Corporate and Professional updates on 26th February 2019

Indirect Tax Updates:


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

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

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

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

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

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

Indian GDP:

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

Other Updates:

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

Key Due Dates:

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


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 for any query you can write to Hope the information will assist you in your professional endeavors. For query or help contact:  or call at 09811322785/4- 9555555480.

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