Impact of GST on Real Estate Industries of INDIA

What is the impact of GST on real estate industries of INDIA?

gstThe introduction of GST would enhance attractions of other countries towards India as the investment destination through encouraging easier operations and higher transparency especially in property deals. In short term basis, the warehousing segment and industrial property shall be the most beneficial sectors of GST Adoption. However nothing can be firmly said if adoption of GST system will definitely bring the prices down in residential and commercial segments as sales of immovable property on which stamp duty continues to apply is outside the ambit of GST.

POSITIVE- IMPACT OF GST ON WAREHOUSING AND INDUSTRIAL PROPERTY

As said earlier, in short run, the warehousing and industrial property sector shall be the prime beneficiary of Adoption of GST. The decision of establishing a warehouse shall no longer be on the base of tax arbitrage. It will be based on achievement of solving the optimal logistics. This will reduce the number of octroi checkpoints leading to considerable reduction in transportation time. Further, the Logistics companies shall look forward to establish large warehouses located on transit corridors.

We can therefore see the development of spoke and hub system in the warehousing, the spokes being on feeder lines and hubs on the transit corridors. We thus are expecting the nation to become a massive large market by cost of products being brought down. Further, the recent Modi government initiatives like 100% FDI in e-commerce sector and “Make in India” shall also boost the warehousing and manufacturing sector. Various international players like E-bay and Amazon have entered Indian markets already and have started to occupy large spaces in warehouses to gain their share in the E-commerce industry.

Neutral- Impact of GST on commercial property

Commercial leasing makes up for the larger portion of commercial property business in our country. Currently, commercial property leasing is considered as a service under finance act,1994 and is thus is taxed as per service tax. The service tax being applicable at 15%. After the introduction of GST, it is assumed that this treatment shall remain unchanged and commercial property leasing will be subject to GST. The negative or the positive impact is primarily dependable on the GST rate which is applicable. Moreover, adding to this is the ambiguity about availability of GST tax credit which is paid on the procurement of services and goods during the phase of construction.

Neutral- Impact of GST on residential property

The impact of GST on the residential property sectors cannot be decided precisely as it is too early to comment. We have briefly analysed the effects of GST on 3 types of transactions of residential property, being, residential property leasing, sale of property which is under construction and sale of immovable property which is completed:

  1. Residential property leasing is currently not subject to service tax. This treatment is more likely to remain unchanged under GST Regime too.
  2. Sale of property which is under construction shall be covered under GST Regime. However, in present times it looks like there wouldn’t be much difference besides the fact being all forms of indirect taxes shall be clubbed under one single heading. Some benefit can be expected only if GST tax credit will be made available for developers for GST paid on services and goods.
  3. The sale of immovable property which is completed will in no way be impacted by GST as these transactions are outside the ambit of GST. On these transactions, stamp duty shall be made payable.

To conclude it, we can expect the GST to increase(boost) the overall demand on real estate, especially on warehousing and industrial sector, due to impact on economy being positive overall. From the perspective of cost, more precision is required on various transactions on the applicability of GST tax credits. The developers must be able to get overall credit for various taxes paid on inputs if proper application of mechanism of credit utilisation is made. This will eventually lead to reduce the overall cost.

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CORPORATE AND PROFESSIONAL UPDATE AUG 9, 2016

Direct Tax:

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Kolkata ITAT allows assessee’s (cooperative bank) appeal against levy of penalty u/s 271FA for delay in furnishing annual information return (‘AIR’) u/s 285BA, accepts assessee’s “bonafide ignorance” of relevant provisions as sufficient cause for non-compliance.[TS-425-ITAT- 2016(Kol)]

Delhi High Court in the below citied case held that The payment made by the Petitioner to Steria France for the managerial services provided by the latter cannot be taxed as fee for technical services and are not liable to withholding of tax u/s 195.( Steria (India) Ltd. Vs. CIT & Anr.)

Fee charged by Finance Co. for collecting EMI from bank customers would be considered for sec. 36(viii) deduction. [Gruh Finance Ltd. v. Assistant Commissioner Income-tax, Circle-4, Ahmedabad]

No disallowance of ITC for mere technical defect in VAT invoice.[M/s Avdesh Tracks Private Limited vs. The State of Punjab and another (Punjab & Haryana High Court)]

NCLT has issued order to prescribed Rs. 200/- per inspection as the fee for inspection for the records as provided under Rule 114 of the NCLT Rules,2016

Only when a corresponding liability arises on the ONGC to pay up the accrued amount, the income will become taxable. [Deep Industries Limited vs Assistant Commissioner of  Income Tax, Circle-1-2016(8)TMI 225 – Gujarat High Court]

The assessee is eligible for the claim of depreciation u/s 32(1)(ii) on the amount of intangible assets acquired by it as per Business Transfer Agreement. [Grindwell Norton Ltd. vs Addl. CIT 1 (1) , Mumbai and Vice-Versa – 2016 (8) TMI 222 – ITAT MUMBAI]

 IT: MAT computation – deferred revenue expenditure is nothing but a window dressing and the authority should not be mislead or guided by the balance sheet which is prepared to satisfy the shareholders. It is the P&L a/c prepared on the basis of the books of accounts as contemplated in Part-II of Schedule-VI which should form and assist to find out what is the profit earned and on that profit tax is levied – CIT & Anr Vs. Karnataka Soaps & Detergents Ltd. (Supreme Court of India)

ITAT Chennai in the below citied case held that the mere sale of few pieces of lands here and there, now and then, irrespective of their value, as long as the said assets/lands did not lose the basic character of agricultural lands, does not constitute business activity for the assessee. (The DCIT, Corporate Circle 6 (1), Chennai Vs. Shri S. Amar Narayana Reddy)

Gujarat High court in the below cited case held that the Tribunal has rightly decide that the assessee is entitled for deduction under Section 801A of the Income Tax Act, 1961 without deducting the amount of subsidy given by the Government to the farmers and accordingly allowed the claim of the assessee .(CIT, Ahmedabad Vs. Kishan Discretionary Family Trust)

Indirect Tax:

Punjab and Haryana High Court held that no disallowance of ITC for mere technical defect in VAT invoice.( M/s Avdesh Tracks Private Limited vs. The State of Punjab and another

ST: Erection Commissioning or Installation Services – receipt of labour charges for installation and commissioning of GRP Pipes for various customers – The pipes that the respondent / assessee had to lay were not plant machinery or equipment – demand was rightly set aside – Addn.C.C.E. Vs. M/s Strategic Engineering Pvt. Ltd. (Madras High Court).

DVAT prescribes Delhi Sugam-2 (DS2) to be produced at check-post or barrier for bringing the goods in Delhi – Notification No.F.7(433)/Policy-II/VAT/2012/PF/1259-70, dt.08 JAN 2016.

DVAT specifies Conditions for downloading Central Statutory forms online – Notification No.F.3(556)/Policy/VAT/2015/1271-82, dt.08 JAN 2016.

Transportation services up to customer’s premises eligible for credit if transfer of title takes place therein-(Commissioner of Central Excise, Service Tax, Bengaluru-IV v. Ultra Tech Cement Ltd.)

Delhi HC sets aside order passed by Jt. Secretary to Govt. of India rejecting assessee’s revision application u/s 129DD of Customs Act, absent valid signature. It Rejected Revenue’s submission that it is consistent practice of Dept. of Revenue that only draft orders are signed by Adjudicating Authority and on that basis, certified copies of final orders are issued to parties and that the word ‘draft’ is mere appendage. [TS-299-HC-2016(DEL)-CUST]

Melting and converting old batteries into lead plates amounts to manufacture under UP VAT.( Shyam Behari Lal Keserwani v. Commissioner, U.P. Trade Tax, Lucknow)-[2016] 72  42 (Allahabad)

Normal mining exp. couldn’t be disallowed just because assessee was engaged in illegal mining.(Obulapuram Mining Company (P.) Ltd.hj v Deputy Commissioner of Income-tax, Central Circle-1 (3), Bangalore)

GST

ICAI releases BGM on Model GST Law- Order online https://goo.gl/NxX2n5 and download soft copy from www.idtc.icai.org

ICAI Updates:-

ICAI invites comments on any aspect of exposure draft of IND AS 102, share based payments, issued by the Accounting Board of the Institute of Chartered Accountants of India dated on 4/8/2016.

RBI Updates:-

RBI launched new website named “sachet” on Thursday, where information regarding entities that are allowed to accept deposits, lodge complaints, and share information regarding illegal acceptance of deposits by unscrupulous entities can be obtained.

SEBI clarified that in case an eligible seller does not receive the tender/offer form, he can participate in the delisting by providing the application in writing on plain paper, signed by the eligible seller, by introducing the issue in the FAQs on SEBI (Delisiting Of Equity Shares) Regulations, 2009

Key Dates:

  • Income tax department extends ITR-V verification deadline till 31 JAN 2016.
  • 10.08.16 is last date to file ER-1,2 & 6 for Excise returns by Non SSI assesses, EOUs,& by units paying duty of more than 1Cr respectively, for July 2016.
  • Excise return in form ER-1 for NON SSI assessee for the month of July: 10/08/2016
  • Return by EOU in the ER-2 form for the month of July-10/08/2016
  • Public Servants Annual Assets Liabilities Return Filing due date extended to 31.12.2016
  • 15-08-16 is the last date for Issue of TDS certificates in form 16A for quarter ended 30-6-16 by all deductors.

The road to success and the road to failure are almost exactly the same.

Why we have so many temples when god is everywhere? An intelligent man said air is everywhere, but we still need a fan to feel it.

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CORPORATE AND PROFESSIONAL UPDATE AUG 5, 2016

CORPORATE AND PROFESSIONAL UPDATE AUG 5, 2016

date-extended

Professional Update For the Day:

DIRECT TAX:

  • Assessee having eligible industry and availing deduction under section 80-IB, will not be entitled for same in respect of income from DEPB and DEPB Premium.
  • Personal property of directors can’t be used to recover import duty payable by company: HC
  • Income Tax:  MAT – computation of the book profit under explanation to section 115JA – the question of increasing the net profit by the amount of lease equalization charge would not arise, the same being not in the nature of a reserve – Gujarat High Court in case of [PCIT Vadodara Vs. Sun Pharmaceutical Industries Ltd]
  • ITAT: Applies Sec. 50C to builder’s land-transfer; Cites long-term holding intention to earn appreciation [TS-415-ITAT-2016(Mum)]
  • SC: Reverses Bombay HC, restores reassessment notice absent proof of bad-debts write-off [TS-410-SC-2016]

INDIRECT TAX:

  • Constitution (122nd) Amendment Bill, 2014 enabling levy of GST by Central Govt. as well as State Govts. is finally passed by Rajya Sabha with 100% in favour of the same. Now it shall go back to Lok Sabha to approve the amendments made by Rajya Sabha. Thereafter it shall be ratified by at least 16 States before being presented to the Hon’ble President for his assent.
  • Order passed by DG allowing confidentiality of documents couldn’t be subject matter of appeal: CCI.
  • No service tax could be levied if there was a transfer of right to use goods irrespective of the fact that the transfer was non-exclusive.
  • CESTAT Bangalore in the below citied case set aside the penalty imposed, due to delay in payment of service tax, by the revisionary authority since the service tax along with interest has been paid voluntarily by the appellant.( S-Mac Security Services Pvt. Ltd. Vs. Commissioner of Service Tax)

Company Law:

  • Extension of last date of filing Form AOC-4, AOC-4 XBRL, AOC-4 CFS & MGT-7 under the Companies Act, 2013.
  • MCA issues The Companies (Accounts) Amendment Rules, 2016. MCA Notification dated 27.07.2016.
  • MCA releases Companies (Incorporation) Third Amendment Rules, 2016. MCA Notification dated 27.07.2016.

OTHER UPDATE :

  • New RBI norms rule out banking licences for big corporates.
  • Result of IPCC announced is Ist group – 9.18%, IInd group – 7.06%, both group – 4.78%.Congratulations to all passed out students
Key Dates:
 ·  Filing of ITR returns by Individuals, HUF (Without Audit): 05/08/2016
·  Filing of ITR returns by Firms, AOP, BOI (Without audit): 05/08/2016
·   E-Payment of Service Tax for July by Companies: 06/08/2016
· Extension of last date of filing of Income tax  returns for the FY 2015-2016 (AY 2016-17) from31.07.2016 to 05.08.2016. For J&K assessees last date is 31.08.2016.
·  Extension to 29.10.2016, of Last Date of filing of e-forms AOC-4 , AOC-4 XBRL, AOC-4 (CFS), & MGT-7. Circular No.08/2016 Dated 29.07.2016.
·  Public Servants Annual Assets Liabilities Return Filing due date extended to 31.12.2016
·  15-08-16 is the last date for Issue of TDS certificates in form 16A for quarter ended 30-6-16 by all deductors.

“Watch your thoughts, they become words. Watch your words, they become actions. Watch your actions, they become habits. Watch your habits, they become character. Watch your character, it becomes your destiny.”

” Zindagi to apne dum par hi ji jati hai, dusron ke kandhon par to sirf janaaze utha karte hain!”

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GST Comming Soon – One tax One India.

Finally, GST Constitutional Amendment Bill passed in Rajya Sabha.

In the biggest tax reform in Indian history since Independence, the Goods and Services Tax (GST) Constitutional (One Hundred and Twenty second Amendment) Bill 2014, was approved by the Rajya Sabha on Wednesday which the Lok Sabha had already approved last year on 6th May 2015.

The 66-year-old Constitution, which gives power to Centre to levy taxes like excise, and empowers states to collect retail sales taxes, was amended though the 122nd Constitution Amendment Bill.

The legislation was approved by the Rajya Sabha with 203 votes in favour and none against, in the 243-member House. It is an enabling amendment to the Constitution to permit the introduction of a single goods and service tax for the entire country.

The core objective of the GST is to eliminate excessive taxation. GST is a uniform indirect tax levied on goods and services across a country. Many developed nations tax the manufacture, sale and consumption of goods using a single, comprehensive tax.

Are-you-ready-for-GST-in-Malaysia-2There is a road ahead to traverse before GST becomes reality.

So, what is the next step?
Here is a simplified Steps to convert GST a reality.
  1. Since the Bill was passed in the Lok Sabha last year, there have been major amendments to it. So it will go back to the Lower House for approval.
  1. Once approved by both the houses, the final draft will go to the state assemblies where the government needs atleast 50% of the 29 state assemblies to ratify the Bill before it is accepted.
  1. Once the Bill is ratified by the states, it will pave the way for the establishment of a GST council to finalise key things like the GST rate — which is still not finalised and a key debating point — the extent of the indirect taxes that will be subsumed under GST, and so on.
  1. The legislation will then go to the President, whose signature will turn it into a law ahead of its rollout by the intended deadline of April 1, 2017. The government is aiming at an April 1, 2017 deadline for the rollout of the new taxation system.
  1. The next step will be the formation of the GST Council. This council will have representatives from both the Centre and states. All this will be made within 60 days of the enactment of the bill. It will decide the revenue neutral rate (RNR), the rate at which there will be no loss in aggregate central and state tax revenue.
  1. The RNR will then get converted into a three-slab GST rate structure, depending on exemptions. Essential commodities will be charged at low rates offset by higher ‘sin’ taxes on goods considered to be luxuries. A so-called standard or GST rate will be the middle slab and will apply to most goods and services. The single GST rate will be split between and central GST and state GST. The split shares will be decided by the GST Council.
  1. GSTC to recommend GST Law and procedure.  Three more laws will need to be passed: laws on the Central GST (CGST), integrated GST (IGST) and 29 separate state GST legislations (SGST).
  1. CGST and IGST Laws to be introduced in Parliament and will require be passed by simple majority.

We look forward for your valuable comments.
Thank You for reading this blog. 

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Should You File Tax Return Even Without Taxable Income?

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As the last day of filing income tax return is coming near, it’s finally time for tax payers to do what they haven’t from so far. The question is it still mandatory to file return if the income is below the taxable limit of Rs. 2.5 lakh per annum. The answer is yes; under certain circumstances it is beneficial to file return even then. There are certain cases which are mandatory while others have benefits of filing return.

One of the biggest benefits of filing return is that it helps in applying for loan in future or applying for visa etc. For clearance of any loan by lender or bank for say home loan, car loan or any vehicle loan, they ask for proof of tax return statements of past three years.

So for instance, if you have monthly income of Rs. 20000 which amounts to less Rs. 2.5 lakh in a year, you are not obliged to file income tax return. But doing so can be beneficial in a long run to provide as a proof of your finances. Filing income tax returns act as a proof of your income when applying for loan as a co-borrower too.

Also, from the year 2012 it has been made mandatory for individual holding a foreign asset to file for income tax return if the asset has no yield. A foreign asset may refer to any foreign account, immovable property, partnership firm etc.

What happens when you file an income tax return?

Let’s take an example of a senior citizen who has an income of 7 lakh which is nontaxable, in the form of tax free shares. Her taxable income is Rs. 14000 which comes below the taxable limit of Rs. 2.5 lakhs. However, she is advised to file return for the same to have it as a proof that she has an income, though not taxable. When you fill a ITR form, it has a column where you are required to show your nontaxable income.

Filing for tax returns also helps in claiming tax returns or to set off the losses. You can set off the losses that may have incurred in share marketing by carrying forward them to the next year. This can be done by filing for a refund even if your annual income is less than Rs. 2.5 lakh.

Even in cases of tax deducted at source or in case of income earned through freelancing, you can file for income tax return for claiming it.

Last Date of filling of ITR for the A.Y. 2016-17 is 05 August 2016.

“Anger comes alone but takes away all our good qualities. Patience too comes alone but brings all the good qualities for us. Choice is our so have patience.”

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The Goods and Services Tax (GST)

GST Bill: Government looks forward to decrease additional tax and compensate the states for 5 years.

The following seven days will be quite challenging Phase in Rajya Sabha as GST Bill is in critical stage as it is proposed to implement GST in April 2017.

There are several reasons which had prevented the passing of GST Bill in the upper house. Out of these some factors were the political agendas which were hidden and other visible factors can be best understood from analyzing the following demands of the Congress Party which is right now the single largest party in the upper house.

India moved a step further to implement the GST when the government agreed on Wednesday to reduce the contentious 1% tax on manufacturing and wholly compensate the states for 5 years for all potential losses suffered after new system comes into force.

Featured_Image4What were the demands of Congress?

There were 3 demands of the congress party:

  1. With a view of benefiting the states which are involved in manufacturing industries, Congress wanted to abolish proposed additional Entry tax by 1%.
  2. To clearly establish a ceiling limit of 18% rate of GST in the constitution.
  3. To draw up an independent authority to settle the Goods and Services Tax dispute headed by a judge.

What the government wished for?

The government already has given its consent to 2 demands:

  1. To establish authority to settle GST dispute.
  2. Abolishing additional Entry tax of 1% on 27th of July, 2016 in one of its cabinet meetings.

On the other hand, the government is not giving consent to consider the third demand to include a ceiling limit of 18% in the GST rate as it says this rate cannot be easily incorporated in the constitution.

What can be the impact if Entry tax is dropped by 1%?

After conducting various meetings for around a decade, by the collective efforts of experts, various organizations and committee led by Dr. Aravind Subramanian,  it was agreed to settle with RNR (Revenue Neutral Rate) the rate between 17% to 18%.

It was duly recommended by making a provision of 1% Entry tax but here the petroleum sector was outside the scope of RNR.

What is Revenue Neutral Rate?

Revenue Neutral Rate refers to the single rate which helps in preserving the revenue at desired levels. It is that single rate which slowly gets converted into full rate structure depending on various exemptions allowed by different policy choices made. It decides what commodities are to to be charged at a lower rate and what commodities with a higher rate.

The RNR can be clearly differentiated from the “standard rate” which is proposed to be given in the GST Regime which is applied to all the services and goods whose taxation policy is not clearly defined in any act or law. So, typically most if the goods and services are taxed at a standard rate,although it may be noted that it need not be a thumb rule (compulsory rule) to charge a standard rate.

So basically RNR is that rate where both state government and the central government will incur loss from the viewpoint of collection of taxes in order to earn revenue.

 

 

 

Government of India has levied a new tax called “Equalisation Levy” effective from June 1, 2016. It is levied on specified services which includes online advertisement services, provision for digital advertising space etc.

Government of India has levied a new tax called “Equalisation Levy” effective from June 1, 2016. It is levied on specified services which includes online advertisement services, provision for digital advertising space etc.

Equalisation Levy – Is it a beginning of a new saga?CN_6-Percent-Equalisation-Levy_Blog-Post-704x454

Tax challenges faced by International Community

In the ever growing digital world it is possible to be heavily involved in the economic life of another country without having a fixed place of business therein which results in base erosion. Base erosion happens when a deductible payment is made for the purpose of business and claimed as business expense but the income arising from such payments is not taxable because of the limitations of existing international taxation rules. For example, deduction claimed by an Indian resident for incurring online advertisement expenses, however, income earned by the non-resident [not having a Permanent Establishment (‘PE’) in India] from rendering such online advertisement services not offered to tax in India in the absence of such non-resident’s PE in India.

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CORPORATE AND PROFESSIONAL UPDATE JULY 26, 2016

Professional Update for the Day:

12

DIRECT TAX:

Income Tax: CBDT has issued standard operating procedure for handling AIR transactions without valid PAN videF.No.225/193/2016/ITA.1I dated 22nd July 2016.

 Income tax ITAT Mumbai in the below citied case held that the fair market value of the property is dependent on several factors which influence valuation and there is no scientific or straight jacket method to value the property at a particular point of time and somewhere estimation element will definitely creep in while determining the fair market value of the property as on date keeping in view the mandate of Section 55 and 55A.

Income tax : The ITAT Delhi in the below cited case held that the need, rendition and benefit test for services availed by the assessee from associated enterprises should be applied having regard to the assessee’s business and not in a generic manner. TPO should have given due thought to the requirements, benefits and manner of rendition of services by AEs before jumping to the conclusion that services not provided and no benefit accrued to assessee.

INDIRECT TAX:

Excise: CESTAT allows Revenue appeal, holds that assessee cannot claim refund of Additional Duty of Excise (Textile and Textile Articles) credit remaining unutilized under Rule 5 of CENVAT Credit Rules, upon opting for Notification exemption. It held that assessee is not entitled to such refund unless it shows fulfillment of conditions prescribed under Rule 5 and Notification there under, and in terms of SC ruling in Woodcraft Products Ltd, assessee is bound to restitute the amount refunded pursuant to appellate order  : Mumbai CESTAT  [TS-292-CESTAT-2016-EXC]

Vat & Service tax: Levy of VAT and Service tax both on Supply of tangible goods service – Merely because the petitioner argues that not service tax but value added tax would be leviable since the title in the property does not pass on to the lessee would not be a ground to hold that the tax authorities cannot examine and entertain such a contention thus rendering them wholly without jurisdiction. – HC – Service Tax

COMPANY LAW UPDATES:

Query:  Do we need to execute any agreement/deed for transferring the assets & liabilities on conversion of company into LLP?

Answer:  On conversion of the Company into LLP, all tangible (movable or immovable) and intangible property vested in the company, all assets, interests, rights, privileges, liabilities, obligations relating to the company and the whole of the undertaking of the company shall be transferred to and shall vest in the limited liability partnership without further assurance, act or deed.

The transfer of assets and liabilities will be made automatically on approval of conversion application and therefore there is no requirement of executing any agreement/deed.

OTHER UPDATES:

SEBI: SEBI through its Circular has asked intermediaries to upload KYC documents with the central server for all new individual accounts that will be opened from August 1.

Govt notifies pay scale as per 7th Pay Commission recommendations .Notification No. 1-2/2016-IC dated 25.07.2016.

KEY DATES:

Advance information in Form BE-2  for 1st fortnight of August of functions with booking cost more than Rs 1 lakh in Banquet Halls, hotel etc. in Delhi in DVAT Act:- 27/07/2016

E-Return of DVAT in form no-16 and CST-1 for the quarter ended June- 28/07/2016

Last Date of filling of ITR for the A.Y. 2016-17 is 31st July, 2016.

“Anger comes alone but takes away all our good qualities. Patience too comes alone but brings all the good qualities for us. Choice is our so have patience.”

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CORPORATE AND PROFESSIONAL UPDATE JULY 25, 2016

Professional Update for the Day:

DIRECT TAX:

1

Income Tax:  CBDT launches paperless PAN & TAN application process vide Press release dated on 22nd July 2016.Under the new process PAN/TAN to be issued within one day. Similarly, New Aadhaar e-Signature based application process also made available.

 Income tax : HC rules in favour of Revenue, holds that exemption to services provided in relation to management, maintenance or repair of roads under Notification No. 24/2009-ST cannot be extended to ‘repair of airport runways. [TS-291-HC-2016(BOM)-ST]

Income tax : No TDS on payment for simple marketing services of introducing foreign institutional investors by foreign subsidiary companies. [Batlivala & Karani Securities (India) Pvt. Ltd. vs. DCIT (ITAT Kolkata)].

INDIRECT TAX:

Excise : Where assessee manufactured two machineries and used same within its factory for manufacturing of final products and subsequently it cleared these machineries to its job worker and for discharging duty liability on machineries calculated assessable value of machineries by availing benefit of depreciation, availing of depreciation was in consonance with law – [2016] 71 taxmann.com 122 (Bangalore – CESTAT)

Service tax :Excess payment of service tax can be adjusted for payment of subsequent months Schwing Stetter India (P.) Ltd. v. Commissioner of Central Excise, LTU, Chennai [2016] 71 taxmann.com 228 (Chennai – CESTAT)

Service tax : CBEC issued Clarification regarding payment of Service Tax through non electronic modes like cheque vide instruction F.No 137/08/2013-Service Tax dated 07.22.2016.

COMPANY LAW UPDATES:

Query:  Do we need to execute any agreement/deed for transferring the assets & liabilities on conversion of company into LLP?

Answer:  On conversion of the Company into LLP, all tangible (movable or immovable) and intangible property vested in the company, all assets, interests, rights, privileges, liabilities, obligations relating to the company and the whole of the undertaking of the company shall be transferred to and shall vest in the limited liability partnership without further assurance, act or deed.

The transfer of assets and liabilities will be made automatically on approval of conversion application and therefore there is no requirement of executing any agreement/deed.

OTHER UPDATES:

In cases under ‘Limited Scrutiny’, the scrutiny assessment proceedings would initially be confined only to issues under ‘Limited Scrutiny’ and questionnaires, enquiry, investigation etc. would be restricted to such issues. Only upon conversion of case to ‘Complete Scrutiny’ after following the procedure outlined above, the AO may examine the additional issues besides the issue(s) involved in ‘Limited Scrutiny.

KEY DATES:

E-Return of DVAT in form no-16 and CST-1 for the quarter ended June- 25/07/2016

E-Return of DVAT in form no-16 and CST-1 for the quarter ended June- 28/07/2016

“Innovation distinguishes between a leader and a follower.

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CORPORATE AND PROFESSIONAL UPDATE JULY 23, 2016

Professional Update for the Day:

1 (2)

DIRECT TAX:

Income Tax:  Leasehold rights in land not eligible for allowance of depreciation
Cyber Park Development & Construction Ltd. v. Deputy Commissioner of Income-tax, Circle 11(2), Bangalore [2016] 71 taxmann.com 210 (Bangalore – Trib.)

 Income tax : The Central Government amended the notification of the Ministry of Finance (Department of Revenue), notification number S.O.1830 (E) dated the 19th May, 2016, published in the Gazette of India, Extraordinary, Part-II, Section-3, and Subsection (ii) dated the 19th May, 2016 vide Notification No. 59/2016 dated 20/07/2016.In the said notification , for clause II , the clause has been substituted with the date on or before which the tax and surcharge is payable under section 184, and the penalty is payable under section 185 in respect of undisclosed income .

Income tax : The Central Government has notified the districts of the state of Telangana, State of West Bengal and State of Bihar as  backward areas under the first proviso to clause (iia) of sub section (1) of section 32 and sun section (1) of section 32AD vide Notification No. 61/2016 dated 20th July 2016

CBDT gives option to file revised income declaration in Form 1 of IDS.

INDIRECT TAX:

Excise : Where assessee manufactured two machineries and used same within its factory for manufacturing of final products and subsequently it cleared these machineries to its job worker and for discharging duty liability on machineries calculated assessable value of machineries by availing benefit of depreciation, availing of depreciation was in consonance with law – [2016] 71 taxmann.com 122 (Bangalore – CESTAT)

Service tax : Permission to pay service tax through non electronic modes

Vat & sales tax : Delhi Govt. calls for speedy disposal of DVAT refund claims
No.F.3(378)/Policy/VAT/2016/489-494 Dated 21st July 2016

COMPANY LAW UPDATES :

Query:  What basic conditions are required to be checked for conversion of company into LLP?

Answer: Following points should be noted for conversion of Company into LLP:

1.All the members of the Company shall become the partners of the LLP on conversion.
2. No security interest in the assets of the company is subsisting or in force on the date of conversion i.e the assets are free of any encumbrance.
3. Up to date Income-tax return has been filed under the Income-tax Act, 1961.
4. Any clearance, approval or permission for conversion of the company into limited liability partnership if required from anybody/ authority etc has been obtained.

OTHER UPDATES:

Sebi may help in government’s recapitalisation plans for PSBs

CBDT launches paperless PAN & TAN application process, PAN/TIN to be issued within one day. New Aadhaar e-Signature based application process also made available.

KEY DATES:

E-Return of DVAT in form no-16 and CST-1 for the quarter ended June- 25/07/2016

“Those who cannot renounce attachment to the results of their work are far from the path.”

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