Overview on GST Advance Rulling

Advance Ruling

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What is Advance Ruling:

Advance ruling” means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in Section 97(2) or Section 100(1) of the CGST Act, in relation to the supply of goods or services or both proposed to be undertaken or being undertaken by the applicant.

“Applicant” means any person registered or desirous of obtaining registration.

Why is advance ruling under GST necessary:

The objective of any advance ruling, including under GST is to-

  1. Provide certainty for tax liability in advance in relation to a future activity to be undertaken by the applicant.
  2. Attract Foreign Direct Investment (FDI) – By clarifying taxation and showing a clear picture of the future tax liability of the FDI. The clarity and clean taxation will attract non-residents who do not want to get involved in messy tax disputes.
  3. Reduce litigation and costly legal disputes.
  4. Give decisions in a timely, transparent and inexpensive manner.
  5. Pronounce ruling expeditiously in a transparent and reasonable manner;
  6. Seeking advance ruling does not include much cost.
  7. Opportunity of personal hearing can be granted to applicant.

Significance of Advance Ruling

  • Helps the applicant in planning his activities which are liable for payment of GST, well in advance.
  • Determining the tax liability well in advance.
  • Binding on the applicant as well as Government authorities.
  • Avoiding long drawn and expensive litigation at a later date.
  • Seeking an advance ruling is inexpensive and the procedure is simple and expeditious.
  • Certainty and transparency to a taxpayer with respect to an issue which may potentially cause a dispute with the tax administration.

Constitution of ‘Authority for Advance Ruling:

CGST Act – The Authority for Advance Ruling constituted under the provisions of SGST Act or UTGST Act shall be deemed to be the Authority for Advance Ruling in respect of that State or Union Territory.

SGST Act – The State Government shall, by notification, constitute an Authority to be known as the Delhi State Authority for Advance Ruling. Provided that the Government may, on the recommendation of the Council, notify any Authority located in another State to act as the Authority for the State.

UTGST Act – The Central Government shall, by notification, constitute an Authority to  be known as the (name of the Union territory) Authority for Advance Ruling: Provided  that the Central Government may, on the recommendations of the Council, notify any  Authority located in any State or any other Union territory to act as the Authority for the  purposes of this Act.

The Authority shall consist of-

(i) one member from amongst the officers of central tax to be appointed by the Central Government; and

(ii) One member from amongst the officers of State tax to be appointed by the State Government.

  • The qualifications, the method of appointment of the members and the terms and conditions of their services shall be such as may be prescribed.
  • The Central Government and the State Government shall appoint officer of the rank of Joint Commissioner as member of the Authority of Advance Ruling.
  • Each State & UT will have its own Advance Ruling Authority.
  • The Authority will comprise one member CGST and one member SGST.
  • Such members will be of designation Joint Commissioner.

Application for Advance ruling – Sec 97

Advance Ruling can be sought for the following questions:

  • Classification of goods or services or both;
  • Applicability of a Notification;
  • Determination of time and value of supply of goods or services or both;
  • Admissibility of Input Tax Credit;
  • Determination of liability to pay tax on any goods or services or both;
  • Whether the applicant is required to be registered;
  • Whether any particular thing done by the applicant qualifies as ‘supply’ within the meaning of the term

Procedure of Filing Application

  • An Applicant desirous of obtaining an Advance Ruling may make an application in such form and manner and accompanied by such fee as may be prescribed.
  • An application for obtaining an advance ruling shall be made on the common portal in FORM GST ARA-01 and shall be accompanied by a fee of five thousand rupees, to be deposited in the manner specified in Section 49.
  • Payment of fees    can    be      made only   using electronic cash ledger. Electronic     credit ledger cannot be used for payment fee.

When can one request for GST Advance Ruling:

Any taxpayer can request for advance ruling when he is uncertain of the provisions. Advance tax ruling is applicable on –
(a) Classification of any goods and/or services under the Act
(b) Applicability of a notification which affects the rate of tax
(c) Determination of time and value of supply of goods/services
(d) Whether input tax credit paid (or deemed to be paid) will be allowed
(e) Determination of the liability to pay tax on any goods/services
(f) Whether the applicant has to be registered under GST
(g) Whether any particular thing done by the applicant regarding goods/services will result in a supply.

Process of Advance Ruling under GST

An advance ruling is first sent to Authority for Advance Ruling (Authority). Any person unhappy with the advance ruling can appeal to the Appellate Authority for Advance Ruling (Appellate Authority).

Process of Advance Ruling under GST

Forms

Application for Advance ruling has to be made in FORM GST ARA-01 along with Rs. 5,000.

Decision of the Authority

The Authority can by order, either admit or reject the application.

Will all applications be allowed:

The Authority will NOT admit the application when-
(b) The same matter has already been decided in an earlier case for the applicant
(c) The same matter is already pending in any proceedings for the applicant

Applications will be rejected only after giving an opportunity of being heard. Reasons for rejection shall be given in writing.

When will the authority give their decision:

Advance ruling decision will be given within 90 days from application.

If the members of the Authority differ in opinion on any point, they will refer the point to the Appellate Authority.

Advance Ruling will have prospective effect only.

On whom will the advance ruling apply:

The advance ruling will be binding only –
(a) On the applicant
(b) On the jurisdictional tax authorities in respect of the applicant.

If the law, facts of the original advance ruling change then the advance ruling will not apply.

Appeal to the Appellate Authority

If the applicant aggrieved by the advance ruling he can appeal to the Appellate Authority.

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.

Corporate and Professional Updates on 22nd February 2019

Indirect tax Updates:

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  • GST Council meeting on February 20 remained inconclusive after Some State Finance Ministers sought a physical meeting as they felt an issue as crucial as a special scheme for Real Estate Sector should not be discussed through a video conference. The meeting will now take place in Delhi on February 24.

RBI Updates:

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  • The Reserve Bank of India on Friday allowed bank exposures to all non-banking financial companies, excluding core investment companies, to be risk weighted according to the ratings assigned by the rating agencies. RBI had said it would consider this when it released its statement on developmental and regulatory policies on 7 February and is expected to facilitate the flow of credit to well-rated NBFCs.
  • Exposures on rated as well as unrated non-deposit taking systemically important NBFCs other than asset finance companies (AFCs), NBFCs–infrastructure finance companies (NBFCs-IFC), and NBFCs–infrastructure development funds (NBFCs-IDF), are uniformly risk weighted at 100%.
  • Exposures to AFCs, NBFCs – IFC, NBFCs–IDF and other NBFCs that are not NBFCND-SI are risk-weighted according to ratings assigned by the rating agencies accredited by RBI. Risk-weighted assets are used to determine the minimum amount of capital that must be held by banks and other institutions to reduce the risk of insolvency and the capital requirement is based on a risk assessment for each type of bank asset.
  • It has been decided that exposures to all NBFCs, excluding core investment companies will be risk weighted as per the ratings assigned by the rating agencies registered with Sebi and accredited by the Reserve Bank of India, in a manner similar to that of corporates.

MCA Updates:

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  • Initial MSME 1 within 30 days from date of availability of form on MCA portal.
  • One time DPT 3 within 90days from date of notifications i.e 20th April 2019.
  • E form Active (INC 22A) on or before 25th April 2019.
  • DIN 3KYC: on or before 30th April 2019.
  • MSME 1 (1st half) on or before 30th April 2019.
  • Annual DPT 3 on or before 30th June 2019.
  • Annual Filling AOC 4 on or before 30th October 2019.
  • MSME 1 (2nd half) on or before 30th October 2019.
  • Annual Return MGT 7 on or before 29th November 2019.
  • Late Fees of Rs. 10000 for newly notified e-form ACTIVE – MCA
  • MCA has notified vide ‘Companies Amendment Rules, 2019’ fees for filing of new notified e -form ACTIVE. Fees – Nil for filing till 25.04.2019 and Rs. 10000/- for Filing after 25.04.2019.

Other Updates:

  • Merger of Vijaya Bank and Dena Bank with BoB to be effective from April 1. Bank of Baroda said the merger of Dena Bank and Vijaya Bank with itself would be effective from April 1 as per the scheme of amalgamation approved by the govt.
  • The Reserve Bank of India (RBI) on Friday allowed bank exposures to all non-banking financial companies (NBFCs), excluding core investment companies (CICs), to be risk weighted according to the ratings assigned by the rating agencies. RBI had said it would consider this when it released its statement on developmental and regulatory policies on 7 February and is expected to facilitate the flow of credit to well-rated NBFCs. Exposures on rated as well as unrated non-deposit taking systemically important NBFCs (NB F C-N D-S I), other than asset finance companies (AFCs), NBFCs–infrastructure finance companies (NBFCs-IFC), and NBFCs–infrastructure development funds (NBFCs-IDF), are uniformly risk weighted at 100%.
  • Exposures to AFCs, NBFCs – IFC, NBFCs–IDF and other NBFCs that are not NBFCND-SI are risk-weighted according to ratings assigned by the rating agencies accredited by RBI. Risk-weighted assets are used to determine the minimum amount of capital that must be held by banks and other institutions to reduce the risk of insolvency and the capital requirement is based on a risk assessment for each type of bank asset. “It has been decided that exposures to all NBFCs, excluding core investment companies will be risk weighted as per the ratings assigned by the rating agencies registered with Sebi and accredited by the Reserve Bank of India, in a manner similar to that of corporate.

Key Due dates:

  • Due Date of GSTR 3B has been Extended upto 22nd February 2019.

Quote of the Day:

My personal life is lived as ‘me,’ but my professional life is lived as other people. In other words, when I go to the office, I lie down, dream, and become ‘someone else.’ That’s my job.

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.

Corporate and Professional Updates on 21st February 2019

Direct tax Updates:

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  • DIRECTORATE OF INCOME TAX (SYSTEM) issued Instruction No. 6 dt. 20-02-2019 regarding Processing of Return of AY 2017-18 and Issue of notice for prima facie adjustment under 143(1)(a).

Indirect tax Updates:

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  • GST Council adjourns meeting, to decide on lowering levy for real estate on Sunday
  • CBIC vide Notification No. 09/2019-CT dt. 20-02-2019 extended the last date of filing GSTR-3B for the month of January, 2019 up to 22.02.2019.

Other updates:

  • MCA Notification dated 19-02-2019 Central Government makes the following rules, further to amend the Companies Rules, 2014 and also to amend the Companies.
  • Supreme Court of India in the case of Ram Siromani Tripathi & Ors. Vs State of U.P. & Ors. Held that No adjournment on the ground of non-presence of counsel in court.
  • Non-filing of appeal changes character of protective additions to substantive additions.
  • DCIT Vs M/s Nirala Housing Pvt. Ltd.
  • Moody’s upgrades outlook on Yes Bank to stable.
  • IL&FS probe ED registers money laundering case.
  • India to remain fastest growing economy.
  • Case SC dismisses contempt plea against SBI
  • FDI during April-Dec 2018-19 falls 7% to $33.49 Billion.
  • Allahabad Bank, IOB’s stake sale in Universal Sompo General Insurance gathers pace
  • to infuse Rs 48,239 cr. in 12 PSBs Corporation Bank gets Rs 9,086 cr.
  • Saudi Aramco in talks with Reliance Industries, others to invest in oil.
  • FinMin expects bad loan recoveries to touch Rs 1.80 trillion in FY19.
  • France court orders UBS to pay $5.1 billion for Swiss accounts scandal.
  • Govt calls meeting next week on mandatory hallmarking of gold jewellery.
  • Supreme Court holds Anil Ambani guilty in Ericsson case.
  • Alembic Pharma gets USFDA nod for glaucoma drug.
  • IRDAI spells out draft norms of standard mediclaim policy.
  • Aviation industry is challenging, says Naresh Goyal.
  • Lite Bite Foods to buy 4 restaurant brands from Phoenix Mills Group arm.
  • Only Jio, BSNL add mobile users in Dec, Voda Idea lost maximum Coal India gets SEBI exemption for share buyback programme
  • EPFO likely to announce 8.55% interest on EPF for FY19
  • Tata Motors betting big on electric buses, hopeful demand will grow
  • Vodafone Idea eyes 100% network integration by June 2020
  • Mukesh Ambani’s RIL world’s 6th fastest growing retailer beats Jeff Bezos’ Amazon, Nike
  • World’s biggest mortgage-backed covered bond market sets another record
  • Maruti Suzuki, Hyundai rule list of top 10 cars sold in January
  • Sonalika Tractors’ exports soar 130% in January
  • Govt mulls additional petroleum reserves
  • Fine on benami can be up to 25 per cent of property rate
  • SBI writes of Rs 10,000 as bad loans; 19 PSBs totalling Rs 41,000 as bad loans
  • Sensex snaps 9-day losing run, rebounds over 400 points
  • TCS recognised as a global top employer.

Key Due dates:

  • Due Date of GSTR 3B has been Extended upto 22nd February 2019.

Quote of the day:

I have always said ‘yes’ to opportunities and experiences.

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.

Corporate and professional Updates on 20th February 2019

Direct Tax Updates:

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  • The government announced a series of changes aimed at freeing investors and entrepreneurs from the so-called angel tax that’s roiled India’s startup ecosystem. It raised the exemption threshold and kept investments by listed companies of certain minimum size, venture capital funds and non-residents in startups outside the ambit of the tax.
  • A notification issued by the government also widened the definition of startups to benefit a larger number of innovators and protect them from the tax. An entity that has been in operation for up to 10 years from its date of incorporation or registration will be considered a startup instead of the current seven years.

Excluded Investors:

  • The investment limit was raised to Rs 25 crore from Rs10 crore now for availing of tax exemption. “Considerations of shares received by eligible startups for shares issued or proposed to be issued by all investors shall be exempt up to an aggregate limit of Rs 25 crore.
  • The Rs 25 crore limit will exclude funds from certain sources. These include non-residents, Category 1 registered alternative investment funds and frequently-traded listed companies with a net worth of Rs 100 crore or turnover of at least Rs 250 crore. The development comes in the wake of startups having been served demands for taxes on angel funds received by them.

Tax Scrutiny:

  • The new norms don’t address cases in which tax demands have already been raised. “In cases where demand notices have been raised, we have directed the tax officers to not enforce recovery of demand.
  • The increase in investment limit to Rs 25 crore and self-declaration procedure with DPIIT are game changers for the startup fraternity.

Indirect Tax Updates:

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  • Compulsory mentioning of the Place of Supply in case of Interstate supply to Unregistered Person.
  • CBIC mandates the reporting of all inter-State supplies made to unregistered persons in Table 3.2 of FORM GSTR-3B and Table 7B of FORM GSTR-1.
  • The Central Board of Indirect Taxes & Customs in its Circular No. 89/08/2019-GST dated February 18, 2019 it shows that the registered persons making inter-State supplies to unregistered persons, composition taxable persons and UIN holders shall report the details of such supplies along with the place of supply of FORM GSTR-3B and the details of all inter-State supplies made to unregistered persons where the invoice value is up to Rs 2.5 lakhs are required to be reported in Table 7B of FORM GSTR-1 as mandated by the law.
  • Contravention of any of the provisions of the Act or the rules made there under attracts penal action under the provisions of section 125 of the CGST Act.

Other Updates:

  • RBI May launch exchange traded fund of PSU bank stocks next fiscal.
  • I-T for charging GST on logo use by subsidiaries.
  • Yes Bank denies any wrong-doing in making report public.
  • National electronics policy eyes 1 cr jobs.
  • Arcelor Mittal buys back shares worth $89 million.
  • Walmart Q4 profits jump 69.5% to $3.7 bn, top estimates.
  • Irdai asks all non-life insurers for a uniform standard health product.
  • WTO pegs global trade at 9-yr low; India exports may face repercussions.
  • Govt raises investment limit for angel tax concession to startups.
  • SIP closure ratio at 18-month high, Dec applications slip to 750,000.
  • Honda to close only UK factory, blames global trends.
  • Reliance Power promoter’s eye 2,500 cr from sale of 18% stake.
  • Vedanta says no revised bid for Essar Steel.
  • I-T dept raids Divi’s Lab premises.
  • Wheat output may cross 100 mt.
  • SEA in pact with Argentinian body to boost vegoil trade.
  • ABB bags 270 cr. orders from Railways.
  • reverts back to old system of awarding oil and gas blocks.
  • Cabinet clears promulgating fresh ordinance for company’s law amendments.
  • SC to pronounce order on Ericsson’s contempt plea against RCom chief Anil Ambani.
  • Jaypee Infra’s promoter makes second attempt to settle dues.
  • Bad loans: 19 PSBs write off nearly Rs 41,000 crore in Q3.
  • Insolvency process: Gaur offers to clear Jaypee Infra dues of Rs 8,358 crore.
  • Vedanta to file fresh writ in High Court Sterlite Copper row.
  • French aerospace firm Safran to have engine plant in Hyderabad.
  • JSW Cement to invest Rs 2,000cr to take capacity to 20mt by’20.
  • Sensex falls for 9th straight session, ends 146 points lower.
  • India’s fuel demand rose 6.4 per cent year-on-year in January.
  • Brent oil eases from 2019 highs as markets await trade talk’s outcome.
  • No PAN is required for transfer of equity shares of listed entities executed by non-residents to their Immediate Relatives.
  • Now INDIAN COMPANIES who are in CIRP process can use ECB to repay their rupee term Loan.

Key Due Dates:

  • Due dates of GSTR-3B (summary return of January) for the month of January 2019 is 20th February 2019.

Quote of the day:

“A professional is someone who can do his best work when he doesn’t feel like it.”

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.

Corporate and Professional Updates On 19th February 2019

Direct Tax Updates:

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Case Law On Income Tax:

  • Shrivardhan Mohta Vs. Union Of India

Prospective application of Black Money – the Act of 1961 does not impose a punishment of imprisonment while the Act of 2015 does. In such circumstances, it cannot be said that, the petitioner has been sought to be punished twice for the same offence – Calcutta High Court.

  • M/S. Vasan Healthcare P Ltd. Vs. The Additional CIT Central Range-2, Chennai

Penalty u/s 271D and 271E – If loan in cash is taken once or twice, in exceptional exigencies, may be a ground for interference, but when the fact remains that a lender not even licensed was illegally giving loans only in cash and accepting repayment in cash cannot be a ground for condonation of regular transaction with such unauthorised lender – Madras High Court.

  • DCIT, Circle 19 (1) New Delhi Vs. M/S Oxigen Services(P) Ltd.

Depreciation on POS terminals – assessee was entitled to the depreciation at 60% on the ground that the equipment was akin to a computer – ITAT Delhi.

  • M/S. Jaya Permai Enterprise(India) Pvt. Ltd. Vs.ITO, Ward- 15 (2) (2) Mumbai

Levy of penalty levied u/s 271(1)(c) – disallowance under section 40(a)(ia), does not amount to concealment of income – No penalty – ITAT Mumbai.

Indirect Tax Updates:

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  • Two new features in the Official Website including System Generated Acknowledgement of Application of Appeal and the Population of Data from EWB System into Form GSTR-1.
  • The Directorate General of Goods and Services Tax Intelligence has unearthed a fraud worth a whopping Rs 1,000 Crore in the state of Chhattisgarh. The GST officials said that such traders are on their radar and the GST intelligence department is keeping a close tab on the tax evaders.
  • GOM panel set up to Review Tax Rate on lottery favours a uniform GST rate of either 18% or 28%– a final call on which would be taken by the GST Council at its meeting on February 20. Currently, a State-Organised Lottery attracts 12% GST while a State-Authorised Lottery attracts 28% tax.
  • CBIC issues Clarification regarding tax payment made for Supply of Warehoused Goods while being deposited in a Customs Bonded Warehouse for the period July, 2017 to March, 2018.
  • CBIC vide it’s Circular No:89 dated 18th February 2019 seeks to clarify situations of mentioning details of inter-State supplies made to unregistered persons in Table 3.2 of FORM GSTR-3B and Table 7B of FORM GSTR-1.

RBI Updates:

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  • The Reserve Bank of Indiawill pay Rs.28,000 crore as interim dividend to the government, which will help the Centre meet its revised budget estimates that include an allocation for the first ever income transfer to farmers and burnish its fiscal credentials ahead of the general elections.
  • RBI in its Board Meeting on February 18 decides to transfer Rs 28,000 Crore as Interim Dividend to the Govt for the period of July to December 2018. The interim surplus has been decided after a limited Audit Review and after applying the Economic Capital Framework.
  • RBI Governor Shaktikanta Das will meet top officials of state-run banks and Private Sector Lenders later this month to discuss the issue of transmission of the RBI’s rate cut move to the wider economy.
  • RBI will inject Rs 12,500 Crore into the system through Purchase of Government Securities on Thursday which is Feb 21 to increase liquidity. The purchase will be made through Open Market Operations.

Key Due Dates:

  • Due dates of GSTR-3B (summary return of January)for the month of January 2019 is 20th February 2019.

Quote of the day:

It’s NOT the job you DO It’s HOW you DO the job.”

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.

Complete Overview on Value of Supply In GST

Value of Supply

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What is Value of Supply?

Value of Supply in common terms is nothing but the amount paid by the recipient on supply to the supplier as consideration for supply.

Example: A goes to shop of B and purchases television. He pays amount of ` 20,000 as consideration for TV Purchased. Let’s decode the transaction between A and B.

(a) What is the nature of transaction: Supply of Television by B to A

(b) Who is the supplier: B

(c) Who is the recipient of supply: A

(d) What is the Value of Supply: ` 20,000.

(e) Who pays for the Value of Supply: A pays to B towards.

(f) Why amount is being paid by A to B for supply: A is paying ` 20000 as consideration to B for supply of Television

What is the value of supply of goods or services or both in GST:

Valuation rules determine value of goods or services or both on which tax under GST has to be charged. Valuation rules have been prescribed under GST for the purpose of determination of fair market value of goods or services or both supplied by the registered person.

How Valuation of Supply would be made -section 15(4):

Valuation of supply of goods or services or both made under section 15(4), would be as follows:

(a) Rule 27: Value of supply of goods or services where the consideration is not wholly in money.

(b) Rule 28: Value of supply of goods or services or both between distinct or related persons, other than through an agent.

(c) Rule 29: Value of supply of goods made or received through an agent.

(d) Rule 30: Value of supply of goods or services or both based on cost.

(e) Rule 31: Residual method for determination of value of supply of goods or services or both.

What is the relevance for ascertaining value of supply:

Value of supply is the figure upon which tax is levied and collected. What forms part of the value and what does not form part of the value of supply is required to be ascertained for correct levy of tax.

Past History of Taxation is full of instances wherein there have been in numerous disputes in ascertaining the value upon which tax would be levied and collected. The ongoing fight between the assesse and the tax regime of whether service tax would form part of the value of sales price for the levy of sales tax is an example of why guidelines for valuation are required to be precise and clear about what to include and what not to include.

Valuation of supply when a transaction is not in INR:

When exports are made the invoice may be raised by the taxpayer in Foreign Currency. The IGST (if any) charged in the invoice will be converted using RBI Exchange Rate.

RBI exchange rates are to be used in case of imports too. When reverse charge is applicable on imported supplies the invoice amount has to be converted using the RBI Exchange Rate.

Transaction value not to include Discount:

The value of the supply shall not include any discount that is given-

  • before or at the time of the supply if such discount has been duly recorded in the invoice, and
  • after the supply has been effected.

(i)      such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and

(ii)     Input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by recipient

Various Kinds of Discounts:

  • ‘In-bill’ discounts: Normally allowed
  • Cash discounts: GST is not a tax on recovery of dues towards supplies
  • Quantity discounts: Allowed subject to S.15(3)
  • Special Discounts:
    • Aggressive Marketing.
    • Difficult to fulfill S. 15(3) conditions.
    • Reverse case: Supply of services by the dealer to manufacturer.

Discounts ‘in-kind’:

  • Holiday packages
  • Gold coins
  • Motor Vehicle
  • Difficult to fulfill S. 15(3) conditions

Example: Holiday package by manufacturer to a dealer

Free Stocks:Similar to discount ‘in-kind’. These free supplies are not only taxable in the hands of manufacturer but ITC is also not available to the dealers. So, it is tax inefficient transaction

‘Buy one-take two’:It is not the case where the two units of stocks are bundled together with a single price assigned to them. Therefore, unless bundled together (e.g. 4 bars of soap) with preselected units of stock and a single price affixed, all other transactions of “buy one-take two” are individually taxable-the paid unit at the price paid and the free unit at the price determined by the valuation rules.

‘Nominal value supplies’:The value as per Rule 27. Second proviso to R. 28 may fail while passing through the test of “sole consideration”.

Liquidated damages: Upon analysing the definition of supply under GST law, it will result in a conclusion that there are actually two supplies which are taking place here: –

  • Main supply say, ‘works contract’ from contractor to the contractee
  • Liquidated Damages: Contractee also provides services to contractor in the form of agreeing to the obligation to tolerate an act in terms of 5(e) of Sch. II for which he receives consideration in the form of LD

‘Cashback coupons in product packaging’: The product being supplied to a customer contains a cash back coupon. It will not reduce the output tax liability. Cashback may represent the marketing expenses.

‘Cashback coupons provided by person other than supplier’: Like benefits given by e-com operators. These are only marketing expenses of the e-com operators.

‘Gift vouchers valid for subsequent supplies’: The customer is given credit points to avail on subsequent purchases. Subsequent sales value can be reduced.

‘Free ancillary articles’:Free bag with laptop. No tax on bag. No ITC reversal. These are only marketing expenses.

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.

GST (Goods and Services)

Nature of Supply Under GST Act

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What is Nature of Supply:

The Nature of Supply refers to “the relationship between the various possible prices of a product and the quantities of the product that businesses are willing to put on the market”.

Any transfer of title to goods is a supply of goods, transfer of right to use goods Hire purchase transactions, transfer of business assets are also brought under the ambit of term ‘supply’ as per Schedule II.

  1. Supply includes

(a)All forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business.

(b) Importation of service, whether or not for a consideration and whether or not in the course or furtherance of business, and

(c) A supply specified in Schedule I, made or agreed to be made without a Consideration.

 2.Schedule II, in respect of matters mentioned therein, shall apply for determining what is, or is to be treated as a supply of goods or a supply of services.

Activities which are not Supply:

Activities and transactions specified in Schedule III –

  • Services by an employee to the employer in the course of or in relation to his employment;
  • Services of funeral, burial, crematorium or mortuary including transportation of the deceased.
  • Actionable claims, other than lottery, betting and gambling
  • Sale of land / Sale of building after occupation or completion will not attract GST. Thus, sale of building before completion or before occupancy will attract GST

Such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council.

Deemed Supply of Goods & Services:

Following matters will be treated as deemed supply of goods and services and will attract GST:

1.In case of Transfer  of title in goods OR, Right in goods, OR of undivided share in goods without the transfer of title, OR, transfer under an agreement which stipulates that property will pass at a future date upon payment of full consideration

  1. In case of Land & Building,– Any lease, tenancy, easement, license to occupy land or building (both for commercial or residential purpose, fully or partly)
  2. Treatment or Process, which is being applied to another person’s goods, is a supply

4.Transfer of Business Assets–  Where goods forming part of the assets of a business are transferred or disposed of, and are no longer forming part of business  OR Where goods held for business are put to use for any private use, in such a way, as not for business OR Where any person ceases to be a taxable person, any goods earlier forming part of business, unless (a) the business is transferred as a going concern to another person, or (b) the business is carried on by a personal representative who is deemed to be a taxable person With or Without for a Consideration

  1. Supply of Services– Following shall be treated as deemed “supply of Services”:
  • renting of immovable property;
  • construction of a complex, building, civil structure or a part thereof, including a complex or building intended for a sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate;
  • Temporary transfer or permitting the use or enjoyment of any intellectual property right;
  1. Composite Supply– Following shall be treated as deemed “supply of Services”:
    • works contract as defined in section 2 (119) of CGST Act
    • Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration.
  1. Supply of goods– supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration.

Inward Supply or Purchases– “Inward Supply” in relation to a person, shall mean receipt of goods and/or services whether by purchase, acquisition or any other means and whether or not for any consideration

Outward Supply or Sales – “Outward Supply” in relation to a person, shall mean supply of goods and/or services, whether by sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made by such person in the course or furtherance of business

Continuous Supply – Means a supply of services which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, for a period exceeding three months with periodic payment obligations and includes supply of such services as the Government may, subject to such conditions, by notification, specify.

Fringe benefits’ to employees & directors under GST:

Supply of Goods or Services between related persons will be supply even if made without consideration – Para 2 of Schedule I of CGST Act. Also, employer & employee are related persons as per 15 of CGST Act.

Further, Para 4(b) of Schedule II of CGST Act, states that goods held or used for the purposes of the business are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business, whether or not for a consideration, the usage or making available of such goods is a supply of services.

This will cover “Fringe Benefits” given to employees or directors by a company and should be subject to GST. This is a back-door entry for FBT, which was earlier in Income Tax Act, and was very litigative.

Mixed Supply under GST

Mixed Supplymeans two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply.

Example – A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drink and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately.

Taxability – The tax liability on a mixed supply comprising two or more supplies shall be treated as supply of that particular supply which attracts the highest rate of tax.

Composite Supply & Principal Supply under GST:

Composite Supply is a supply made by a taxable person to a recipient comprising two or more supplies of goods or services, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of trade, one of which is a principal supply

Example – Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is the principal supply.

Principal Supply MeansThe supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary and does not constitute, for the recipient an aim in itself, but a means for better enjoyment of the principal supply.

Zero Rated Supply under GST:

Zero Rated Supply have means exported of goods or services or both; or supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit (eligible for ITC).

Important Points to Note:

  1. Supply of goods or services or both is “taxable event “in GST as that event triggers liability to pay GST.
  2. Supply of goods and services for consideration is always taxable.
  3. Supply by taxable person to related person is subject to GST even if there is no consideration that is no amount charged and will cover the followings:

This will cover transactions between group companies (like deputation of persons, supply of goods on loan basis, common facilities shared by group companies), transactions between branches

  1. Free Gifts to related persons will be subject to GST
  2. Benefits provided to employee by the employers like transport, meals, telephone. However, gifts up to Rs. 50K to employees will not be subject to GST, but input credit will have to be reversed.
  3. Supply by principal to agent is subject to GST, GST is payable on supplies to C & F agents. However, commission agent has to pay GST only on his commission.
  4. Import of services from related persons or from business establishment outside India is subject to GST even if there is no consideration. Branch / Head office in India receiving free services from Head Office / Outside India will be subject to GST.
  5. Lottery, betting and gambling is subject to GST
  6. Lottery tickets are goods and GST will be payable. GST will also be payable on services relating to betting and gambling
  7. Some services provided by government are taxable and mostly will be subject to reverse charge.

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.

GST (Goods and Services Tax)

Levy of GST

Image result for hd pics on Levy Of GST

The Act came into effect on 1st July 2017; Goods & Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. In simple words, Goods and Service Tax (GST) is an indirect tax levied on the supply of goods and services.

Unlike earlier when there were multiple taxes such as Central Excise, Service Tax and State VAT etc., under GST, there is just one tax. GST is categorized into CGST, SGST or IGST depending on whether the transaction is Intra-State or Inter-State.

What determines if CGST, SGST or IGST is applicable:

To determine whether Central Goods & Services Tax (CGST), State Goods & Services Tax (SGST) or Integrated Goods & Services Tax (IGST) will be applicable in a taxable transaction, it is important to first know if the transaction is an Intra State or an Inter-State supply.

  • Intra-State supply of goods or services is when the location of the supplier and the place of supply i.e., location of the buyer are in the same state. In Intra-State transactions, a seller has to collect both CGST and SGST from the buyer. The CGST gets deposited with Central Government and SGST gets deposited with State Government.
  • Inter-State supply of goods or services is when the location of the supplier and the place of supply are in different states. Also, in cases of export or import of goods or services or when the supply of goods or services is made to or by a SEZ unit, the transaction is assumed to be Inter-State. In an Inter-State transaction, a seller has to collect IGST from the buyer.

3. What is Central Goods and Services Tax (CGST)?

Under GST, CGST is a tax levied on Intra State supplies of both goods and services by the Central Government and will be governed by the CGST Act. SGST will also be levied on the same Intra State supply but will be governed by the State Government.

This implies that both the Central and the State governments will agree on combining their levies with an appropriate proportion for revenue sharing between them. However, it is clearly mentioned in Section 8 of the GST Act that the taxes be levied on all Intra-State supplies of goods and/or services but the rate of tax shall not be exceeding 14%,each.

For levy and collection of CGST following conditions must be satisfied:-

  1. There must be an intrastate supply of goods or services or both within the meaning of the Act.
  2. The supply must be capable of being valued as per the provisions of the act and the will be levied on the basis of the value so determined.
  3. The tax will be collected at the prescribed rates not exceeding twenty per cent. If the supply is not capable of being categorized under any of the prescribed rates category than tax cannot be levied on the same.
  4. Tax can be collected in the prescribed manner and that too from the taxable person. If any person does not fall within the ambit of the definition of taxable person than tax cannot be collected from him. Taxable person means a person who is registered or liable to be registered under section 22 or section 24 of the Act.

4. What is State Goods and Services Tax (SGST):

Under GST, SGST is a tax levied on Intra State supplies of both goods and services by the State Government and will be governed by the SGST Act. As explained above, CGST will also be levied on the same Intra State supply but will be governed by the Central Government.

Note: Any tax liability obtained under SGST can be set off against SGST or IGST input tax credit only.

An example for CGST and SGST:

Let’s suppose Rajesh is a dealer in Maharashtra who sold goods to Anand in Maharashtra worth Rs. 10,000. The GST rate is 18% comprising of CGST rate of 9% and SGST rate of 9%. In such case, the dealer collects Rs. 1800 of which Rs. 900 will go to the Central Government and Rs. 900 will go to the Maharashtra Government.

Why the split into SGST, CGST, and IGST:

India is a federal country where both the Centre and the States have been assigned the powers to levy and collect taxes. Both the Governments have distinct responsibilities to perform, as per the Constitution, for which they need to raise tax revenue.

The Centre and States are simultaneously levying GST.

The three types tax structure is implemented to help taxpayers take the credit against each other, thus ensuring “One Nation, One Tax”.

 Tax on reverse charge basis:

Normally supplier of goods or services or both is liable to pay tax under GST. However there are certain circumstances under which the onus to pay tax lies with the recipient of taxable supply.

According to section 9(3) of the CGST Act, the Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.

Supply by unregistered suppliers:

As per section 9(4) of the CGST Act, the central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.

From the aforesaid discussion it is clear that if the supplier is an unregistered person making supply of taxable goods or services or both to a registered person than in that the recipient person is liable to pay tax on reverse charge basis as if he is the person making taxable supply and these provisions are applicable in respect of all goods and supplies rather than the notified goods.

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.

Corporate and professional Updates on 15th February 2019

Indirect Tax Updates:

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  • The Goods and Services Tax Council will focus on lowering the tax rate on under-construction properties. A ministerial panel has firmed up its recommendations in this respect, which will be placed to the federal indirect tax body.
  • A ministerial panel led by Gujarat deputy chief minister Nitin Patel has favoured lowering GST on under-construction properties to 5% without credit for taxes paid on raw materials, down from an effective 12% at present with tax credits. The seven-member panel also favoured slashing the rate on affordable housing from 8% to 3%.
  • Completed ones are subject to stamp duty. The proposed tax cut on under-construction properties follows several measures by the government in the interim budget FY2019-20 and by the Reserve Bank of India. The budget gave income tax relief to the middle class the RBI slashed the rate at which it lends to banks by 25 basis points to 6.25%.

Other Updates:

  • Jet Airways approves lenders Rescue Deal.
  • Growth likely to reach 7.5% next fiscal.
  • Jobs, Tech Transfer top agenda for Indo-US.
  • RCom to repay NCD holders only via NCLT.
  • Govt hikes minimum selling price of sugar by Rs 2/Kg.
  • DoT floats Cabinet note on Voda Idea’s FDI proposal ahead of Rs 25,000 cr rights issue.
  • UK Parliament defeats May again in Brexit vote.
  • RBI Governor Shaktikanta Das rules out asset quality review of NBFCs.
  • Bharat 22 ETF’s additional offering subscribed over ten times.
  • Expert committee suggests Rs 9,750 a month as National Minimum Wage.
  • Oil at new high in CY19 on US-China trade Optimism, OPEC Output cuts.
  • Nestle India Q4 Net Profit rises 9.6% to Rs 341.76 Crore; sales up 11.2%.
  • India on the verge of significant data centre expansion.
  • Revenues of Auto Parts cos to grow 12% over four years.
  • Banks come up with rescue package for Jet.
  • India, EU to jointly develop Water Technologies.
  • McLeod Russel’s net profit drops 24% in Q3.
  • Solar Power tariffs will be lower than 2.30/unit by 2030.
  • Paytm pledges all its assets to borrow 1,400 Crore from ICICI Bank.
  • Bata India sprints as margin expansion springs a surprise in Q3.
  • Mahindra lost out on the SUV growth opportunity: Pawan Goenka.
  • Glenmark Q3 Net Profit up 11% to Rs. 116.34 Crore.
  • Petronet signs initial deal to invest, buy LNG from Tellurian.
  • Ashok Leyland net drops 21 per cent at Rs 381 Crore in Q3.
  • Q3 Results ONGC Profit up 65 per cent on higher realisation.
  • Essar Steel NCLT reserves orders on pleas related to ArcelorMittal plan.
  • Banking health Aggregate losses of 21 PSBs stood at Rs 11,605 crore in Q3.
  • Doubts over Govt data prompt call for independent verifier.
  • I-T releases Coffee Day shares.
  • PNB to e-auction 4,000 Properties to reclaim loans.
  • Larsen & Toubro infotech to acquire Germany’s Nielsen Partner for EUR 28.

Key Due Dates:

  • Due Date of GSTR-3B for the month of January 2019 is 20th 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.

Micro, Small & Medium Enterprises

MSME Mandatory Reporting:

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  • The government has given a new turnover based classification of MSMEs in February 2018.
  • As per this new classification, the MSMEs are categorized in term of business turnover instead of Investment in machinery.
  • It was the Micro, Small and Medium Enterprises D87evelopment (MSMED) Act which was notified in 2006 that defined the three tiers of micro, small and medium enterprises and set investment limits. But this investment limit changed to Turnover.
  • This MSME act applicable to both manufacturing and service sector.
  • A Micro Enterprise will be defined as a unit where the annual turnover does not exceed Rs 5 crores.
  • A Small Enterprise will be defined as a unit where the annual turnover is more than Rs 5 crore but does not exceed Rs 75 crore.
  • A Medium Enterprise will be defined as a unit where the annual turnover is more than Rs 75 crore rupees but does not exceed Rs 250 crore.
  • Specified Companies every Public or private Companies receive good or services from MSME and whose payment made due for 45 days or more.
  • Every specified company shall file in MSME Form I one time Return, covering details of dues existing on the date of notification of this order that is 22nd January 2019, within 30 days from the date 22nd January 2019 that is 21st February 2019.
  • No form available on MCA website yet.
  • After above filing company has to file two half yearly return every year before 31st October and 30th April.

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.