CORPORATE AND PROFESSIONAL UPDATE MAY 11, 2016

Professional Update For the Day:

Untitled34ADirect Tax: 

IT: Taxing of capital gains u/s.50B r.w.s.2 (42C) – sale of undertaking as a going concern for a lump sum consideration – addition made by the AO u/s.50B on account of gain arising from transfer of BOPP Films Undertaking confirmed – Supreme Industries Ltd. Vs. ACIT, CC-29, Mumbai (2016 (5) TMI 264 – ITAT Mumbai)

IT: Undisclosed income – Addition made on the basis of the statement during the survey u/s. 133A is not sustainable in the eyes of law – Avinash Kumar Setia Vs. DCIT, CC-17, New Delhi (2016 (5) TMI 261 – ITAT Delhi)

CBDT prescribes procedure for e-filing of Form 15CC in respect of foreign remittance made u/s 195

CBDT prescribes procedure for e-filing of Form 15G/15H

Provisions relating to gift apply only to an Individual or HUF and not to an AOP
[2016] 68 taxmann.com 376 (Delhi – Trib.) Mridu Hari Dalmia Parivar Trust v. Assessing Officer, Circle 31(1)

A person can apply for non-deduction of TDS u/s 195 even if he has been subjected to concealment penalty: CBDT

Now, TDS or TCS return can also be filed via incometaxindiaefiling.gov.in

Indirect Tax:

Excise & Customs : Where pre-deposit amount has been determined after considering/adjusting Cenvat credit amount, then, such ‘net pre-deposit’ amount has to be paid in cash and cenvat credit cannot be used to pay same[2016] 69 taxmann.com 10 (Kerala) Commissioner of Central Excise, Customs & Service Tax v. Kinship Services (India) (P.) Ltd.

Govt. entities in Delhi no more required to file details of purchases below Rs. 1000 in DVAT Form GE-II

ST: Levy of penalty – As the assessee had paid service tax and interest by showing their bonafides before issuance of SCN – Penalty liable to be waived of by invoking Section 80 – Cognizant Technology Solutions India Pvt. Ltd. Vs. CCE&ST, Chennai (2016 (5) TMI 230 – CESTAT Chennai)

VAT & ST: Merely because the advertisements of the advertisers were displayed on the Sites would not necessarily lead to the conclusion that they had acquired the right to use the Sites – Tim Delhi Airport Advertising Pvt. Ltd. Vs. CT&T (2016 (5) TMI 297 – Delhi High Court)

FEMA Updates:                 

Ministry of Commerce & Industry has issued  Policy on foreign investment for Asset Reconstruction Companies-amendment of paragraph 6.2.18.1 of ‘consolidated FDI Policy Circular of 2015’ vide press No. 4(2016 Series) dated 06/05/2016.

MCA Updates:

MCA has issued Companies (Registration Offices and Fees) Amendment Rules, 2016 vide Notification dated 06/05/2015, which shall come into force from the date of their publication in the Official Gazette. The New Rules has further substituted Form No. GNL-1 (Form for filing an application with Registrar of Companies) and Form GNL-4 (Form for filing addendum for rectification of defects or incompleteness)

Word of Wisdom:

The most difficult task is to make everybody happy. The simplest task is to be happy with everyone. Surprisingly, the purpose of both are the same.

Mankind is made great or little by its own will.      -Friedrich Schiller

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CORPORATE AND PROFESSIONAL UPDATE MAY 5, 2016

Professional Update For the Day:

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DIRECT TAX:

IT: Waiver of levy of interest u/s 234B – Application made u/s 119(2)(a) before CCIT – Chief Commissioners of Income Tax cannot exercise that power except in accordance with directions which are issued by the CBDT – Arun Sunny Vs. CCIT & DCIT (2016 (5) TMI 74 – Kerala High Court)

IT: Deemed dividend addition u/s.2(22) – trade advance in relation to business transaction cannot be treated as deemed dividend – M/s Penguin Apparels Pvt. Ltd. Vs. ACIT (2016 (5) TMI 71 – ITAT Chennai)

CBDT has extended due date for payment of TDS on Transfer of Immovable Property u/s 194IA from the existing 7 days to 30 days – Notification No.30/2016, dt.29.04.2016

CBDT has issued Income Tax (10th Amendment) Rules, 2016. The Board has made submission of report in relation to the approval of in-house research and development facility in Part A of Form 3CL and quantifying the expenditure incurred on in-house research and development facility by the company during the previous year and eligible for weighted deduction in Part B of Form No.3CL, electronic. It has also introduced a new Form 3CLA to be submitted electronically to the Secretary, Department of Scientific and Industrial Research on or before the due date specified in Explanation 2 to sub-section (1) of section 139 of the Act for furnishing the return of income, for each succeeding year. 

INDIRECT TAX:

ST: Test of input being used in or in relation to manufacture is to be applied to consider allowance of CENVAT credit of the service tax paid on the input utilized and having relevance to the output manufactured –M/s ITC Ltd. Vs. CCE, Salem (2016 (5) TMI 89 – CESTAT Chennai)

VAT & ST: A quasi judicial authority should discharge the statutory discretionary powers independently and not under the dictation of superior officers – Kumagai Skanska Hcc Itochu Group Vs. CVAT (2016 (5) TMI 77 – Delhi High Court)

Delhi Com Vat in a meeting informed that the Notification dated 12/4/16 relating to ITEM / ITEM Code being issued by finance deptt. after partial modification from relevant deptt. to come up soon. Further, assured DVAT systems will be ready with the option of accepting Q4 returns on old pattern or new pattern by 8/5/16. Furthermore, vide Notification no. 157 dated: 3/5/16 use of DSC for Q4 made optional for all dealers. TEAM STBA

OTHER UPDATE

IASB,ICAI org. certificate course on concurrent audit at hamirpur from may 7, for regn call: 09418026466, or mail at  info@himachalicai.org

Registration opens for ICAI certificate course on service tax starting @ Delhi from 4 June 16, contact- 120-3045954,  visit www.idtc.icai.org

ICAI invites innovative suggestions for govt. on policy matters. Link: https://goo.gl/2OymKi  Email: neac@icai.in

Dena Bank invites applications by CA firms for empanelment as Concurrent Auditors for the period July 2016-June 2017 to be submitted by 10.05.16.

KEY DATES:

Last date of E-payment of service tax foe April by companies vide Challan No. GAR-7 -06/05/2016

It should be noted that – Last date of filing TDS returns for F.Y 2015-16 shall be 15thMay 2016.

WORD OF WISDOM:

One today is worth two tomorrows. -Benjamin Franklin

“Keep your eyes on the stars and your feet on the ground.”

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CORPORATE AND PROFESSIONAL UPDATE MAY 2, 2016

Professional Update For the Day: 

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DIRECT TAX:

Disallowance of the deduction claimed u/s 54 – two flats situated on different storey – Held that:- There is nothing in these sections, which require the residential house to be constructed in a particular manner. The only requirement is that it should be for the residential use and not for commercial use.We do not think that the fact that the residential house consists of several independent units can be permitted to act as an impediment to the allowance of the deduction under section 54/54F.(Surendra Sharma Versus Income Tax Officer, Ward 6 (3) , Jaipur).- 2016 (4) TMI 1098 – ITAT JAIPUR

IT: Period of Limitation for passing the Block Assessment Order – benefit of exclusion of the period during which there was a stay order against the order of special audit is available to Revenue – VLS Finance Ltd. & Anr Vs. CIT & Anr – 2016 (4) TMI 1133 – Supreme Court

Society having 2 PAN cards asks to surrender duplicate one[2016] 68 taxmann.com 297 (Delhi) Sri Ram Chandra Mission v. Commissioner of Income-tax

IT: Assessment against non-existing companies to be held as void ab initio – Orbit Corporation Ltd. Vs. DCIT, Central Circle-47, Mumbai – 2016 (4) TMI 1130 – ITAT Mumbai

Disallowance of interest paid by the appellant to the bank as well as to the other parties – Held that – The assessee was able to establish that he had incurred the expenditure wholly and exclusively for the purpose of business and therefore there is no justification for the revenue to disallowance the interest component. The revenue cannot claim to put itself in the armchair of the businessman and decide how much is reasonable expenditure. (M/s. Lakhani Shoe Co. Pvt. Ltd. Versus The ACIT, Circle-2, Alwar)-  2016 (4) TMI 1127 – ITAT JAIPUR

A transaction couldn’t be deemed as transaction of agency just because word ‘agency’ was written in agreement
IT : Where assessee-logistic company did not deduct TDS on payment made to overseas organizations for availing their logistic services, since transaction was on principal to principal basis and merely word ‘agency’ was used in agreement did not mean that there existed relationship of agency, TDS was not required to be deducted[2016] 68 taxmann.com 384 (Kolkata – Trib.) Balmer Lawrie & Co. Ltd. v. Income-tax Officer

Transactions having contingent impact on profit/ losses are not international transactions. [ Siro Clinpharm Pvt. ltd. vs. DCIT (ITAT Mumbai)].

CBDT notifies new form 35 for e-filing of appeal with CIT (A). IT notification no. 11/2016.

INDIRECT TAX:

In terms of the provisions authorization has to be specifically from the foreign service provider and cannot be fastened upon the Indian Service recipient by the Revenue – In absence of such authorization no liability would fall upon appellant.(Escorts Ltd. Versus CCE, Jaipur And Vice-Versa)- 2016 (4) TMI 1077 – CESTAT NEW DELHI

Seeking cross-examination of certain witnesses – Petitioner submitted that show cause notice is based on several statements of witnesses including those of the experts and any reliance on such statements without offering such witnesses for cross examination would be opposed to the principles of natural justice. Held that:- the reasons cited by the adjudicating authority are completely baseless. Merely because, the concerned witnesses have not retracted their statements would not be a ground to deny cross examination. .(M/s Mulchand M. Zaveri & 1 Versus Union of India & 1)- 2016 (4) TMI 1074 – GUJRAT HIGH COURT

Additional Commissioner of Delhi VAT can’t reject application filed under Amnesty Scheme [2016] 68taxmann.com 385 (Delhi)Jaycon Infrastructure Ltd. v. Commissioner of Trade & Taxes

CST & VAT: Delhi VAT – Where assessee, a bank, made advances to customers for purchase of cars and said cars were hypothecated to bank as security and upon default in repaying loan bank had right to repossess car and brought it to sale, disposal of repossessed cars by bank constituted ‘sale'[2016] 68 taxmann.com 296 (Delhi) Citi Bank v. Commissioner of Sales Tax

Amount received by bank from sale of hypothecated goods is liable to sales tax under Delhi VAT

Company Law:

MCA clarifies that the Companies (Accounting Standards) Amendment Rules, 2016, dt.30.03.2016 is applicable from F.Y.2016-17. Cir.No.04/2016.

Government increases interest rates on employee provident fund (EPF) contributions from 8.7% to 8.8% for 2015-16.

Taxis that run on petrol or diesel will not be allowed to ply in NCR from May 1.

Key Dates:

Last date of E-payment of service tax foe April by companies vide Challan No. GAR-7 -06/05/2016

Income Tax Updates:-

The facility to upload online quarterly TDS/TCS statements in the E-Filling portal shall be available with effect from 1st May 2016. (Click here to see the procedure)

Bulk upload of form 15CA, Form 15CB and Form 15CC are available for E-Filling.

No teacher, no professor nor a mentor can teach the important lessons in life better than a hungry stomach and an empty pocket.

The things that we love tell us what we are. -Thomas Aquinas

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CORPORATE AND PROFESSIONAL UPDATE MAY 3, 2016

Professional Update For the Day:

29DIRECT TAX:

Now, deductor is liable to furnish of evidence of claims by employee for deduction of tax under section 192 of IT Act, 1961. Notification no. 30/2016 dated 29/06/2016.

Property TDS Payment due date extended to 30 days. Notification no. 30/2016-IT dated 29/04/2016.

In absence of contumacious conduct penalty U/s. 271C not leviable. [ITO (TDS), Vs. Pushpanjali Hospital and Research Centre Pvt. Ltd. (ITAT Agra)].

CBDT has issued a Press Release on Framework for computation of book profit for the purposes of levy of MAT under section 115JB of the Income-tax Act, 1961 for Indian Accounting Standards (Ind AS) compliant companies dated on 28th April, 2016.

CBDT has issued a MAT-IndAS Committee Report.

Madras HC sets-aside ITAT order, holds loss on share-sale transaction, not speculative for assessee rejects Revenue’s invocation of deeming fiction under Explanation to Sec 73;Held that When there is no systematic or organised course of activity and when there is no regularity in the transaction and as the purchase is infact an one time activity it cannot be construed as a speculative transaction” and further cannot come under the ambit of ‘business.

PERMANENT ACCOUNT NUMBER  : Duplicate PAN card : Where two PAN Cards were allotted in name of assessee-society to two factions within management of assessee – society, it was held that question as to, which of two actions should be authorized to operate PAN CARD would depend on orders of pending suit; till that time, holder of second PAN CARD should Surrender said second PAN Card to PAN Service provider – [2016] 68 taxmann.com 297 (Delhi)

INDIRECT TAX:

Central Govt. exempts all coastal vessels carrying exclusively coastal goods and operating from coastal or EXIM berths from provisions of Sections 92, 93, 94, 95, 97 and 98(1) of Customs Act; Accordingly, such vessels would no longer be required to make entry by presenting bill of coastal goods and carry advice book; Also, goods can be loaded at any port without bill being passed by the officer and can depart without written order vide notification No. 56/2016 dated 27th April,2016.

Delhi Govt. issues clarification on new composition scheme for restaurants and halwais u/s 16(12) of DVAT Act; States that condition requiring payment of tax on opening stock is not applicable to those dealers who w.e.f April 1, 2016 intend to shift from composition scheme u/s 16(1) to new the scheme, as such goods have already suffered VAT at time of purchases and also no ITC has been claimed thereon; Also clarifies that such dealers shifting to new scheme shall not be eligible to claim ITC on closing stock held on March 31, 2016 vide Circular No. 1 of 2016-17 dated 27-04-2016.

ST: Cenvat credit – Common Input services belongs to three units but whole of the credit was availed at one unit – assessee has been able to prove that all the three units are one and the same have common management – credit allowed – National Engineering Industries Ltd. Vs. CCE, Jaipur (2016 (5) TMI 12 – Rajasthan High Court)

VAT & ST: Waiver of pre-deposit under APGST Act – It is always open to the petitioner to file appropriate proceedings before ADC seeking stay in the appeal filed or by filing a separate application as required under Section 19(2A) – Anand Cements Vs. State of Telangana (2016 (5) TMI 5 – Supreme Court)

Company Law Updates:

Company Law Board has notified the amended Regulations further to amend the Company Law Board Regulation, 1991 through which official timing for hearing at CLB has been changed w.e.f 02.05.2016, words  and   expression “10.30 a.m. to 1.30 p.m.  and 2.30 p.m. to 4.30 p.m.” the words and  expression  “10.30 a.m.  to 1.00 p.m. and 2.00 p.m. to 4.30 p.m.” shall be substituted in Regulation 9 of the said regulation.

Other Updates:

The Real Estate (Regulation and Development) Act, 2016 came into force on May 01, 2016. Union Ministry of Housing and Urban Poverty Alleviation (HUPA) notified 69 of the total 92 sections of the Act to bring it into force from 1 May 2016.

Key Dates:

Last date of E-payment of service tax foe April by companies vide Challan No. GAR-7 -06/05/2016

Look at mistake as just a mistake not as “My” or “His” mistake because “My” brings guilt & “His” brings anger. Only acceptance brings Improvement.

Noble deeds that are concealed are most esteemed. -Blaise Pascal

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Levy of Service Tax on Services Provided By Government or Local Authority to Business Entities

Levy of Service Tax on Services Provided By Government or Local Authority to Business Entities

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CIRCULAR NO.192/02/2016-STDATED 13-4-2016 : Any service provided by Government or a local authority to a business entity has been made taxable w.e.f 1st April 2016. Post Budget 2016, representations have been received from several quarters including business and industry associations in respect of various aspects pertaining to the taxation of such services. Accordingly, the following clarifications are issued:—

Sl. No. Issue Clarification
1. Services provided by Government or a local authority to another Government or a local authority. Such services have been exempted vide Notification No. 25/2012-ST dated 20-6-2012 as amended byNotification No. 22/2016-ST dated 13-4-2016 [ENTRY 54 REFERS]. 

However, the said exemption does not cover services specified in sub-clauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act, 1994.

 

2. Services provided by Government or a local authority to an individual who may be carrying out a profession or business. 1. Services by way of grant of passport, visa, driving license, birth or death certificates have been exemptedvide Notification No. 25/2012-ST dated 20-6-2012 as amended by Notification No. 22/2016-ST dated 13-4-2016 [ENTRY 55 REFERS].2. Further, for services provided upto a taxable value of Rs 5000/-, Sl. No. 5 below may please be seen.

 

3. Service Tax on taxes, cesses or duties. Taxes, cesses or duties levied are not consideration for any particular service as such and hence not leviable to Service Tax. These taxes, cesses or duties include excise duty, customs duty, Service Tax, State VAT, CST, income tax, wealth tax, stamp duty, taxes on professions, trades, callings or employment, octroi, entertainment tax, luxury tax and property tax. 
4. Service Tax on fines and penalties. 1. It is clarified that fines and penalty chargeable by Government or a local authority imposed for violation of a statute, bye-laws, rules or regulations are not leviable to Service Tax. 
2. Fines and liquidated damages payable to Government or a local authority for non-performance of contract entered into with Government or local authority have been exempted vide Notification No. 25/2012-ST dated 20-6-2012 as amended by Notification No. 22/2016-ST dated 13-4-2016 [ENTRY 57 REFERS]. 
5. Services provided in lieu of fee charged by Government or a local authority. It is clarified that any activity undertaken by Government or a local authority against a consideration constitutes a service and the amount charged for performing such activities is liable to Service Tax. 

It is immaterial whether such activities are undertaken as a statutory or mandatory requirement under the law and irrespective of whether the amount charged for such service is laid down in a statute or not. As long as the payment is made (or fee charged) for getting a service in return (i.e., as a quid pro quo for the service received), it has to be regarded as a consideration for that service and taxable irrespective of by what name such payment is called.

 

It is also clarified that Service Tax is leviable on any payment, in lieu of any permission or license granted by the Government or a local authority.

 

2. However, services provided by the Government or a local authority by way of:
(i) registration required under the law;

 

(ii) testing, calibration, safety check or certification relating to protection or safety of workers, consumers or public at large, required under the law,
have been exempted vide Notification No. 25/2012-ST dated 20-6-2012 as amended by Notification No. 22/2016-ST dated 13-4-2016 [ENTRY 58 REFERS]. 
3. Further, services provided by Government or a local authority where the gross amount charged for such service does not exceed Rs 5000/- have been exempted vide Notification No. 25/2012-ST dated 20-6-2012 as amended by Notification No. 22/2016-ST dated 13-4-2016 [ENTRY 56 REFERS]. 

However, the said exemption does not cover services specified in sub-clauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act, 1994. Further, in case of continuous service, the exemption shall be applicable where the gross amount charged for such service does not exceed Rs. 5000/- in a financial year.

4. It is also clarified that Circular No.  89/7/2006-Service Tax dated 18-12-2006 & and Reference Code 999.01/23.8.07 in Circular No. 96/7/2007-ST dated 23-8-2007 issued in the pre-negative list regime are no longer applicable. 
6. Services in the nature of allocation of natural resources by Government or a local authority to individual farmers. Services by way of allocation of natural resources to an individual farmer for the purposes of agriculture have been exempted vide Notification No. 25/2012-ST dated 20-6-2012 as amended by Notification No. 22/2016-ST dated 13-4-2016 [ENTRY 59 REFERS]. 

Such allocations/auctions to categories of persons other than individual farmers would be leviable to Service Tax.

 

7. Services in the nature of change of land use, commercial building approval, utility services provided by Government or a local authority. Regulation of land-use, construction of buildings and other services listed in the Twelfth Schedule to the Constitution which have been entrusted to Municipalities under Article 243W of the Constitution, when provided by governmental authority are already exempt under Notification No. 25/2012-ST dated 20-6-2012. 

The said services when provided by Government or a local authority have also been exempted from Service Tax vide Notification No. 25/2012-ST dated 20-6-2012 as amended by Notification No. 22/2016-ST dated 13-4-2016 [ENTRY 39 REFERS].

 

8. Services provided by Government, a local authority or a governmental authority by way of any activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution. Such services have been exempted vide Notification No. 25/2012-ST dated 20-6-2012 as amended by Notification No. 22/2016-ST dated 13-4-2016 [ENTRY 60 REFERS].
9. Whether Service Tax is payable on yearly installments due after 1-4-2016 in respect of spectrum assigned before 1-4-2016. Service Tax is payable on such installments in view of rule 7 of Point of Taxation Rules, 2011 as amended byvide Notification No. 24/2016-ST dated 13-4-2016

However, the same have been specifically exemptedvide Notification No. 25/2012-ST dated 20-6-2012 as amended by Notification No. 22/2016-ST dated 13-4-2016 [ENTRY 61 REFERS].

 

The exemption shall apply only to Service Tax payable on one time charge, payable in full upfront or in installments, for assignment of right to use any natural resource and not to any periodic payment required to be made by the assignee, such as Spectrum User Charges, license fee in respect of spectrum, or monthly payments with respect to the coal extracted from the coal mine or royalty payable on extracted coal which shall be taxable.

10. When does the liability to pay Service Tax arise upon assignment of right to use natural resource where the payment of auction price is made in 10 (or any number of) yearly (or periodic) instalments under deferred payment option for rights assigned after 1-4-2016. Rule 7 of the Point of Taxation Rules, 2011 has been amended vide Notification No. 24/2016-ST dated 13-4-2016 to provide that in case of services provided by Government or a local authority to any business entity, the point of taxation shall be the earlier of the dates on which:
(a) any payment, part or full, in respect of such service becomes due, as indicated in the invoice, bill, challan, or any other document issued by Government or a local authority demanding such payment; or
(b) such payment is made.
Thus, the point of taxation in case of the services of the assignment of right to use natural resources by the Government to a business entity shall be the date on which any payment, including deferred payments, in respect of such assignment becomes due or when such payment is made, whichever is earlier. 

Therefore, if the assignee/allottee opts for full upfront payment then Service Tax would be payable on the full value upfront. However, if the assignee opts for part upfront and remainder under deferred payment option, then Service Tax would be payable as and when the payments are due or made, whichever is earlier.

 

11. How to determine the date on which payment in respect of any service provided by Government or a local authority becomes due for determination of point of taxation (Sl. No. 10 refers)? The date on which such payment becomes due shall be determined on the basis of invoice, bill, challan, or any other document issued by the Government or a local authority demanding such payment [Point of Taxation Rules, 2011 as amended by Notification No. 24/2016-ST dated 13-4-2016 refers]. 

For instance, Notice Inviting Applications (NIA) dated January 9, 2015 issued vide File No. 1000/16/2014-W.F./Auction for auction of right to use spectrum and letter dated March 29, 2015 issued vide File No. 1000 /23 / 2014 -W.F. /Auction by Department of Telecommunications to successful bidders of spectrum indicate the dates on which the payments in respect thereof become due. These may be accessed at

http://www.dot.gov.in/sites/default/files/u8/NIA_January_2015.pdfand

 

http://www.dot.gov.in/sites/default/files/u8/PaymentMethodologyAndPaymentDetai ls.pdf

respectively.

12. Whether Service Tax is leviable on spectrum user charges and license fee payable after 1-4-2016 for the year 2015-16. Service Tax is payable on such payments in view of rule 7 of Point of Taxation Rules, 2011 as amended by Notification No. 24/2016-ST dated 13-4-2016. However, the same have been specifically exemptedvide Notification No. 25/2012-ST dated 20-6-2012 as amended by Notification No. 22/2016-ST dated 13-4-2016 [ENTRY 62 REFERS]. 
13. Whether Service Tax is payable on the interest charged by Government or a local authority where the payment for assignment of natural resources is allowed to be made under deferred payment option. Rule 6(2)(iv) of the Service Tax (Determination of Value) Rules, 2006 has been amended videNotification No. 23/2016-ST dated 13-4-2016 so as to provide that interest chargeable on deferred payment in case of any service provided by Government or a local authority to a business entity, where payment for such service is allowed to be deferred on payment of interest, shall be included in the value of the taxable service. 
14. When and how will the allottee of the right to use natural resource be entitled to take CENVAT Credit of Service Tax paid for such assignment of right. The CENVAT Credit Rules, 2004 have been amendedvide Notification No. 24/2016 C.E. (N.T.) dated 13-4-2016. Consequently, the CENVAT Credit of the Service Tax on one time charges (whether paid upfront or in installments) paid in a year, may be allowed to be taken evenly over a period of 3 (three) years. [Rule 4(7) of CENVAT Credit Rules, 2004 as amended refers]. Detailed illustrations explaining how the CENVAT Credit is to be availed, are given in para 2 below. 
  However, the Service Tax paid on spectrum user charges, license fee, transfer fee charged by the Government on trading of spectrum would be available in the year in which the same is paid. Likewise, Service Tax paid on royalty in respect of natural resources and any periodic payments shall be available as credit in the year in which the same is paid. The existing eighth proviso in sub-rule (7) of rule 4 of CENVAT Credit Rules, 2004 is being omitted because the same is superfluous.
  Amendments have also been made in CENVAT Credit Rules, 2004 so as to allow CENVAT credit to be taken on the basis of the documents specified in sub-rule (1) of rule 9 of CENVAT Credit Rules, 2004 even after the period of 1 year from the date of issue of such a document in case of services provided by the Government or a local authority or any other person by way of assignment of right to use any natural resource [Fifth Proviso to sub-rule (7) of Rule 4 of CENVAT Credit Rules, 2004]. 
15. On basis of which documents can CENVAT Credit be availed in respect of services provided by Government or a local authority. CENVAT Credit may be availed on the basis of challan evidencing payment of Service Tax by the Service recipient [Clause (e) of sub-rule (1) of rule 9 of CENVAT Credit Rules, 2004, refers].

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 ;Hope the information will assist you in your Professional   endeavors. For query or help, contact:  info@carajput.com or call at 9555555480

STARTUP INDIA PORTAL HAS BEEN FINALLY LAUNCHED

STARTUP INDIA PORTAL HAS BEEN FINALLY  LAUNCHED

33

  • Information Availability: The portal and mobile app provide up-to- date information on various notifications/ circulars issued by various Government ministries/ departments, towards creation of a conducive ecosystem for Startups. The portal and mobile app provide information regarding incubators and funding agencies recognized for the purpose of recommending Startups (as part of Startup recognition application). A comprehensive list of FAQs is also available to help Startups, Incubators and Funding Agencies use the portal and mobile app more effectively.
  • Startup India Hub:The Startup India Hub, which has been established within Invest India, will be a single point of contact for the entire Startup ecosystem which would enable exchange of knowledge. The Hub will work in a hub and spoke model with Governments, VCs, Angel Funds, Incubators, Mentors, etc. It will assist Startups through their lifecycle, on all aspects, such as providing mentorship, incubator facilities, IPR support, funding etc. The Hub will be operational from 10:00 AM to 5:30 PM on working days and can be reached via the toll free number: 1800115565 or the email ID: dipp-startups@nic.in
  • Application for Startup Recognition:Entities that fulfill the criteria as per the definition of “Startup” and are incorporated/ registered in India, can obtain recognition as a “Startup” to avail various benefits listed in the Startup India Action Plan. The process of recognition is simple and user friendly and involves a single page application form that a user can fill either through a web interface or through mobile app. Formats of the recommendation/ support letters that need to be attached as part of the application form have been published on the portal and mobile app.
  • Real Time Startup Recognition: A real time recognition certificate is provided to Startups on completion of the application process. A digital version of the final certificate of recognition is available for download, through the portal and mobile app. A request for certificate of eligibility for tax exemptions from Inter-ministerial Board will be made simultaneously by selection of a simple option.
  • Verification of Recognition Certificate:The certificate of recognition is verifiable through the portal and mobile app by entering the Startup Recognition/ Certificate Number.
  • Approval of Inter-Ministerial Board: DIPP has also setup an Inter-Ministerial Board to verify the eligibility of Startups opting to avail Tax and IPR related benefits and to provide a certificate of eligibility to innovative Startups.

LINKS

  • Official site startup India portal : http://startupindia.gov.in/
  • To download mobile app of start up : http://startupindia.gov.in  /download-app.php

 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 ;Hope the information will assist you in your Professional   endeavors. For query or help, contact:  info@carajput.com or call at  9555555480

Update on services provided by Government or Local Authority

Update on services provided by Government or Local Authority

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Services (except few) provided by Government or Local Authority to business entities are covered under Reverse Charge Mechanism w.e.f 1st April, 2016 meaning thereby business entities are required to pay Service Tax on services received from Government or Local Authority. To curtail dilemma regrading non-taxability of various charges received by government like registration fee, Central Government has issued Notification No. 22/2016-ST. In addition, changes have been made in Point of Taxation Rules, 2011 and Service Tax (Determination of Value) Rules, 2006 vide Notification No. 23/2016-ST and Notification No. 24/2016-ST, respectively.

Changes in Mega Exemption Notification to exempt following services:-

  1. In entry 39, benefit of exemption has been extended to services provided by Government or Local Authorities by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution. Earlier this exemption is available only to Governmental Authorities.
  2. Services provided by Government or a local authority to another Government or local authority:
    Provided that nothing contained in this entry shall apply to services specified in sub-clauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act, 1994
  3. Services provided by Government or a local authority by way of issuance of passport, visa, driving licence, birth certificate or death certificate
  4. Services provided by Government or a local authority where the gross amount charged for such services does not exceed Rs. 5000/-
    Provided that nothing contained in this entry shall apply to services specified in sub-clauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act, 1994
    Provided further that in case where continuous supply of service, as defined in clause (c) of rule 2 of the Point of Taxation Rules, 2011, is provided by the Government or a local authority, the exemption shall apply only where the gross amount charged for such service does not exceed Rs. 5000/- in a financial year.
  5. Services provided by Government or a local authority by way of tolerating non-performance of a contract for which consideration in the form of fines or liquidated damages is payable to the Government or the local authority under such contract
  • Services provided by Government or a local authority by way of-
    (i) registration required under any law for the time being in force;
    (ii) testing, calibration, safety check or certification relating to protection or safety of workers, consumers or public at large, required under any law for the time being in force
  1. Services provided by Government or a local authority by way of assignment of right to use natural resources to an individual farmer for the purposes of agriculture
  2. Services by Government, a local authority or a governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution
  3. Services provided by Government or a local authority by way of assignment of right to use any natural resource where such right to use was assigned by the Government or the local authority before the 1st April, 2016
    Provided that the exemption shall apply only to service tax payable on one time charge payable, in full upfront or in installments, for assignment of right to use such natural resource
  4. Services provided by Government or a local authority by way of allowing a business entity to operate as a telecom service provider or use radiofrequency spectrum during the financial year 2015-16 on payment of licence fee or spectrum user charges, as the case may be
  5. Services provided by Government by way of deputing officers after office hours or on holidays for inspection or container stuffing or such other duties in relation to import export cargo on payment of Merchant Overtime charges (MOT).

Changes in Point of Taxation Rules, 2011:-

Generally, point of taxation in case of reverse charge is date of payment. Further, in case payment is not made within a period of three months the point of taxation shall be the date immediately following period of three months.

Now in specific case where services are provided by the Government or local authority to any business entity; the point of taxation shall be the earlier of the dates on which, –

  1. Any payment, part or full, in respect of such service becomes due, as specified in the invoice, bill, challan or any other document issued by the Government or local authority demanding such payment; or
  2. Payment for such services is made.

Changes in Service Tax (Determination of Value) Rules, 2006:-

As per rule 6, in sub-rule (2), in clause (IV), the value of taxable service, does not include interest on delayed payment of any consideration for the provision of services or sale of property, whether moveable or immoveable. Now following proviso has been inserted:

“Provided that this clause shall not apply to any service provided by Government or a local authority to a business entity where payment for such service is allowed to be deferred on payment of interest or any other consideration.”

Hence interest or any other consideration paid for deferment of payment against services provided by Government or a local authority will not be excluded for the purpose of calculation of value of taxable service.

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 ;Hope the information will assist you in your Professional   endeavors. For query or help, contact:  info@carajput.com or call at  9555555480

FORM 15CB TO BE ISSUED FOR PAYMENT TO NON-RESIDENT FOR USING IMMOVABLE PROPERTY SITUATED IN INDIA.

FORM 15CB TO BE ISSUED FOR PAYMENT TO NON-RESIDENT FOR USING IMMOVABLE PROPERTY SITUATED IN INDIA

Untitled213The primary right to tax the income from immovable property is with the country where the immovable property is situated as per Article 6 of the DTAA. This view holds good for all the Model Tax conventions namely, OECD, U.N, U.S. The situs of the immovable property has vital role in determining distributive rules for taxation i.e. State of source vs. State of residence. Various paragraphs of Article 6 has been discussed under all the three Model Conventions:

Distributive Rule of Taxation

This paragraph denotes that income derived by a resident of a Contracting state from immovable property situated in other contracting state may be taxed in that other state. The paragraph uses the words “may be taxed in” which implies that state of source is not getting exclusive but primary right to tax and hence, the state of residence may also tax the same income. Double taxation so arising, is mitigated by way of exemption or tax credit mechanism available under the tax treaty (Article 23A or 23B). There are tax treaties of India with Bangladesh, Greece and Egypt which provides that- income from immovable property shall be taxable in the contracting state in which such property located. Thus, the source state retains an exclusive right to tax the income from immovable property. The use of different terminologies, i.e, ‘may be taxed in’ & ‘shall be taxed only in’ led to controversies in the interpretation of tax treaties.

With respect to Article 6, a landmark decision was given by the Apex court of India in case of CIT vs. P.V.A.L. Kulandagan Chettiar. The Supreme Court held that income arising from rubber estate in Malaysia was not liable to tax in India, even though Article 6 uses the language ‘may be taxed in’. A notable fact, in the context of language ‘may be taxed in’ is NOTIFICATION 91/2008 dated. 28 August, 2008  which clarifies – in case tax treaty provides that any income of a resident of India “may be taxed in” in the other country, such income shall be included in his total income chargeable to tax in India and relief shall be granted in accordance with the treaty provisions. Thus, it is clear that India preserves right to tax worldwide income of its tax residents also under the tax treaties. However, this notification has remained unnoticed and doesn’t find reference in rulings dealing with the phrase ‘may be taxed in’.

In a situation where a resident of one of the Contracting State earns income from immovable property located in third state, the same shall fall outside the ambit of Article 6 and it shall bear the character of ‘other income ‘ and taxed accordingly.

Income from Agriculture and forestry

Model tax Conventions also include Income from agricultural and forestry within the ambit of income from immovable property, because of the concept that these incomes primarily concern with use of land. However, ownership of immovable property which is exploited for the purpose of agriculture and forestry need not rest with the person carrying out the activities of agriculture and forestry.

However, Income from Agriculture is exempt u/s 10 of Income Tax Act, 1961, hence, there is no need to take the benefit of the treaty.

Computation of income from immovable property

Article 6 deals only with attribution of taxation on income arising from immovable property, it is silent on the modalities of determining income. It also doesn’t mention about deductible expenses. In absence of such specification, the computation shall have to be carried out as per domestic tax laws of the state of source.

Conclusion

The primary taxation right over income from immovable property is always with State of situs.

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; Hope the information will assist you in your Professional endeavors. For query or help, contact: info@carajput.com or call at 9555555480

NEW CHANGES ON TDS – CHANGES IN WITHHOLDING TAX

NEW CHANGES ON TDS – CHANGES IN WITH HOLDING TAX

Untitled29ASection 192 (2D) – TDS on Salary: The person responsible for making the payment referred to in sub-section (1) shall, for the purposes of estimating income of the assessee or computing tax deductible under sub-section (1), obtain from the assessee the evidence or proof or particulars of prescribed claims (including claim for set-off of loss) under the provisions of the Act in such form and manner as may be prescribed.

Now the employer is responsible to verify all the supporting documents before determining the applicable Tax liability of employees.

Applicable with effect from 1 June 2015

Section 195 – Payment to Non-Resident: The person responsible for making the payment referred to in sub-section (1) shall, for the purposes of estimating income of the assessee or computing tax deductible under sub-section (1), obtain from the assessee the evidence or proof or particulars of prescribed claims (including claim for set-off of loss) under the provisions of the Act in such form and manner as may be prescribed.

Now the 15 CA should be furnished for the cases even if tax at source is not applicable

Applicable with effect from 1 June 2015

Section 194 C – Deduction of Tax on Transporter :In section 194C of the Income-tax Act, in sub-section (6), with effect from the 1st day of June, 2015, for the words “on furnishing of”, the words “where such contractor owns ten or less goods carriages at any time during the previous year and furnishes a declaration to that effect along with” shall be substituted.

Now the transporter needs to provide above stated declaration along with PAN to get the payment without ant Tax Deduction

Applicable with effect from 1 June 2015

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; Hope the information will assist you in your Professional endeavors. For query or help, contact:   info@carajput.com or call at 011-233 433 33