Corporate and Professional Updates on 27th February 2019

Direct tax updates:

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  • Candidates contesting all forthcoming elections will not only have to declare their income-tax returns of the last five years, offshore assets and PAN details, but also those of their spouses and family members as announced by the Government.
  • Form 26 is filed along with the nomination papers giving details about the criminal antecedents, if any, PAN, income tax return of self, spouse and dependent. It is also used to provide a list of assets and liabilities of a candidate, spouse and all dependents. As per the new notification, offshore assets will include the details of deposits or investments in foreign banks, any other body or institution abroad. It will also include details of assets and liabilities abroad.

Indirect Tax Updates:

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FAQ’s on GST:

Ques. Would forward contracts in commodities or currencies be within the ambit of definition of ‘supply’?

Ans. A forward contract is an agreement, executed, to purchase or sell a predetermined amount of a commodity or currency at a pre-determined future date at a pre-determined price. The settlement could be by way of actual delivery of underlying commodity/currency or by way of net settlement of differential of the forward rate over the prevailing market rate on the settlement date. Where the settlement takes place by way of actual delivery of underlying commodity/currency, then such forward contracts would be treated as normal supply of goods and liable to GST. Where the settlement takes place by way of net settlement of differential of the forward rate over the prevailing market rate on the settlement date, the same would be falling within the purview of ‘securities’ as defined in Section 2(101) of the CGST Act, 2017. As securities are neither ‘goods’ nor ‘services’ as defined in the CGST Act, 2017, future contracts are not chargeable to GST. However, if some service charges or service fees or documentation fees or broking charges or such like fees or charges are charged, the same would be a consideration for supply of service and chargeable to GST.

Ques. What is the nature of income earned / expended in instruments like repos and reverse repos and is such income taxable under GST?

Ans. Section 45U(c) of the RBI Act, 1934 defines ‘repos’ as an instrument for borrowing funds by selling securities with an agreement to repurchase the securities on a mutually agreed future date at an agreed price which includes interest for the funds borrowed. Section 45U (d) of the RBI Act, 1934 defines ‘reverse repos’ as an instrument for lending funds by buying securities with an agreement to re-sell the securities on a mutually agreed future date at an agreed price which includes interest for the funds lent. Repos and reverse repos are financial instruments of short term call money market that are normally used by banks to borrow from or lend money to RBI. Page 14 of 32 The margins, called the repo rate or reverse repo rate, in such transactions are nothing but interest charged for lending or borrowing of money. Thus they have the characteristics of loans and deposits for interest and are accordingly exempt from GST.

Ques. Whether assignment or sale of secured or unsecured debts is liable to GST?

Ans. Section 2(52) of the CGST Act, 2017 defines ‘goods’ to mean every kind of movable property other than money and securities but includes actionable claim. Schedule III of the CGST Act, 2017 lists activities or transactions which shall be treated neither as a supply of goods nor a supply of services and actionable claims other than lottery, betting and gambling are included in the said Schedule. Thus, only actionable claims in respect of lottery, betting and gambling would be taxable under GST. Further, where sale, transfer or assignment of debts falls within the purview of actionable claims, the same would not be subject to GST Further, any charges collected in the course of transfer or assignment of a debt would be chargeable to GST, being in the nature of consideration for supply of services

Other Updates:

  • April-Jan fiscal deficit at 121.5% of full-year target.
  • SBI calls lenders’ meeting with Naresh Goyal, Etihad.
  • India delays levying retaliatory tariff on U.S. goods.
  • Trai to decide rules for internet calling firms soon.
  • JM files insolvency case against Hotel Leelaventure.
  • True north buys 51% stake in Max Bupa from Max India.
  • After tough times, future is bright for telcos.
  • RBI removes Allahabad Bank, Corp Bank, Dhanlaxmi from PCA framework.
  • ED attaches Nirav Modi’s properties worth Rs 147 crore in PNB fraud case.
  • Adani Group emerges highest bidder for Guwahati airport.
  • NBFC crisis: $22 billion already gone, but more dark days likely ahead.
  • IOC, HPCL win maximum areas under tenth round of city gas bidding.
  • ArcelorMittal sees major capex risk in Essar Steel acquisition.
  • India’s growth momentum slowed down in late 2018.
  • Global, national AAA ratings are not comparable.
  • Govt eases import norms for prototype devices.
  • Mustard crop seen up 19% on higher yield.
  • BHEL’s claims: NCLAT dismisses Monnet Power’s petition.
  • E-wallet companies welcome extension in KYC deadline.
  • Future Group’s too many diversifications were a mistake.
  • Airtel won’t buy 5G spectrum at current prices, says Sunil Mittal.
  • Copper slips from 8-month high, dwindling stockpiles limit losses.
  • Vedanta sells down Sterlite copper concentrate stockpiles.
  • Rating action DHFL’s debt downgraded by Icra.
  • Finance ministry asks PSBs to submit asset sale details to ARCs.
  • Northeast gas grid project likely to get Rs 5k crore from Centre.
  • Jaypee Infra creditors vote against another forensic audit demand.
  • Prabhu for extending interest subsidy to more products from chemical sector.
  • India, Italy discuss ways to promote trade, investments.
  • Kotak Mahindra Bank raises foreign investment limit.
  • Sensex ends 240 points lower on rising India-Pak tension.
  • Iran buys Indian raw sugar for the first time in five-years

Key Due Dates:

  • Due date of TDS Return for the month of January 2019 is 28th February 2019.

Disclaimer:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Before making any decision do consult your professional /tax advisor for their misrepresentation or interpretation of act or rules author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. The author is a Chartered Accountant and the Chief Gardener & Founder Director of Rajput Jain & Associate, a leading Tax & Investment planning Advisor Service provider. His Blog can be found at http://carajput.com for any query you can write to info@carajput.com. Hope the information will assist you in your professional endeavors. For query or help contact: info@carajput.com  or call at 09811322785/4- 9555555480.

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Authority for Advance Rulings

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What is Authority for Advance Rulings (AAR)?

  • The scheme of Advance Rulings has been introduced under the Income-tax Act, 1961. It was reinforced by the Finance Act, 1993. Chapter XIX-B of the Income-tax Act, which deals with advance rulings, came into force with effect from 1-6-1993. Under the scheme the power of giving advance rulings has been entrusted to an independent adjudicatory body. Accordingly, a high level body headed by a retired judge of the Supreme Court has been set-up. This is empowered to issue rulings, which are binding both on the Income-tax Department and the applicant. The procedure prescribed is simple, inexpensive, expeditious and authoritative.
  • Advance Ruling means written opinion or authoritative decision by an Authority empowered to render it with regard to the tax consequences of a transaction or proposed transaction or an assessment in regard thereto.
  • The Authority for Advance Rulings has emerged as an important adjudicatory body on tax matters. Recent rulings by the AAR in Castleton Investment Limited and the MAT controversy have brought the importance of the institution in tax disputes and related matters.
  • The Responsibility of the AAR is to provide the facility of ascertaining the income-tax liability of a non-resident as well as that of certain special categories of residents. If an entity or company has any doubt about the tax liability of its business, it can go to the AAR. The AAR here gives a ruling and it will become policy guide to the company as well as to the tax authorities. Hence, the companies can plan their income-tax affairs well in advance and to avoid long drawn and expensive litigation.
  • In the case of Income Tax Appellate Tribunal, a company goes to it if it has a grievance related to the tax notice it has got from the tax authorities. But in the case of AAR, such a notice is not needed to seek its ruling.

Constitution of AAR

  • Authority for Advance Rulings consists of a Chairman who is a retired Judge of the Supreme Court and two members of the rank of Additional Secretary to the Government of India, one each from the Indian Revenue Service and the Indian Legal Service. A non-resident or certain categories of resident can obtain binding rulings from the Authority on question of law or fact arising out of any transaction/proposed transactions which are relevant for the determination of his tax liability.
  • The Authority for Advance Rulings (AAR) pronounces rulings on the applications of the non-resident/residents submitted in the prescribed form following prescribed procedure and such rulings are binding both on the applicant and the income-tax department.
  • Thus, the applicant can avoid expensive and time consuming litigation on any question of law or fact which might arise from normal income-tax assessment proceedings. AAR (Procedure) Rules, 1996 provide detailed procedure for obtaining advance rulings.

Disclaimer:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Before making any decision do consult your professional /tax advisor for their misrepresentation or interpretation of act or rules author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. The author is a Chartered Accountant and the Chief Gardener & Founder Director of Rajput Jain & Associate, a leading Tax & Investment planning Advisor Service provider. His Blog can be found at http://carajput.com for any query you can write to info@carajput.com. Hope the information will assist you in your professional endeavors. For query or help contact: info@carajput.com  or call at 09811322785/4- 9555555480.

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Reverse Charge Mechanism

 

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What is Reverse Charge?

Normally, the supplier of goods or services pays the tax on supply. In the case of Reverse Charge, the receiver becomes liable to pay the tax, i.e., the chargeability gets reversed.

When is Reverse Charge Applicable?

  1. Supply from an unregistered dealer to a Registered dealer

If a vendor who is not registered under GST, supplies goods to a person who is registered under GST, then Reverse Charge would apply. This means that the GST will have to be paid directly by the receiver to the Government instead of the supplier.

The registered dealer who has to pay GST under reverse charge has to do self-invoicing for the purchases made.

For Inter-state purchases the buyer has to pay IGST. For Intra-state purchased CGST and SGST has to be paid under RCM by the purchaser.

  1. Services through an e-commerce operator

If an e-commerce operator supplies services then reverse charge will be applicable to the e-commerce operator. He will be liable to pay GST.

For example, UrbanClap provides services of plumbers, electricians, teachers, beauticians etc. UrbanClap is liable to pay GST and collect it from the customers instead of the registered service providers.

If the e-commerce operator does not have a physical presence in the taxable territory, then a person representing such electronic commerce operator for any purpose will be liable to pay tax. If there is no representative, the operator will appoint a representative who will be held liable to pay GST.

  1. Supply of certain goods and services specified by CBEC

CBEC has issued a list of goods and a list of services on which reverse charge is applicable.

Time of Supply under Reverse Charge:

  1. Time Of Supply in case of Goods

In case of reverse charge, the time of supply shall be the earliest of the following dates:

  • The date of receiptof goods
  • The date of payment
  • The date immediately after 30 days from the date of issue of an invoiceby the supplier

If it is not possible to determine the time of supply, the time of supply shall be the date of entry in the books of account of the recipient.

Illustration:

  1. Date of receipt of goods 15th May 2018
  2. Date of invoice 1st June 2018
  3. Date of entry in books of receiver 18th May 2018

The Time of supply of service, in this case, will be 15th May 2018

  1. Time Of Supply in case of Services:

In case of reverse charge, the time of supply shall be the earliest of the following dates:

  • The date of payment
  • The date immediately after 60 days from the date of issue of invoiceby the supplier

If it is not possible to determine the time of supply, the time of supply shall be the date of entry in the books of account of the recipient.

Illustration:

  1. Date of payment 15th July 2018
  2. Date of invoice 15st May 2018
  3. Date of entry in books of receiver 18th July 2018

The Time of supply of service, in this case, will be 15th May 2018

What is Self Invoicing:

Self-invoicing is to be done when you have purchased from an unregistered supplier and such purchase of goods or services falls under reverse charge.

This is due to the fact that your supplier cannot issue a GST-compliant invoice to you, and thus you become liable to pay taxes on their behalf. Hence, self-invoicing, in this case, becomes necessary.

Disclaimer:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Before making any decision do consult your professional /tax advisor for their misrepresentation or interpretation of act or rules author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. The author is a Chartered Accountant and the Chief Gardener & Founder Director of Rajput Jain & Associate, a leading Tax & Investment planning Advisor Service provider. His Blog can be found at http://carajput.com for any query you can write to info@carajput.com. Hope the information will assist you in your professional endeavors. For query or help contact: info@carajput.com  or call at 09811322785/4- 9555555480.

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FORM NO. INC.22A

Introduction:

Active Company Tagging Identities and Verification is a new concept which is introduced by the Ministry of Corporate Affairs on 21-02-2019 by notifying Companies (Incorporation) Amendment Rules, 2019. It also introduces new E-FORM ACTIVE (INC-22A).

It is an attempt of Ministry of Corporate Affairs in order to identify the Active Companies and to verify their Registered Office.

Rule 25A:

New rule has been inserted in Companies Incorporation Rules, 2014 under Verification of Registered Office.

Rule 25A states that-Every company Incorporated on or before the 31st December, 2017 shall file the particulars of the company and its registered office in e-form ACTIVE (Active Company Tagging Identities and Verification) on or before 25.04.2019. 

Every Company* Incorporated on or before 31st December 2017 are required to file this e-form.

So, we can say that all this companies are required to file e-Form Active i.e. INC-22A

  1. Public Company (whether listed or not)
  2. Private Company

iii. Government Company

  1. One Person Company

Following Companies are not required to file this form:-

  1. Companies which have been struck off
  2. Companies which are under process of Striking off.

iii. Companies which are under Liquidation.

  1. Companies which has been dissolved or amalgamated.

As per the register maintained by Ministry of Corporate Affairs.

Following Companies will not be allowed by Ministry of Corporate Affairs to file this e-form Active are:-

  1. Company which has not filed its due financial statements under Section 137 i.e. Not Filled AOC-4
  2. Company which has not filled its Annual Returns under section 92 i.e. Not Filled MGT-7

iii. A company who’s any of the director/s has not filled DIR 3 KYC form or is disqualified under section 164 of the Companies Act, 2013.

Consequences of non filling of this e-form Active

Company will be marked with “Active- Non compliant” at the portal of MINISTRY OF CORPORATE AFFAIRS and due to this the company will not be allowed to carry on some transactions such as:-

  1. Change in Authorised Capital
  2. Change in Paid up Capital

iii. Changes in Director Accept Cessation,

  1. Change in Registered Office.
  2. Amalgamation, De-merger

Consequences of Filing e-form Active after the due date .i.e. 25-04-2019

Penalty will be charged from those companies who will file this form after the due date and the amount of penalty is Rs. 10,000/- as inserted by Companies (Registration offices and Fees) Amendment Rules, 2019.

In INC22A, the company is required to submit the following information:-

  1. Name of the Company and CIN
  2. Registered Address of the Company
  3. Two Photograph of the registered office of the company. The first photo of the registered office shall be taken from outside of the premises, whereas the second photo needs to be taken from within the registered office premises showing at least one director / KMP who shall be signing the e-form INC-22A.
  4. Location of registered office on Map defining Latitude / Longitude
  5. Email ID of the company
  6. Email for OTP verification
  7. Whether the company is listed (Yes or No)
  8. Details of:
  • List of all Directors of the company with Active status of DIN. if any Director on Board of the Company who does not have the Active DIN Status, company will not be able to file Form 22A.
  • Name of all the Directors of the Company, if it is more than 15 then Details of Special resolution passed for such appointment will be required. However, in case of Government Company details of such resolution will not be required as there is no limit of directors in Government Company. Kindly Check that all the Directors have filled the DIR-3 KYC Form or They are not disqualified under section 164 of the Companies Act, 2013.
  1. Details of Statutory Auditor.
  • Name of the Auditor/Firm.
  • PAN No. of the Auditor/ Firm.
  • Membership No. or Firm’s Regn. No.
  • Period for which the Auditor has been appointed.
  1. Details of Cost Auditor
  • Name and No. of Cost Auditor Appointed
  • Membership no.
  • Period for which Appointed.
  • Financial Year to be covered by the cost auditor.
  1. Details of Company Secretary.
  • Name of the Company Secretary of the Company.
  • PAN No.
  • Membership No.
  • CEO or Managing Director (if applicable)
  • CFO (if applicable)
  • SRN Number of AOC 4 / MGT 7 For FY 17-18 SRN of AOC-4/AOC-4 XBRL SRN of MGT-7

Disclaimer:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Before making any decision do consult your professional /tax advisor for their misrepresentation or interpretation of act or rules author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. The author is a Chartered Accountant and the Chief Gardener & Founder Director of Rajput Jain & Associate, a leading Tax & Investment planning Advisor Service provider. His Blog can be found at http://carajput.com for any query you can write to info@carajput.com. Hope the information will assist you in your professional endeavors. For query or help contact: info@carajput.com  or call at 09811322785/4- 9555555480.

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Virtual CFO

Virtual CFO and related function:

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  • Most of the Businesses fail during its initials and to deal with that failure CFO needs support from outsider to make the business profitable and reputed.
  • Virtual CFO plays a crucial role in the success of businesses. It helps to achieve the financial goals as it expected. Virtual CFO has practical knowledge cloud based accounting software, modern data analytics and mobile technology to support the businesses.

What is a virtual CFO?

  • Virtual CFO is completely new concept that helps small business for a period of time by the financial.
  • Here is the definition that consist of the detail examination of the virtual CFO
  • Virtual CFO plays the role of CFO for the part-time.
  • Who acts as the CFO and provides financial stability
  • As well as maintain the wellbeing of the business.
  • In the last few years, the awareness of Virtual CFO services has been increased drastically. It is the time in which CFO’s understand the importance of the Virtual CFO.

What Virtual CFO does?

The services of the Virtual CFO:

  • Virtual CFO works at the top level by performing the same activities of CFO.
  • Virtual CFO take care of all the financial functions of the organization.
  • It also takes the control of finance and accounting function.

Responsibilities of Virtual CFO:

  • Managing Finance: It is the responsibility of virtual CFO to maintain the stability of finance because
  • The stakeholders are used to depend upon it. He is also responsible to prevent fraud in the business.
  • Maintaining the stability of the budget: Virtual CFO has to focus on maintaining the expense and performance as defined in the budget plan. It is the responsibility of the CFO to take the right approach to maintain the budget.
  • Risk management and mitigation: CFO is also responsible to analyze the risk that comes with taking.
  • The decision and in the company’s profile. He also has to take care of the insurance and relates systems.
  • Maintain professional relationships: He has to maintain business relations with employees to solute the problems. He also works as Mediator between the board of the directors and stakeholders.
  • Financial engineering: It is the responsibility to use the funds of the company in an appropriate way and in the right place.

Why the role of Virtual CFO is becoming crucial?

  • Due to increased competition
  • Virtual technology is supporting businesses.
  • The agreement work is commoditizing.
  • There is an increment in the fees.
  • It needs knowledge and capabilities to play the role of virtual CFO and the demand will increase in the Near future because many financial firms want to work smarter not harder.

Disclaimer:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Before making any decision do consult your professional /tax advisor for their misrepresentation or interpretation of act or rules author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. The author is a Chartered Accountant and the Chief Gardener & Founder Director of Rajput Jain & Associate, a leading Tax & Investment planning Advisor Service provider. His Blog can be found at http://carajput.com for any query you can write to info@carajput.com. Hope the information will assist you in your professional endeavors. For query or help contact: info@carajput.com  or call at 09811322785/4- 9555555480. 

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Corporate and Professional updates on 26th February 2019

Indirect Tax Updates:

FAQ’s On GST:

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Ques. Are services supplied without consideration to a recipient other than ‘related party’ / ‘distinct person’ taxable?

Ans.   Section 7 of the CGST Act, 2017 read with Schedule I thereto provides that services supplied without consideration to related persons or distinct persons only would qualify as ‘supply’. Also import of services by bank from a related person or from any of its establishments outside India in the course or furtherance of business will be supply even if imported without consideration. Therefore, where the services are supplied by a supplier without consideration to an unrelated recipient or a person other than a related or distinct person, the same would not amount to supply and not liable to GST.

Ques. Can value of services be enhanced by invoking the CGST Rules in case of services provided by banks at a concessional / differential rate to a recipient other than ‘related party’ / ‘distinct person’?

Ans. Banks provide various services to customers for a charge. However, at times, account holders / customers are provided services free or at a concessional / differential rate. The free or concessional / differential rate is offered considering factors such as credit rating and stability of the customer, size of relationship, expected future business or the opportunity presented in the market elsewhere etc. As a result, the charges for the same service may differ from customer to customer. Such services provided to persons who are not related persons will be taxable on the transaction value, that is, the value of the services charged or recovered from the customers or account holders as per section 15 of the CGST Act, 2017. Thus, in case of services provided at a concessional / differential rate to a recipient other than ‘related party’ / ‘distinct person’, there is no requirement for enhancing the value of services by invoking the CGST Rules, 2017.

Ques. In the case of Banks which are not availing the reversal of ITC at 50%, how should inter-branch services be valued where open market value of services of like kind and quality is not available?

Ans. In such cases, banks can adopt any reasonable basis consistent with Rule 30 and 31 of the CGST Rules, 2017.

Indian GDP:

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  • In Third Quarter the GDP growth rate is likely to further decelerate the current financial year, as compared to the first two quarters. Economists with independent agencies have pegged it at 6.7-6.9% against 8.2% for the first quarter and 7.1% for the sec­ond. Only EY India pegged it at 7.3-7.4%. The growth rate, along with the second advance estimates for FY19, is set to be released by the Central Statistics Office on Thursday.
  • Most economists also projected the entire FY19 GDP growth rate at 7.2%, the same as the first advance estimates. This was despite the fact that 2017-18 GDP growth rate was revised from 6.7% to 7.2%, which could have a dampening impact on the growth numbers for the current financial year. For instance, SBI group Chief Economist Soumya Kanti Ghosh said the new number for 2017-18 would have pulled down GDP growth rate to 5.9% for FY19. However, he said the GDP deflator (a technical name for the inflation rate in the GDP series), which stood at 4.1% in the first advance estimates, could be revised downwards by 50 basis points, pushing the growth rate close to 7.2% for FY19.

Other Updates:

  • Britannia to replace HPCL on Nifty50 in stock reshuffle.
  • SBI Research pegs Q3 GDP at 6.6-6.7%.
  • India lacks good economic, jobs data.
  • Adani wins bids to operate 5 AAI airports for 50 years.
  • MFI loan book growth hits 43% at Rs 1.66 trn in Q3.
  • Regulations against every telco except Jio.
  • 2 cr jobs created in 16 months to Dec 2018.
  • A/cs of IL&FS and its subsidiaries will not be declared NPA for now: NCLAT.
  • GMR wins bid for Andhra’s Greenfield Bhogapuram Int’l Airport Project.
  • EID Parry in talks with Indian Oil to start Compressed Biogas production.
  • Etihad conditions may delay debt-laden Jet Airways resolution plan.
  • Steel cos set to hike price for third time this month.
  • New EPF subscribers’ monthly count hits a 16-month low in Dec.
  • Rabi sowing closes with record rice acreage of 49 lakh hectares.
  • Lupin gets USFDA nod for anti-inflammatory drug.
  • Thomas Cook India buys 51% stake in Digiphoto.
  • Shilpa Medicare gets USFDA nod for cancer drug.
  • Bharti Airtel board to meet on 28 February to consider fundraising plans.
  • RBI extends KYC compliance norms by six months.
  • India’s foreign direct investment inflows fall amid pre-election uncertainty.
  • EPFO begins survey to assess quantum of fund parked in IL&FS bonds.
  • Copper near 8-month high on deferred US tariff hikes.
  • Funding, regulatory process haunts life sciences and healthcare startups.
  • Proceed against Malvinder, Shivinder for Rs 472 crore fraud.
  • Exporters group calls for providing export sops to more products.
  • Real estate defaults could trigger next crisis for struggling Indian NBFCs.
  • Sugar production may exceed demand of 26 MT in SS 18-19.
  • Rupee strengthens by 17 paise against US dollar on easing trade war concerns.
  • Insurers too got stuck in securitised debt deals.
  • Goods and services exports to cross USD 500 bn this fiscal.

Key Due Dates:

  • Due date of TDS Return for the month of January 2019 is 28th February 2019.

Disclaimer:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Before making any decision do consult your professional /tax advisor for their misrepresentation or interpretation of act or rules author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. The author is a Chartered Accountant and the Chief Gardener & Founder Director of Rajput Jain & Associate, a leading Tax & Investment planning Advisor Service provider. His Blog can be found at http://carajput.com for any query you can write to info@carajput.com. Hope the information will assist you in your professional endeavors. For query or help contact: info@carajput.com  or call at 09811322785/4- 9555555480.

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Corporate and Professional Updates on 25th February 2019

Indirect tax Updates:

GST updates:

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  • A new window has been enabled for claiming TDS/TCS credits. The taxpayer has the option of accepting or rejecting the TDS/TCS credits available and filing their return, after which the credits get transferred to the cash ledger and can be used for making GST payments.
  • A taxpayer can file an appeal against an order passed by an appellate authority or against an advanced ruling by an appellate authority on the GST portal. He even has the option to file an application with the appellate authority in the case of rectification of a mistake in order passed.
  • For affordable housing GST rate reduced from 8% to 1% & for other housing from 12% to 5%.
  • Definition of affordable housing: 90 sq. Meter for non-metro & 60 sq. meter. For metro area.  Cap on Cost of house to be qualified as affordable kept at Rs 45 Lakh for both non-metro and metro areas.
  • A GST registration number can be obtained without the same. New businesses who are in the process of obtaining bank accounts can simultaneously proceed with GST registration, thus saving time.
  • Claiming of ITC and amendment of B2B invoices of 17-18 are re-opened up till March 2019.
  • Users can now amend B2B invoices of FY 2017-18. The facility to amend the GSTR-1 details of FY 17-18 was closed on filing the September 2018 return. The same has been made available while filing returns for the months of January to March 2019. Input tax credit of FY 2017-18 that was omitted and hence unclaimed up till September 2018 can be claimed now up to March 2019 as well. This was a much-needed remedy for taxpayers who made errors reporting any invoice in the past, or previously missed out claiming genuine credit.
  • For composition taxpayers, there is a simpler way to reply to show cause notices(SCN) now. This is in the case of a show cause notice being issued for compulsory withdrawal from the composition scheme, and if proceedings are initiated against the composition taxpayer, he now has the option to reply to show cause notices on the portal.

E-way Bill Updates:

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  • E-way bill data can be imported for GSTR-1.
  • The E-way bill (EWB) and the GST portal has now been integrated. The same gets automatically imported for the B2B and B2C (large) invoices sections as well as the HSN-wise-summary of outward supplies section. Users only need to verify the data and proceed.

Other Updates:

  • Saudi Arabia to make India regional hub for oil supply
  • Assured return scheme for NPS subscribers proposed
  • REC needs nod from at least 50% lenders for PFC deal
  • India to be 2nd-largest 5G market in 10 yrs.
  • 3-4 more banks to come out of RBI’s PCA framework
  • Warren Buffett’s firm reports $25 bn. Q4 loss
  • May postpones vote on Brexit deal until March 12
  • SBI considers moving NCLT for insolvency proceedings against Jet Airways
  • Blackstone, Embassy to launch India’s first real estate investment trust
  • Tata Steel, JSW Steel are key beneficiaries of the rise in steel demand
  • Raymond revamps supply chain, weighs on digital tools for more efficiency
  • Bharti Airtel set to conduct trial of Nokia’s 5G-ready telecom gear
  • JNPT SEZ to bid out 300 acres to manufacturing companies
  • India’s financial condition looking up, says CII-IBA
  • Boards of companies should assert ethical conduct: CII
  • 347 infra projects show cost overruns worth over Rs 3.2 lakh cr.
  • Hindustan National Glass to raise 1,800 cr. to pare debt
  • Uber in talks to sell India food delivery business
  • KKR, Black Rock set to invest in Adnoc pipeline unit
  • Afghanistan launches new export route to India through Iran
  • Wipro shareholders approve bonus issue, increase in authorised share capital
  • Seven of top 10 Indian companies lose₹67,980 crore in m-cap, TCS worst hit
  • RIL preparing to list Reliance Retail soon
  • US-China talks Superpowers haggling over currency pact
  • Lack of big-ticket deals drive down PE/VC investments in January 2019
  • Swiggy in talks to buy Uber Eats India, deal expected to be sealed soon
  • Singapore largest FDI source, leaves Mauritius far behind
  • PNGRB rejects HPCL review petition on ATF pipeline
  • FPIs sell blue-chips take away Rs 30K cr.
  • Foreign portfolio investors pull out over Rs 1,900 cr. from debt market in Feb
  • Unregulated Deposit Ordinance bans only Ponzi schemes not regulated deposits.

Key Due Dates:

  • Due date of TDS Return for the month of January 2019 is 28th February 2019.

Disclaimer:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Before making any decision do consult your professional /tax advisor for their misrepresentation or interpretation of act or rules author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. The author is a Chartered Accountant and the Chief Gardener & Founder Director of Rajput Jain & Associate, a leading Tax & Investment planning Advisor Service provider. His Blog can be found at http://carajput.com for any query you can write to info@carajput.com. Hope the information will assist you in your professional endeavors. For query or help contact: info@carajput.com  or call at 09811322785/4- 9555555480.

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33rd GST Council Meeting Decision held on Feb 24, 2019

GST Council Meeting:

Image result for gst hd pics

  • Meeting adjourned from 20th Feb to 24th Feb 2019.
  • Real estate sector is one of the largest contributors to the national GDP and provides employment opportunity to large numbers of people. “Housing for all by 2022” envisions that every citizen would have a house and the urban areas would be free of slums. There are reports of slowdown in the sector and low off-take of under-construction houses which needs to be addressed. To boost the residential segment of the real estate sector, following recommendations were made by the GST Council.
  • The GST council met on 20th February 2019 for a brief time to start with the discussions on real estate. However, considering that a meet via video conferencing cannot support the detailed discussion on issue crucial such as real estate taxation, the meeting was adjourned. No discussions were initiated on Lottery.
  • The GST Council also extended the GSTR-3B Due date for the month of January 2019 by two days to 22nd February 2019.
  • GST shall be levied at effective GST rate of 5% without ITC on residential properties outside affordable segment. GST shall be levied at effective GST of 1% without ITC on affordable housing properties. The new rate shall become applicable from April 01, 2019.
  • Definition of affordable housing shall be: A residential house/flat of carpet area of up to 90 sq. meters in non-metropolitan cities/towns and 60 sq. meters in metropolitan cities having value up to Rs. 45 lakhs.
  • GST exemption on TDR/ JDA, long term lease FSI Intermediate tax on development right, such as TDR, JDA, lease FSI shall be exempted only for such residential property on which GST is payable. Details of the scheme shall be worked out by an officers committee and shall be approved by the GST Council in a meeting to be called specifically for this purpose.
  • Details of the scheme shall be worked out by an officers committee and shall be approved by the GST Council in a meeting to be called specifically for this purpose.
  • GST Council decided that the issue of tax rate on lottery needs further discussion in the GOM constituted in this regard. The decisions of the GST Council have been presented in this note in simple language for easy understanding.  The same would be given effect to through Gazette notifications/ circulars which alone shall have force of law.

Disclaimer:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Before making any decision do consult your professional /tax advisor for their misrepresentation or interpretation of act or rules author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. The author is a Chartered Accountant and the Chief Gardener & Founder Director of Rajput Jain & Associate, a leading Tax & Investment planning Advisor Service provider. His Blog can be found at http://carajput.com for any query you can write to info@carajput.com. Hope the information will assist you in your professional endeavors. For query or help contact: info@carajput.com  or call at 09811322785/4- 9555555480.

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Overview on Input Tax Credit

Input Tax Credit:

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What is Input Tax Credit:

The meaning of ITC can be easily understood when we take the words ‘input’ and ‘tax credit’. Inputs are materials or services that a manufacturer purchase in order to manufacture his product or services which is his output. Tax credit means the tax a producer was able to reduce while paying his tax on output.

Input tax credit means that when a manufacturer pays the tax on his output, he can deduct the tax he previously paid on the input he purchased. Here, while paying the tax on his output, he can deduct or take credit for the tax he paid while purchasing inputs.

Example: An example will make things much clear. Suppose that a readymade garment firm buys polyester (input) from a supplier (of input) at Rs 100 and a CGST of Rs 10 is also has to be paid (CGST rate of 10%). The price of polyester input will be Rs 110.

Now the garment manufacturer sells the product at Rs 200 plus tax (means his value addition is Rs 100). Imagine that the GST rate of readymade shirt is 12%. Here, the manufacturer must pay a tax of Rs 24. But he has previously paid a tax of Rs 10 while purchasing the input of polyester. Hence, he can claim this Rs 10 and has to pay only the remaining Rs 14 (of the total Rs 24). The Rs 10 that the manufacturer claimed is the input tax credit.

How to calculate Input Tax Credit:

consider how to calculate Input Tax Credit:

Suppose you have a business. The service or product you sell attracts a tax of 18%. You use input services or goods during your business. The tax due from you (of 18%) can be adjusted to the taxes paid already by you on the purchase of such inputs. The manufacturers add taxes only for the value addition done and not on the total product value.

A steel utensils manufacturer who manufactures utensils like spoons, plates, etc. Assume that the manufacturer had bought an INR 500 worth of raw steel to make a pressure cooker and INR 100 worth other raw materials. Let’s assume that the GST for steel is 18%. Also, assume that the GST he paid is 28% of other raw materials.

Hence, the manufacturer has paid Rs. 28 on other raw materials and Rs. 90 on raw steel which he used as inputs.

So, the total input tax paid was INR 118 by the manufacturer.

Now, after considering the cost of manufacturing steel pressure cooker using the raw materials and including a decent profit, he decided to sell the pressure cooker to a distributor at INR 800 + GST.

Assume that the steel utensil attracts a GST of 18%.

Now the tax on it will be INR 144. So the manufacturer will invoice the pressure cooker for INR 944.

Hence, the manufacturer is collecting INR 144 as GST on sale from the distributor. The manufacturer had paid INR 118 towards GST during the purchase of his input raw materials. Hence, out of INR 144 of GST, the manufacturer can now claim a credit of INR 118 which he already paid towards GST for inputs and deposit the difference of INR 26 with the government.

This tax credit is available at all succeeding stages, retailers and distributors charge GST and can claim the Input Tax Credit.

How to claim Input Tax Credit (ITC):

The following conditions have to be met to be entitled to Input Tax Credit under the GST scheme:

  1. One must be a registered taxable person.
  2. One can claim Input Tax Credit only if the goods and services received is used for business purposes.
  3. Input Tax Credit can be claimed on exports/zero-rated supplies and are taxable.
  4. For a registered taxable person, if the constitution changes due to merger, sale or transfer of business, then the Input Tax Credit which is unused shall be transferred to the merged, sold or transferred business.
  5. One can credit the Input Tax Credit in his Electronic Credit Ledger in a provisional manner on the common portal as prescribed in model GST law.
  6. Supporting documents – debit note, tax invoice, supplementary invoice, are needed to claim the Input Tax Credit.
  7. If there is an actual receipt of goods and services, an Input Tax Credit can be claimed.
  8. The Input Tax should be paid through Electronic Credit/Cash ledger.
  9. All GST returns such as GST-1, 2,3, 6, and 7 needs to be filed.

How Input Tax Works Under GST:

Suppose Mr. A is a seller. He sells goods to Mr. B. The buyer Mr. B is now eligible to claim the purchase credit using his purchase invoices.

This is how it works:

  1. A uploads all his tax invoices details as issued in GSTR-1.
  2. The details uploaded by Mr. A is automatically populated or reflected in GSTR-2A.
  3. The details of the sale are then accepted and acknowledged for by Mr. B, and subsequently, the purchase tax is credited to Mr. B’s ‘Electronic Credit ‘ He can use this to adjust it later for future output tax liability and receive a refund.

How to utilize the Input tax credit?

In GST we have three types of taxes CGST, IGST, and SGST/UTGST.
For the inter-state supply of goods/ services, IGST is charged.
And for the intra-state supply of goods/services CGST and SGST/UTGST are charged.

While making payment for the above taxes, input tax credit will be allowed in the following manner-

Credit 1st to be utilized for payment of Balance if any
CGST CGST IGST
IGST IGST CGST and then SGST

/UTGST

SGST/UTGST SGST/UTGST  IGST

The documents and forms required to claim Input Tax Credit:

Each applicant will require the following documents to claim Input Tax Credit under GST:

  1. Supplier issued invoice for supplying the services and goods or both according to GST law.
  2. A debit note issued by the supplier to the recipient in case of tax payable or taxable value as specified in the invoice is less than the tax payable or taxable value on such supplies.
  3. Bill of entry.
  4. A credit note or invoice which is to be issued by the ISD (Input Service Distributor) according to the GST invoice rules.
  5. An invoice issued like the bill of supply under certain situations instead of the tax invoice. If the amount is lesser than INR 200 or in conditions where the reverse charges are applicable according to the GST law.
  6. A supplier issued a bill of supply for goods and services or both as per the GST invoice rules.

The above documents prepared as per the GST invoice rules should be furnished while filing the GSTR-2 form. Failure to present these forms can lead to either rejection or resubmission of the request.

For taxes paid on goods and services or both due to any fraud or due to order for the demand raised, suppression of facts or wilful misstatement, Input Tax Credit cannot be claimed.

Since input credit will be available to the seller at each stage, the input tax credit is expected to bring down the overall taxes charged on the product at present. So, if input credit mechanism works efficiently, final consumers may see the cost reduction.

Disclaimer:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Before making any decision do consult your professional /tax advisor for their misrepresentation or interpretation of act or rules author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. The author is a Chartered Accountant and the Chief Gardener & Founder Director of Rajput Jain & Associate, a leading Tax & Investment planning Advisor Service provider. His Blog can be found at http://carajput.com for any query you can write to info@carajput.com. Hope the information will assist you in your professional endeavors. For query or help contact: info@carajput.com  or call at 09811322785/4- 9555555480.

 

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Overview on Assessment under GST

Assessment under GST Act

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Assessment

Section 2(11) of CGST Act defines assessment as determination of tax liability under this Act and includes self-assessment, re-assessment, provisional assessment, summary assessment and best judgment assessment.

Types of Assessment under GST

The different types of assessment under GST are as under:

  • Section 59 – Self assessment of taxes payable
  • Section 60 – Provisional assessment
  • Section 61 – Scrutiny of tax returns filed by registered taxable persons
  • Section 62 – Assessment of registered taxable person who have failed to file the tax returns
  • Section 63 – Assessment of unregistered persons
  • Section 64 – Summary assessment in certain special cases

Section 59 – Self Assessment

The taxable person is required to pay tax on the basis of self-assessment done by himself. Hence, all GST return filings are based on self-assessment by the taxpayer.

In this regard, a provision of Section 59 of the GST Act is reproduced hereunder:

“Every registered person shall self-assess the taxes payable under this Act and furnish a return for each tax period as specified under section 39.”

Section 60 – Provisional Assessment

Provisional assessment can be conducted for a taxable person when the taxpayer is unable to determine the value of goods or service or both or determine the rate of tax applicable thereto.

Procedure for Provisional Assessment

Step 1: The taxable person has to give, the concerned GST officer, a request for provisional assessment in writing.

Step 2: The GST officer on reviewing the application, will pass an order, within a period not later than ninety days from the date of receipt of the request, allowing payment of tax on provisional basis or at a GST rate or on such value as specified by him.

Step 3: The taxable person, who is making payment on provisional basis, has to issue a bond with a security promising to pay the difference between provisionally assessed tax and final assessed tax.

Step 4: The GST officer will pass final assessment, with a period not exceeding six months from the date of communication of order of provisional payment.

Interest Payable for Provisional Assessment

In case, after final assessment, the tax is held payable i.e. taxable person is held liable to pay more tax than tax paid at the time of provisional assessment, in such case, the taxable person will be liable to pay interest on such tax payment. Interest would be calculated from the actual due date of tax (please note original due date should be considered and not provisional tax payment date) till the date of actual payment of tax. The interest calculation position will remain same, even if the payment of tax is done before or after final assessment.

Refund under Provisional Assessment

In case of refund, interest will be paid on such refund as provided under section 56.

Section 61 – Scrutiny Assessment

GST Officers can scrutinize a GST return and related particulars furnished by the registered person to verify the correctness of the return. This is called a scrutiny assessment. In case there is any discrepancies noticed by the officer, he/she would inform the same to the registered person and seek his explanation on the same. On the basis of the explanation received from the registered person, the officer can take following action:

  • If the explanation provided is satisfactory, the officer will inform about the same to the registered person and no further action will be taken in this regard.
  • If the explanation provided is not satisfactory or the registered person has failed to take corrective measures after accepting the discrepancies, the proper officer will initiate appropriate action like conducting audit of registered person, conducting special audit, inspect and search the place of business of registered person, or initiate demand and recovery provisions.

Section 62 – Failure to File GST Return – Best Judgement Assessment

When a registered person fails to furnish the required returns, even after service of notice under Section 46 an assessment would be conduced by the GST Officer. In such cases, the GST officer would proceed to assess the tax liability of the taxpayer to the best of his judgement taking into account all the relevant material which is available or which he has gathered and issue an assessment order within a period of five years from the date for furnishing of the annual return for the financial year to which the tax not paid relates.

On receipt of the said assessment order, if the registered person furnishes a valid return within a period of 30 days from the date of issuance of assessment order, then in such case, the assessment order would deemed to have withdrawn. However, the registered person will be liable to pay interest under Section 50 (1) and/or liable to pay late fee under Section 47.

Section 63 – Assessment of Unregistered Person – Best Judgement

When a taxable person fails to obtain GST registration even though liable to do so or whose registration has been cancelled under section 29 (2) but who was liable to pay tax, the GST officer can proceed to assess the tax liability of such taxable person to the best of his judgment for the relevant tax periods and issue an assessment order within a period of five years from the date specified under section 44 for furnishing of the annual return for the financial year to which the tax not paid relates.

Section 64 – Summary Assessment

A GST Officer can on any evidence showing a tax liability of a person coming to his notice, proceed to assess the tax liability of such person to protect the interest of revenue and issue an assessment order, if he has sufficient grounds to believe that any delay in doing so may adversely affect the interest of revenue. In order to undertake assessment under section 64, the proper officer is required to obtain previous permission of additional commissioner or joint commissioner. Such an assessment is called summary assessment.

Disclaimer:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Before making any decision do consult your professional /tax advisor for their misrepresentation or interpretation of act or rules author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. The author is a Chartered Accountant and the Chief Gardener & Founder Director of Rajput Jain & Associate, a leading Tax & Investment planning Advisor Service provider. His Blog can be found at http://carajput.com for any query you can write to info@carajput.com. Hope the information will assist you in your professional endeavors. For query or help contact: info@carajput.com  or call at 09811322785/4- 9555555480.

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