Corporate and Professional Updates on 26th December 2018

INCOME Tax Updates:

• The Assessment is reopened simply on the basis unclear information received from the Director of Income Tax by the Assessing without independently applying his own mind to form any belief, it is not justify by the reason for reopening of the assessment.
• CBDT has ordered a fresh cadre review and restructuring of the income tax department with an aim to create a “caring but strict” direct taxes regime in the country. CBDT ordered the creation of a 12-member committee of senior officials to accomplish the task within the next three months.
• To Avoid higher Late fee of upto Rs 10,000 file your Income Tax Return before 31st December 2018 if not filed yet.
• Direct Taxes Code task force is likely to submit its report by February 28, 2019 and some of its recommendations of the panel is expected to be included in the final Budget for 2019-20 which will be presented after the general elections due in May next year.
• CBDT has asked field officials to desist from taking any coercive action against angel tax notices being slapped on start-u or recovery of demands of completed assessments from these firms till a policy decision is taken.
• Direct tax collections increased by 14.4% to Rs 4.8 lakh crore during April-November this financial year. The net direct tax collections represent 49% of the total Budget Estimates of direct taxes for 2017-18. The gross collections (before adjusting for refunds) have increased by 10.7% to Rs 5.82 lakh crore during April-November, 2017. Refunds amounting to Rs 1.02 lakh crore have been issued during April-November, 2017.
• CBDT has issued Clarification on Indirect Transfer provisions in case of redemption of share or interest outside India under the Income-tax Act, 1961.

Judicial Pronouncements on income tax act

• ITAT Ahmedabad held that wherever any irregularity crept in the proceedings, the proceedings itself cannot be declared void, rather irregularity deserves to be rectified.[Late Shri Atulkumar Mansukhlal Shah Vs. ITO (ITAT Ahmedabad)]
• ITAT Mumbai held that the assessee is having sums deposited in the foreign bank account, it was incumbent upon the assessee to disclose the same in the subsequent years, unless the assessee produces necessary evidence that the afore-said deposit has been liquidated. Thus, once the Assessing Officer has come to the possession of the information that the assessee is beneficiary of deposits in foreign bank accounts and from the return of income filed by the assessee, the Assessing Officer notices that the interest from the said deposit in accounts has not been disclosed in the return of income, the reopening of the case is duly justified. The computation and assessment of interest is reasonable and justified. [Mr. Hasmukh I. Gandhi Vs. Dy. CIT (ITAT Mumbai)]
• ITAT Ahmedabad held that addition based on Fake sale deed is not sustainable. [Shri Gopichand Chhabaria Vs. CIT (ITAT Ahmedabad)]

INDIRECT TAX:

• Refund procedure for refund claims in respect of zero rated supplies has been initiated by the Government. However, the refund process for other cases has not been initiated as of now

GST Updates:

• It is said by the finance ministry that the Council had been looking at the 28% tax slab and constantly rationalising items in it in lesser tax slabs. The GST council had been looking at the 28% tax slab and constantly rationalising items in it in lesser tax slabs. Council has decided to reduce tax slabs for 178 items from 28 per cent to 18 per cent. It will be applicable from 15th of this month.
• When you claim ITC through RFD 01 Credit on Capital goods not allowed.
• It is said by the , NITI Aayog Vice-Chairman Rajiv Kumar that the Average rate of GST will soon be around 15%, after a day after Prime Minister Narendra Modi expressed his Govt commitment to reduce GST on many more items.
• GST Advisory* – If you opt for reset of GSTR3B, late fee inadvertently gets visible for months for which it has been waived off.
• Finance:After slashing the GST rates of over 200 items last month, the Govt on Saturday hinted at reviewing levies on the items in the top 28% tax bracket.

• Unsold inventory of imported chocolates, confectionery and cosmetics, which attracted 28% IGST during inbound shipments but are now retailing with an 18% levy, can claim refunds on the excess tax paid

Details about Guidance on GST recovery Preceding CGST act 

FAQ on GST:

Query:  What will be the place of supply of banking services and other financial services, stockbroking services?

Answer: As per Section 12(12) of the IGST Act, 2017, the place of supply of banking services shall be the location of the recipient of service as available on the records of the supply of services. If the location of recipient of service is not on records of the supplier, the place of supply shall be the location of supplier of service.

MCA UPDATE:

• MCA has issued circular to give Relaxation of additional fees and extension of last date of filing of Form CRA – 4 under the Companies Act, 2013
• MCA has notified the Companies (Filing of Documents and Forms in Extensible Business Reporting Language), Second Amendment, Rules, 2017 which shall come into force from the date of their publication in the Official Gazette.
• MCA vide its notifications dated 13 December, 2018 has Extended the last date of filing of Form NFRA-1 to 30 days from the date of deployment of this form on the website of Ministry/ NFRA.

• Minimum Additional Fee payable to MCA after 31.12.2018 for Annual filing of Financial statements for y.e.31.3.2018 will be filing fee plus Rs 6,100/- for Financial Statements (Form AOC-4) and Rs. 3,100/- for Annual Returns (Form MGT-7)* plus Rs. 100/- per day per document thereafter.

RBI UPDATE:

• RBI’s latest guidelines on merchant discount rates (MDR) have brought some respite to the digital payments industry, many payment executives ET spoke to feel that the central bank needs to ensure equitable distribution of MDR between the various participants of digital transactions
• RBI has permitted overseas branches and subsidiaries of Indian banks to refinance the existing External Commercial Borrowings (ECBs), giving them a level playing field vis-à-vis their global counterparts.

SEBI Updates:

• The Clubbing of investment limit norm of SEBI by well regulated foreign investors, the foreign portfolio investors (FPIs) are treated as part of the same investor group and the investment limits of all such entities.
• The guidelines pertaining to setting up cyber security operations centre for small market intermediaries as they lack knowledge in cyber security is relaxed by SEBI.
• A more robust risk management framework with regard to margin system for the equity derivatives segment is put in place by SEBI. Now, the payment of mark to market margin (MTM) would mandatorily be made by all the members on T+0 basis — before start of trading on the next day, as per a circular.
• SEBI said it was planning a sandbox policy to support technology developments in financial markets. The Sandbox policy will allow companies to test products in a closed environment, a particular geography or among a set of users, before they are allowed roll out commercially meeting all regulations.

RBI Updates:

• It is announced by the RBI on the outstanding stock of ECB at 6.5 percent of GDP at current market prices. On the basis of GDP Figures on March end 2018, the soft limit works out to $160 billion for the current financial year.

FAQ’S on Financial Sector:

Ques.  Is the condition to make payment for the value of supply plus the GST thereon required to be complied with by the recipient to claim the input tax credit where supplies for services are made between distinct persons?

Ans. No, this condition is not required to be complied with by the recipient. As per the proviso to sub rule (1) of Rule 37 of the CGST Rules, 2017 the value of supplies made without consideration as specified in paragraph 2 of Schedule I of the CGST Act, 2017 shall be deemed to have been paid for the purposes of the second proviso to sub-section (2) of Section 16 of the CGST Act, 2017.

Ques. A customer may avail numerous services from the Bank / insurer in a given taxable period. Is it mandatory for Banks to issue a tax invoice for each transaction or can the Bank issue a consolidated invoice for the service rendered during the tax period?

Ans. As per the provisions contained in the first proviso to Rule 47 of the CGST Rules, 2017 an insurer, a banking company or a financial institution, including a NBFC may issue invoices within 45 days from the date of supply of service. Further, Rule 54(2) of CGST Rules, 2017 provides that such entities may issue any other document in lieu of the tax invoice. Accordingly, such entities may issue a consolidated statement/ invoice/ advice to the customer at the end of the month, with the details of all the charges levied during such month and GST payable thereon.

IBC UPADATE:

• IBC*: Clause (e) of Section 2 of the Code has been substituted with three clauses. This would facilitate the commencement of Part III of the Code relating to individuals and partnership firms in phases.
• IBC*: NCLT has struck down an attempt by a group of banks to block an insolvency resolution plan by citing the 75% vote share requirement prescribed under Section 30(4) of the IBC, 2016.
• Real estate firms are once again adding inventory at a faster clip as sales offtake fails to keep pace with the rising supply of new properties. At the end of March this year, top listed developers were sitting on unsold inventory worth Rs 99,000 crore. If receivables (the amount due from buyers for partial sales) are included, the amount comes up to Rs 1.16 lakh crore, highest in the last decade. The total value of unsold inventory is equivalent to 26 months’ worth of sales and highest in the last seven years. This was around 23 months during the end of FY16.

OTHER UPADATE:

• RBI* has launched an SMS campaign and a ‘missed-call’ helpline to warn people against prize money frauds.
• RERA Registration requirement* of any Project under RERA – No registration of the real estate project shall be required where the area of land proposed to be developed does not exceed five hundred square meters or the number of apartments proposed to be developed does not exceed eight units inclusive of all phases.
• The Financial Resolution and Deposit Insurance Bill, 2017 (FRDI Bill),* introduced in the Lok Sabha on August 10, 2017, is presently under the *consideration of the Joint Committee* of the Parliament.
• ICAI Clarifies* on Rumors of Reservations in CA course – The general public is hereby advised not to pay any heed to such messages as being circulated by unscrupulous persons.
• BITCOIN*: Government is planning to set up panel to decide on bitcoin policy. The RBI has last week warned the public of the risks related to virtual currencies (VCs).
• NIRC Seminar on Impact Analysis Of GST* On Various Sectors On Saturday 16th December, 2017 at Hotel The Park, Parliament Street, New Delhi register at https://www.nircseminars.org/
• The CII Business Confidence Index has climbed up to the level of 59.7 during October-December 2017 compared to 58.3 in the previous quarter, reflecting an improvement in perception regarding overall economic conditions amidst indications of a normalisation in business situation post the recent disruptions like GST. The survey underscores the perception that the economy is on a sustainable recovery path, with the many Govt interventions having an impact on the ground. The climb in business confidence underpins the hope that the upward trend one is seeing on macro figures would be sustained.
• The SBI has changed the names and IFSC codes of branches located in major cities such as Mumbai, New Delhi, Bengaluru, Chennai, Hyderabad, Kolkata and Lucknow, among others.The bank has put up the list of branches with old and new names and IFSC codes on its website.

IFCS Code VS MICR Code

KEY DATES:

• 15 DEC 2017* is the last date for payment of 3rd installment of Advance Tax for AY    2018-19.
• 11 DEC 2017* GSTR-5 for July to October  2017

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