Overseas Citizen of India (OCI) Card holders can also get Aadhaar provided they have stayed for 182 days or more in the last 12 months from the date of application.
21/03/2023
Restaurants can levy GST on service charges if supplier charges & customer pays voluntarily:Replied by Govt in Loksabha Question Hour 20.3.23
Question
(a) whether restaurants are entitled to charge GST on service charge voluntarily paid by the customer and if so, the details thereof and the provision and the slab under which GST is charged; and
(b) whether GST Council or the Government has given any permission to levy GST on service charge voluntarily paid by the customer and if so, the details thereof?
ANSWER
MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)
(a) & (b): As per section 9 of the CGST Act, 2017, GST is levied on supply of goods or services on the value as determined under section 15 of the CGST Act, 2017. According to section 15 of the CGST Act, 2017, any amount charged by the supplier for anything done by the supplier in respect of supply of goods or services forms part of the value of service.
Supply of restaurant service other than at hotels/premises having room tariff above Rs 7500, is taxed at the rate of 5% without Input Tax Credit (ITC) and supply of restaurant service at hotels having room tariff above Rs 7500 per day is taxed at 18% with Input Tax Credit (ITC).
Demat accounts to be frozen if nominee not added by 31st March, 2023: The last date for nomination with regard to demat accounts is March 31, 2023 and investors not meeting the deadline will see trading and demat accounts frozen for debits. The deadline for making nominations was supposed to be March 2022, but SEBI (Securities and Exchange Board of India) had extended the date by a year. The decision to extend the deadline was taken after representations and feedback from various stakeholders. In July 2021, SEBI had asked all existing eligible trading and demat account holders to provide a choice of nomination.
SEBI issued Circular No.: SEBI/HO/MIRSD/RTAMB/CIR/P/2021/601 dated 23rd July, 2021.
For existing investors who have already provided the nomination details prior to the circular issued in July 2021, re-submission of nomination details is optional. Further, existing investors who have not submitted nomination details to date and intend to submit their nomination or opt out of nomination will be allowed to do so by way of two-factor authentication login on trading platforms for stock brokers or depository participants providing such service.
The details previously required, like mobile number, e-mail ID and identification details of the nominee/guardian of the minor nominee, have been made optional.
Here are the steps to add nominee to demat account:
Step 1: Login to your demat account
Step 2: Navigate to 'My nominees' under the profile segment and you will be redirected to the nominee details page
Step 3: You can choose 'add nominee' or 'opt-out'.
Step 4: Fill the nominee details and upload ID proof of the nominee. After uploading the documents, enter the nominee share in 'percentage' you would like to assign to the nominee
Step 5: E-sign the document with Aadhaar OTP
Step 6: The details of the nominee will be then processed for verification and added to the demat account within 24-48 hours.
PENALTY IMPOSED FOR NOT NUMBERING BOARD MEETING & PAGES IN MINUTE BOOK: Kudos Finance And Investments Private Limited.
In terms provisions of section 118 (10) Companies Act, 2013, “Every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980 (56 of 1980), and approved as such by the Central Government;
b) In terms of the provisions of section 118(11) of the Act, If any default is made in complying with the provisions of this section in respect of any meeting, the company shall be liable to a penalty of twenty-five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees; in the instance case, as per examination of records it is seen that the company has not numbered Board Meeting and the pages in the minute book of the company and Minutes book are not signed by the Chairman, further, the minute book of the Company is not paginated at all.
GST Department to scrutinize IT, MCA data to identify entities not paying taxes: The GST department will soon begin analysing ITRs filed by businesses and professionals and also MCA filings to ascertain if the entities are adequately discharging their GST liability and widening the taxpayer base. The data analysis will focus on those entities which are not exempt and are required to register under the GST and file returns, either monthly or quarterly. They will be doing data triangulation based on the information available with the I-T department.
20/03/2023
Gst ADVISORY for banquet halls, marriage gardens and hotels:
It has come to the notice of the Department that several banquet halls, farm houses, marriage gardens, and hotels registered under Delhi GST are not reporting or under reporting their business transactions/turnover and hence not paying due
GST thereon. Moreover, many of such entities are running business activities without having registration under GST despite liable to obtain the same.
Therefore, it is advised that all such banquet halls, farm houses, marriage gardens and hotels must take registration under GST and report their turnover in a correct and transparent manner and pay GST due thereon as per law. Non-compliance shall attract penal action in accordance with the relevant provisions of DGST Act, 2017 and Rules made there under.
The Minister of State for Finance Pankaj Chaudhary in Rajya Sabha dated March 14, 2023, has clarified that there is no restriction on Professionals for obtaining GST Registration if they are operating from residential premises.
Questions:
(a) whether it is a fact that Management consultants, Architects and other professionals operating from their homes are not allowed to get GST numbers for working from the residential premises;
(b) if so, the details thereof;
(c) whether it is a fact that post COVID-19 pandemic, most of senior professionals and consultants have started their professional activities under the Work from Home (WFH) concept; and
(d) if so, the steps Government is contemplating to allow all Professionals and Management Consultants to work from home and allot GST numbers?
Answers:
(a) to (c) The Central Goods & Services Tax Act, 2017 does not restrict GST registration of Management consultants, Architects and other professionals operating from residential premises, due to covid-19 pandemic or otherwise.
(d) Does not arise in view of above.
19/03/2023
Centralises processing of striking of names of certain companies wef 01.04.2023 vide Mca notification dated 17.3.2023; the move is to crunch timeline for exits. MCA has now established a dedicated unit — Centre for Processing Accelerated Corporate Exit (C-PACE) in Indian Institute of Corporate Affairs, IMT Manesar, Gurugram. The government is planning to ease the winding-up rules for start-ups by facilitating exits in 100 days, sources in the Ministry of Corporate Affairs told TNIE. At present, corporate exits take anywhere between one-two years, the aim is to make it 6 months for all corporates and 100 days for start-ups. As per information released by the insolvency regulator, 34% of the ongoing voluntary liquidation processes have taken more than two years and 52% have taken more than one year.
Key changes in income tax act/ rules effective in financial year 2023-24:
1. The new tax regime is now the standard system.
2. New Tax Regime to Result in TDS Reduction for Taxpayers with Salary Income.
3. TDS on EPF Withdrawal Without PAN is to be charged at 20%.
4. Tax exemption on life insurance proceeds limited to premiums below Rs 5 lakh.
5. Taxpayers to See Higher Capital Gains on Sale of Property from this Financial Year.
6. Exemption Limit for Capital Gains Reduced to Rs. 10 Crore.
7. No Capital Gains Tax on Conversion of Physical Gold into
EGR by SEBI-Registered Vault Managers Starting April.
8. Tax Implications of Gift Received by RNOR from Resident.
9. New Reduced Income Tax Rates for Manufacturing Co-operatives and Non-Manufacturing Income.
10. New Limit for Cash Transactions by Agricultural Credit
Societies and Rural Development Banks.
11. TDS on lottery and horse race winnings to apply to annual amounts over Rs 10,000, not transaction-wise.
12. Co-operative Societies get TDS Relief.
13. TDS relief for non-residents.
14. Amendments to Section 206AB and 206CCA exclude certain non-filers from higher TDS deductions.
15. Exemption of TDS on interest payments for listed securities to be withdrawn from April.
Delhi High Court allows Assessee’s writ petition, quashes the demand arising from TDS by Kingfisher Airlines (Assessee's employer) which was not duly deposited; Holds that the Assessee cannot be called upon to pay the tax which has been deducted at source from his income, even though not deposited by his employer, under Section 205 read with CBDT Instruction dated 01.06.2015; Further holds that the said demand cannot be adjusted against the future refund payable to the Assessee, as it will amount to indirect recovery of tax and grants Assessee the refund of Rs. 1.94 Lacs due to him for Assessment year 2015-16; - [Sanjay Sudan v. ACIT [TS-93-HC-2023(DEL)] – Date of Judgement : 17.02.2023 (Del.)]
Why has Credit Suisse reached the crisis point?
1. Credit Suisse ranks among the world's largest wealth managers and crucially it is one of 30 global systemically important banks, whose failure would cause ripples through the entire financial system.
2. The sell-off in Credit Suisse's shares began in 2021, triggered by losses associated with the collapse of investment fund Archegos and Greensill Capital.
3. In January 2022, Antonio Horta-Osorio resigned as chairman for breaching COVID-19 rules, just eight months after he was hired to fix the ailing bank.
4. In July, new CEO and restructuring expert Ulrich Koerner unveiled a strategic review - but failed to win over investors. An unsubstantiated rumour on an impending failure of the bank in the autumn sent customers fleeing.
5. Credit Suisse confirmed in February that clients had pulled 110 billion Swiss francs ($119 billion) of funds in the fourth quarter while the bank suffered its biggest annual loss of 7.29 billion Swiss francs since the financial crisis.
6. On Wednesday, Saudi National Bank, the bank's top backer, told reporters it could not give more money to the bank as it was constrained by regulatory hurdles, while saying it was happy with the bank's turnaround plan.
7. Credit Suisse was thrown a $54 billion lifeline by the Swiss central bank on Thursday to shore up liquidity after a slump in its shares and bonds intensified fears about a global banking crisis
The way forward: The Swiss National Bank and Swiss regulator FINMA have told their international counterparts they regard a deal with UBS Group as the only way to prevent a collapse in confidence in Credit Suisse Group.
A new report has found that 186 banks in the US are at risk of failure due to rising interest rates and a high proportion of uninsured deposits. The research, posted on the Social Science Research Network titled 'Monetary Tightening and US Bank Fragility in 2023: Mark-to-Market Losses and Uninsured Depositor Runs?' estimated the market value loss of individual banks' assets during the Federal Reserve's rate-increasing campaign. Assets such as Treasury notes and mortgage loans can decrease in value when new bonds have higher rates. The study also examined the proportion of banks' funding that comes from uninsured depositors with accounts worth over $250,000. If half of the uninsured depositors quickly withdrew their funds from these 186 banks, even insured depositors may face impairments as the banks would not have enough assets to make all depositors whole. This could potentially force the FDIC to step in, according to the paper. However, it is important to note that the research does not consider hedging, which may protect many banks against rising interest rates. S-BT
18/03/2023
Recent Messages sent by the Income Tax Department:
Income Tax Department has received information about certain significant financial transactions relating to FY 2022-23 (AY 2023-24). Please view transactions under e-Campaign tab on Compliance Portal and remember to pay appropriate Advance Tax.
How do we address this message?
1. The authorities are reminding us to pay appropriate Advance Tax by 15th March keeping in mind the income earned and taxable keeping in view the transactions entered into.
2. We are also advised to reconcile the transactions shown in Annual Information Statement (AIS) with the advance tax payment.
3. In the e campaign homepage on the compliance portal, we can see the significant transactions will be seen. We can provide feedback in AIS and generate acknowledgement for the same.
Government has amended rules under the anti-money law, making it mandatory for banks and financial institutions to record financial transactions of politically exposed persons (PEP). Also, financial institutions or reporting agencies will be required to collect information about the financial transactions of non-profit organisations or NGOs under the provisions of the Prevention of Money Laundering Act (PMLA).
Taxpayers will get relief from recovery if they file a declaration of their intent to appeal against the order of lower authorities, even as the GST Appellate Tribunal is yet to be constituted, ruled the Bombay High Court. Once the declaration is put on record, there would be no recovery, the court ordered.
Companies continue to face technical challenges in using the MCA upgraded Version 3 portal for corporate filings, despite the government's efforts to address such problems. Industry associations may seek physical filings of more forms until the portal is fully functional.
16/03/2023
The Ministry of Corporate Affairs (MCA) through three notifications had notified that every company using accounting software must use software that records an audit trail of each and every transaction and creates an edit log of each change made in the books of account. The software must also ensure that the audit trail cannot be disabled. By the notification dated March 31, 2022, in the proviso to sub-rule (1) of rule 3, for the figures, letters and words “1st day of April, 2022”, the figures, letters and words “1st day of April, 2023” was substituted. In short, moving the effective date of implementation of the same to 1st April of this year. According to the notifications, every company using accounting software must use software that records an audit trail of each and every transaction and creates an edit log of each change made in the books of account. The software must also ensure that the audit trail cannot be disabled. The provisions make a major amendment to the Companies (Accounts) Rules, 2014. The stakeholders are requested to migrate to or ensure that the accounting software used by the company meets the above requirements with effect from April 1, 2023.
The Unique Identification Authority of India (UIDAI) has decided to allow residents to update documents in their Aadhaar online free of cost, a people-centric move that will benefit millions of residents. As part of Digital India initiative, the UIDAI took the decision and is urging residents to get the benefit of free document update facility on myAadhaar portal. The free service is available for the next three months, i.e., March 15 to June 14, 2023. It is important to note that this service is free only on myAadhaar portal and will continue to attract a fee of Rs 50 at physical Aadhaar centres, as in the case earlier.
The UIDAI has been encouraging residents to upload Proof of Identity and Proof of Address (Pol/Pod) documents to revalidate their demographic details, especially if Aadhaar was issued 10 years back and never got updated. This will help in improved ease of living, better service delivery and enhances authentication. If there is a need to change demographic details (Name, Date of Birth, Address, etc), the residents can use regular online update service, or may visit nearest Aadhaar centre. In such cases normal charges will apply. As per Aadhaar Enrolment and Update Regulations, 2016; Aadhaar number holders may, on completion of every 10 years from the date of enrolment for Aadhaar, update their supporting documents in Aadhaar, at least once, by submitting POI and POA documents, so as to ensure continued accuracy of their information.
Residents may login on https://myaadhaar.uidai.gov.in/ using their Aadhaar number.
Consequence of not linking PAN with Aadhar by 31st March 2023: if a taxpayer having PAN and who is eligible to obtain Aadhaar, does not link his PAN with Aadhaar on the Income Tax portal, within 31.03.2023 he/ she shall be liable to all the consequences under the Act, in addition to PAN remaining inoperative as per Sec 139AA of the Income Tax Act. Rule 114AAA of the Income-tax Rules provides that if PAN of a person has become inoperative, he will not be able to furnish, intimate or quote his PAN and shall be liable to all the consequences under the Act for such failure.
Following are the possible consequences:
1. The person shall not be able to file return using the inoperative PAN.
2. Pending returns will not be processed.
3. Pending refunds cannot be issued to inoperative PANs.
4. Pending proceedings as in the case of defective returns cannot be completed once the PAN is inoperative.
5. Tax will be required to be deducted at a higher rate as PAN becomes inoperative
Checking GST Registration on Official Website:
To check the validity of the GST number, visit the official GST website at https://services.gst.gov.in/services/searchtp.
Enter the 15-digit GST number and fill out the captcha. If the number is valid, you can view information about the restaurant. But there are a few things you need to look out for.
When you view information about the restaurant, check the “GST/UIN Status.” If it says “Active,” then it’s okay to pay the GST fee.
If it says “Suspended,” do not pay the fee.
Also, check the “taxpayer type.” If it’s “Regular,” you can pay the fee, but if it’s “Composition,” then do not pay the fee.
If the restaurant is charging you GST fees without a valid GST registration, then you do not need to pay that amount. If you see the charges on your bill but cannot see the 15-digit GST number, you should not pay the fee.
What to Do if You’re Forced to Pay:
If the restaurant insists that you pay the GST fees, call the GST helpline customer care number at 18001200232 and register a complaint regarding the restaurant.
Remember, if the GST registration is invalid or suspended, or if the restaurant has a “Composition” taxpayer type, you should not pay the fee.
15/03/2023
Clarification about applicability of Plastic Waste Management
Rules, 2016, as amended from time to time, on imported goods.
1. The importers of plastic packaging, the importers of various items such as primary products, chemicals, machinery, textiles, articles etc. which are not plastic packaging but are coming packed in plastic packaging are also required to take said EPR registration.
2. Importers of goods, which are not directly associated with plastic packaging but their goods are coming wrapped or packed in plastic packaging such as machinery, textile, etc., are required to upload the PR registration in e-sanchit at the time of filing of the Bills of Entry to avoid any query on this issue.
3. Goods shall not be kept on hold by the Customs Authorities and the consignment shall be released and the officer giving Out of Charge shall maintain the record of such consignments in the format attached to this Standing Order, to enable monitoring of the Importer having eventually obtained the EPR registration or otherwise.
4. The Deputy/Assistant Commissioner (Appraising General Unit) shall forward the complete list of consignments cleared by Kolkata Customs (Port) in the previous month, where PR registration was not available with the Importer at the time of clearance of goods but application had been filed on the CPCB Portal, to the CPCB. This shall be completed by the Deputy/Assistant Commissioner (Appraising General Unit) by 20th of every month.
Credit Suisse Group has been suspended from trading after shares plummeted 20% to a record low on Wednesday.
Shares fell below two Swiss francs (180p) amid market contagion fears following SVB’s collapse.
Saudi National Bank’s chairman (Credit Suisse’s largest investor) Ammar Al Khudairy ruled out injecting further funds into Credit Suisse (SIX:CSGN) if there was another call for additional liquidity. The U.S. Treasury Department is actively reviewing the U.S. financial sector's exposure to Credit Suisse (SIX:CSGN) Group AG after the bank's shares fell to a record low.
Indian banks including Axis Bank, Kotak Mahindra Bank, ICICI Bank, and HSBC have set up crack teams to help startups move their funds from collapsed SVB accounts to their branches in GIFT City, Gujarat.
Extending help:
1. The banks have set up their International Financial Services Center Banking Unit (IBU) in GIFT City to cater to non-residents and foreign entities.
2. Axis Bank exec Ganesh Sankaran said B2B ecommerce entities, large online car marketplaces, and agri/foodtech startups have expressed interest in moving funds to GIFT City.
3. Several fintechs including Razorpay, GetVantage, Kluband Recur Club, Salt.Pe etc have also offered a line of credit to manage expenses.
14/03/2023
The collapse of the SVB would've been an "extinction-level event" for Indian SaaS companies with SVB accounts had US authorities not helped save around Rs 20,000 crore of their deposits. Founders and investors YourStory spoke to suggested there was widespread panic in the ecosystem.
The panic:
1. At least 600 SaaS startups headquartered in the US with roots in India, or India-based, had bank accounts with the SVB.
2. Some of them have either their entire chunk of money lying in SVB accounts or a significant portion tied up at the shuttered bank.
Advisory: Investors and founders across the board advised not to put all eggs in one basket and add controls to assess financial risks.
The income tax department has identified around 68,000 cases for e-verification due to underreporting of income in tax returns in comparison with the Annual Information Statement for the fiscal year 2019-20, according to sources. The e-verification process involves notifying taxpayers about the mismatch in the Annual Information Statement (AIS) of their financial transactions and the Income Tax Returns filed. About 56% of the cases or 35,000 cases have already been resolved satisfactorily by the taxpayers by either filing an updated tax return or replying to the notice. The remaining 33,000 cases have not yet received any response. Taxpayers have until March 31, 2023, to file updated tax returns for income earned in the 2019-20 fiscal year.
13/03/2023
The FDIC created a new bank, the National Bank of Santa Clara, to hold the deposits and other assets of the failed one. On Friday, Silicon Valley Bank, a lender to some of the biggest names in the technology world, became the largest bank to fail since the 2008 financial crisis. The move put nearly $175 billion in customer deposits under the control of the Federal Deposit Insurance Corp. Here’s what we know so far about this developing story. Regulators take over the bank. The California Department of Financial Protection and Innovation shut down Silicon Valley Bank on Friday, less than two days after the bank tried to persuade clients not to pull their money over concerns it was running low on available cash. The regulator appointed the Federal Deposit Insurance Corp. as the receiver. Flush with cash from high-flying startups, Silicon Valley Bank bought huge amounts of bonds more than a year ago. Like other banks, Silicon Valley Bank kept a small amount of the deposits on hand and invested the rest with the hope of earning a return.
That had worked well until the Federal Reserve began raising interest rates last year to cool inflation. At the same time, startup funding started to dry up, putting pressure on many the bank’s clients — who then began to withdraw their money. To pay those requests, Silicon Valley Bank was forced to sell off some of its investments at a time when their value had declined. In its surprise disclosure on Wednesday, the bank said it had lost nearly $2 billion.
Canadian banks erase $19.7 billion in value from Canada’s top banks in the last four days on SVB contagion. Some of the nation’s biggest banks, including Bank of Nova Scotia, Bank of Montreal and Toronto-Dominion Bank fell more than 2 per cent on Friday. With banking equities far and away the largest sector by weighting of the S&P/Toronto Stock Exchange Composite Index, Canada’s main stock benchmark slumped more than the S&P 500 as the biggest U.S. bank failure in more than a decade roils the market. Large Canadian banks have acquired regional U.S. banks in recent years, increasing their exposure to the banking fallout from the failure of Silicon Valley bank, which entered receivership Friday. SVB Financial Group had opened a Canadian office in 2019 and listed e-commerce darling Shopify Inc. as a client. Shopify was among the biggest decliners in Toronto on Friday.
Signature Bank's closure marks the third-largest U.S. bank failure. New York state regulators on Sunday shut down Signature Bank
, a big lender in the crypto industry, in a bid to prevent the spreading banking crisis. We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority,” the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. said in a joint statement Sunday evening. Signature is one of the main banks to the cryptocurrency industry, the biggest one next to Silvergate, which announced its impending liquidation last week. It had a market value of $4.4 billion as of Friday after a 40% sell-off this year, according to FactSet. As of Dec. 31, Signature had $110.4 billion in total assets and $88.6 billion in total deposits, according to a securities filing. The FDIC’s deposit insurance fund will be used to cover depositors, many of whom were uninsured due to the $250,000 cap on guaranteed deposits. While depositors will have access to their money, equity and bondholders at both banks are being wiped out, a senior Treasury official said.
Financial regulators said Sunday night depositors of the failed Silicon Valley Bank will have access to all of their money starting Monday, March 13, while announcing new facilities to backstop deposit withdrawals across the banking system amid fears of contagion following SVB's shock failure last week. Depositors will have access to all of their money starting Monday, March 13," the statement added. "No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer." The Fed is not purchasing securities at banks only lending against their book value. Fed officials stressed no bank is being bailed out, but banks are instead receiving longer-term liquidity at a higher valuation and lower risk.
HSBC has agreed to buy Silicon Valley Bank’s subsidiary in the United Kingdom for 1 pound — just over $1 — under a deal facilitated by the British government and the Bank of England following the U.S. lender’s collapse. Under the terms of the agreement, HSBC’s U.K. subsidiary will finance the acquisition of Silicon Valley Bank UK Limited, which is expected to be completed immediately. The deal excludes all assets and liabilities of the parent company, SVB.
The U.K. deal comes after the Biden administration moved to protect SVB customers from losses, announcing Sunday night that depositors would have access to all their money on Monday morning, approving an extraordinary intervention aimed at averting a crisis in the financial system.
12/03/2023
Last date for Final instalment of advance tax for the financial year 2022-23 is 15th March 2023. Advance tax, also called pay-as-you-earn tax, is tax that is paid in advance, in instalments, on certain dates that are fixed by the Income Tax Department. The taxpayers are expected to deposit the advance tax in 4 instalments, the timeline states 15th June for 15%, 15 September for 45% of the advance tax, 75% by 15 December while 100% of the advance tax is to be deposited till 15 March. The tax can be paid through the e-payment method via a net banking facility in the authorized banks. In case the tax not paid on time, the penalty will be charged under section 234B and 234C of income tax.
Singapore has announced an increase in the minimum investment amount required for individuals seeking permanent residency through the Global Investor Programme (GIP). The new rules will come into effect from 15th March, 2023, and require applicants to invest at least S$10 million in a business or S$25 million in an approved fund. Those who wish to establish family offices must deploy and maintain at least S$50 million in any of the four investment categories.
1. The GIP programme enables eligible global investors to obtain permanent residency status in Singapore through three investment options. Each of these options has additional requirements for PR holders to get their re-entry permit (REP) renewed after five years.
2. Option A is to invest in a new or existing business in Singapore, with the new minimum investment amount being S$10 million, inclusive of existing paid-up capital.
3. Option B is to invest in a GIP-select fund, shortlisted by EDB, with a minimum investment amount of S$25 million.
4. Option C is to establish a Singapore-based single family office with Asset Under Management (AUM) of at least S$200 million, of which at least S$50 million must be deployed in any of the four categories, within 12 months of final approval.
5. Additionally, certain other conditions apply for renewals after five years in terms of hiring of employees.
6. According to the Singapore Economic Development Board (EDB), the aim is to selectively appeal to those who can make a greater economic impact and “be more rooted to Singapore” amidst competition from other jurisdictions seeking to attract high-calibre business owners and owners of capital.
The West Bengal government has decided that farmers will not have to pay income tax on any agricultural product for the next two fiscal years, Finance Minister Chandrima Bhattacharya said Monday. The state government has also announced the withdrawal of two types of cess on raw tea leaves for the period. Presenting the Finance Bill in the assembly, Bhattacharya said the current exemption period for agricultural income tax ends on March 31.
11/03/2023
The Silicon Valley Bank crisis has taken a new turn. On Friday, the California Department of Financial Protection and Innovation issued a closure order for the bank, appointing the Federal Deposit Insurance Corporation (FDIC) as receiver. This move has served a body blow to the many Indian startups that had hoped to withdraw their funds from the bank ahead of a potential crash.
1. Trouble began on Wednesday when the bank’s parent company SVB Financial Group announced the sale of $21 billion of securities, adding that it was preparing to sell $1.75 billion worth of shares to bolster its finances. Widespread panic and questions around its insolvency resulted in several investors advising portfolio companies to move their money out of SVB accounts.
2. Now, things look bleak. Ahead of the closure, the FDIC created the Deposit Insurance National Bank of Santa Clara (DINB) in order to take control of all insured deposits of SVB. In a statement, it said insured deposits will be accessible to customers on Monday, March 13, while ‘uninsured depositors’ will get a ‘receivership certificate’ for amounts higher than $250,000.
3. The sudden collapse of SVB has thousands of tech startups wondering what happens now to their millions of dollars in deposits, money market investments and outstanding loans. Most importantly, they’re trying to figure out how to pay their employees.
4. The Bank of London is considering a rescue bid for the UK arm of collapsed Silicon Valley Bank. The British bank has appointed investment bank Perella Weinberg Partners to advise it on its interest in SVB UK.
The Hon’ble Allahabad High Court in Vriddhi Infratech India Pvt. Ltd v. Commissioner, Commercial Tax and Ors. [Writ Tax No. – 4 of 2022 dated February 23, 2023] has set aside the order passed by the Revenue Department, on the grounds, that the Revenue Department and the Appellate Authority have committed the misreading of FORM GSTR-09 filed by the assessee. Directed the Revenue Department to adjust the GST amount deposited by the Petitioner.
Facts:
Vriddhi Infratech India Pvt. Ltd. (“the Petitioner”) was issued a Notice (“the Notice”) dated June 23, 2020 as per Section 61 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) claiming that the Petitioner’s annual return, filed in the FORM GSTR-09 dated January 30, 2020, showed a turnover of INR 129.52 lakhs, which did not match its bank statement.
The Petitioner has challenged the Order-in-Original dated June 4, 2021 (“the OIO”) passed, as per Section 61 of the CGST Act and Section 74 of the CGST Act and the Order-in-Appeal (“the OIA”) dated October 26, 2021 on the grounds, that the GST amount which could not be deposited in the Financial Year (“F.Y.”) 2017-18, but in June, 2018, to be adjusted in the F.Y. 2018-19.
The Petitioner contended that, the very basis of the Notice is wrong, as its FORM GSTR-09 shows the turnover amount of INR 129.52 lakhs with regard to supply made to unregistered persons under the B2C Category and the Revenue Department (“the Respondent”) did not consider the entire form, which at its end shows the total turnover of INR 20,37,13,502.00 lakhs through FORM GSTR-09 in the F.Y. 2017-18.
10/03/2023
Exchange between virtual digital assets and fiat currencies, exchange between one or more forms of virtual digital assets, and the transfer of digital assets will be covered under money laundering laws, the notification said. In the latest step to tighten oversight of digital assets, the Indian government has imposed anti-money laundering provisions on the cryptocurrency sector.
Regulatory steps:
On Tuesday, a Finance Ministry notice revealed that crypto businesses—exchanges, custodians, wallet providers, and others—will come under the Prevention of Money-laundering Act, 2002 (PMLA).
The laws will apply to any exchange between virtual digital assets and fiat currencies; an exchange between one or more forms of virtual digital assets; and the transfer of digital assets.
This move aligns with the global trend of requiring digital-asset platforms “to follow anti-money laundering standards” like banks or stock brokers, Jaideep Reddy, counsel at law firm Trilegal, told Bloomberg.
Cryptocurrency Exchanges are reporting entities under PMLA: Notification. As per the Ministry of Finance Notification dated 7th March, 2023, cryptocurrency exchanges will be “persons carrying on designated businesses or professions” within the meaning of Section 2(1)(sa) of the Prevention of Money Laundering Act.
The crypto exchanges will come within the definition of "reporting entity" within the meaning of Section 2(wa) of the PMLA. As a consequence, crypto exchanges should follow the norms and obligations of other reporting entities likes banks and financial institutions in relation to verification of identities of clients, maintenance of records etc.
The obligations of "reporting entities" are specified in Chapter IV of the PMLA.
The notification issued by the Ministry of Finance brought the following activities under Section 2(1)(sa) of the PMLA :
(i) exchange between virtual digital assets and fiat currencies;
(ii) exchange between one or more forms of virtual digital assets;
(iii) transfer of virtual digital assets;
(iv) safekeeping or administration of virtual digital assets or instruments enabling control over virtual digital assets; and
(v) participation in and provision of financial services related to an issuer’s offer and sale of a virtual digital asset.
Operational Guidance -Amendment to Securities and Exchange Board of India (Buy-back of Securities) Regulations, 2018. Securities and Exchange Board of India (Buy-Back of Securities) (Amendment) Regulations,2023 were notified on February 07, 2023. They shall come into force on 30th day of the date of notification i.e 9th March, 2023. That means all buy-back offers where the Board of Directors of the company approve resolution with respect to Buy-back on or after 9th March, 2023 the above mentioned Regulations shall be applicable.
Following restrictions have been set-out for the companies undertaking buy-back through stock exchange route:
1. The company shall not purchase more than 25% of the average daily trading volume (in value) of its shares or other specified securities in the ten trading days preceding the day in which such purchases are made.
2. The company shall not place bids in the pre-open market, first thirty minutes and the last thirty minutes of the regular trading session.
3. The company’s purchase order price should be within the range of ±1%from the last traded price.
4. Margin Requirement for deposits in Escrow Account the escrow account shall consist of cash and/or other than the cash.
The e-Invoice System of Goods and Services Tax (GST) is set to undergo a major change in the following weeks, after the recent developments of including more IRPs. In a few weeks time, the e-invoice portal will stop accepting 4-digit Harmonic Nomenclature System (HSN) Code and accept only 6-digit HSN Codes. The e-invoice System is for GST registered persons for uploading all the B2B invoices to the Invoice Registration Portal (IRP). The IRP generates and returns a unique Invoice Reference Number (IRN), digitally signed e-invoice and QR code to the user.
After a few weeks of time , the e-invoice System will not accept 4-digit HSN codes. The date for blocking e-invoice generation having HSN code as 4-digits will be intimated shortly in this portal. The Portal further instructed the stakeholders to make necessary changes in your system to report 6-digit HSN codes to e-Invoice Portal and comply with the notification No.78/2020 — Central Tax dated 15th October, 2020
09/03/2023
Maharashtra State Budget: HIGHLIGHTS OF THE BUDGET SPEECH DATED 9TH MARCH, 2023
A. Amnesty Scheme, 2023 for GST
Dept (For Pre-GST Laws):—
1. Complete waiver of the arrears in cases where arrears are
Rs. 2,00,000/- or less per year.
2. Dealers having arrears up to Rs. 50 lakhs or less per statutory order will pay only 20% amount and balance 80% will be waived.
B. Professional Tax
1. Female employees drawing monthly salary up to 25000/-
will be exempted from Profession Tax.
2. The definition of Person with Disability in the Profession Tax Act is proposed to be amended.
C. VAT Rate Changes
Reduction of VAT rate on ATF from 25% to 18% in Mumbai, Pune and Raigad districts.
D. Benefits to the Farmers
1. Farmers to get Rs 12,000 honorarium per year.
2. Only INR 1/- would be required to pay for Peek Vima instead of existing 2% of the premium amount.
3. Free accommodation, lunch and other related facilities provided at Krushi Markets.
4. E-punchanama through mobiles, Drones etc. can be done.
E. Health Insurance Coverage
The coverage of the Mahatma Phule Jan Arogya scheme, a health insurance scheme of the government, has been raised from Rs 1.5 lakh to Rs 5 lakh.
F. Students Scholarship
Rs 1,000 to Rs 5,000 for students of Class 5 to Class 7 Rs 1,500 to Rs 7,500 for students of Class 8 to Class 10 Uniforms will be provided free of charge to students of all categories up to Class 8 in local body and government schools.
G. Unorganised Workers
Social security benefits and welfare schemes will be provided. Maharashtra State Auto Rickshaw Taxi Driver-Owner Welfare Corporation will be established.
H. Gems and Jewellery
State government will soon announce new gems and jewellery policy. State to set up plan in Navi Mumbai.
I. Ration Kit benefits to Poor Citizens
Poor citizens to be provided with Anand Shida (free ration kit) on the occasion of Gudi Padwa and Dr Bhimrao Ambedkar's birth anniversary.
J. Financial Aid for Girl Child - INR 1,00,000/-
Families having yellow and orange ration cards to get Rs 5,000 after birth of child, Rs 4,000 after Class 4, Rs 6,000 after Class 6 and Rs 8,000 after Class 11. Rs 75,000 will be given to the beneficiary girl after she attains the age of 18 years.
K. Benefits for women's
1. Women to get 50% discount in state transport buses.
2. 1% discount on stamp duty.
3. Shakti Sadan', a new scheme to provide shelter to women in distress, liberated from sexual exploitation or facing domestic violence.
L. Hospitals - APLA DHAWAKHANA
700 Apla Dawakhana dispensaries will be started in the entire state in the name of late Balasaheb Thackeray.
Layoffs by US companies over Jan and Feb touched the highest since 2009, with the tech sector accounting for more than a third of the over 180,000 job cuts announced. In Feb alone, layoffs in the US stood at 77,770, over five times higher than the 15,245 job cuts in the previous year.
08/03/2023
Why should you care about unpaid care work? Happy Women’s Day!! Some points to ponder on the occasion of Women’s day:
1. The Organisation for Economic Cooperation and Development (OECD) estimates the value of time spent on unpaid work to be approximately 15% of GDP on average across available OECD countries.
2. Based on time-use survey data in 64 countries that was done by the International Labour Organisation (ILO), estimates show that 16.4 billion hours are spent on unpaid care work every day—this is equivalent to 2 billion people working 8 hours per day with no remuneration.
3. If that care work was valued on the basis of an hourly minimum wage, they would amount to 9% of global GDP, which corresponds to USD 11 trillion.
4. 80 percent of the world’s 67 million domestic workers are women — 90 percent don’t have access to social security, and more than half have no limits on their weekly working hours.
5. A 2017 analysis by the Women’s Budget Group in India has found that if an additional 2 percent of the GDP were invested in the Indian health and care sector, the country could generate 11 million additional jobs, nearly one-third of which would go to women.
6. Central and state governments must actively invest in building care infrastructure and the provision of care services to reduce the burden of unpaid care work on women, enabling their economic participation.
07/03/2023
Bullet points on meeting held on 02.02.2023 under the Chairmanship of Chief Secretary, GNCT of Delhi.
1. Target of Revenue Collection for FY 2022-23 to be Rs. 33,200 Cr. Total VAT collection target to be revised from Rs.5,200 Cr. to Rs. 5,500 Cr.
2. Study of Income Tax Model t o be undertaken to make Department of Trade & Taxes faceless.
3. department to work out integration of RFID Data in consultation with NHAI.
4. Recovery of pending VAT demand to be initiated in coordination with the concerned district authorities (DM/SDM/Tehsildar).
5. Field verification for pending VAT refunds to be done by concerned Tehsildars.
6. Officials to visit states like Karnataka and Maharashtra etc. to study the best practices and their implementation.
7. Informer Scheme be devised and implemented.
8. Disposal of all Pending cases of VAT with Objection Hearing Authority (OHA) be cleared within 03 months.
Sale of gold jewellery and gold artefacts hallmarked with only a six-digit alphanumeric HUID — union identification number — will be permitted from April 1, the government said on Saturday. This means the sale of old hallmarked jewellery with four logos without HUID (Hallmark Identification) number will not be allowed after March 31. Gold hallmarking was voluntary in nature til June 16, 2021. The six-digit HUID number was introduced from July 1, 2021. 256 districts were covered under Mandatory Hallmarking w.e.f 23 June 2021 and 32 more districts covered under Mandatory Hallmarking since June 1, 2022, increasing the number of total districts to 288. Additional 51 new districts with AHCs/OSCs established, whereby total districts covered would increase to 339.
It may be noted that prior to the implementation of the six-digit HUID number, hallmarking of gold jewellery consisted of four marks — BIS logo, purity of the article as well as the logo of the jeweller and Assaying and Hallmarking Centre. Till now, the old hallmarked jewellery with four marks without HUID was also permitted to be sold by the jewellers along with the six-digit HUID mark. More than a year and nine months were given to jewellers to clear their stock of their four mark hallmarked articles. Jewellers who violate the rule could face a penalty of five times the price of the jewellery or one year imprisonment or both.
Saudi Arabia said on Monday (March 6) that it was depositing USD 5 billion in Turkey's central bank. This could be a major boost to Turkey which is attempting to contain inflation and aftereffects of the devastating earthquake. Presidential elections are around the corner in Turkey. The decision, which will shore up Turkey's foreign reserves and help it combat inflation, was made on the order of King Salman and Crown Prince Mohammed bin Salman, it said.
Elon Musk acquired the social media company for $44 billion and became its CEO on 27 October last year. Turkish competition board to fine Elon Musk 0.1% of Twitter's gross income in Turkey. In a statement on Monday, the Turkish Competition Board said that it will impose a fine on Musk as the takeover of the company was made without the board's permission in Turkey. It added that the fine on billionaire Elon Musk will be 0.1 per cent of Twitter's gross income in Turkey in 2022.
06/03/2023
Delhi Airport Customs on rummaging an aircraft utilized for Intl. flight on completion of its subsequent domestic trips at Terminal 2, recovered 4 gold bars affixed below the sink in the washroom valued at Rs 1.95 crore. Gold seized under Section 110 of the Customs Act, 1962.
GSTN has launched the e-invoice registration services through multiple private IRPs at the recommendation of the GST Council. Four private companies viz. ClearTax, Cygnet, E&Y and IRIS Business Ltd were empaneled by GSTN for providing these e-invoice registration services.
India's fiscal deficit for April to January of the current fiscal year came in at ?11.91 lakh crore or 67.8 percent of revised annual estimates.The Centre made an upward revision in its fiscal deficit target for 2022-23 in the 2023 Budget to ?17.55 lakh crore from ?16.61 lakh crore.
Delhi High Court in a case has held that the revision powers conferred under section 264 of the Income-tax Act, 1961, on the CIT were very wide and could give relief to the taxpayer in a case where the taxpayer detected mistakes due to which he was over-assessed. Further, it held that when a substantive law confers a benefit on the taxpayer under a statute, it could not be taken away by the adjudicatory authority on mere technicalities. Furthermore, it held that the Tax Officer should not take advantage of any error or mistake that a taxpayer committed. – [TS-163-HC-2016(Delhi)]
Government plans to rope in more industry partners to increase the pace of training under its flagship SAMARTH scheme for skill development in the textile sector. The government aims to make the country's textile sector worth USD 250 billion by 2030 from USD 150-155 billion at present.
05/03/2023
GSTN has onboarded four new IRPs (Invoice Reporting Portals) for reporting e-invoices in addition to NIC-IRP. As a result, the beta launch of a new e-Invoice portal (www.e invoice.gst.gov.in), has been done where taxpayers can find comprehensive information on e-invoice compliance in a user-friendly format, such as check your enablement status, self-enable themselves for invoicing, search for IRNs, web links to all IRP portals – all the relevant links/information in one convenient location. Taxpayers can log in to the new e-invoice portal using their GSTN credentials for select services pertaining to their GSTIN profiles.
CBIC issued Circular No. 214/1/2023-Service Tax dated February 28, 2023 regarding Leviability of Service Tax on the declared service “Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act" under clause (e) of section 66E of the Finance Act, 1994.
Social sector spending by rich drops despite increase in wealth: BCG Report
1. The ultra high networth individuals' (UHNIs) social sector spending declined by 5 per cent in FY22, despite a 9.2 per cent increase in their wealth and the persisting inequities in India, a report said on Thursday.
2. Giving by the UHNI segment declined to Rs 4,230 crore in FY22, if one were to exclude the contributions of Wipro's Azim Premji, the report said.
3. Amid the clampdown on foreign funding of non-profits, the report by consulting firm BCG and Dasra said international funding also declined in FY22.
4. Private foreign giving dipped by about 3 per cent to Rs 15,000 crore in FY22 as compared to the contributions in the year-ago period, the report said, adding that their contribution to overall giving reduced further to 14 per cent as compared to 15 per cent in FY21 and 21 per cent in FY17.
5. Overall, the private giving remained flat in FY22 at Rs 1.05 lakh crore compared to FY21, the report said, adding that the corporate social responsibility spends grew during the fiscal year on the back of the government mandate for top countries to donate towards social causes.
04/03/2023
Delhi Gst deptt issues SOP dtd 1.3.2023 for dealing with fake dealer/ suspicious transactions.. Information is received from various sources such as CGST, DGGI, DGARM, Other States, Economic Offence Wing (EOW) etc. which shows involvement of the concerned taxpayers…
Gst notices, withholding of refunds, cancellation of registrations will be issued in case of fake dealers, in genuine supplies….
Read More
http://cajatinminocha.com/Image/SOP_for_Cancellation_of_Registration_and_Respository_of_Non-genuine_Tax_Payers.pdf
High Pitched Income Tax demand of Rs 1140 crores on Oyo: Delhi HC directs CIT to grant a personal hearing: Oyo Hotels and Homes Pvt Ltd ( W.P.(C) 2085/2023)
Facts:
1. OYO (petitioner), had challenged the order denying the stay on the recovery of the complete tax demand. The petitioner asked the department not to treat the company as an assessee in default under Section 220(6) of the Income-tax Act, 1961, for the entire outstanding demand of Rs. 11,39,93,05,320 until the Commissioner of Income-tax (Appeals) decided the appeal.
2. The grievance of the petitioner, which is also obvious, is that the Commissioner of Income Tax (CIT) has not dealt with its application, preferred before him, in respect of the order dated 01.02.2023 passed by the Assessing Officer (AO) under Section 220(6).
3. The petitioner has preferred an application dated 01.02.2023 which, it appears, has not been disposed of by the CIT.
Hon Delhi HC held as below:
1. The CIT is directed to dispose of the application at the earliest, though not later than four weeks from the date of the receipt of a copy of the order passed.
2. The CIT will accord a personal hearing to the authorized representative of the petitioner, and also allow filing of written submissions.
3. It is also made clear, that in case an order is passed by the CIT, which is adverse to the interests of the petitioner, the order of the CIT will not be given effect to, for a period of two weeks from the date when the order is received by the petitioner.
03/03/2023
The income tax (I-T) department Thursday carried out searches on premises linked to the Edelweiss group in Mumbai over suspected tax evasion, sources in the know told ET. Along with Edelweiss group, premises of certain entry operators were also se- arched, these sources added. Another source told ET that the searches are in connection with the I-T’s larger action on asset reconstruction companies. (ARCs). Both the Mumbai and the Delhi investigations wing of the I-T department have been probing ARCS for alleged tax evasion. There are certain unsecured loans linked to entry operators which the company requires to explain,” said a source privy to the development The I-T spokesperson confirmed the search operations. An email sent to Edelweiss didn’t elicit a response. Edelweiss Asset Reconstruction Company (EARC) is sponsored by Edelweiss and CDPQ Private Equity Asia Pte Limited. It is in the business of acquiring non performing assets (NPAs) both wholesale and retail from banks and financial institutions and resolving them.
02/03/2023
The United Arab Emirates (UAE) Ministry of Finance has published Federal Decree-Law No. 47 of 2022 providing the legislative framework for corporate tax on business profits in the UAE.
A. UAE Corporate Tax (UAE CT) will become effective for financial years starting on or after 1 June 2023. It shall apply to:
1. Individuals who are engaged in a business or business activity in UAE through an unincorporated partnership or sole proprietorship;
2. Juridical persons incorporated in the UAE;
3. Juridical persons effectively managed and controlled in the UAE; and
4. Foreign juridical persons that have a permanent establishment in the UAE.
B. The decree provides that the financial statements of businesses should be prepared in accordance with accounting standards accepted in the UAE.
C. Taxpayers should prepare financial statements on an accrual basis unless they are permitted to use the cash basis of accounting instead.
D. Further, in determining Taxable Income, transactions and arrangements between Related Parties must meet the arm’s length standard. The arm’s length result of a transaction must be determined by applying one or a combination of the prescribed transfer pricing methods.
E. The corporate tax shall be imposed on the Taxable income at the following rates:
1. The announced UAE CT regime introduces a tier system with 3 rates.
2. All annual taxable profits that fall under AED 375,000 shall be subject to zero rate.
3. All annual taxable profits above AED 375,000 shall be subject to 9% rate.
4. ALL MNEs that fall under the scope of Pillar 2 of the BEPS 2.0 framework (i.e. consolidated global revenues in excess of AED 3.15 billion) shall be subject to different rates as per OECD Base Erosion and Profit-Sharing rules.
F. Taxable profits are the accounting profits subject to certain adjustments. .
G. Despite this tax increase, UAE will still be one of the most attractive worldwide locations to conduct businesses for the following reasons:
1. No other country has a lower rate on corporate tax with only Hungary and Montenegro sharing the same 9% corporate tax rate.
2. There will be a tax exemption for the first AED 375,000 of taxable profits.
3. UAE holding companies will be completely exempt from paying corporate tax on capital gains and dividends received from qualifying shareholdings.
4. The UAE will continue to comply with international standards for tax transparency.
5. The UAE has an extensive network of double tax treaties, with 107 in-force double tax treaties and a further 30 in various stages of signature or ratification (as of 31 January 2022).
H. The UAE’s infrastructure and lifestyle make it a much more attractive proposition for start-ups and small businesses than most other low tax jurisdictions.
The Income Tax Department, in a final warning to taxpayers and PAN Card-holders, recently tweeted in its Official Twitter handle that, “As per Income-tax Act, 1961, it is mandatory for all PAN holders, who do not come under the exempt category, to link their PAN with Aadhaar before 31.3.2023.” The tweet also said that, “From 1.04.2023, the unlinked PAN shall become inoperative.”
According to the Chairman of the Central Board of Direct Taxes (CBDT), out of the 61 crore PANs issued to individuals, about 48 crore have already been linked to Aadhaar. The Chairman has clarified that individuals who do not link their Aadhaar with PAN will not be eligible for any tax or business-related benefits.
Request you to share your details (along with PAN & mobile number) with us at orm@cpc.incometax.gov.in for our team to get in touch with you for assistance, in case of any technical error.
01/03/2023
The gross GST revenue collection for the month of February 2023 stood at rs 149,577 crore, up around 12 percent on a yearly basis. Of the total revenue collected, CGST was rs 27,662 crore, SGST was rs 34,915 crore, IGST was rs 75,069 crore (including rs 35,689 crore collected on import of goods) while cess was rs 11,931 crore (including rs 792 crore collected on import of goods).
Advisory on opting for payment of tax under the forward charge mechanism by a Goods Transport Agency (GTA). In compliance of Notification No. 03/2022-Central Tax (Rate), dated 13th July, 2022, an option is being provided on the portal to all the existing taxpayers providing Goods Transport Agencies Services, desirous of opting to pay tax under the forward charge mechanism to exercise their option.
GSTIN portal issued advisory dated February 24, 2023, regarding Geocoding of Address of Principal Place of Business.Functionality for geocoding the principal place of business address (i.e. the process of converting an address or description of a location into geographic coordinates) is now available on the GST Portal. This feature is introduced to ensure the accuracy of address details in GSTN records and streamline the address location and verification process. This functionality can be accessed under the Services/Registration tab in the FO portal. The system-generated geocoded address will be displayed, and taxpayers can either accept it or update it as per the requirements of their case. This is a one-time activity, and once submitted, revision in the address is not allowed and the functionality will not be visible to the taxpayers who have already geocoded their address through new registration or core amendment. This functionality is available for normal, composition, SEZ units, SEZ developers, ISD, and casual taxpayers who are active, cancelled, and suspended. This functionality is currently being made available for taxpayers registered in Delhi and Haryana only.
The proposed Entity DigiLocker is also likely to be used to improve the audit quality of top-tier and large companies, with the National Financial Reporting Authority (NFRA) planning to ask auditors of these firms to use the facility to store client records and audit files.
28/02/2023
CBIC issued notification giving effect to changes as per recommendation of 49th Council Meeting
01/2023-
Exemption for any authority, board or body set up by the Central Government or State Government including National Testing Agency for conduct of entrance examination for admission to educational institutions shall be treated as educational institution for the limited purpose of providing services by way of conduct of entrance examination for admission to educational institutions.”.
02/2023-
03/2023-
5% for Jaggery of all types including Cane Jaggery (gur), Palmyra Jaggery, Khandsari Sugar,Rab if sold pre-packaged and labelled.
12% for Pencil Sharpener.
04/2023-
GST will not levy when Rab sold otherwise (other than pre-packaged and labelled)
Communique of the G20 meeting of the Finance Ministers and Central Bank Governors: At the conclusion of the two-day meeting in Bengaluru, the "G20 Chair's Summary and Outcome Document" stated the following:
1. The global economic outlook had modestly improved since their last meeting in October 2022.
2. However, global growth remains slow, and downside risks to the outlook persist, including elevated inflation, a resurgence of the pandemic and tighter financing conditions that could worsen debt vulnerabilities in many Emerging Market and Developing Economies (EMDEs).
3. We will continue to enhance macro policy cooperation and support the progress towards the 2030 Agenda for Sustainable Development.
4. We will use macroprudential policies, where required, to safeguard against downside risks.
5. We will prioritize temporary and targeted fiscal support to vulnerable groups while maintaining medium-term fiscal sustainability.
6. Central banks remain strongly committed to achieving price stability and will ensure inflation expectations remain well-anchored.
7. The ministers and governors look forward to the mapping exercises on food insecurity currently being undertaken by the Food and Agriculture Organization and the World Bank.
8. While maintaining the focus on poverty reduction and all other Sustainable Development Goals, they will work to strengthen the key role of Multilateral Development Banks in development financing.
9. Commitment should be made by developed countries to mobilize $100 billion in climate finance annually through 2025 for poorer countries.
26/02/2023
SBI allows Bhim-based real-time payment with Singapore : A day after a real-time payments system linkage was established between India and Singapore using the UPI platform, State Bank of India on Wednesday announced a partnership with PayNow, the online payment system of the city state, for cross-border payments. The facility is offered through SBI's Bhim SBIPay mobile application and the linkage will allow fund transfers from India to Singapore through registered mobile numbers, and from Singapore to India using the UPI ID, the bank said in a statement. The UPI-PayNow linkage is a significant milestone towards developing an infrastructure for cross-border payments between the two countries and the initiative closely aligns with the G20's priorities of driving faster, cheaper, and more transparent cross-border payments. -S ET
HDFC Bank, Lulu Exchange ink deal to enhance cross-border payments between India-Gulf region : HDFC Bank, a major private sector bank, and UAE-based Lulu Exchange have signed an MoU to strengthen cross-border payments between India and the Gulf Cooperation Council (GCC) region. In the first phase of the partnership, Lulu Exchange's expertise and regulatory framework would be utilised to launch a digital inward remittance service titled 'RemitNow2India'. That will allow resident individuals of UAE to send money to any bank account in India via IMPS and NEFT through HDFC's digital banking channels, a release issued by the bank on Tuesday said. - S ET
In a recent development, the Goods and Services Tax Network (GSTN) has introduced a new functionality on the GST Portal that enables taxpayers to geocode their principal place of business address. The move is aimed at enhancing the accuracy of address details in GSTN records and streamlining the address location and verification process. According to an advisory issued by the GSTN on February 24, 2023, the system-generated geocoded address can be accessed under the Services/Registration tab in the FO portal. Taxpayers can either accept it or update it as per their case’s requirements. In cases where the system-generated geocoded address is not available, taxpayers can directly update it. The geocoded address details will be saved separately under the “Principal Geocoded” tab on the portal, which can be viewed under My profile>>Place of Business tab.
Stage set to lower the E invoicing turnover limit wef 01.04.2023. The e-invoice portal so far has been run by state-owned NIC. In addition, GSTN has empaneled few more companies for setting up Invoice Registration Portals (IRPs) such as - Cygnet InfoPath, IRIS Business Services, Cleartax.
GSTN advisory on new e-Invoice Portals.
Dear Valued Taxpayers,
1. We would like to inform you that GSTN has onboarded four new IRPs (Invoice Reporting Portals) for reporting e-invoices in addition to NIC-IRP. As a result, the beta launch of a new e-Invoice portal (www.einvoice.gst.gov.in), has been done where taxpayers can find comprehensive information on e-invoice compliance in a user-friendly format, such as check your enablement status, self-enable themselves for invoicing, search for IRNs, web links to all IRP portals – all the relevant links/information in one convenient location. Taxpayers can log in to the new e-invoice portal using their GSTN credentials for select services pertaining to their GSTIN profiles.
2. Taxpayers may note that the portal is reference site for all masters (data), news and updates, latest releases etc. For registering e-invoices and to access APIs, you still need to go to sites. The urls of IRPs sites authorised to generate IRNs as on date are as follows:
einvoice1.gst.gov.in is
Active URL
einvoice3.gst.gov.in
einvoice4.gst.gov.in
einvoice6.gst.gov.in
Shall be available soon
Also, at the helpdesk for e-invoice issues, for supporting the taxpayers vis-a-vis IRP issues is available at our Grievance Redressal Portal where the relevant IRP can be selected using the dropdown created for each of the private IRP.
3. Please note that taxpayers can continue to report e-invoices on the NIC IRP portal as previously.
4. GSTN is committed to making your compliance journey as smooth as possible. If you have any questions or concerns, please do not hesitate to contact us.
Thank you for your cooperation.
Thanking You,
Team GSTN
25/02/2023
Allahabad HC holds that the reassessment proceedings cannot be conducted by giving benefit of relaxation/extension under the Taxation and Other Laws (Relaxation And Amendment of Certain Provisions) Act, 2020 (TOLA) upto Mar 30, 2021, and the time limit prescribed in Section 149 (1)(b) (as substituted w.e.f. Apr 1, 2021) cannot be counted by giving such relaxation from Mar 30, 2020 onwards to the Revenue, (ii) in respect of the proceedings where the first proviso to Section 149(1)(b) is attracted, benefit of TOLA will not be available to the Revenue, or in other words, the relaxation law under TOLA would not govern the time frame prescribed under the first proviso to Section 149 as inserted by the Finance Act, 2021, in such cases, and (iii) the reassessment notices issued to the petitioners in this bunch of writ petitions, on or after Apr 1, 2021 for AY 2013-14 to 2017-18 are to be dealt with, accordingly, by the Revenue.
The implications of this judgment will be that all 148 reassessment proceedings for asstt year 2013-14 and 2014-15 initiated on or after 1st April,2021 will have to be closed irrespective of income escaping asstt. And all reassessment proceedings for AY 2015-16 to 2017-18 , where income escaping asstt is less than Rs 50 lakhs or where income escaping asstt is not represented by any assets shall also have to be closed as barred by limitation.
The Goods and Services Tax Network (“GSTN”) has enabled the option to file a declaration in Annexure-V to opt for payment under the Forward Charge Mechanism (“FCM”) by the Goods Transport Agency (“GTA”) on the GST Portal.
The functionality can be accessed at: Dashboard > Services > User Services > Opting Forward Charge payment by GTA (Annexure V) > Select FY & apply
Please Note: Last date for submission of declaration for the Financial Year 2023-2024 is March 15, 2023.
Source #GST Portal
In a recent reply to a Right to Information application filed under the Right to Information (RTI) Act, 2005, the Goods and Services Tax Network (GSTN) has disclosed that the Government of India has spent a total sum of Rs. 1,379,70,96,763/- (Rupees One Thousand Three Hundred and Seventy-Nine Crore Seventy Lakh Rupees and Ninety Six Thousand Seven Hundred and Sixty-Three Rupees Only).
There were a number of occasions where the Government had to extend the GSTR deadlines and waive off late fees and even change the return filing process and norms due to the poor performance and the technical glitches on the portal. In spite of such a huge expense on development, application development, operation and maintenance, the GST Portal has a long way to becoming the one stop-solution for all Goods and Services Tax related compliances. The technical glitches often caused headaches to the stakeholder practitioner and taxpayers. In the last 5 years, there have been a number of occasions where the High Courts of different States had to interfere and issue necessary directions to the Government to address the grievances of the taxpayers.
24/02/2023
In connection with a Rs. 1 crore bribe demand made by officials of the Directorate General of GST Intelligence (DGGI), Pune, the Central Bureau of Investigation (CBI) conducted searches at three sites in Pune and Mumbai on 23rd February 2023(Thursday). A total of 4 lakh gold ornaments were discovered during the search at the former Directorate General of GST Intelligence’s offices (DGGI). On January 11, a case was filed against the former DGGI officer, the Senior Intelligence Officer at the time, and other unnamed individuals. According to the CBI, the searches produced digital devices and papers that might be used as evidence.
After Singapore, Hong Kong introduces Global Minimum Tax in the budget:
1. In the Budget 2023, Hong Kong’s Financial Secretary confirmed that Hong Kong will implement the Pillar Two Global Minimum Tax from 2025.
2. Hong Kong plans to set a 15% minimum corporate tax rate in 2025 on multinationals with a global turnover of at least (nearly $800 million) from 2024-25.
3. This is estimated to generate a tax revenue of $15 billion per year for the Government. A consultation is to be launched to allow MNE groups to make early preparation.
4. The Global Anti-Base Erosion rules (GloBE rules) under Pillar Two of the OECD BEPS 2.0 project seek to introduce a global minimum effective tax of 15% through the Income Inclusion Rule (IIR) and the Undertaxed Payment Rule (UTPR).
5. Adopted by 137 countries, the Pillar Two is the most significant to be agreed by such a large group of countries in a century. But progress toward translating it into national laws has been slow, including in the U.S., where it is stranded in Congress.
6. Interestingly, A global minimum effective tax rate of 15 per cent will be introduced for large Singapore multinational enterprises too in 2025.
23/02/2023
MCA permits physical filing of certain forms due to migration from V2 Version to V3 Version in MCA 21 Portal from 22/02/2023 to 31/03/2023. MCA vide Circular No. 05/2023 dated 22nd February, 2023 has allowed the filing of the following forms in physical mode due to migration from V2 Version to V3 Version in MCA 21 Portal from 22/02/2023 to 31/03/2023:
a) GNL-2 (filing of prospectus related documents and private placement);
b) MGT-14 (filing of Resolutions relating to prospectus related documents and private placement);
c) PAS-3 (Allotment of Shares);
d) SH-8 (letter of offer for buyback of own shares or other securities);
e) SH-9 (Declaration of Solvency); and
f) SH-11 (Return in respect of buy-back of securities)
Read More
https://www.mca.gov.in/bin/dms/getdocument?mds=L1%252FlzzFGRvjYOFmh0PQHAw%253D%253D&type=open
Co-owners of property have to pay their share of notional rent, 50% if share not defined: ITAT
Shivani Madan (ITA No. 1642/Del/2020)
Facts:
1. Property was purchased for Rs. 3.50 crores in joint ownership with the husband of the assessee on 08.03.2011. During assessment proceedings the Ld. Assessing Officer ("AO") asked the assessee vide notesheet entry dated 09.12.2019 to explain why income from the aforesaid property be not charged to tax under the head "income from house property".
2. Vide reply submitted on 10.12.2019 it was submitted that the said property is a single unit and is owned by her husband. Her name in the sale deed is only for security purposes and that she contributed Rs. 20 lacs only during AY 2011-12.
3. The registered sale deed of the property has not defined shareholding between the co-owners. Therefore, the AO held that the ownership of the property would be considered 50-50 and taxed as per section 23(1)(a) of the Income Tax Act. Since the assessee did not provide any expected reasonable rent of the property, he assessed the annual letting value at 8%.
ITAT Delhi held as below:
1. In the absence of specification of the shares purchased by two persons in the sale deed, it must be held that both purchased equal shares.
2. Husband and wife purchased equal shares and therefore, the Revenue is justified in bringing to tax 50% of the income from house property in the hands of the assessee.
3. The appeal of the assessee is dismissed.
22/02/2023
As per the rule of Indian government all PAN should be linked to Aadhar (whether filing the Income tax return or not filing ITR). The Last date of linking is 31st March 2023, if this is missed your PAN will be CANCELED. It Applies to all Pan Holders Even if the Income Tax Return is not filed. To check your Aadhar link status in PAN, pls follow the link
https://eportal.incometax.gov.in/iec/foservices/#/pre-login/link-aadhaar-status
If not linked kindly do the same through the below link:
https://eportal.incometax.gov.in/iec/foservices/#/pre-login/bl-link-aadhaar
Following categories are exempted from Aadhaar-PAN linking
(i) NRIs
(ii) Not a citizen of India
(iii) age > 80 years as on date
(iv) state of residence is ASSAM, MEGHALAYA or JAMMU & KASHMIR
Tax Calculator is now live! A dedicated tax calculator to check Old Tax Regime vis-à-vis New Tax Regime for Individual/HUF/AOP/BOI/Artificial Juridical Person(AJP) as per Section 115BAC can now be accessed on the IT Dept website. One can check the calculations on the link below:
https://incometaxindia.gov.in/Pages/tools/115bac-tax-calculator-finance-bill-2023.aspx
21/02/2023
Merchandise exporters will have to cough up 18% goods and services tax, or GST, on the services of transportation of goods, a move that the industry says could lead to cash flow issues at a time when exports are declining. This follows a recommendation of the GST Council that the place of supply of transportation of goods must be determined on the location of the service receiver, rather than on the basis of destination of goods. Government officials said the move aims to provide tax parity between foreign and Indian shipping lines with regard to integrated GST on transportation of goods by vessels from India to outside India and vice-versa. Currently, the export freight rate charged by Indian shipping lines to Indian exporters is taxable while freight charged by foreign shipping lines to Indian exporters for transport of goods to a place outside India is not taxable as it is neither an inter-state nor an intrastate supply.
The Reserve Bank of India has made necessary changes in reporting of NEFT and RTGS system used for receiving contribution to the FCRA Account under Foreign Contribution (Regulation) Act. Member banks are advised to incorporate necessary changes in their core banking / middleware solutions to capture the requisite details while forwarding the foreign donations through NEFT and RTGS systems to SBI. The instructions will be effective from March 15, 2023.
Civil Appeal No. 312/2023 M/S RADHIKA THEATRE Hon'ble Apex Court vide order dt. 2O.O1.2O23 allowed the appeal and set aside the order dt. 17.02.2021 of Hon'ble High Court and the demand notices for the period post 20.10.1989 have been restored. Apex court has observed that ESI Act shall be
applicable even with respect to those establishments, established prior . to 31.3.1989/20.10.1989 and the ESI Act shall be applicable irrespective ofthe number of persons employed or notwithstanding that the number of persons employed at any time falls below the limit specified by or under the ESI Act.
20/02/2023
Notification No. 58/2015-2020: The Directorate General of Foreign Trade has notified that the export of Agri Residue Based Biomass and Briquettes/Pellets under Schedule - 2 of ITC-HS Export Policy, 2018 Heading 1213 is placed under Free category with immediate effect. The export of Fodder, including wheat, rice straw will continue to be in Restricted category.
The Government of Rajasthan, has notified vide Notification No: F.4(2)FD/TaX/2023-25 dated 10.2.2023; the reduction of Stamp Duty Chargeable on the below stated instruments:
1. Every intermediary unregistered and understamped instrument executed on the basis of allotment order in respect of Jand allotted or sold by the State Government, local authorities, public enterprises or any other Government bodies before getting lease deed from the aforesaid authorities- stamp duty shall be on the 20 % of the amount of original allotment
2. Every intermediary unregistered and understamped instrument executed in respect of land allotted or sold by housing cooperative societies or any other person, before getting the lease deed from the Urban Local Bodies- Stamp duty shall be on 20% of the market value of the land on the date of presentation before the Sub-Registrar or on the date of reference to the Collector (Stamps), as the case may be.
The Ministry of Corporate Affairs (MCA) has advised all the New Directors to register themselves as Business Users and associate their DSC in V3 before filing forms in V3. The Ministry of Corporate Affairs (MCA) has advised the stakeholders to check their already filed/initiated Spice+ applications of V2 in the Historic tab of V3 Application History.
19/02/2023
49th GST Council Meeting
Amnesty and Measures for facilitation of trade:
1. Extension of time limit for application for revocation of cancellation of registration and one time amnesty for past cases:
The Council has recommended amendment in section 30 of CGST Act, 2017 and rule 23 of CGST Rules, 2017 so as to provide that -
a) the time limit for making an application for revocation of cancellation of registration be increased from 30 days to 90 days;
b) where the registered person fails to apply for such revocation within 90 days, the said time period may be extended by the Commissioner or an officer authorised by him in this behalf for a further period not exceeding 180 days.
The Council has also recommended that an amnesty may be provided in the past cases, where registration has been cancelled on account of non-filing of the returns, but application for revocation of cancellation of registration could not be filed within the time specified in section 30 of CGST Act, by allowing such persons to file such application for revocation by a specified date, subject to certain conditions.
2. Amendment to Section 62 of CGST Act, 2017 to extend timelines under sub-section (2) thereof and one time amnesty for past cases:
As per sub-section (2) of section 62 of CGST Act, 2017, the best judgment assessment order issued under sub-section (1) of the said section is deemed to be withdrawn if the relevant return is filed within 30 days of service of the said assessment order. The Council recommended to amend section 62 so as to increase the time period for filing of return for enabling deemed withdrawal of such best judgment assessment order, from the present 30 days to 60 days, extendable by another 60 days, subject to certain conditions.
The Council has also recommended to provide an amnesty scheme for conditional deemed withdrawal of assessment orders in past cases where the concerned return could not be filed within 30 days of the assessment order but has been filed along with due interest and late fee upto a specified date, irrespective of whether appeal has been filed or not against the assessment order, or whether the said appeal has been decided or not.
3. Rationalisation of Late fee for Annual Return:
Presently, late fee of Rs 200 per day (Rs 100 CGST + Rs 100 SGST), subject to a maximum of 0.5% of the turnover in the State or UT (0.25% CGST + 0.25% SGST), is payable in case of delayed filing of annual return in FORM GSTR-9. The Council recommended to rationalise this late fee for delayed filing of annual return in FORM GSTR-9 for FY 2022-23 onwards, for registered persons having aggregate turnover in a financial year upto Rs 20 crore, as below:
a) Registered persons having an aggregate turnover of up to Rs. 5 crores in the said financial year: Rs 50 per day (Rs 25 CGST + Rs 25 SGST), subject to a maximum of an amount calculated at 0.04 per cent. of his turnover in the State or Union territory (0.02% CGST + 0.02% SGST).
b) Registered persons having an aggregate turnover of more than Rs. 5 crores and up to Rs. 20 crores in the said financial year: Rs 100 per day (Rs 50 CGST + Rs 50 SGST), subject to a maximum of an amount calculated at 0.04 per cent. of his turnover in the State or Union territory (0.02% CGST + 0.02% SGST).
4. Amnesty in respect of pending returns in FORM GSTR-4, FORM GSTR-9 and FORM GSTR-10:
To provide relief to a large number of taxpayers, the Council recommended amnesty schemes in respect of pending returns in FORM GSTR-4, FORM GSTR-9 and FORM GSTR-10 by way of conditional waiver/ reduction of late fee.
5. Rationalization of provision of place of supply of services of transportation of goods:
Council recommended to rationalize the provision of place of supply for services of transportation of goods by deletion of section 13(9) of IGST Act, 2017 so as to provide that the place of supply of services of transportation of goods, in cases where location of supplier of services or location of recipient of services is outside India, shall be the location of the recipient of services.
The state GST department has unearthed a scam with a new modus operandi where 1,500 Aadhaar cards were illegally used in the past eight months to generate bogus GST registration numbers. To keep a check on bogus billing, the department carried out spot verification of suspected firms, including those in Surat, Bhavnagar, Ahmedabad, Anand and Rajkot, on February 7. During operations conducted over 75 firms in Surat, it was found that duplicate documents such as Aadhaar and PAN cards were created using an android mobile application. In Surat, an Aadhaar card holder with residential address in Palitana had no knowledge about the GST registration and PAN number obtained in their name by amending the mobile number linked to Aadhaar. Many residents said that in the name of government assistance, they were taken to Aadhaar centres at Palitana and their thumb impressions were taken,” stated the GST department, which conducted search operations in Palitana and seized mobiles, laptops and other digital devices from Aadhaar centres. On checking these seized devices, it was found that in the past eight months, more than 1,500 Aadhaar cards have had their mobile numbers amended,” the department stated adding that 470 GST registrations obtained through this illegal process were found. Of these, 118 registrations were from Gujarat, while the remaining were from other states. Thus a new kind of modus operandi has come to the attention of the department to obtain bogus GST numbers,” it added.
18/02/2023
Important updates on 49th GST Council Meet
1) Council approved recommendations on commodities like pan masala, gutkha, chewing tobacco
- No Capacity based levy
- Exports of these items to be allowed only on LUT with consequential refund of accumulated ITC
- compensation cess to be changed from ad valorem to specific tax based levy
2) Amnesty
- Extension of time limit from 30 days to 90 days for application for revocation of cancellation of registration.
- One time amnesty scheme for past cases of GST cancellation on account of non-filing of the returns, but application for revocation of cancellation of registration could not be filed within the time. Amendment to Section 62 of CGST Act, 2017 to extend timelines under sub-section (2) thereof and one time amnesty for past cases
3) Rationalisation of Late fee for Annual Return GSTR-9
-For FY 2022-23 onwards reduced from Rs200 per day to Rs 50 per day if turnover upto Rs.5 crores subject to maximum of 0.04% of turnover
-For FY 2022-23 onwards reduced from Rs200 per day to Rs 100 per day if turnover exceeds Rs.5 crores & upto Rs.20 crores subject to maximum of 0.04% of turnover.
4) Amnesty in respect of pending returns in FORM GSTR-4, FORM GSTR-9 and FORM GSTR-10- by way of conditional waiver/ reduction of late fee
5) Rationalization of provision of place of supply of services of transportation of goods by deletion of section 13(9) of IGST Act, 2017
6) Reduction in GST Rate–
- On “Rab” rate reduced from 18% to 5% (if sold prepackaged and labelled) and NIL (if sold otherwise)
- “Pencil Sharpener” rate reduced from 18% to 12%
More details will be shared once the relevant notifications would be issued in due course
17/02/2023
India’s Foreign Trade for the month of January, 2023
1. India’s overall exports (Merchandise and Services combined) in January 2023 are estimated to be USD 65.15 Billion, exhibiting a positive growth of 14.58 per cent over the same period last year.
2. Overall imports in January 2023 are estimated to be USD 66.42 Billion, exhibiting a positive growth of 0.94 per cent over the same period last year.
3. Merchandise exports in January 2023 were USD 32.91 Billion, as compared to USD 35.23 Billion in January 2022.
4. Merchandise imports in January 2023 were USD 50.66 Billion, as compared to USD 52.57 Billion in January 2022.
5. The estimated value of services export for January 2023 is USD 32.24 Billion, as compared to USD 21.63 Billion in January 2022.
6. The estimated value of services import for January 2023 is USD 15.76 Billion as compared to USD 13.24 Billion in January 2022.
7. The merchandise trade deficit for April-January 2022-23 was estimated at USD 232.95 Billion as against USD 153.79 Billion in April-January 2021-22.
8. The services trade surplus for April-January 2022-23 is estimated at USD 121.01 Billion as against USD 87.58 Billion in April-January 2021-22.
9. Global growth is projected to fall from an estimated 3.4 percent in 2022 to 2.9 percent in 2023, while India continues to shine as a bright spot with a growth of 6.8% in 2022 and 6.1% in 2023 with resilient domestic demand despite external headwinds.
10. Under merchandise exports, 14 of the 30 key sectors exhibited positive growth in January 2023 as compared to same period last year (January 2022).
11. These include Electronic Goods (55.54%), Oil Meals (48.89%), Oil Seeds (23.81%), Iron Ore (21%), Rice (18.8%), Fruits & Vegetables (14.57%), Cashew (10.34%), Tobacco (9.41%), Ceramic Products & Glassware (8.25%), Petroleum Products (8.01%), Marine Products (6.61%), Other Cereals (3.92%), Spices (3.79%) and Tea (3.76%).
12. All agricultural commodities exports barring coffee have shown positive growth in January 2023.
As Canadians continue to feel the pinch of decades-high inflation, one in four say they can’t afford an unexpected expense of $500, according to new data from Statistics Canada. The report released on Monday also showed that more than one-third (35 per cent) of the population found it hard to make ends meet over the past year as the cost of everyday essentials soared. Meanwhile, nearly half of Canadians said they were worried about keeping a roof over their head. While the vast majority of Canadians were concerned with rising gasoline and food prices, almost half (44 per cent) said they were very concerned with their household’s ability to afford housing or rent,” Statistics Canada said. Statistics Canada conducted its survey between October and December 2022. Nearly half (46 per cent) of Canadians aged 35 to 44 said they faced challenges to cover their expenses in the past 12 months. That was the highest proportion of any age bracket, followed by 41 per cent for those aged 45 to 54 years. Recent polling by Ipsos conducted exclusively for Global News echoed some of those concerns, with 22 per cent saying they are “completely out of money” to the degree that they would not be able to pay more for household necessities.
16/02/2023
The Supreme Court in the case M/s. Canara Bank AndOrs. v. S. ReghukumarAndAnr observed and has upheld the order passed by National Consumers Disputes Redressal Commission wherein directing the Canara Bank to pay Rs. 5 lakhs to a lawyer, the Canara Bank was kept in the list of defaulters as per CIBIL for about 7.5 years after discharging his loan obligations.
The bench comprising of Justice Aniruddha Bose and Justice Sudhanshu Dhulia in the case observed and has stated that this court finds no reason to interfere with the order of the National Consumers Disputes Redressal Commission, New Delhi as the court is satisfied with the reasoning given for awarding compensation of Rs. 5,00,000/- (Rupees five Lac).
In the present case, a vehicle loan has been availed by the complainant from Canara Bank in 2002 and the complainant purchased a Maruti 800 Car. In 2008, the entire loan was closed and in 2010, the complainant had taken another vehicle loan from Vijaya Bank. Thus, when the complainant went to Vijaya Bank, the complainant was informed that a loan defaulter by Canara Bank as per the Consumer Credit Information Report of Credit Information Bureau (India) Ltd. (CIBIL) has been arrayed against him. It is being appeared before the court that even though the loan amount was being discharged the Canara Bank did not inform CIBIL. Therefore, the said complaint was filed before the Kerala State Commission wherein seeking compensation for mental agony and for hampering the reputation of him. Thus, a demand of Rs. 25 lakhs was made which is to be paid as compensation along with a cost imposed of Rs. 25,000.
It has been directed by the Kerala State Consumer Dispute Redressal Commission to the Canara Bank to pay Rs. 5 lakhs to the lawyer with interest. The Canada Bank aggrieved with the same, filed an appeal before the National Consumers Disputes Redressal Commission. Thus, the order was upheld by NCDRC of the State Commission, but the NCDRC has set aside the interest awarded.
It has also been noted by the NCDRC that the in 2015 the Canara Bank had rectified the error only after informing of the complainant which is almost 7.5 years after the loan amount was being discharged.
However, the Special Leave Petition was filed by Canara Bank against the NCDRC order on February 13, which was dismissed by the Supreme Court.
The bench comprising of Justice Aniruddha Bose and Justice Sudhanshu Dhulia in the case observed and has noted that this court does not find any reason to interfere with the order of the National Consumers Disputes Redressal Commission, New Delhi as this court is satisfied with the reasoning given for awarding compensation of Rs. 5,00,000/-.
The counsels, Advocate Jaimon Andrews and Advocate Piyo Harold Jaimon appearing on behalf of the complainant lawyer.
On February 10, 2023, the CBDT released Notification No. 04/2023, introducing revised versions of Income Tax Return (ITR) forms and the ITR Acknowledgement for the Assessment Year 2023-24
Additional changes in new forms:
1. As per the modified norms, individuals on whom search and seizure operations have been carried out by tax officials can now file revised return under section 153 C on the basis of self-assessment of their undisclosed wealth in ITR-1.
2. CBDT has also made certain changes in ITR-1 form with regard to disclosure under Section 139 (1), which is filed voluntarily by persons having annual taxable income of less than Rs 2.5 lakh. These individuals will not be required to intimate in their ITR forms even if their fixed deposits exceeds Rs 1 crore.
3. A separate 'Schedule - VDA' has been added to report income from virtual digital asset such as crypto currency. This new schedule requires taxpayers to report the date of acquisition, date of transfer as well as cost of acquisition and the proceeds received on sale of VDAs. Income from VDA must be reported quarterly.
4. the forms have been amended to include additional questions relating to selection of the new tax regime. The form requires the taxpayer to report whether the filer has opted for the new regime in the last assessment year, and also select the assessment year in which it was opted.
5. Additionally, another question has been inserted asking whether taxpayers have opted out of New Regime in any of the previous year and is also expecting the taxpayer to mention the 10IE details for both selections.
6. There is now an option to disclose turnover and income from intra-day trading in the trading accounts.
7. Taxpayers will have to disclose whether they are foreign institutional investors or foreign portfolio investors.
15/02/2023
CBDT Advance Ruling
1. The Central Board of Direct Taxes (CBDT) in its new notification notified the Establishment of Board for Advance Ruling (BAR) for Direct Taxes on February 6th 2023.
2. The CBDT in continuation of the notification to the Notification No. 96 of 2021, Extraordinary Part II, section 3, subsection (ii) and in pursuance of Para 4(2) of the e-Advance Rulings Scheme, 2022, made by the Central Government by Notification No. 7 of 2022, Extraordinary Part II, section 3, sub-section(ii), the CBDT established an office for the BAR.
3. In accordance with the notification, 3 Board for Advance Ruling has been set up with specifying the Income Tax Authority. According to the schedule, the BAR-I and BAR-II are headquartered in Delhi. Also each consists of 2 members and one secretary. And the BAR-III has its headquarters in Mumbai in which it also has 2 members and one secretary.
4. The notification further said that the BAR would have access to any additional income-tax authorities, ministerial personnel, executives, or consultants that the Board deemed essential to assist the BAR members. Additionally, this responsibility is given to the jurisdictional Principal CCIT for the BAR in question, the Principal Chief Commissioner of Income Tax concerned, in conjunction with the board. The Central Government in its 2021 budget proposed to constitute a Board for Advance Ruling.
5. And now it happened. It was proposed that the board shall constitute one or more Board for Advance Rulings for giving advance rulings under the said Chapter on and after the notified date. Every such Board shall consist of two members, each being an officer not below the rank of Chief Commissioner. Advance rulings of such Board shall not be binding on the applicant or the Department and if aggrieved, the applicant or the Department may appeal against the ruling or order passed by the Board before the High Court.
6. Further, Section 245N of Income Tax Act was proposed to be amended to incorporate the definitions of the Board of Advance Rulings, notified date, Member of the Board of Advance Rulings and change in the definition of Authority to include the Board for Advance Rulings. Also it was proposed that Section 245-OB shall be inserted to provide for the constitution of the Board of Advance Rulings.
Gujrat High Court vide orders dated 8.2.2022, passed in the case of Taru Pallav Projects (P) Ltd. quashed 148A(b) notice, 148A(d) order and 148 notice for AY 2013-14 and 2014-15, and in the case of Vinod Fabrics (P) Ltd. quashed order u/s 148A(d) and notice u/s 148 for AY 2013-14, considering the decision of Hon'ble Supreme Court dated 4.5.2023 in the case of Ashish Agarwal and following the decision of Gujrat High Court dated 7.2.2023 in the case of Keenara Industries (P) Ltd.
A number of unlisted companies are encountering business impediments as the portal of the Ministry of Corporate Affairs (MCA) continues to face glitches. Market participants who spoke with ET said several of these companies were already in violation of the filing rules, as they could not submit the forms due to the portal issues. The MCA has transitioned to a new version of the portal, V3, from V2 last year and this is the first major filing season. when companies are required to use the updated portal. Compliances related to disclosure of private placements, appointment of directors and creation of charge documents are among the major categories. that have not been completed as the portal continues to face glitches, making uploading of forms difficult, said compliance experts. Due to the delay in filings, these companies are now staring at the possibility of auditor and fines, they added. Auditors are required by law to red flag any failure in compliance as specified under the Companies Act. To alleviate the issue, the MCA on January 23 and again on February 7 extended the timeline for filing of 46 different forms by 15 days. While this may give additional time for companies to comply, business continuity is impacted until the portal issue is resolved.
14/02/2023
The Income Tax Department has raided the Delhi office of the British Broadcasting Corporation (BBC), located in Kasturba Gandhi Marg. The phones of employees have been seized. Employees have also been asked to leave the office and go home early. Over 100 employees, who were working in the morning shift, have been held back at the Delhi bureau office. The majority of them belong to editorial teams. Those in the afternoon shift at the Delhi office have been asked to work from home. During the raid, two people associated with BBC Urdu services as well as finance department officials were inside the office premises, according to sources. The Income Tax Department’s Delhi team is also monitoring the BBC premises in Mumbai’s Bandra-Kurla Complex (BKC) area. BBC also has another Mumbai office in Khar, where employees were asked to go home. Employees are not allowed to enter the Mumbai office of the BBC at present due to the ongoing search. The Income Tax Department is carrying out searches across BBC premises over allegations of irregularities in international taxation and transfer pricing. . In the case of a survey operation, the IT Department only covers the business premises of a company and does not raid residences and other premises related to the directors or promoters of a company.
Pakistan edging closer to a debt default:
1. The Pakistani Rupee has been on a steep slide for weeks. The Pakistani Rupee fell on 11 February fell to ?271.50 per dollar in the inter-bank market.
2. Pakistan is scheduled to pay USD 8.3 billion to external lenders over the first three months of 2023. Pakistan’s reserves have however, fallen below USD 3 billion and the country is feared to default on its external liabilities.
3. Pakistan Business Council has reportedly suggested discontinuation of its highest denomination banknote ?5,000 to stabilise the economy.
4. The country's inflation is at a 48-year high. Foreign currency reserves cover less than a month of imports. The Consumer Price Index index increased by 27.6% in January 2023. Wholesale Price Index has increased to 28.5% in the same period.
5. Rising inflationary pressure has increased the prices of essential commodities like wheat, onions, gas cylinders, etc. The average cost of a 20kg wheat flour bag in January 2022 was Pakistani Rupee (PKR) 1,164.8. This shot up to PKR 1,736.5 in January 2023, a 50% rise.
6. Pakistan and the IMF have failed to reach a staff-level agreement on a much-needed $ 1.1. billion bailout package aimed at preventing the country from going bankrupt. Pakistan is in its 13th bailout from the IMF since the late 1980s.
7. Most of the petrol pumps in the Punjab region of Pakistan ran out of petrol disrupting the routine life of people last month. Notably, the oil companies of Pakistan are on the verge of 'collapse' due to economic crisis and currency's devaluation.
8. Last month Pakistan suffered nationwide power outages due to the breakdown of the "national grid".Outages were reported in Karachi, Islamabad, Lahore, and Peshawar.
9. The country is heavily reliant on imports. Pakistan's imports have seen a significant rise, and exports have remained largely stagnant, widening the trade deficit in recent years.
10. Due to high levels of borrowing, total debt and liabilities reached Pakistani Rupee 59,697.7 billion (89% of the GDP) in FY22. Of the total outstanding bilateral debt owed by Pakistan as of March 2022, China accounts for about 35%.
CBDT Notification No. 04/2023/F.No. 370142/51/2022-TPL] Dated 10th February 2023 notifying the income tax return forms for the assessment year 2023-24. In exercise of the powers conferred by section 139 read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the rules further to amend the Income-tax Rules, 1962.
13/02/2023
Vide Order No. F.12(5)FD/Tax/2023-102, Dated 10.02.2023, the Rajasthan Government has issued order to reimburse the late fees paid by taxpayers during filing GST Returns for the period from April 2021 to March 2022 in a manner which will be prescribed shortly. The order reads as under:
The State Government hereby orders that the late fee payable under section 47 and the same has been deposited by the registered taxable person (hereinafter referred to as “beneficiary”) under the Rajasthan Goods and Services Tax Act, 2017 for the period from April, 2021 to March, 2022 shall be reimbursed on the applicable conditions.
Perquisite” may be defined as any casual emolument or benefit attached to an office or position in addition to salary or wages. Perquisites may be in the form of cash or in the form of kind, but will always form part of the salary.
Perquisites are divided in two parts i.e. monetary perquisites and non-monetary perquisites.
1. Monetary perquisites are taxable for all employees.
2. non-monetary perquisites are taxable in the hands of specified employees.
The following employees are deemed as specified employees:
1) A director-employee
2) An employee who has substantial interest (i.e. beneficial owner of equity shares carrying 20% or more voting power) in the employer-company
3) An employee whose monetary income under the salary exceeds Rs.50,000.
The taxable value of perquisites can be determined on the basis of specific rules for valuation of certain perquisites as laid down in Rule 3 of the Income-tax Rules. An option has been given to the employer to pay the tax on non-monetary perquisites given to an employee. The employer may, at its option, make payment of the tax on such perquisites himself without making any TDS from the salary of the employee. As per Section 10(10CC) of the Act, the tax paid on such non-monetary perquisites by the employer is exempt from tax in the hands of the employee. However, the employer will have to pay the tax at the time when such tax was otherwise deductible i.e. at the time of payment of income chargeable under the head “salaries” to the employee.
12/02/2023
Amendments proposed in Capital Gains in the budget:
1. Proposed Amendments to Section 54 and Section 54F of the Income Tax Act: It is proposed to impose a limit on the maximum deduction that can be claimed by assessee under Section 54 and Section 54 F to Rs 10 crores. It has been proposed that where the cost of new asset exceeds ten crore rupees, the amount exceeding ten crore rupees shall not be taken into account.
2. Example – Section 54 : Suppose there is a Long Term Capital Gain (LTCG) amounting to Rs 12 crores. In that case, exemption u/s 54 would be restricted to Rs 10 crores even if assessee purchased a new residential house amounting to Rs 12 crores or more. So the restriction is on the exemption available.
3. Example- Section 54 F – Net Sale consideration amounts to Rs 50 crores and LTCG amounts to Rs 12 crores then capital gain exemption will be 10/50*12 i.e. Rs 2.4 crores even if you have reinvested the entire net sale consideration of Rs 50 crores!
4. A new section 50AA has been inserted to treat the full value of the consideration received or accruing as a result of the transfer or redemption or maturity of the “Market Linked Debentures” as reduced by the cost of acquisition of the debenture as capital gains arising from transfer of a short term capital asset.
11/02/2023
Sources in the know of the development say that Chinese multinational Alibaba has sold its entire stake in Paytm in today`s block deal. With this sale, Alibaba is no longer a stakeholder in Paytm. The company had sold around 3.1 per cent of 6.26 per cent equity in Paytm in January. This latest deal almost completes Alibaba`s exit from India since it had earlier sold its stakes in Zomato and BigBasket. The news will bring cheer to the market as it ends the Chinese stake holding in the homegrown Paytm. Paytm`s shares have been rallying in the last few days since it announced operating profitability in its Q3FY23 results with EBITDA before ESOP cost at Rs 31 crore, significantly ahead of its guidance of September 2023. The fintech giant revenue from operations increased to Rs 2,062 crore (no UPI incentive recorded this quarter), a growth of 42 per cent on a yearly basis. This was followed by Paytm`s robust operating update of January 2023 that it filed with the stock exchange on February 8.
Expenses incurred to make the newly purchased house habitable can be claimed as a deduction U/S 54: ITAT Mumbai
Renu Ratnakar Bhattacharya Vs Commissioner of Income Tax (Appeals) (ITAT Mumbai) (ITA No. 2146/M/2022)
Facts:
1. The Assessee had sold an immovable property and had earned LTCG. The assesse inter-alia made investment in new house property for Rs. 2.83 crore which was claimed as deduction u/S. 54.
2. Further, the Assessee had incurred other expenses like brokerage, legal fees, construction and structural repairs, architect fees, etc. aggregating to Rs. 19.91 lakhs which was also claimed as deduction u/s. 54.
3. The AO allowed the claim u/s. 54 for the value of new property of Rs. 2.83 crore; however, disallowed the claim for other costs of Rs. 19.91 lakhs for the purpose of section 54.
4. The Assessee argued that the cost of improvement incurred in respect of the new house property with respect to structural repairs and in order to make the new house property habitable should also be included in the value of deduction claimed u/s. 54.
5. The revenue contended that for the purpose of claiming deduction u/s. 54 only the value for which new house property is acquired would be allowed and the subsequent cost of improvement incurred would not be allowed as deduction u/s. 54 against the LTCG earned.
ITAT Mumbai held as below:
1. Assessee had incurred various expenditure in relation to structural changes like plumbing, ceiling, flooring in kitchen, bathroom of the new house; which were in non- working condition, to make the house habitable.
2. The Assessee had produced necessary documentary evidences of such renovation/interior work.
3. When the identity and genuineness of the architect/interior designer was not in question; there was no reason to deny these deductions. It was also not the case of the Revenue that hiring services of architect/designer and making payment to them by the assessee was a sham transaction.
4. It was settled principle of law that when the tax payer is otherwise allowed to purchase or construct a residential house without any ceiling on the amount of investment, benefits u/s. 54 cannot be denied, if he has made some alterations, addition or modifications in the house purchased for taking benefit u/s. 54.
Non-Linking of Aadhaar with PAN may Result in Denial of Income Tax Benefits: CBDT Chief
1. Aadhar and Permanent Account Number ( PAN ) became an inevitable part of life of a common man in India. Both have their own purpose to serve. The Aadhar-PAN linking is a hot subject for a time being and the deadline is March 2023.
2. The chairman of the Central Board of Direct Taxes ( CBDT ), has stated that as of this point, about 48 crores of the 61 crore PAN issued to individuals have been connected with Aadhaar. The chairman clearly stated that whoever does not link the Aadhaar with PAN shall not get any type of benefits in both business and tax related filings.
3. Individual PANs that are not linked to the Aadhaar by the end of this financial year (March 31, 2023) would become defunct. In addition, between now and March 31 one must spend Rs 1,000 to link their PAN and Aadhaar.
10/02/2023
Relief to MSMEs ; Vivad Se Vishwas I
1. The Government of India, Ministry of Finance, Department of Expenditure, Procurement Policy Division has issued Office Memorandum vide No.F.1/1/2023-PPD dated February 6, 2023 providing Relief to the Micro, Small and Medium Enterprises (“MSMEs”).
2. In order to further support MSMEs, it has been decided to provide relief in all contracts for procurement of Goods and Services, entered into by any Ministry/ Department/ attached or subordinate office/ autonomous body/ Central Public Sector Enterprise (CPSE)/ Public Sector Financial Institution etc with MSMEs, which meet the following criteria:
a. The contractor/ supplier should be registered as a MSME Enterprise with Ministry of MSME, as on March 31, 2022.
b. The original delivery period/ completion period was between February 19, 2020 and March 31, 2022.
3. For the MSMEs which meet the specified criteria, the following reliefs shall be provided:
a. 95% of the performance security forfeited from such firms shall be refunded.
b. 95% of the Bid security (Earnest Money Deposit), if any, forfeited from MSME firms in tenders opened between February 19, 2020 and March 31, 2022 shall be refunded.
c. 95% of the Liquidated Damages (LD) deducted from such firms shall also be refunded. LD so refunded shall not exceed 95% of the performance security stipulated in the contract.
d. In case firm has been debarred only due to default in execution of such contracts, such debarment shall also be revoked, by issuing an appropriate order by the procuring entity.
e. No interest shall be paid on such refunded amount.
4. Government e-Marketplace (GeM) shall provide an online portal for the purpose implementation of this order.
5. The date of commencement of the scheme shall be notified.
Tamil Nadu based gang busted for smuggling 17.74 Kg Gold
Worth Rs 10.1 crores in Operation Dolphin. In a joint operation with
@IndiaCoastGuard. Directorate of Revenue Intelligence (DRI) recovered and seized 17.74 Kgs of Gold from sea bed of Tamilnadu coast, after it was thrown by smugglers from the fishing boat.
09/02/2023
India wants to launch its central bank digital currency at a national level by the end of 2023, but early into its pilot, the Reserve Bank of India has identified challenges, several people familiar with the matter said.
India launched two CBDC pilots last year. The first, a wholesale CBDC effort (CBDC-W), began on Nov. 1 with the participation of nine banks. The other, a retail CBDC (CBDC-R) pilot, launched on Dec. 1 in four cities – Mumbai, New Delhi, Bengaluru and Bhubaneswar. Initially, four banks, including the State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank participated. It has "now been extended to 15 cities with Chandigarh as the newest addition," a senior official told CoinDesk. "More than 50,000 customers and 10,000 small and big merchants have been onboarded now," including Reliance Retail, the nation's largest retail chain. In the context of the internationalization of the Indian rupee, an Indian CBDC will make it easier for the nation to get international acceptance because it is digital,” said an official working on the CBDC efforts. “For emerging markets, it is a good weapon to have so that in future when we are looking for internationalization this can be one good help.”
Trade deficit with China has reached record levels amidst frosty relations:
1. The latest data released by the China customs department shows India’s trade deficit with the country breaching $100 billion for the first time in 2022.
2. China was India’s top import source in April-December 2022, with an increase of 11.9 %(Y-O-Y) to $75.87 billion, while exports to the country during the period declined 35.58 % to $11.03 billion pushing up trade deficit in the first nine months of the fiscal to $64.84 billion.
3. India fairs worse than many other countries in exports to China. Share of China in global exports of Japan, Korea, and the EU are 21.6 %, 25.3 %, 10.1 per cent, and 3.9 %, respectively. But the share of China in global exports of India is just 5.8 %.
4. The United Nations’ Comtrade database shows that India’s imports from China are swelling largely because of imports of capital or industrial goods. Over the past 10 years (from 2011 to 2021), India’s imports of capital goods from China have grown by an average of 4 % every year.
5. High imports of Chinese goods could have been driven by India’s manufacturing sector which is recovering well from the Covid-19 pandemic and other disruptions, but continues to depend heavily on critical intermediates like active pharmaceutical ingredient (API) and electronic components from China.
6. Also, on the global trade front despite the weakening of the U.S. and European demand and the Covid-19 controls leading to periodic shutdowns of several cities including Shanghai, China posted a trade surplus of $877.6 billion in 2022.
08/02/2023
The Enforcement Directorate (ED) on Friday told the special PMLA (Prevention of Money Laundering Act) court that Videocon Group had laundered around ?60,000 crore it had obtained from a consortium of banks to develop its oil and gas assets in Mozambique, Brazil, Indonesia, Australia and East Timor. ED has initiated the probe based on an FIR registered by the Central Bureau of Investigation (CBI) on June 23, 2020, against then CMD of Videocon Group, Venugopal Dhoot, and some unknown officers of public sector and private banks, for allegedly causing the financial loss to the consortium led by State Bank of India.
There is no proposal to exempt foreign tourists shopping in the country from the Goods and Services Tax (GST), Union Minister for Tourism and Culture G. Kishan Reddy said on Monday. As informed by the Central Board of Indirect Taxes and Customs, the Department of Revenue under the Ministry of Finance, there is no proposal at present under consideration of the government to reimburse the GST to foreign tourists at airport on arrival to India,” he responded. He was answering an unstarred question from Perambalur Member T.R. Paarivendhar in the Lok Sabha. The MP and founder- chancellor of SRM Group of Institutions wanted to know if any agreements were signed with foreign countries to promote tourism and whether the government was considering a proposal to exempt foreign tourists shopping locally from the GST. Mr. Reddy said the Ministry had signed 46 agreements with different countries for strengthening and promoting Indian tourism products. The MP wanted to know how many foreign tourists had visited India after the lockdown. The Minister replied that while 27.44 lakh foreign tourists had arrived in the country between January and December 2020, it had fallen to 15.27 lakh in 2021. The provisional number of foreign tourist arrivals in the country was 61.91 lakh till December 2022.
07/02/2023
Budget Direct Tax Highlights:
A Section 43B of the Act
1. provides for certain deductions to be allowed only on actual payment.
Further, the proviso of this section allows deduction on accrual basis, if the amount is paid by due date of furnishing of the return of income.
2. In order to promote timely payments to micro and small enterprises, it is proposed to include payments made to such enterprises within the ambit of section 43B of the Act.
Accordingly, it is proposed to insert a new clause (h) in section 43B of the Act to provide that any sum payable by the assessee to a micro or small enterprise beyond the time limit specified in section 15 of the Micro, Small and Medium Enterprises Development (MSMED) Act 2006 shall be allowed as deduction only on actual payment.
However, it is also proposed that the proviso to section 43B of the Act shall not apply to such payments.
3. Section 15 of the MSMED Act mandates payments to micro and small enterprises within the time as per the written agreement, which cannot be more than 45 days. If there is no such written agreement, the section mandates that the payment shall be made within 15 days. Thus, the proposed amendment to section 43B of the Act will allow the payment as deduction only on payment basis. It can be allowed on accrual basis only if the payment is within the time mandated under section 15 of the MSMED Act.
4. This amendment will take effect from 1st April, 2024 and will accordingly apply to the assessment year 2024-25 and subsequent assessment years. [clause 13]
B to promote non-cash transactions, it is proposed to increase the threshold limits for presumptive scheme of taxation for eligible businesses from 2 crore to 3 crore and for specified professions from 50 lakh to Rs. 75 lakh. The increased limit will apply only in case the amount or aggregate of the amounts received during the year, in cash, does not exceed five per cent of the total gross receipts/turnover.
C Further, the Government proposed to allow a taxpayer to obtain certificate of deduction of tax at source to lower or nil rate on sums on which tax is required to be deducted under section 194LBA of the Act by Business Trusts.
D For online games, it is proposed to provide for TDS and taxability on net winnings at the time of withdrawal or the end of the financial year. Moreover, TDS would be without the threshold of 10,000.
E For the lottery, crossword puzzles games, etc threshold limit of 10,000 for TDS shall continue but shall apply to aggregate winnings during a financial year.
The new provision provided certain conditions that where there is a withdrawal from a user account during the financial year, the income tax shall be deducted at the time of such withdrawal on the net winnings comprised in such withdrawal, as well as on the remaining amount of net winnings in the user account, computed in the manner as may be prescribed, at the end of the financial year.
A new section 115BBJ in the Income tax Act relating to tax on winnings from online games.
F The Budget 2023 rationalise the EPF mechanism by reducing the TDS rate from 30 per cent to 20 per cent on the taxable portion of EPF withdrawal in non-PAN cases. TDS will be deducted by Section 192A of the Income Tax Act of 1961. When an employee reaches the age of 58, his or her EPF account matures. If an employee is unemployed for 60 days in a row, the amount in his or her EPF account is paid to the employee in full and that amount will be tax-free. However, if the employee withdraws the amount before it matures while he is employed, tax deducted at the source (TDS) will be applicable.
G an exemption to Tax on capital gains can be avoided by investing proceeds of such gains in residential property and this is proposed to be capped at 10 crore u/s 54 and 54F.
H It is also proposed that the income from market linked debentures is proposed to be taxed as short-term capital gains at the applicable rates.
I An exemption was given in case of the proceeds of the insurance policy. It is proposed to provide that where the aggregate of premium for life insurance policies (other than ULIP) issued on or after 1st April, 2023 is above 5 lakh, income from only those policies with aggregate premium up to 5 lakh shall be exempt. This will not affect the tax exemption provided to the amount received on the death of a person insured. It will also not affect insurance policies issued till 31st March, 2023.
J In case of interest paid on borrowed capital for acquiring or improving a property certain condition have been laid up claiming deductions, it can also be included in the cost of acquisition or improvement on transfer, thereby reducing capital gains. The cost of acquisition or improvement is expected from the amount of interest claimed earlier as deduction.
06/02/2023
Amendments related to GST proposed in Finance Bill 2023
1) Composition dealers can now supply goods inter-state and through e-commerce operators also.
2) ITC to be reversed pertaining to supply of warehoused goods before clearance for home consumption.
3) ITC blocked on CSR done by company.
4) Big Relief: Section 23 has been given overriding effect on section 24 retrospectively.
Which means that persons making only exempt supplies and agriculturist now not liable to take registration even though required under section 24.
5) GSTR-1, 3B, 8, 9, cannot be filed after 3 years from due date. (Exceptions to be notified)
6) 90% of refund to be granted considering provisionally accepted ITC also. (Earlier it was not allowed)
7) Penalties for e-commerce operator introduced u/s 122.
8) Some offenses decriminalised. (As covered under CPC also)
9) Compounding fees reduced.
10) Supply of goods from non taxable territory to non-taxable territory,
Supply of warehoused goods before clearance of home consumption and high seas sales not be treated as Supply RETROSPECTIVELY.(no refund to be made if tax deposited).
05/02/2023
Budget proposal on taxation of cash perquisites- implication on loan waiver:
1. As per section 28(iv) of the Income Tax Act,1961, the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise shall be taxable as business income.
2. The moot question is that whether the loan amount waived off by the lender constitutes taxable income u/s. 28(iv) of the Act?
3. Hon'ble Supreme Court (SC) in the case of Commissioner v. Mahindra & Mahindra Ltd. [2018] 93 taxmann. com 32/255 Taxman 305 has held that in order to invoke the provision of section 28(iv), the benefit which is received has to be in some other form rather than in the shape of money. As waiver of loan is a cash receipt, Section 28(iv) does not come into picture.
4. The Budget 2023 has now proposed to amend the clause (iv) of section 28 of the Act and clarify that the said clause also applies to cases where benefit or perquisites is in cash or in kind or partly in cash or partly in kind.
5. An explanation has also been proposed to be inserted in section 194R, wherein it has been clarified that provisions of section 194R (1) shall apply to benefit or perquisites whether in cash or in kind or partly in cash or partly in kind.
6. So, going forward, the loan amount waived off in the hands of the any person will be taxed under section 28(iv) of the Act as a benefit or perquisite though the same is received in monetary form.
04/02/2023
Budget proposal on Set off and withholding of refunds in certain cases: –
* Section 241A of the Act deals with withholding of refund in certain cases. As per the section, where a refund becomes due to an assessee under sub-section (1) of section 143 and notice for assessment is issued to him under sub-section (2) of section 143, the Assessing Officer (AO) may withhold such refund till the date of such assessment being made, if he is of the opinion that the grant of refund is likely to adversely affect the revenue. Such withholding can be done after recording the reasons for doing so and with the prior approval of the Principal Commissioner or Commissioner, and applicable to assessment years on or after 2017-18.
* Section 245 of the Act deals with set off of refunds against tax remaining payable. It provides that where refund is found to be due to any person under any provisions of the Act, the AO or other income-tax authorities mentioned in the section, may, in lieu of payment, set off part or whole of the refund against any sum remaining payable by such person, after giving him an intimation in writing regarding the proposed action.
* There is an overlap between the two provisions. Therefore, it is proposed to integrate the two sections by substituting section 245, so as to provide that where under any of the provisions of this Act, a refund is due to any person, the Assessing Officer or Commissioner or Principal Commissioner or Chief Commissioner or Principal Chief Commissioner, may, in lieu of payment of the refund, set off the amount to be refunded or any part of that amount, against any sum remaining payable (ie Income Tax liability for any AY) by the person to whom the refund is due, after giving an intimation in writing to such person of the action proposed to be taken under this section.
* It is also proposed to provide that where a part of the refund has been set off under subsection (1) or where no amount is set off, and refund becomes due to a person, then, the Assessing Officer, having regard to the fact that proceedings of assessment or reassessment are pending in such case and grant of refund is likely to adversely affect the revenue, and for reasons to be recorded in writing and with the previous approval of the Principal Commissioner or Commissioner, may withhold the refund till the date on which such assessment or reassessment is made.
* It is also proposed to amend section 241A of the Act to make the provisions of that section inapplicable from 1st April, 2023.
* Further, as the amendments proposed under section 245 would have an impact on cases referred to in sub-section (1A) of section 244A, i.e., where refund due to the assessee is required to be withheld by the AO under sub-section (2) of the proposed section till the date of the making assessment or reassessment, it is proposed to amend sub-section (1A) of section 244A by inserting a proviso that in case of an assessee where proceedings for assessment or reassessment are pending, the additional interest shall not be payable to the assessee under this sub-section, for the period beginning from the date on which such refund is withheld by the Assessing Officer, in accordance with and subject to provisions of sub-section (2) of section 245, till the date on which the assessment or reassessment pending in such case, is made.
* However, the proposed amendment shall not impact the existing position with regard to all other types of interest, except additional interest under sub-section (1A) of section 244A, payable to the assessee as required under the Act.
* These amendments will take effect from the lst day of April, 2023.
Budget proposals on Search and Seizure:
1. Section 132 of the Income Tax Act contains provisions related to Income Tax search and seizure.
2. The section provides that during the course of search, the authorised officer may requisition the services of any police officer or any officer of the Central Government, to assist him for any of the actions required to be performed during the course of such search, and it shall be the duty of such officer to comply.
3. It is proposed to amend Section 132 of the act to provide that during the course of search the authorised officer, may requisition the services of any other person or entity, as approved by the Principal Chief Commissioner or the Chief Commissioner, the Principal Director General or the Director General, in accordance with the procedure prescribed by the Board in this regard, to assist him for the purposes of the search.
4. The timelines for completing assessment or reassessment in search cases is linked to the execution of the last of the authorisations during such procedure, in order to establish the day of conclusion of search proceedings, and what constitutes as last authorisation is provided in section 153B. As the provisions of section 153B are no longer applicable, it is proposed to provide the meaning of execution of last authorisation under section 132 itself.
5. Last authorisation is deemed to have been executed on the conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued; or in the case of requisition under section 132A, on the actual receipt of the books of account or other documents or assets by the authorised officer.
6. In case of a search action or requisition and cases for which information emanates from the above proceedings are deemed to be information under section 149, which provides the period of limitation for issuance of notice under section 148.
7. It has been seen that in the cases where the aforementioned search, requisition or survey proceedings are conducted after 15th March of a financial year, there is extremely little time to collate this information and issue a notice under section 148 or show cause notice under section 148A(b) of the Act.
8. In cases where a search is initiated or a search for which the last of the authorization is executed or requisition is made, or where the information deemed to be with the Assessing Officer emanates from a statement recorded or documents impounded under summons or survey after the 15th March of any financial year a period of fifteen days shall be excluded for the purpose of computing the period of limitation for issuance of notice under section 148 and the notice so issued shall be deemed to have been issued on the 31st day of March of such financial year.
03/02/2023
TCS on overseas tour packages is proposed to be increased sharply to 20%
1. Sub-section (1G) of Section 206 provides for Tax Collection at Source (TCS) on foreign remittance through the Liberalised Remittance Scheme and on the sale of overseas tour packages.
2. The current TCS rate and the proposed TCS rate are as below:
a) In the case of education, if the amount being remitted out is a loan obtained from any financial institution as defined in section 80E, the present rate is 0.5% of the amount or the aggregate of the amounts in excess of Rs. 7 lakh. The proposed rate has remained unchanged in the budget.
b) In the case of education, other than above or for the purpose of medical treatment, the present rate is 5% of the amount or the aggregate of the amounts in excess of Rs. 7 lakh. The proposed rate remains unchanged.
c) Overseas tour package – Existing Rate 5% without any threshold limit. – Proposed Rate is now 20% without any threshold limit.
d) Any other case - 5% of the amount or the aggregate of the amounts in excess of Rs. 7 lakh. Proposed rate us now 20% without any threshold limit.
3. This amendment will take effect from 1st July, 2023.
02/02/2023
2 unique budget proposals- TDS Credit and Payment to MSMEs
Facilitating TDS credit for income already disclosed in the return of income of past year – Section 155 (20) –
1. Where income is included in the ITR filed by the assessee and tax is deducted in subsequent year according to the provisions.
3. Application can be filed by the assessee within 2 years from the end of financial year in which such tax was deducted at source with assessing officer.
4. Assessing officer will allow the tax credit and pass the necessary order with section 154.
5. It is required that the assessee has not claimed tax credit in any other assessment year.
A new clause inserted in section 43B of the Income Tax Act as follows – Any sum payable by the assessee to a micro or small enterprise beyond the time limit specified in section 15 of the Micro, Small and Medium Enterprises Development Act, 2006,”;
1. Which means – if any payment due to a micro or small enterprises is not paid within the time limit specified in section 15 of MSME Act, 2006 (i.e. any agreed date in contract; in the absence of agreed date – 45 days) will not be allowed as expenses and the same is disallowed under income tax.
2. The important fact to be keep in mind is that the payment due to a micro or small enterprise will be allowed as expenses under Income Tax only if the same is paid within time limit as per section 15 of MSME Act and not before the due date of filing of return of income for the relevant assessment year.
3. However expenses will be allowed on actual PAYMENT basis.
Budget 2023 measures for widening and deepening of tax base and anti avoidance:
1. In a significant move, the Union Budget 2023 has proposed the measures for widening & deepening of tax base and anti avoidance.
2. It is proposed to extend the deemed income accrual provision relating to sums of money exceeding fifty thousand rupees, received from residents without consideration to a not ordinarily resident (non residents were included by Finance Act 2019) with effect from 1st April, 2023.
3. It is proposed to omit the provision to allow tax exemption to news agencies (10(22B))set up in India solely for collection and distribution of news from the financial year 2023-24.
4. It is proposed to tax distributed income by business trusts (Real Estate Investment Trust and Infrastructure Investment Trust) in the hands of a unit holder (other than dividend, interest or rent which is already taxable) on which tax is currently avoided both in the hands of unit holder as well as in the hands of business trust.
5. Clause (ix) of the proviso to section 193 provides that no tax is to be deducted in the case of any interest payable on any security issued by a company, where such security is in dematerialized form and is listed on a recognized stock exchange in India in accordance with the Securities Contracts (Regulation) Act, 1956 (32 of 1956) and the rules made thereunder. It is seen that there is under reporting of interest income by the recipient due to above TDS exemption. Hence, it is proposed to omit clause (ix) of the proviso to section 193 of the Act.
6. In Section 44BB and Sec 44BBB presumptive taxation, a new sub-section is inserted to provide that notwithstanding anything contained in sub- section (2) of section 32 and sub-section (1) of section 72, where an assessee declares profits and gains of business for any previous year in accordance with the provisions of presumptive taxation, no set off of unabsorbed depreciation and brought forward loss shall be allowed to the assessee for such previous year.
7. It it is proposed to amend section 194B and 194BB of the Act to provide that deduction of tax under these sections shall be on the amount or aggregate of the amounts exceeding ten thousand rupees during the financial year; amend section 194B of the Act to include “gambling or betting of any form or nature whatsoever” within its scope; amend section 194B of the Act to exclude online games from the purview of the said section from the 1st day of July, 2023, since a new section 194BA is proposed to be introduced for deduction of tax at source on winnings from online games from that date; insert a new section 194BA in the Act, with effect from 1st July 2023, to provide for deduction of tax at source on net winnings in the user account at the end of the financial year.
8. It is proposed to impose a limit on the maximum deduction that can be claimed by the assessee under section 54 and 54F to rupees ten crore. It has been provided that if the cost of the new asset purchased is more than rupees ten crore, the cost of such asset shall be deemed to be ten crores.
9. 50AA has been introduced in the Act to treat the full value of the consideration received or accruing as a result of the transfer or redemption or maturity of the “Market Linked Debentures” as reduced by the cost of acquisition of the debenture and the expenditure incurred wholly or exclusively in connection with transfer or redemption of such debenture, as capital gains arising from the transfer of a short term capital asset.
10. It is proposed to enable the Assessing Officer to direct the assessee to get the inventory valued by a cost accountant, nominated by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in this behalf.
*Key Highlight of Direct Taxes*
1. Common IT form and grievance redressal system
2. MSME - avail benefit of presumptive taxation increased to 44AD to 3 crores
Professionals u/s 44ADA - 75 lakhs
Provided receipt in cash doesn't exceed 5%
3. TDS only on payment for deduction
4. Co-operatives tax -15%
Higher limit of 2 lakh per member for cash deposit in agricultural banks
Higher limit of Rs. 3 crores on TDS for cooperative societies
5. Startups
To avail startup benefits from 31-03-2023 to 31-03-2024
6. 100 new joint commissioners for appeal
7. S.54 to S.54F capped at 10 crores
8. TDS on Online gaming -
9. TDS 30% to 20% on taxable portion of EPF
10. Extending funds for GIFT and IFSC
*Personal Income Tax*
1. Rebate for income upto 7 lakhs u/s 87A in the new tax regime
2. New tax regime from
0-3 lakhs nil
3-6 lakhs- 5%
6-9 lakhs 10%
9-12 lakhs 15%
12-15 lakhs 20%
Above 15 lakhs- 30 %
3. Standard deduction for new tax regime for Rs. 15.5 lakhs or more -52,500
4. Reduction of highest surcharge from 37% to 25% on new income tax regime
5. Limit on tax exemption for leave encashment is increased from 3,00,000 to 25,00,000
6. New income tax regime default regime
*Part B of Honourable Finance Minister speech in Budget 2023*
*Indirect Taxes*
1. Customs duty on goods of textiles, toys, bicycle reduced from 21 to 13%
2. To promote Green Mobility - basic customs duty concession for lithium ion battery
3. To promote Electronics manufacture- relief on customs duty for camera lens and lithium battery
4. Television - TV panels customs duty reduced
5. Electric kitchen chimney to reduce inverted duty structure from 7.5 to 15 percent
6. Benefit for ethanol blending program and acid program and epichlorohydrine
7 Marine Products- to promote exports - shrimps, etc. Duty on shrimpfeed reduced
8. Basic Customs duty reduced for seeds in manufacture for diamonds
9. Customs duty to increase in silver bars
10. Steel - concessional customs duty on steel and ferrous products
11. Copper - concessional customs duty on copper
12. Rubber - concessional customs duty on rubber
13. Cigarettes - increased tax
*Direct Taxes*
1. Common IT form and grievance redressal system
2. MSME - avail benefit of presumptive taxation increased to 44AD to 3 crores
Professionals u/s 44ADA - 75 lakhs
Provided receipt in cash doesn't exceed 5%
3. TDS only on payment for deduction
4. Co-operatives tax -15%
Higher limit of 2 lakh per member for cash deposit in agricultural banks
Higher limit of Rs. 3 crores on TDS for cooperative societies
5. Startups
To avail startup benefits from 31-03-2023 to 31-03-2024
6. 100 new joint commissioners for appeal
7. S.54 to S.54F capped at 10 crores
8. TDS on Online gaming -
9. TDS 30% to 20% on taxable portion of EPF
10. Extending funds for GIFT and IFSC
01/02/2023
BUDGET 2023
Saptarshi is the buzzword for the Modi Government 2023 Budget :
1. Inclusive development
2. Infrastructure growth
3. Green Growth
4. Governance focus
5. Youth Power
6. Financial Empowerment
7. Agriculture digital Infra
1. Special scheme to Boost Fisheries
2. Agri accelerator to boost start ups
3. India to be global hub for Sri Anna
4. Ministry for cooperative development formed
5. Massive spurt in opening medical colleges
6. National Digital Library for Youth
7. National Database for mapping cooperatives
8. Capex outlay hiked by 33% to 10 lakh Crores
9. 50 year interest free loans for states to continue for one more year
10. Rs.2.40 lakhs crores for Railways
11. 100 critical infra projects highlighted
12. Rs. 10000 crore for urban infra work
13. 3 centres of excellence to be set up for artificial intelligence.
14. PAN to be used as a common identifier in government websites through a online mandate( In simple terms KYC to be simplified)
15. Refund Schemes for MSME failure by government agencies
16. Rs. 7000 crores for Phase 3 of E-Courts
17. 100 labs for 5G services
GREEN POWER DRIVE
1. Net zero carbon emission target on track
2. Rs 19700 crores for national green hydrogen outlay
3. 13 GW Green energy from ladakh via investment of Rs. 20700 crores
4. Gobardhan Scheme for 2020 Bio Gas Plant
5. PM Pranam scheme for Agro Drive
6. 10000 Bio Input Research to be set up.
7. 83BN Central Support For Ladakh Energy
8. More funds for Old Vehicle Scrapping
YOUTH POWER
1. National Education Policy to focus on Skilling and Job Creation
2. New Age Skills like Robotics, Artificial Intelligence & IOT
3. Stipend Support to 47 lakhs Youth
4. Focus on Skill Development
5. New Application to Improve Tourism
6. Dekho Apna Desh Scheme to Promote Tourism
7. UNITY MALLS IN STATE CAPITALS to promote Tourism
Financial Empowerment
1. Credit Guarantee scheme for MSME :- Reducing credit guarantee by 1%
2. National Financial Registry for Financial Strategy
3. 9000 crores for MSMEs, Rs 2 lakh Crores for collateral
4. Banking Laws to be amended
5. SEBI to regulate and enforce awarding of diplomas
6. Senior Citizens Saving Schemes to be doubled to 30 Lakhs
7. Mahila samman bachat scheme for women with 7.5% interest
8. Savings Schemes for women up to 2 years
9. Fiscal deficit is estimated at 5.9% of GDP
INDIRECT TAXES
1. Tax exemption on Capital Goods and lithium Batteries for Electric vehicles
2. GST Exemption on Blended CNG
3. Custom Duty reduced from 21% to 13%
4. Mobiles Cameras lenses to get cheaper
5. Customs on Kitchen Chimney to go down
6. Gold Silver Diamonds to get expensive
7. Clothes to become more expensive
DIRECT TAXES
1. MSME with turnover upto 2cr and 50 lakhs can avail presumptive taxation
2. Tax relief to 3.7 lakhs for customers whose cash receipts is 5%
3. New IT return form for easing Filing returns
4. Higher TDS limit of 3cr for Cooperatives
5. Lower Taxes on Higher Digital Payments
6. 100 Joint Commisioner to dispose small Tax disputes
7. TDS reduced on EPF withdrawal
Personal Income Tax
1. Rebate limit upto 7 lakhs
2. Upto 3 laks nil Rs. 3-6 lakhs - 5% Rs. 6-9 lakhs - 10% Rs. 9-12lakhs - 15% Rs. 12-15 lakhs - 20% above 15 lakhs - 30%
3. Std deduction to 52500 for income slabs to 15.5 lakhs to more
4. Surcharge reduced to 25% from 37%
5. Will implement default new TAX regime.
Highlights of Union Budget 2023-24
-FY-2024 fiscal deficit target at 5.9% of GDP
-Cigarettes to get costlier as Budget proposes 16% hike in duty
-Sitharaman says the economy is growing the fastest among major economies
-50-year interest free loan to state governments extended for one more year
-30 Skill India International Centres to be setup across states
-Existing Regulations to be reviewed to ease compliance - Single window for registration of SEZ, GSTN, IFSC
FM Nirmala Sitharaman also outlined seven priorities for the 'first Budget in Amrit Kaal'
Inclusive development
Reaching the last mile
Infra & investment
Unleashing the potential
Green growth
Youth power
Financial sector
Part B of Honourable Finance Minister speech in Budget 2023
Indirect Taxes
1. Customs duty on goods of textiles, toys, bicycle reduced from 21 to 13%
2. To promote Green Mobility - Will exempt excise duty on GST- based green compressed Biogas
3. To promote Electronics manufacture- relief on customs duty for camera lens and lithium battery
4. Television - Basic customs duty for import of TV panel cut to 2.5%
5. Basic Custom Duty on Electric kitchen chimney increased
6. Basic customs duty brought to "0" for denatured ethyl alcohol
7. Customs duty on key inputs will be reduced to enhance the export of Marine products, such as shrimp feed.
8. Customs duty to increase in silver bars
9. Duty increased on cigarettes
Direct Taxes
1. Common IT form to be rolled out and grievance redressal system to be strengthen
2. Enhanced limits for Presumptive taxation
Sec 44AD - Rs.3 crore - Allowed for Micro businesses
Sec 44ADA - Rs.75 lakhs
Professionals u/s 44ADA - 75 lakhs - certain professionals, respectively, who have less than 5% cash receipts.
3. Co-operatives tax -15% fixed for manufacturing segment
Higher limit of 2 lakh per member for cash deposit in agricultural banks
Higher limit of Rs. 3 crores on TDS for cash withdrawls
4. Income tax benefits has been extended by a year till 2024 for startups.
5. Carry forward of loss benefit from 7 years to 10 years allowed for startups
6. 100 joint commissioners will be deployed to dispose of small appeals in Income Tax.
7. Tax concession granted- From Capital Gains On investment in Residential House - Sections 54 and 54F to Rs.10 Crores.
8. TDS rate reduced to 20% on taxable withdrawal of EPF.
Personal Income Tax
1. Sec 87A Rebate - Currently, income up to Rs. 5 Lakh do not pay any income tax. It is proposed to increase the Income limit to Rs.7 Lakh which will be applicable to those who opted under the New Regime only.
2. 6 income slabs in the new regime are now to be changed to 5 slabs -
Basic exemption upto 3 Lacs,
3-6 Lakh 5%,
6-9 Lakh - 10%,
9-12 Lakh 15%
12-15 Lakh 20% and
> 15Lac is 30%
3. Salaried and pension - standard deduction in a new regime with over Rs.15.5 lakhs is Rs.52,500
4. Reduction of highest surcharge from 37% to 25% on new income tax regime
5. Limit on tax exemption for leave encashment is increased from 3,00,000 to 25,00,000
6. New IT regime as default tax regime. Still, old regime will be available for tax assesses to choose.
7. Reduction of the highest surcharge from 37% to 25% in the new tax regime.
31/01/2023
Wrap-up: Key takeaways of Economic Survey 2022-23:
1. India's GDP growth is expected to remain robust in FY23 at 7 per cent (in real terms).
2. India to remain the fastest-growing major economy in the world. GDP forecast for FY24 to be in the range of 6-6.8 %.
3. Survey projects a baseline GDP growth of 11 per cent in nominal terms.
4. Credit growth to MSME sector has been remarkably high, over 30.5 per cent, on average during Jan-Nov 2022.
5. The Economic Survey cautions that the challenge of the depreciating rupee. CAD may continue to widen as global commodity prices remain elevated.
6. Electronics exports rise nearly threefold.
7. The government's finances have shown a resilient performance during the year FY23.
8. Cleaner balance sheets led to enhanced lending by financial institutions. Credit disbursed by Non-Banking Financial Companies (NBFCs) has also been on the rise.
9. Social Sector witnessed significant increase in government spending.
10. Labour markets have recovered beyond pre-Covid levels, in both urban and rural areas.
11. The year FY22 saw improvement in Gross Enrolment Ratios (GER) in schools and improvement in gender parity.
12. Private investment in agriculture increases to 9.3% in 2020-21.
13. The services sector is expected to grow at 9.1% in FY23.
S-ET
Economic Survey 2022-2023 highlights that on account of the strong macroeconomic fundamentals of the Indian economy and the improvement in market risk appetite from time to time, India remains an attractive investment destination. The World Bank’s India Country Director, Auguste Tano Kouame, credited India’s strong macroeconomic fundamentals for the “remarkably resilient” economy.
1. Economic Survey 2022-2023 highlights buoyant performance of the Indian capital markets in the past year, driven by increased contribution of Small and Medium Enterprises (SMEs) and greater participation of domestic institutional and retail investors.
2. The Survey observes that India’s capital markets had a good year despite global macroeconomic uncertainty, unprecedented inflation, monetary policy tightening, volatile markets, etc.
3. The number of SMEs coming with IPOs was almost double compared to the FY 2022 (till November 2021), and the total funds raised by them were almost three times the funds raised by them in the same period last year.
4. The overall net investments by Foreign Portfolio Investors during FY23 registered an outflow of Rs 16,153 crore at the end of December 2022 from an outflow of Rs 5,578 crore during FY22 at the end of December 2021, with both the equity segment and the debt segment witnessing net FPI outflows. Investments by Domestic Institutional Investors (DIIs) acted as a countervailing force against FPI outflows during recent years, rendering the Indian equity market relatively less susceptible to large scale corrections. Net DII inflows and net investment by mutual funds in equities were observed during FY23 (until November 2022).
5. As per ES 22-23 highlights contribution of GST for digital transformation in the para give below
Network (GSTN) and e-Way Bill system have enabled the formalisation of business transactions. The increasing number of GST taxpayers, from 70 lakh in 2017 to more than 1.4 crore in 2022, indicates the expansion in formal businesses. Formalisation of transactions, for even the smallest of amounts, has been possible with the wide usage of the digital payment system of UPI. The greater formalisation will enhance the productivity of individuals and businesses in the economy through improved access to credit and efficiency gains in their operations.
6. As per ES 22-23 highlights about certain reforms under GST in the para given below
GST, for instance, has helped businesses by reducing compliances, ensuring a free flow of goods across states, doing away with the need for businesses to have a separate warehouse for every state, and hence improving the ease of doing business. The earlier indirect tax regime was origin based, and it distorted the location choices of the businesses.
Structural reforms like the introduction of GST and the digitalisation of economic transactions have led to the greater formalisation of the economy and hence expanded the tax net.
7. Other tax administration/policy measures, such as the Faceless Assessment and Appeal, simplification of return filing, assistance to taxpayers in getting familiar with the systems, generation of e-way bills under the GST system, and information sharing between government departments among others, have nudged higher tax compliance through technology and artificial intelligence.
8. In ES 22–23, certain measures made in the previous year to accomplish the objectives of the GST law and rules thereunder are also highlighted. Below are a few actions from the past year that are prescribed in ES 22-23.
A. Changes in GST (Rates)
At present, GST council focus has been observed on rate rationalisation. ES 22-23 has highlighted various measures taken in the 47th GST Council meeting with an aim of rate rationalisation. Additionally, ES 22-23 highlighted increase the GST rates on items such as Printing, writing or drawing ink, Power driven pumps primarily designed for handling water such as centrifugal pumps, Pawan Chakki, Drawing and marking out instruments, Solar Water Heater and system etc to correct inverted duty structure in these items.
B. Also, it is highlighted that in the 47th GST Council Meeting with an objective to rationalise GST exemptions, recommended to withdraw GST exemption on items such as Cheques, lose or in book form, Maps and hydrographic or similar charts of all kinds, including atlases, wall maps, topographical plans and globes, printed etc.
C. Changes in GST Law and Procedure:
ES 22-2 has highlighted certain measures which were undertaken under GST in 2022-23. Below are key
measures highlighted with a view for trade facilitation
Retrospective amendment made in section 50 of CGST Act with effect from 01.7.2017 to provide the interest is required to be paid on the wrongly availed ITC only when the same utilised. Also, rate of interest on wrongly availed and utilised ITC reduced to 18% from 24% with retrospective effect from 01.7.2017
D. UPI & IMPS have been provided as an additional mode for payment of GST
Transfer of CGST/IGST cash ledger balance has been allowed between 'distinct persons' Facility has been provided for withdrawal of refund applications made under GST by the taxpayers.
E. A mechanism has been prescribed for refund of accumulated ITC on export of electricity
F. Procedure of sanction of IGST Refund in case of export of goods, where the exporters have been identified as risky, has been streamlined, to expedite verification and processing of such claim
G. Additionally, it is highlighted that below measures have been taken for ease of doing business
H. Threshold for mandatory issuance of e-invoice has been reduced to ?10 crore from 01.10.2022.
I. To facilitate small taxpayers in making supply of goods through e-commerce operators and to provide parity in intra-state offline and online supply of goods, in-principle decision has been taken for waiver of requirement of mandatory registration under GST for intra-state supply of goods through ECO's Composition taxpayers would also be allowed to make intra-State supply through ECOs subject to certain conditions.
30/01/2023
On 25 January, Anderson’s research firm Hindenburg released a devastating report, titled “How The World’s 3rd Richest Man is Pulling The Largest Con in Corporate History". Over two trading days (25 and 27 January), the 10 listed entities owned by Adani lost between 5% and 25%.
Adani group has called Hindenburg’s allegations malicious and fabricated, and published a detailed rebuttal of its charges Sunday night. Since Nathan Anderson started Hindenburg as a standalone research firm in December 2017, the firm has put out notes on 45 companies, according to an executive and review of the reports by Mint.
Anderson has said in past interviews that Hindenburg has six employees. That means an average of nine reports per employee per year.
Firms such as Hindenburg typically shares its research with a small pool of investors ahead of the public release, allowing them to take short positions and profit once the report is released. Such firms make a commission off the profits its investor-partners make—it’s akin to a subscription fee. But it’s a high-risk gambit. If the stock moves up instead, investors can get caught in what is known as a short squeeze.
India Inc. has been preparing to replace over 2,000 independent directors, as they complete their tenures in 2024. The hunt is on for managing directors and chief executives across sectors. Search firms and consultants are wooing independent directors from overseas to join Indian firms. The directors are from 961 firms listed on the National Stock Exchange.
More than 150 companies that have raised funds through initial public offering (IPO) since July 2017 are now staring at additional goods and services tax (GST) liability. Tax authorities have started issuing notices to these companies, asking them to reverse credit claimed on expenses for listing of the shares, people aware of the matter said. The authorities argue that listing of shares is equivalent to trading of securities, which is an exempted service as per the GST provisions, hence tax credit claimed by the companies should be reversed. Tax experts, however, said the treatment of IPO as security trading may not be the correct interpretation as the proceeds are used for “furtherance of business”. which is not exempted under GST provisions.
To get the benefit of Double Taxation Avoidance Agreement (DTAA) while filing the income tax return in India, one need to follow these steps:
1. Determine your residency status: Your residency status will determine which country has the right to tax your income.
2. Know the DTAA provisions: Check if India has a DTAA with the country where you are earning income and understand the provisions of the agreement.
3. Keep records: Maintain proper documentation and records of your income, taxes paid abroad, and other relevant information.
4. File taxes in both countries: If both countries have the right to tax your income, file your tax returns in both countries.
5. Claim relief: You can claim relief from double taxation by using the provisions of DTAA while filing your tax return in India.
6. Don’t forget to file Form No. 67 within due date for getting the Tax Credit
29/01/2023
The Australia – India Economic Cooperation and Trade Agreement was signed between the 2 nations (India and Australia) on 2 April 2022. It was ratified on 21 November 2022 and has come into force with effect from 29 December 2022 onwards. Amongst others, the Agreement ensures that payments or credits paid to Indian residents by Australian customers for technical services provided are not subject to tax in Australia, for FYs which will start after 29 December 2022 i.e. 2023-24 onwards. Earlier, these payments were considered to be taxable in Australia as Australian sourced income by virtue of Article 23 of Australia-India double taxation avoidance agreement, following the decision in Tech Mahindra Ltd vs. Commissioner of Taxation (2016) FCAFC 130. The amendment is a welcome move, likely to result in elimination of double taxation on IT services giving India more competitive edge by creating more job opportunities.
https://www.pib.gov.in/PressReleasePage.aspx?PRID=1887259
The Ahmedabad bench of Income Tax Appellate Tribunal recently held Tax Deduction at Source could not be denied to developer following percentage completion method if buyer deducted Tax at the time of execution of sale deed. These appeals filed by the assessee Neelkanth Developers are against the order of National Faceless Appeal Centre (NFAC). Assessee was a builder and developer and has offered income on the basis of percentage completion method, whereas the TDS has been deducted by the purchaser of the property under section 194-IA of the Income Tax Act 1961 at the time of execution of sale deeds. Therefore, the case of the assessee is that it is not possible at all times to correlate a specific amount of TDS with the specific amount of income earned by the assessee in a particular year. But the Assessing officer issued notice under section 139(2) of the Act for the reason that credit of TDS had been claimed, but the corresponding receipts/income had been omitted to be offered for taxation. Section 194-IA of the Income Tax Act 1961 transferee is responsible for paying a sum by way of consideration for transfer of any immovable property and credit such sum to the account of the transferor it pay in mode of cash or cheque or draft and deduct an amount equal to one percent of such as income –tax thereon.
CITATION: 2023 TAXSCAN (ITAT) 298
Check once all your PAN linked with aadhar or not. Specifically for those who do not file returns as PAN will be inactive if not linked with Aadhaar by 31st March, 2023.
Find the link here below to verify:
https://eportal.incometax.gov.in/iec/foservices/#/pre-login/link-aadhaar-status
28/01/2023
MCA Updates:
1. Ministry of Corporate Affairs released frequently asked questions regarding Incorporation of the Company and allied matters.
2. Companies (Accounts) Amendment Rules 2023 notified amending Form AOC-5 for notification of address where books of account will be kept. Now documentary proof of ownership/rent agreement, utility bill etc. will have to be attached alongwith photograph of office.
3. Section 164 of the Companies Act, 2013 provides various grounds for disqualification of directors in a company as below:
Grounds for disqualification u/s 164(1) (related to individual)
• Director is declared by court to be of unsound mind, or an undischarged insolvent, or convicted by court for any offence involving moral turpitude and has been imprisoned for the said offence for more than 6 months, or convicted of any offence with respect to related party transactions u/s 188 of Companies Act during last 5 years, or holding directorships in more than 20 companies at the same time
• A court order is in force disqualifying the individual to be appointed as director in a company
• Non-payment of share application money due on the shares held by a director for more than 6 months from the due date for payment
• Director fails to obtain Director Identification No. (DIN) as per the Companies Act
Grounds for disqualification u/s 164(2) (related to company in which the individual is a director) If the individual is a director in a company that has defaulted in:
• Filing its financial statements / annual returns for 3 continuous FYs
• Repayment of deposits and debentures (including interest thereon) continuously for more than a year • Payment of declared dividend to shareholders continuously for more than a year Company Law
Earlier, if an individual at the time of his / her appointment (or reappointment) as director in a company would be disqualified u/s 164(2) of the Companies Act, 2013, he / she had to intimate the same to the company in Form DIR-8, at the beginning of each FY. MCA vide notification dated 20 January 2023 has now included section 164(1) as well within the above requirement for intimation to the company. Form DIR-8 has been suitably amended to incorporate the said disclosure requirement. Once the company receives the intimation / disclosure from the director in Form DIR-8, the company shall report the same to RoC in e-Form DIR-9 within 30 days from the date of receiving such intimation from the director
https://www.mca.gov.in/bin/dms/getdocument?mds=5gAUSA0m%2FLmgaQtCZdCS2Q%3D%3D&type=open
4. Issue of bonus shares – No requirement to annex shareholders’ approval with e-Form PAS-3 (return of allotment of shares) to be submitted with RoC.
What are bonus shares? Bonus shares are additional shares issued by a company to its existing shareholders. Bonus shares are issued by a company when it is not able to pay dividend to its shareholders due to shortage of funds. In such a situation, the company issues bonus shares to its shareholders instead of paying dividend. Requirement to annex shareholders’ approval with e-Form PAS-3 done away with Currently, Rule 12(6) of the Companies (Prospectus and Allotment of Securities) Rules, 2014 requires mandatorily to annex shareholders’ approval with e-Form PAS-3 to be submitted with RoC for issue of bonus shares. MCA vide notification dated 20 January 2023 has dispensed the above requirement. Rule 12(6) has been omitted.
27/01/2023
RBI notifies auto-acknowledgement of forms filed on Foreign Investment Reporting & Management System (FIRMS) portal of RBI along with online system generated late submission fee Background RBI with the objective of integrating the reporting structures of various types of foreign investment in India, launched a separate online portal ‘FIRMS’ in 2018. On the FIRMS portal, various foreign investment related forms (some of them mentioned below), are filed as web-based Single Master Form (SMF).
• Form FC-GPR (reporting of receipt of funds against foreign investment)
• Form FC-TRS (reporting of transfer of shares in company between non-resident shareholder and resident shareholder)
• Form LLP-I (reporting of receipt of contribution from foreign partners in Limited Liability Partnership)
• Form LLP-II (reporting of transfer of contribution in LLP between non-resident partner and resident partner)
Any delay in filing of the above form(s) attracts late submission fee levied by RBI. Processing of forms on FIRMS portal and computation of late submission fee To address the issues encountered in previous regime of FIRMS portal, RBI vide notification dated 4 January 2023 has modified the procedure for processing of forms filed on FIRMS portal, and computation of late submission fee
Calcutta HC on allowing hookah bars in West Bengal until an Act is enacted in this regard.
https://taxguru.in/income-tax/calcutta-hc-allowing-hookah-bars-west-bengal-act-enacted-regard.html
26/01/2023
SEBI Updates:
1. Relaxation up to 30 September 2023 from the requirement of sending physical copy of annual reports to the shareholders of listed companies Pursuant to regulation 36(1)(b) of SEBI Listing Obligations and Disclosure Requirements (LODR), every listed company is required to send physical copies of its annual reports to all the shareholders who have not registered their email addresses with the company. Considering the representations received from listed companies seeking dispensation from the said requirement, SEBI vide circular dated 13 May 2022 had provided the said relaxation to all the listed companies till 31 December 2022. Now, vide circular dated 5 January 2023, SEBI has once again extended the said relaxation till 30 September 2023. Listed companies are required to ensure compliance with the following.
• Listed companies are required to send physical copy of full annual report to those shareholders who request for the same
• Notice of the Annual General Meeting (AGM) of the shareholders published by advertisement in terms of regulation 47 of SEBI LODR regulations, shall contain a link to the annual report, so as to enable shareholders to have access to the full annual report.
2. Introduction of ‘Investor Risk Reduction Access’ (IRRA) platform in case of disruption of trading services provided by trading members to investors In recent times, with increasing dependence on technology in securities market, there is a rise in instances of glitches in trading members’ systems, some of which lead to disruption of trading services and investor complaints. In such instances, investors are at risk of non-availability of options to close their trading, particularly if markets are volatile. To address this issue, SEBI had extensive consultations with stock exchanges, clearing corporations and trading members. Vide circular dated 30 December 2022, SEBI has notified that trading members shall provide IRRA service to its investors, giving them an opportunity to square off / close their trading and / or cancel pending orders in case of disruption of trading services. IRRA shall be developed by the stock exchanges and will support multiple segments across multiple exchanges.
The working mechanism of the IRRA platform is given below.
• Trading members upon facing technical glitches which lead to disruption of trading services, may request the stock exchange for enablement of the IRRA services. IRRA shall be enabled by the stock exchange on receipt of such requests
• Once the IRRA service is enabled, investors will be informed by the stock exchange of the availability of such service through email / sms along with a public notice on stock exchange and trading member’s website
• Investors may login to the IRRA service using either their Unique Client Code (UCC) or PAN which shall be further authorized by a one-time password (OTP) sent to their registered mobile numbers and e-mail ids
• Once successfully authorized, the investors may: Square off / close the open positions across segments and stock Exchanges; and / or Cancel the orders across segments which are pending at the stock exchange(s)
• IRRA service shall not permit any action that increases the risk of the investor
• Trading member shall continue to be responsible for all the activities on the IRRA platform with respect to all obligations including settlement and margin requirements
• Stock exchanges shall ensure that credible and periodic testing of the IRRA platform is carried out from time to time for smooth functioning of the service; Stock exchanges and clearing corporations shall put in place appropriate systems to ensure compliance of the aforesaid provisions on or before 1 October 2023.
25/01/2023
SC’s decision dated 4 November 2022 In the decision of State Bank of India (SBI), the employees had done travel not just within India but their journey involved a foreign leg as well (such as Delhi- Madurai- Columbo - Kuala LampurSingapore- Columbo- Delhi). The employee’s claim for LTA was fully reimbursed by SBI without deduction of tax at source u/s 192(1) of the Income-tax Act. Accordingly, the question before SC was, whether SBI should be treated as defaulter or not within the meaning of section 201(1) of the Act for not deducting tax at source while releasing payments to its employees as LTA. The Income-tax department, Tribunal as well as High Court had decided the matter against SBI. The SC upheld the decision of lower courts and also decided the matter against SBI. While pronouncing its decision, SC observed the following:
· For entitlement of tax exemption, the travel must be done from 1 designated place in India to another designated place within India. In other words, LTA is not allowed for a foreign travel. Further, LTA is given for the shortest route between the 2 places.
·The employees of SBI had done their travel not just within India but their journey involved a foreign leg as well. It was also not the shortest route. Hence, the bank should have deducted tax at source, while making the payment
·Contention of the taxpayer that there is no specific bar u/s 10(5) for a foreign travel and therefore a foreign journey can be availed as long as the starting and destination points remain within India, is without merits. The moment employees undertake travel with a foreign leg, it is not a travel within India and hence not covered u/s 10(5) of the Act
A foreign travel also frustrates the basic purpose of LTA. The basic objective of the LTA scheme was to familiarize a civil servant or Government employee to gain some perspective of Indian culture by traveling in this vast country. It is for this reason that the 6 th Pay Commission rejected the demand of paying cash compensation in lieu of LTA and also rejected the demand of foreign travel
SBI cannot claim ignorance about the travel plans of its employees. During settlement of LTA bills, the complete facts were available before SBI about the details of its employees’ travels.
https://main.sci.gov.in/supremecourt/2020/13239/13239_2020_8_1501_39468_Judgement_04-Nov-2022.pdf
24/01/2023
Many wealthy Indians, some belonging to the close-knit community of diamantaires, are being asked by the tax office to explain why their names figure in foreign life insurance policies running into millions of dollars. Most of these individuals either did not disclose that they were nominees in foreign life policies or were found to have purchased life insurance from an offshore company without the permission of the Reserve Bank of India. Summons were served under section 131 of the Income Tax Act which empowers the tax authorities to conduct enquiries, two persons familiar with the development told ET. According to a tax official, the enquiries are based on specific information, and assesses have been asked to explain why they have failed to disclose it in the foreign assets (FA) schedule of the I-Treturns as mandated under the law. Till now, the tax office has been primarily receiving information on overseas bank accounts under the in- formation-sharing pacts shared bet- ween India and respective jurisdictions. Now, foreign insurance companies have also begun parting with data on the insured and nominees having Indian addresses. “Schedule FA for reporting of off- shore assets and incomes was introduced from assessment year 2012-13. The 5-lakh threshold amount is generally applicable to overseas bank accounts. It’s unclear how the threshold would be determined for insurance policies. The Foreign Exchange Management Act (or, Fema) is triggered when life insurance is bought from a foreign company without obtaining an authorisation from the central bank. Officials in the wealth management business say that the interest on large overseas life covers (known as jumbo policies in the trade) has sharply increased since the pandemic. After receiving the green light from the RBI, a person can buy such a policy by transferring the premium amount using RBI’s liberalised remittance scheme (LRS) which allows a resident to invest up to $250,000 a year in stocks, bonds, properties and debt mutual funds.
In October 2022, the I-T department received its third tranche of information as part of the annual automatic information exchange arrangement with various countries. “For more than one lakh assesses there are discrepancies between the disclosures made in filing of tax returns and the information received from different countries. These cases will be taken up by field officers across the country. Unlike in the past, the information has come not just from foreign banks but also other institutions, thereby expanding the financial intelligence pool.
Few transactions that may draw the attention of the income tax department :–
1. Credit Card Bill Payments: Any payment of your credit card bills exceeding 1 Lakh Rupees or more in Cash, or Rs. 10 Lakhs by any other mode will be reported to the tax authorities, as per the regulations of the Central Board of Direct Taxes (CBDT).
2. Property related Transactions: Purchase/Sale of real estate worth more than Rs. 30 Lakhs is reportable by the Registrar to the appropriate Income Tax Authority,
3. Sale of Foreign Currency: Purchases/Sales of foreign currencies exceeding Rupees 10 Lakh in a Financial Year, along with Forex Cards and Travelers’ Checks are reportable to the tax department.
4. Bank Deposits: Current Accounts with deposits in excess of Rs. 50 Lakhs and Savings Bank (SB) accounts with deposits exceeding Rs. 10 Lakhs in a financial year attract the attention of the department.
5. Cash deposits in Fixed Deposits (FDs) exceeding Rs. 10 Lakh limit in a financial year can also put you under the radar.
6. Securities Transactions: Investments exceeding 10 Lakh Rupees in mutual funds, equity shares, debentures and bonds also invite the attention of the tax authorities.
7. Payment of property tax (per annum) – 20,000
8. Health and Life Insurance Premiums – 20,000 and 50,000
9. Hotel Bills – 20,000
10. Payments of Educational Fees and Donations – 1 Lakh
11. Electricity Bill – 1 Lakh
12. Jewelry purchases – 1 Lakh
13. Term Deposits – 10 Lakhs
Also, the filing of Income Tax Returns have also been made compulsory for :
1. businesses and professionals with turnover above Rs. 50 Lakh, and the individuals with bank transactions exceeding Rs. 30 Lakhs and whose monthly rent payments exceed Rs. 40,000.
14 new features added to MCA V3 portal:
1) Trademark validation is added in Incorporation Form.
2) Every User has to create his/her id on the portal and have to register DSC through their respective login
3) E-MOA and E-AOA is added for Section 8 Company.
4) E-Form DIR-2 is added. Most of Physical Form has been removed.
5) NIC Code 2008 needs to be provided for Object in V3.
6) E-MOA is added in Form MGT-14 in Changing Registered Office from one state to another Memorandum of Association
7)Section Pertaining to IBC added in Form MGT-14.
8) Photograph of Registered Office is added in Form INC 20-A (For Commencement of Business).
9)Form INC-22 cannot be filed if your any Form is pending for approval ( in case of change in registered office/state).
10) Type of Security to be allotted, Type of issue (Right issue/ Private Placement) is added in Form PAS-3.
11) List of allottee in included in the Form itself instead of separate attachment.
12)One declaration is added in Form PAS-3 that “There is no pending Forms for previous allotment”.
13)Form 28 is now conditional STP earlier it was non STP for all purpose.
14) Form size is increased to 10 MB.
23/01/2023
Shri Ashokbhai Amrutbhai Valand vs ITO Counsel for Appellant: Shri Keyur Bavishi Counsel for Respondent: Shri Alpesh Parmar CITATION: 2023 TAXSCAN (ITAT) 234
The Income Tax Appellate Tribunal (ITAT) has recently deleted additions made for cash gifts from close relatives to meet the emergency situation and held that uncle and aunt are considered close relatives of the assessee. Assessee Shri Ashokbhai Amrutbhai Valand filed return of income under Section 148 of the Income Tax Act 1961 declaring total income of Rs. 1,44,000/-. The Assessing Officer made an addition of Rs. 10,42,000/- and treated the same as unexplained money under Section 69A of the Income Tax Act 1961.Against this order assesee filed appeal before ITAT. After considering the contention of the both sides the single bench of Suchitra Kamble, (Judicial Member) allow the appeal and observed “It is pertinent to note that to meet the emergency situation of additional expenses by the assessee the assessee has obtained cash not only from assessee’s father and mother but also the close relative that is the maternal uncle, maternal aunt as well as paternal uncle and paternal aunt and the said relation cannot be doubted by the Assessing Officer and the gift offered by this relatives are appears to be genuine.”
The Orissa High court’s division bench distributed a decision that benefits the taxpayer by allowing them to correct GSTR-1 for obtaining input tax credit, due to a honest mistake of filing Form-B2B instead of B2C by supplier. Facts: Shiva Jyoti Construction, the applicant, requested the Court for a ruling from the department to permit them to revise the GST Return submitted for the period of September 2017 to March 2018, as it was mistakenly submitted as B2C instead of B2B, under GSTR-1 Form in order to obtain the Input Tax Credit benefit from M/s. Odisha Construction Corporation Limited (OCCL), the principal contractor. The applicant was not aware of the error until January 21, 2020. The fact remains that by permitting the Petitioner to rectify the above error, there will be no loss whatsoever caused to the Opposite Parties. It is not as if that there will be any escapement of tax. This is only about the ITC benefit which in any event has to be given to the Petitioner. On the contrary, if it is not permitted, then the Petitioner will unnecessarily be prejudiced.” The Honorable Madras High Court in the case of M/s. Sun Dye Chem v. the Assistant Commissioner (ST) where the Court allowed the taxpayer to correct its Form GSTR-1 for the period August 2017 to December 2017 and redistribute the available Input Tax Credit (ITC) and directed the Revenue Department to enable the amendment in Form GSTR-1.
The Hon’ble High Court of Calcutta vide its order dated 22.12.2022 in the matter of M/s Modicum Enterprise (OPC) Private Limited Vs. Deputy Commissioner of State Tax & Another in M.A.T. No. 1828 of 2022 with I.A. No. CAN 1 of 2022, allowed the appeal filed by the Assessee/Appellant and restrained the revenue/respondents from demanding any late fee for non-filing of returns. It was found by the Hon’ble Court that the Appellant could not filed the returns due to cancellation of registration by the revenue authority, which was later on found incorrect and was restored by the Appellate Authority. Therefore, the appellant cannot be penalised by demanding late fee and Section 47 would not be attracted in the present case. The Appellant/writ petition filed the intra-court appeal before the Hon’ble High Court against the order dated 28th September, 2022 in W.P.A. 21708 of 2022, whereby the learned Single Judge declined to provide interim order. the nodal officer in the Goods and Services Tax Help Desk, Kolkata is directed to render necessary assistance so that the appellant will be able to file the return without the payment of late fee. This direction shall be complied with within a period of three weeks from the date of receipt of the server copy of this order. Further, no fresh proceeding for cancellation or registration would not be initiated by the respondents.
DRI seized Rs. 80 crores worth electronics goods, mobile accessories, branded watches, shoes of Chinese origin, attempted to be smuggled through SEZ at Mundhra.
22/01/2023
The Ministry of Finance, Department of Revenue has issued a set of Instructions to all officers/officials of the Department of Revenue to follow Cyber Security Guidelines issued by the National Informatics Centre (“NIC”) to ensure Cyber Security in the Department.
1. Use complex password with a minimum length of 8 characters, using a combination of capital letters, small letters, numbers and special characters. Change your passwords at least once in 45 days. Use multi-factor authentication, wherever available.
2. User shall strictly be advised to download KAVACH application only from kavach.mail.gov.in and keep a check on Registered Devices’ and ‘User Country Policy’ in Kavach App/Web portal to allow only permitted devices and country to access respectively.
3. Save your data and files on the secondary drive (ex: d:\). Maintain an offline backup of your critical data. Keep your Operating System and BIOS firmware updated with the latest updates/patches. Install centralized antivirus client offered by the Government on your official desktops/laptops.
4. Ensure that the antivirus client is updated with the latest virus definitions, signatures and patches. Observe caution while opening any links shared through SMS or social media, etc., where the links are preceded by exciting offers/discounts, etc., or may claim to provide details about any current affairs. Such links may lead to a phishing/malware webpage, which could compromise your device. Use authorized and licensed software only. When you leave your desk temporarily, always lock/log-off from your computer session.
5. When you leave office, ensure that your computer and printers are properly shutdown.
6. Keep the GPS. Bluetooth, NFC and other sensors disabled on your computers and mobile phones. They maybe enabled only when required.
7. Use a Standard User (non-administrator) account for accessing your computer/laptops for regular work. Observe caution while opening any shortened uniform resource locator (URLs) (ex: tinyurl.com/ab534/). Many malwares and phishing sites abuse URL shortener services.
CAM Charges Not Part of Rent, No TDS Default: ITAT
BIBA Apparels Private Ltd. (ITA Nos.1996 & 1997/Del/2020)
Facts:
1. Assesee BIBA Apparels Private Ltd., company entered into an agreement with Ambience group for business purpose and to make two payments- one for rent and the other for maintenance charges.
2. During assessment, the assessing officer noted that this arrangement has been made to avoid the higher deduction of TDS and so passed an order under section 201(1) and 201(1A). Against this order assesse filed an appeal before ITAT.
3. Under section 201(1), when the company or the principal officer did not deduct TDS or failed to pay tax after deducting they shall be considered to make a default tax payment.
4. The assessee had deducted TDS u/s 194C of the Act on the payment of CAM charges to the respective third parties who provided services to maintain common area. TDS on rent is 10% U/S 194I.
5. The assessee contended that there was a separate clause of ‘payment of rent’ and payment of common area maintenance charges. Payments could not be mixed for attracting the provisions of TDS.
ITAT Delhi held as below:
1. The AO noted that arrangement has been made to avoid the higher deduction of TDS rate applicable to which we do not agree as when the receiver of rent and receiver of maintenance charges are different and distinct and the character of the payment is also different and distinct.
2. Therefore, we are inclined to hold that in the present case the common area maintenance charges was not forming part of the actual rent paid to the owner by the assessee company. Payments of rent and common area maintenance charges have been made to distinct entities/companies, therefore, the authorities below were not right in creating the impugned liability payable by the assessee firm under the provisions of sub- sections (1) and (1A) of section 201 of the Act.
3. The AO is directed to delete the impugned liability u/s 201(1) and 201(1A) of the Act.
21/01/2023
GoMechanic admits revenue fraud:
1. In a joint statement, GoMechanic investors said the startup’s founders recently informed them of the “serious inaccuracies in the company’s financial reporting.
2. With confessions of revenue fraud by cofounder Amit Bhasin and announcement of layoffs impacting 70% of the workforce, GoMechanic is the latest Sequoia-backed startup to come into the limelight for such discrepancies.
3. The due diligence process for the potential deal with Japanese VC giant SoftBank and Malaysia’s Khazanah is said to have unearthed discrepancy in revenue recognition, according to media reports.
4. GoMechanic reported revenue from operations of INR 34.1 Cr in FY21, which grew 2.6X to INR 90.5 Cr in FY22 (March 2022). Its expenses grew faster in the fiscal, surging from INR 74 Cr to INR 210 Cr. As a result, the losses ballooned to INR 114 Cr ($15 Mn as per 2022 rates) from INR 74 Cr ($10 Mn as per 2021 rates) a year ago.
5. The higher losses are down to a major increase in costs for purchase of stock in trade with INR 37.6 Cr spent on this line item in FY22, 3X higher than FY21. Employee costs doubled from INR 30 Cr to INR 61.7 Cr in the fiscal.
6. The biggest expenditure is bracketed under ‘other expenses’ at INR 108 Cr, again 3X higher than FY21. This opaque expense item has not been further explained in the company’s regulatory filings.
7. It must be noted that the company’s filings for FY22 show a higher loss for FY21 than its earlier financial filings for FY21.
8. In the FY21 numbers reported and approved by the board in October 2021, the losses stated were INR 27.4 Cr. In its FY22 filings reported and approved by the board in September 2022, the losses for FY21 grew to INR 74 Cr.
Source: INC 42
CBDT Notifies Income Tax Exemption to Indian Institute of Science Education and Research, Tirupati:
1. As per Notification No : F. No. 203/02/2022 issued by the CBDT on Monday, In exercise of the powers conferred by clause (ii) of sub-Section (1) of Section 35 of the Income-tax Act, 1961 (43 of 1961) read with Rules 5C and 5E of the Income-tax Rules, 1962, the Central Government hereby approves ‘Indian Institute of Science Education and Research, Tirupati (PAN: AAAAI9820P)’ under the category of ‘University, College or Other Institution’ for ‘Scientific Research’ for the purposes of clause (ii) of subSection (1) of Section 35 of the Income-tax Act, 1961 read with Rules 5C and 5E of the Income-tax Rules, 1962.
2. To claim deduction of 150% under section 35(2AA), the sum should have been paid by the assessee with a specification that the said sum shall be used for scientific research undertaken, under a program approved by the prescribed authority.
3. This Notification shall apply with effect from the date of publication in the Official Gazette (i.e., from the Previous Year 2022-23) and accordingly shall be applicable for Assessment Years 2023-2024 to 2027-2028.
20/01/2023
The government has identified four more properties owned by Chinese nationals in Meghalaya and one each in West Bengal and Maharashtra, taking the number of Chinese-owned “enemy properties” to 131, said officials. These properties were left behind by Chinese nationals after the India-China war in 1962 but had remained under legal dispute, they said. The total number of enemy properties vested with the Custodian of Enemy Properties for India (CEPI) is estimated to be 9,406, according to government officials. Out of these, more than 9,200 belonged to Pakistan nationals-identified after the 1965 and 1971 wars. Their value is estimated to be 1 lakh crore. Apart from immovable properties, enemy properties also consist of shares, gold and silver ornaments. According to home ministry officials, CEPI has attached about 65 mil- lion such enemy shares in 996 companies. In 2022-23, the Department of In- vestment and Public Asset Management sold shares worth 24 lakh while in 2021, gold and silver were sold for 60 lakh, the officials added. As per official data, the highest number of properties left behind by Chinese nationals is in Meghalaya (61), followed by West Bengal (52) and Assam (15). There are one such property each in Delhi, Karnataka and Maharashtra. “Identification of enemy properties is a continuous process, and several cases are under examination and being processed,” a senior government official said. Among properties in West Bengal, 14 are tanneries, mostly located in Tangra, also known as China Town. In Meghalaya, the properties include restaurants and shoe stores. In the wake of Chinese aggression in 1962, the CEPI was called upon to take charge of the Chinese assets, with the aim of attaching the properties under the Defence of India Rules, 1962. In 1968, the Enemy Property Act was enacted to deal with such properties. The Act was amended in 1977 and 2017.
The mention of crypto at a holiday party likely stoked talk of crisis, fraud and the end of an era. But with everyone back at work, the biggest digital currency of them all Bitcoin is ripping through a nine-day rally. Bitcoin rose as much as 4.5% on Thursday to trade around $18,356, its highest since early November, when the first signs of trouble at the FTX exchange began a tale of bankruptcy and criminal charges that has decimated the crypto industry. The cryptocurrency is on pace for its longest winning streak since the heydays of July 2020, Bloomberg data show. Other coins also advanced, with Ether jumping more than 5.6% at one point to cross above $1,400 before paring its gain. But Wall Street, rather than forecasting a sudden renewal of crypto mania, sees the gains as a result of a change in investor sentiment that is lifting technology shares and other risky holdings.
“Seems to me that Bitcoin is moving higher in sympathy with stocks/risk assets,” said Jake Gordon at Bespoke Investment Group. “The most interesting thing is that the run in Bitcoin is coming out of a very tight range since the whole FTX saga too. Next few days will be a good test if we take out the December highs.”
18/01/2023
GST Circular No. 189/01/2023- dated 13.01.2023 and Circular No. 190/02/2023- issued by CBIC clarifying taxability of various goods and services in the wake of the 48th GST council meeting:
1. Rab being distinguishable from molasses is not classifiable under CTH 1703 and the appropriate classification of Rab will be under CTH 1702 attracting 18% GST.
2. W.e.f. 01.01.2023, by-products of dal/ pulses such as Chilka, Khanda and Churi/ Chunni are exempt under GST vide entry no. 102C of N/N. 02/2017-GST dated 28.06.2017.
3. HS code 220299 is applicable on 'Carbonated Beverages of Fruit Drink' or 'Carbonated Beverages with Fruit Juice' and shall attract 28% GST and 12% Compensation Cess.
4. Snack Pellets manufactured through the process of extrusion are classifiable under CTH 1905 90 30.
5. Vehicles which satisfy all four specifications such as: Popularly known as SUVs, engine capacity exceeds 1500CC, length exceeds 4,000mm and ground clearance is 170mm and above shall fall under entry no 52B of N/N 01/2017- Compensation Cess (Rate) dated 28.06.2017 and shall attract 22% compensation cess.
6. Goods specified in the list annexed to N/N 03/2017- IT(R) and eligible for a 12% rate under such notification and also eligible for benefit of a lower rate under any other notification than the benefit of the lower rate can be claimed.
7. Services of accommodation provided by Air Force Mess or Army Mess or Navy Mess or other similar messes to their personnel is exempt vide Sr. No. 6 of N/N 12/2017- CT(R).
8. Incentive paid by the Ministry of Electronics and Information Technology (MeitY) to acquiring bank for promotion of RuPay debit cards and low-value BHIM-UPI transactions is in the form of subsidy paid by CG to such bank and no GST shall be payable on the same.
16/01/2023
High Current account deficit is a cause for worry:
1. India’s current account deficit for the second quarter (July-September) of 2022-23 has reached a massive $36.4 billion, which is 4.4% of the gross domestic product, higher than at any time in the last nine years. The current deficit was 1.3% of GDP in the second quarter of 2021-22, i.e., exactly a year ago.
2. The primary reason for the deficit is the merchandise trade deficit which increased by over $20 billion, from $63 billion to $ 83.5 billion, between the first and the second quarters.
3. According to the Reserve Bank of India (RBI) this increase was for two reasons: first, the increase in oil prices that has occurred in the wake of the Ukraine war and pushed up our import bill and the second was the lacklustre performance of our exports because of the slowing down of the world economy.
4. Most surprisingly, the deficit has occurred in the midst of a sharp decline in the exchange rate of the rupee amounting to as much as 10% over the calendar year 2022. Normally, an exchange rate depreciation is supposed to improve the trade balance.
5. The persistence of a large deficit invariably creates expectations of an exchange rate depreciation, which, in turn, could give rise to an actual exchange rate depreciation by causing financial outflows. Will this in turn further deplete our foreign exchange reserves? (In the second quarter of 2022-23 itself there was a $25 billion decline in reserves).
6. Should we now explore more options for trade in INR? Should the currency be devalued more to increase exports? Is it time to curtail the reckless freebies? These are some of the questions which policymakers have to deal with urgently. Government is rightly focusing on attracting global manufacturing but the biggest hope is still the service exports, which have continued to fare well.
E-way bill is required for movement of goods from one place to another. In some situations, there is no need to issue the eway bill. Cases when e way bill is not required:
1. If exempted goods are transported.
2. If goods are transported in a non-motorised conveyance.
3. If goods are transported from port, airport, air cargo complex and land customs station to an inland container depot or a container freight station for clearance by customs.
4. If goods are being moved to specific areas (areas defined under SGST act of respective states)
5. If notified goods are transported.
6. If alcoholic liquor for human consumption, petroleum crude, high speed diesel, petrol, natural gas or aviation turbine fuel is transported.
7. If supply is not involved in the transportation of goods.
Gross Direct Tax collections for FY 2022-23 upto 10th January, 2023 are at Rs.14.71 lakh crore, higher by 24.58% over gross collections for corresponding period of preceding yr. Net collections at Rs.12.31 lakh crore are 19.55% higher than net collections for same period last yr.
15/01/2023
The Hon’ble Karnataka High Court in M/s. Wipro Limited India v. the Assistant Commissioner of Central Taxes and Others: Allowed the assessee to rectify the errors committed at the time of filing of Forms and submitting GST Returns.
Held that, the error committed by the assessee in showing the wrong Goods and Services Tax Identification Number (“GSTIN”) in the invoices, which was carried forward in the relevant forms is a bonafide error, which has occurred due to bonafide reasons, unavoidable circumstances and sufficient cause. Hence, Circular No. 183/15/2022-GST dated December 27, 2022 (“the Circular”), which allows rectification of such bonafide and inadvertent mistakes, would be directly and squarely applicable. Further, allowed the assessee to avail the benefit of the Circular for FY 2019-20 also.
A division bench of the Orissa High Court has pronounced an assessee-friendly ruling wherein the Court allowed the assessee to correct GSTR-1 in order to get the Input Tax Credit (ITC) as there was a bonafide mistake of filing of Form-B2B instead of B2C. The Petitioner, Shiva Jyoti Construction approached the Court seeking a direction to the department to permit the Petitioner to rectify the GST Return filed for the period September, 2017 and March 2018 in Form-B2B instead of B2C as was wrongly filed under GSTR-1 in order to get the Input Tax Credit (ITC) benefit by M/s. Odisha Construction Corporation Limited (OCCL), the principal contractor. The Petitioner contended that the error came to be noticed after the OCCL held up the legitimate running bill amount of the Petitioner by informing it about the above error on 21st January, 2020. It is the case of the Petitioner that thereafter it has beenmaking requests to the GSTdepartment to permit it to correct the GSTR-1 Forms but to no avail. The department contended that once the deadline for rectification of the Forms was crossed, then no further indulgence could be granted to the Petitioner.
The fact remains that by permitting the Petitioner to rectify the above error, there will be no loss whatsoever caused to the Opposite Parties. It is not as if that there will be any escapement of tax. This is only about the ITC benefit which in any event has to be given to the Petitioner. On the contrary, if it is not permitted, then the Petitioner will unnecessarily be prejudiced.”
14/01/2023
The Central Board of Indirect Taxes and Customs (CBIC) has issued a clarification on whether GST is payable on accommodation services supplied by Air Force Mess to its personnel and Applicability of GST on incentive paid by MeitY to acquiring banks under Incentive scheme for promotion of RuPay Debit Cards and low value BHIM-UPI transactions. “All services supplied by Central Government, State Government, Union Territory or local authority to any person other than business entities (barring a few specified services such as services of postal department, transportation of goods and passengers etc.) are exempt from GST vide Sl. No. 6 of notification No. 12/2017 – Central Tax (Rate) dated 28.06.2017. Therefore, as recommended by the GST Council, it is hereby clarified that accommodation services provided by Air Force Mess and other similar messes, such as, Army mess, Navy mess, Paramilitary and Police forces mess to their personnel or any person other than a business entity are covered by Sl. No. 6 of notification No. 12/2017 – Central Tax (Rate) dated 28.06.2017 provided the services supplied by such messes qualify to be considered as services supplied by Central Government, State Government, Union Territory or local authority.” The Payments and Settlements Systems Act, 2007 prohibits banks and system providers from charging any amount from a person making or receiving a payment through RuPay Debit cards or BHIM-UPI.
The service supplied by the acquiring banks in the digital payment system in case of transactions through RuPay/BHIM UPI is the same as the service that they provide in case of transactions through any other card or mode of digital payment. The only difference is that the consideration for such services, instead of being paid by the merchant or the user of the card, is paid by the central government in the form of incentive. However, it is not a consideration paid by the central government for any service supplied by the acquiring bank to the Central Government. The incentive is in the nature of a subsidy directly linked to the price of the service and the same does not form part of the taxable value of the transaction in view of the provisions of section 2(31) and section 15 of the CGST Act, 2017,” CBIC said.
13/01/2023
Non-Resident Indians (NRI) will now be able to access the Unified Payments Interface (UPI) on their international mobile numbers as well. The National Payments Corporation of India (NPCI) has issued new guidelines allowing NRIs in ten countries to access UPI services using their international mobile numbers for banks accounts which are classified as Non Resident External (NRE) or Non Resident Ordinary (NRO) accounts. According to the guidelines, NRIs in these countries will now have the option of activating a UPI account with the mobile number they use in the particular country with an international country code. Keep in mind that setting up a UPI ID for any app requires a valid India mobile phone number. keep the India numbers activated, comes with hefty costs given the prices of international roaming. Further, all the “necessary Anti-Money Laundering (AML)/ Combating of Financing of Terrorism (CT) checks and compliance validation/account level validations as per the extent” need to be applicable to these bank accounts. The list of countries supported is
Singapore
Australia
Canada
Hong Kong
Oman
Qatar
USA
Saudi Arabia
United Arab Emirates
United Kingdom
12/01/2023
The first robot lawyer will represent a person in court next month. According to the New York Post, history will be made next month when the world’s first robot attorney helps a defendant fight a traffic ticket in court. The artificial intelligence bot will run on the smartphone of the respondent. It will listen to court arguments in real time and advise the defendant on what to say through the earpiece. The AI ??has been trained to stick to the truth, said Joshua Brower, CEO of Do Not Pay.
NCLT Mumbai has approved the Resolution Plan of Adani Goodhome for Radius Estates & Developers
Case Title: Beacon Trusteeship Ltd. v Radius Estates and Developers Pvt. Ltd.
Case No.: CP (IB) No: 1390 of 2020
Background:
1. Radius Estates and Developers Pvt. Ltd. (“Corporate Debtor”) entered into a joint venture as co-developer with the MIG Bandra Realtors and Builders Pvt. Ltd., for redevelopment of a land situated at Bandra (East) Mumbai (Project).
2. The Corporate Debtor commenced selling of flats and collection of monies from potential flat purchasers. However, the construction of the Project came to a halt in 2020.
3. Beacon Trusteeship Ltd. (“Financial Creditor”) filed a petition under Section 7 of the Insolvency and Bankruptcy Act, 2016 (“IBC”), seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) against Corporate Debtor.
4. The NCLT has approved the Resolution Plan submitted by M/s. Adani Goodhomes Pvt. Ltd. for Radius Estates and Developers Pvt. Ltd.
5. Upon an invitation by the Resolution Professional for submission of Resolution Plans, M/s. Adani Goodhomes Pvt. Ltd. (“Successful Resolution Applicant”) and Ashdan Developers Pvt. Ltd. submitted plans for the Corporate Debtor. The resolution plan submitted by M/s. Adani Goodhomes Pvt. Ltd.
Approved Resolution plan:
1. Homebuyers who have not sought refund and/or who do not have orders for refund, will be given units in the stuck real estate project.
2. The secured Financial Creditors would be paid a total of Rs. 31,49,82,262/- as against their total admitted claim of Rs. 11,86,66,20,306/-.
3. The unsecured Financial Creditors other than related parties will be paid Rs. 47,12,798/- as against a total admitted claim of 4,71,27,97,999/-. While the related party creditors would be paid nil.
4. The operational Creditors (workmen and employees) would be paid a total of Rs. 1,51,89,094/- towards their admitted claims. However, the other Operational Creditors such as Government authorities and others would be paid NIL amount.
11/01/2023
Flags of convenience for tax avoidance:
1. In the shipping parlance, the flag of a ship refers to the state in which the shipowners or shipping companies have registered it. Registered ships are therefore bound by the laws and regulations of the maritime authority of the country concerned, for example in terms of taxation, ship safety or labor laws to which the crew is subject.
2. A flag of convenience is a legal identity for a ship, offshore oil platform, offshore maritime space launching pad, or other offshore ocean object registered easily for a fee in a jurisdiction where it is not ultimately/ beneficially owned, for the purpose of commercial or tax advantages.
3. For example Panama dominates the world fleet in flags of convenience. This is because, ships registered in Panama can continue to operate international trade without paying any taxes as taxation in Panama is only territorial and there is nil tax on the income of ships involved in international navigation or trade.
4. The figures from the United Nations Conference on Trade and Development (UNCTAD) show that the vast majority of global shipping is carried out under flags of convenience.
5. Three of these flags of convenience, Panama, Liberia and the Marshall Islands, are by far the most represented in the world fleet. In 2022, they jointly accounted for 44.3 percent of the world's cargo capacity.
6. In comparison, merchant vessels registered in China, the world's largest exporting country, accounted for only 5.2 percent of total capacity. Other frequently used flags of convenience include Malta (5.2 percent of capacity) and the Bahamas (3.3 percent).
Source: statista
10/01/2023
Loss on account of purchase of distribution rights of the film ‘Arakshan’ is a capital loss: ITAT
M/s Nadiadwala Entertainment & Technologies 9 ITA No. 5663/M/2019 & CO NO. 23/M/2021
Facts:
1. The assessee advanced a sum of Rs.8.9 crores to “Prakash Jha Production” on account of a feature film “Arakshan”.
2. It was claimed by the assessee that the said investment was made for purchase of distribution rights of the film but the assessee could not fulfil its obligation of financing the further amount for production of the film and dispute arose between the parties.
3. Prakash Jha Production acquired funds from some other parties and assessee was settled with a refund of Rs.3 crores. The balance amount was claimed by the assessee in return of income as operating expenses written off.
4. The Ld. Assessing Officer (AO) disallowed the claim holding that written off of the loss was in the nature of prior period expenses and therefore not allowable.
5. On further appeal, the Ld. CIT(A) however characterized the loss as short term capital loss being loss on purchase of distribution rights.
ITAT Mumbai held as below:
1. The assessee has not incurred expenses for production of the film whereas, the assessee claimed that the said investment was made for purchase of distribution right of the film which are in the nature of intangible assets.
2. So the investment was for purchase of capital asset and loss incurred on the same is in the nature on ‘short term capital loss’.
Borrowers Enter OTS ; Supreme Court Directs Bank To Re-Consider Decision Of Wilful Default
Orbitz Irrigation Pvt. Ltd. & Ors. v Bank Of Baroda & Anr.
Case No.: Special Leave to Appeal (C) No.15751/2022
Facts:
1. The Petitioners contended that the Orders declaring them wilful defaulter were unreasoned; failed to disclose the coram of committees; did not weigh their defences against the allegations; and did not disclose the evidence or documents relied upon for arriving at the decision.
2. Petitioners also contended that they had shown their bona fide to repay and have been paying sums towards sanctioned OTS. Therefore, Petitioner cannot be declared a wilful defaulter in absence of any ‘wilful’ element in default.
Hon SC held as below:
1. Petitioners had entered into OTS with the Bank and have deposited Rs.1.17 Crores and 55 Thousands so far.
2. In light of the changed circumstances and subsequent events, the Petitioners are well within their right to represent the Bank for reconsideration of its earlier decision whereby the petitioners have classified as “Willful defaulters”.
3. Further liberty has been granted to the Petitioners to avail legal remedy if the Bank’s decision on the representation is not favourable to them.
09/01/2023
Amount received from Sale of Software Products not Royalty as per Article 12(3) of India -USA DTAA: ITAT
Digite Inc. USA (ITA No. 260/Del/2019)
Facts:
1. Assessee was asked to show-cause during the assessment proceedings, as to why the aforesaid receipts which was from license fees by granting provision of copyrighted software licenses be not taxed as Royalty under the provisions of Income Tax Act, 1961 and India – USA Double Taxation Avoidance Agreement.
2. Assessee contended that the amount received from various customers in India were not for any grant of copy right but was for merely using user license and was not for giving substantial right to reproduce the software or to copy or to duplicate the same.
3. The submissions of the assessee was not found acceptable to AO. AO thereafter in the draft assessment order passed u/s 144C(1)/143(3) order and held the amount to be taxable as Royalty under Income Tax Act as well as under India – USA DTAA. He accordingly held it to be taxable at 15%, being the rate of tax for royalties as per the DTAAA.
ITAT New Delhi held as below:
1. Where payments are made for purchase of software as a product would be treated as a payment for purchase of software rather than payment for use or right to use software' to be considered as a royalty.
2. Right to use a copyrighted article or product with the owner retaining his copyright, is not the same thing as transferring or assigning rights in relation to the copyright. The enjoyment of some or all the rights which the copyright owner has, is necessary to invoke the royalty definition.
3. The amount received by the assessee from sale of software products/licenses is not royalty as per Article 12(3) and as per Section 9(1)(vi) of the Act. Thus the grounds of the assessee are allowed.
The Reserve Bank of India said that State Bank of India, ICICI Bank and HDFC Bank continue to be domestic systemically important banks (D-SIBs) which are 'too big to fail'. RBI said state-owned SBI along with private sector lenders ICICI Bank and HDFC Bank have been placed under the same bucketing structure as in the 2021 list of D-SIBs. Accordingly, the additional common equity tier 1 (CET1) requirement for SBI continues to be 0.6% of its risk weighted assets while that of ICICI and HDFC Bank continue to be 0.2%. In case a foreign bank having branch presence in India is a Global Systemically Important Bank (G-SIB), it has to maintain additional CET1 capital surcharge in India as applicable to it as a G-SIB, proportionate to its Risk-Weighted Assets (RWAs), i.e., additional CET1 buffer prescribed by the home regulator (amount) multiplied by India RWA as per consolidated global Group books divided by total consolidated global Group RWA.
08/01/2023
The key features of the Tds e-Verification Scheme 2021 are:
1. Information gathered from Source/ Reporting Entity is pushed to taxpayer for viewing in AIS and taxpayer can raise an objection if he/she believes that the transaction is incorrectly attributed to the taxpayer (fully/partially).
2. Commissioner of Income Tax (e-Verification) [henceforth referred as CIT(e-V)] pushes the disputed information back at the Source/ Reporting Entity for confirmation.
3. If Source/ Reporting Entity agrees that information uploaded was incorrect and agrees with taxpayer, then CIT(e-V) closes the matter.
4. Source/Reporting entity is required to modify the statement in which the incorrect data was filed
5. If Source/ Reporting Entity stands by the information and reports back to CIT(e-V) then the case is sieved through Risk Assessment module.
6. If required to be verified, the Directorate of Income Tax (I&CI) will contact the taxpayer and verify the transaction with reference to the return of income filed/ not filed by the taxpayer.
7. Based on the response of the taxpayer to the proceedings under the Scheme, the Source/Reporting Entity may be contacted once again, if required, by the officer in Directorate of Income Tax (I&CI) who is conducting the verification.
According to the Economic Survey 2016-17, the country’s private sector wealth actually declined because some high denomination notes were not returned and the real estate prices fell drastically. The survey also noted that there were job losses, decline in farm incomes and social disruption especially in cash-intensive sectors like agriculture, real estate and jewellery etc. Although government bodies and discoms showed sudden spurt in revenue it was more due to the need to dispose of the banned notes which were legal tender in these places. One welcome result of the demonetisation was the use of digital platforms and banking transactions for commercial transactions. With the introduction of Unified Payments Interface (UPI) and other platforms and banks adopting the non-cash payment method, digital payment has increased tremendously to such an extent that smaller currency notes have lost their relevance and utility, not to speak of coins. The “no-human-touch” payment methods have gained immense popularity and acceptance especially after the pandemic. The Economic Survey 2016-17 also acknowledged this. The white paper could probably go into the details of increasing digital transactions (799 crore as of March 2022) but the corresponding increase in cash in circulation (CIC) as a proportion of GDP as well.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that the Amount received from the sale of software products is not royalty as per Article 12(3) of India -USA DTAA and is not taxable in India. In the matter of M/S Digite Inc. USA a foreign company Vs ADIT. CITATION: 2023 TAXSCAN (ITAT) 141
07/01/2023
NBFC Alert:
a) RBI is likely to engage the services of external auditors to audit the majority of the 9,500-odd non-banking finance companies (NBFCs) to delve into their operations.
Failure of certain NBFCs due to idiosyncratic factors and several digital lenders violating extant regulations and guidelines on outsourcing and Fair Practices Code may be the trigger for the aforementioned audit.
b) As on October 1, 2022, the CoRs of 5,451 NBFCs were cancelled by the central bank. The proposed audit exercise could lead to cancellation of CoRs of more NBFCs in FY24.
CBDT vide Circular No. 1 of 2023 dated 06.01.2023 has granted a further extension of timelines to comply with provisions of section 54 to 54GB for which the last date of such compliance falls between 01.04.2021 to 28.02.2022 (both days inclusive), such compliance may be completed on or before 31.03.2023.
The CEO of Tesla (TSLA), SpaceX and Twitter is worth $137 billion, according to the Bloomberg Billionaires Index, good enough for second place on the list of the world’s richest behind LVMH (LVMHF) Chairman Bernard Arnault. But at its peak in November 2021, Musk’s net worth was $340 billion. That makes Musk the first person ever to lose $200 billion in wealth, Bloomberg reported last week. The bulk of Musk’s wealth is tied up in Tesla (TSLA), whose stock plunged 65% in 2022. Elon Musk has lost a bigger fortune than anyone in history. Evidence of car buyers' sinking interest in Teslas became apparent last month after the company announced a rare sale in a bid to clear out inventory. Tesla offered two rebates for buyers taking delivery of a vehicle before the end of the year, initially offering a $3,750 discount then doubling the rebate to $7,500 with two weeks left in 2022. Investors were rattled by the rebates, sending the stock plunging 37% in December. Critics have long questioned whether Tesla was ever worth the trillion-dollar valuation it had at the start of 2022. At its peak, Tesla was worth more than the 12 largest automakers on the planet combined, despite having a fraction of their sales. Tesla ended the year worth $386 billion — still much larger than its automaker rivals but far smaller than the tech titans — Apple (AAPL), Microsoft, (MSFT) Google (GOOGL) and Amazon (AMZN) — with which it was being compared a year ago.
06/01/2023
Canada set a new immigration record last year with more than 430,000 permanent residents arriving in the country. Immigration Minister Sean Fraser said in a news release Tuesday that the federal government has reached its goal of welcoming 431,645 new permanent residents in 2022. Ottawa beat its previous record set in 2021, when Canada welcomed more than 401,000 new permanent residents. The previous immigration record was set in 1913, when Canada welcomed more than 400,000 newcomers, Statistics Canada data shows. By 2025, the federal government wants to see 500,000 people arrive in Canada per year.
Rebuttal to Media Reports on Privatization of Public Sector Banks. A fictitious message is being circulated in media regarding list shared by NITI Aayog on privatization of Public Sector Banks. It is hereby informed that no such list as mentioned has been shared by NITI Aayog in any form.
Source PIB
The Gujarat Authority for Advance Ruling ( AAR ) has held that the lower rate of 5% GST applicable to the food items “prepared and cooked” in the restaurant alone whereas, the sale of readily available food items would attract the applicable rates. M/s Riddhi Enterprise, the applicant, is in the restaurant business which offers a variety of food items including food and beverages prepared at the restaurant as well readily purchased food and beverage sold over the counter. The applicant is engaged in the restaurant business and supplying foods which is prepared and cooked in the restaurant and also supplying the foods purchased from the outside and sold over the counter in the restaurant premises. The main point here is to decide the Tax Rate of GST on both types of supply which are happened from the restaurant.
05/01/2023
Mca Updates:
1. Company e-Filings on V2 portal will be disabled from 07th January 2023 12:00 AM to 08th January 2023 11:59 pm for 10 forms which are planned for roll-out on 09th January 2023.
2. Company e-Filings on V2 portal will be disabled from 07th January 2023 12:00 AM to 22nd January 2023 11:59 pm for 46 forms which are planned for roll-out on 23rd January 2023.
3. V3 portal will not be available from 07th January 2023 12:00 AM to 08th Jan 2023 11:59 pm due to 10 company forms roll-out and from 21st January 2023 to 22nd January 2023 for 46 company forms roll-out.
4. All stakeholders are advised to ensure that there are no SRNs in pending payment and Resubmission status.
MCA clarifies that where AGMs are scheduled for 2023, companies can hold them using VC/ OAVM until September 30, 2023. However, the MCA has reiterated that this clarification/circular is not intended to extend the deadline, and the companies will continue to face legal action for non-adherence to timelines, as may be applicable, under the Companies Act, 2013.
Some important Income tax Citations:
A. Shri Sanjay Marotrao Modak
F-503, Redwoods, Near Swap, Vasant Gardens, Mulund (W),
Mumbai-400 080
ITA No.2041/Mum/2021 (Assessment Year: 2015-16)
Hon'ble ITAT "G" Bench Mumbai, in an appeal against penalty u/s 271B, vide order dated 21.11.2022, deleted the penalty of Rs. 1,50,000/- , which was levied for the reason that the assessee failed to get his accounts audited u/s 44AB despite the fact his turnover from trading in future and options was 34 crores.
While deleting the penalty Hon'ble ITAT observed as follows:
1. In the absence of any provision for computation of "turnover" for the purpose of section 44AB, the guidance provided by ICAI shall prevail as it is the highest expert accounting body.
2. For this purpose the method of computation of turnover provide in the guidance note on tax audit should be relied upon.
3. For this Hon'ble has placed reliance on CIT vs. Punjab Stainless Steel Industries (2014) 364 ITR 144 (SC).
B. BEST BUILDWELL PRIVATE LIMITED
W.P.(C) 11338/2022
Hon'ble Delhi High Court, vide order dated 1.8.2022, quashed order passed u/s 148A(d) dated 30.3.2022 and consequent notice issued u/s 148 dated 31.3.2022 for AY 2018-19.
1. The order and notice have been quashed for the reason that in the notice issued u/s 148A(b) dated 16.3.2022 no details of transactions and entities were provided to the assessee which allegedly provided information about alleged bogus purchases.
2. Merely observing that the assessee had made purchases from certain non-filers is not sufficient to reopen assessment.
3. In the absence of the details of transactions and entities, it is not understood as to how the assessee would know as to out of the transactions and entities which pertains to non-filers.
4. The notice refers to a, report relating to alleged bogus purchases, but no such report was provided to the assessee.
5. Court observed that In fact there no specific allegation in the show cause notice to which the assessee could file reply.
6. While quashing, the Court provided opportunity to the Revenue to provide the assessee with the additional materials in support of the allegations made in the show cause notice of 148A(b).
C. M/s. N.C. Rajagopal & Co., 22, V. Krishnaswamy Avenue, Luz Church Road, Mylapore, Chennai – 600 004.
ITA No.: 817/Chny/2020
Important decision of "B" Bench of ITAT, Chennai Bench dated 14.10.2022 on credit of TDS u/s 199 and 200 of the Income Tax Act, 1961.
In AY 2017-18 assessee claimed credit of TDS u/s 199 for Rs. 45,59,855/- on disclosing the corresponding income on cash basis of accounting, whereas in processing u/s 143(1), cpc allowed credit of Rs. 33,25,055/- on the basis of amount reflected in Form No. 26AS of AY 2017-18.
The differential amount pertained to earlier years which was not claimed carried forward in the TDS schedules of returns of earlier years.
1. ITAT held that credit of TDS is to be allowed in accordance with the provisions of section 199 of the Act in the year in which the corresponding income is offered for taxation.
2. ITAT further held that credit of TDS can not be denied merely for the reason that such differential amount is not appearing in Form No. 26AS.
3. ITAT with the concurrence of remanded the matter back to AO to verify the claim in respect of the differential amount and allow credit as per section 199.
4. The appeal of the assessee was allowed for statical purposes.
04/01/2023
UIDAI enables 'Head of Family' based online update in Aadhaar.
The Unique Identification Authority of India (UIDAI) has put in place a resident-friendly facility to help update addresses in Aadhaar cards online with the consent of the Head of Family (HoF). The HoF based online address update in Aadhaar is aimed to help relative(s) of a resident, like children, spouse, parents etc, who don’t have supporting documents in their own name to update address in their Aadhaar card. By submitting Proof of Relationship documents like Ration Card, Marksheet, Marriage Certificate, Passport etc. mentioning the name of both the applicant and HOF and the relationship between them and OTP-based authentication by the HOF on his/her registered number.
The Canadian government has imposed a ban on foreigners buying residential properties in the country. The law came into effect on Sunday. According to a report by CNN, the new ban has an exception for immigrants and permanent residents of Canada, who are not citizens. The desirability of Canadian homes is attracting profiteers, wealthy corporations, and foreign investors, the campaign site of Prime Minister Justin Trudeau's party had stated in the past year. This is leading to a real problem of under-used and vacant housing, rampant speculation, and skyrocketing prices. Homes are for people, not investors," the campaign site read. However, the steep rise in home prices in 2020 and 2021 was already reversed in 2022, well before the law took effect.
At a Supreme Court hearing on whether people can take food to cinema halls, the judges remarked at one point, "Should we start bringing jalebis to the movies?"
The court was hearing a petition that called for a ban on food from outside at cinemas. Cinema halls and multiplexes have the right to set terms and conditions and decide whether to allow food and beverages from outside, the Supreme Court ruled. A bench of Chief Justice DY Chandrachud and Justice PS Narasimha set aside a Jammu and Kashmir High Court order that had removed the ban on people carrying their own food and water in theatres. A cinema hall is private property. It is for the owner to decide subject to statutory rules. Saying that arms are not allowed or that no discrimination on basis of caste or gender can be there, is fine. But how can the High Court say that they can bring any food inside cinema halls?"
Legality of demonetisation upheld by the Supreme Court:
The Supreme Court Constitution Bench has upheld by 4:1 majority, the decision taken by the Union Government, six years ago, to demonetise the currency notes of Rs. 500 and Rs.1000 denominations.
Majority decision by the Hon SC:
1. The demonetisation had a reasonable nexus with the objectives sought to be achieved. It is not relevant whether the objective was achieved or not.
2. The prescribed period of 52 days for currency exchange cannot be said to be unreasonable.
3. Section 26(2) RBI Act, which empowers Centre to demonetize any series of bank notes of any denomination, can be used to demonetize the whole series of currency. Restrictive meaning cannot be given to word "any" in Section 26(2) of RBI Act. The modern trend is of pragmatic interpretation. Interpretation which leads to absurdity must be avoided. The purposes of the Act must be considered while interpretation.
4. The decision-making process cannot be faulted merely because the proposal emanated from the Central Govt. There has to be great restraint in matters of economic policy. Court cannot supplant the wisdom of executive with its wisdom.
Dissenting view of Hon SC:
1. On looking at the records submitted by RBI, there are words "as desired by the Central Govt"...this demonstrates there was no independent application by the RBI. The entire exercise was carried out in 24 hours.
2. Sec 26(2) of the RBI Act cannot mean "all series". Section 26(2) can be only for a particular series of currency notes & not for the whole series of currency notes of a denomination.
3. The proposal originated from the Central Government and the opinion of the RBI was sought. Such an opinion given by the RBI cannot be construed as a "recommendation" under Section 26(2) of the RBI Act...When the proposal for demonetisation originates from the Central Govt, it is not under Section 26(2) RBI Act. It is to be way of a legislation, and if secrecy is needed, then by way of an Ordinance.
Case details: Vivek Narayan Sharma vs Union of India (WP(C) 906 OF 2016)
Justices S. Abdul Nazeer, B R Gavai, A S Bopanna, V Ramasubramanian and Justice B V Nagarathna(dissenting)
03/01/2023
Global economy faces a tougher year in 2023: IMF
1. For much of the global economy, 2023 is going to be a tough year as the main engines of global growth - the United States, Europe and China - all experience weakening activity, the MD of the International Monetary Fund, Kristalina Georgieva said on Sunday.
2. In fact IMF says that it could be tougher than 2022 because the three big economies - the U.S., EU and China - are all slowing down simultaneously.
3. For the first time in 40 years, China's growth in 2022 is likely to be at or below global growth. For the next couple of months, it would be tough for China, and the impact on Chinese growth would be negative, the impact on the region will be negative, the impact on global growth will be negative.
4. U.S. is most resilient and it may avoid recession. The labor market would remain quite strong but that fact on its own presents a risk because it may hamper the progress the Fed needs to make in bringing U.S. inflation back to its targeted level from the highest levels in four decades touched last year. Inflation showed signs of having passed its peak as 2022 ended, but by the Fed's preferred measure, it remains nearly three times its 2% target.
5. The euro area faces recession in 2023, but how shallow or deep this will be remains a puzzle. Manufacturing and service purchasing managers’ indexes are below 50. Germany is hard hit. But Europe has secured energy supplies to get through the current winter. A mild winter would benefit the continent’s outlook. However, given surging average energy prices, headline inflation around 10% and with core at 5%, the European Central Bank is rapidly raising rates.
6. The worst is yet to come, and for many people 2023 will feel like a recession, the IMF said in October, noting the slowdown will be broad-based and may reopen economic wounds that were only partially healed post-pandemic.
India's current account deficit in July-Sept rises sharply to 4.4% of GDP:
1. India’s current account deficit (CAD) shot up to an all-time high of $36.4 billion, about 4.4 per cent of the country’s gross domestic product (GDP), in the quarter ended September 2022 (Q2FY23), owing to a widening of the merchandise trade gap.
2. According to Bloomberg data, the previous highest CAD in absolute terms was $31.8 billion in the quarter ended December 2012 (Q3FY13).
3. The CAD was $18.2 billion (2.2 per cent of GDP) in the first quarter ended June 2022 (Q1FY23) and $9.7 billion (1.3 per cent of GDP) a year ago (Q2FY22), said the Reserve Bank of India (RBI) in a statement.
4. The high CAD in Q2FY23 was due to the widening of the merchandise trade deficit to $83.5 billion from $63 billion in Q1FY23 and an increase in the net outgo under investment income.
5. The RBI’s Financial Stability Report (FSR), released on Thursday, said the rise in the CAD due to the huge trade deficit in Q2FY23 reflected the impact of slowing global demand for exports, even as growth in services exports and remittances remained robust.
6. As for the balance of payments (BoP) position in Q2FY23, there was depletion in reserves of $30.4 billion. This was in contrast to an accretion of $31.2 billion in Q2FY22, which included special drawing rights (SDRs) of $17.86 billion by the International Monetary Fund on August 23, 2021.
7. Of the decline in reserves by $75 billion in 2022-23 (end-September 2022), about 66 per cent can be attributed to valuation losses as the dollar strengthened and yields on treasuries and other sovereign bonds rose, the FSR said.
Note: The current account measures the flow of goods, services and investments into and out of the country. The country runs into a deficit if the value of goods and services we import exceeds the value of those we export. The current account includes net income, including interest and dividends, and transfers, like foreign aid.
02/01/2023
SC in a 4:1 majority verdict upholds decision to demonetise the Rs 1,000 and Rs 500 denomination notes. Says decision making process was not flawed, has to be great restraint in matters of economic policy and court cannot supplant wisdom of the executive by a judicial review of its decision. Demonetisation Was Valid, Says Supreme Court, 1 Judge Disagrees.
The Supreme Court backed Prime Minister Narendra Modi's 2016 notes ban today in a landmark 4-1 majority judgment and said it was "not relevant" whether the objective of the overnight ban was achieved. One judge disagreed, calling the move "unlawful". The Centre, said the court, is required to act in consultation with the Reserve Bank of India (RBI) and there is an "inbuilt safeguard". This consultation did take place for six months, four of the five judges said. It is "not relevant" whether the objective was achieved or not, the Supreme Court ruled, adding that the period of 52 days given to exchange the banned notes was not unreasonable. "There has to be great restraint in matters of economic policy. Court cannot supplant the wisdom of executive with its wisdom," said Justice BR Gavai, reading out the order. Some 58 petitions challenged the Centre's decision to ban ?1,000 and ?500 currency notes overnight. ?10 lakh crore was wiped out of circulation by the move.
GST revenues rose by 15% in December 2022 to over rs 1.49 lakh crore, the Finance Ministry said on Sunday. "The gross GST revenue collected during December 2022 is rs 1,49,507 crore, of which CGST is rs 26,711 crore, SGST is rs 33,357 crore, IGST is rs 78,434 crore (including rs 40,263 crore collected on import of goods) and cess is rs 11,005 crore (including rs 850 crore collected on import of goods)," the ministry said in a statement. The monthly GST revenues more than rs 1.4 lakh crore for 10 straight months in a row.
Key Gst changes effective from 01st January 2023:
1. CBIC said that no GST is payable where a residential dwelling is rented to a GST registered person if it is rented it in his or her personal capacity for use as his or her own residence. This exemption is applicable when the dwelling is rented on his own account and not on account of his business. This brings clarity about the GST liability of proprietors of businesses on rented properties.
2. CBIC also said that the tax rate changes cleared by the Council will be effective from 1 January. Accordingly, ethyl alcohol supplied to refineries for blending with motor spirit (petrol) will only attract 5% GST against 18% now.
3. The Council had decided to lower the rate on the husk of pulses, including chilka and concentrates, to zero from 5%.
4. It had also decided to include supply of mentha arvensis under reverse charge mechanism as has been done for mentha oil in order to improve tax compliance.
5. At the last Council meeting on 17 December, Centre and states had clarified on the applicability of GST cess on sports utility vehicles and decided to decriminalise certain provisions of the law.
6. As per this, the minimum threshold of tax amount for launching prosecution under GST has been raised to ?2 crore from ?1 crore, except for the offence of issuing invoices without supply of goods or services.
7. The Council had also decided to reduce the compounding amount from the present range of 50-150% of tax amount to 25-100%.
The Central Board of Direct Taxes (CBDT) has enabled the e-filing of updated Income Tax Returns (ITR) in the Income Tax Portal for the Assessment Year (AY) 2022-23 or Financial Year (FY) 2021-22. Taxpayers can now file the updated Income Tax Returns (ITRs) under Section 139(8A) for the current assessment year. Section 139(5) of the Income Tax Act, 1961 provides the taxpayer an opportunity to revise the return already filed under Section 139(1) or Section 139(4) of the Income Tax Act. This opportunity can be made use of to include any omitted entries or to rectify any mistakes in the return filed earlier. Assessees cannot file the updated return if the return is a return of loss, results in increase of refund as per the previously filed return or if the filing of return results in a reduced tax liability.
01/01/2023
Wishing happy healthy prosperous new year 2023 to everyone
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