Corporate & Professional Updates on 11th December 2018

Income tax Updates:

• Direct tax collection has risen up by 15.7% for the period of April-November as compared to previous year. Collections added to Rs 6.75 lakh crore while refunds amounting to Rs 1.23 lakh crore have been issued during April-November, that is 20.8% higher than refunds issued during the same period.
• The income tax department has moved up over half the kitty of the targeted direct tax revenue for this financial year on more than 6.63 trillion on a record “high growth rate of last seven years” it was also appreciated by demonitisation, according to CBDT report. As per the report of CBDT, the policy-making body for the I-T Department, on the “impact of demonetisation” states that the 2016 exercise of invalidating the two high-value currencies of Rs 1,000 and Rs 500 has “thrown up a large tranche of data and credible information based on which enforcement actions, with the process of search and survey, should be conducted by the tax department.

GST Updates:

• Finance Ministry has extended the due date for filing annual return by three more months. “The competent authority has decided to extend the due date for filing FORM GSTR-9, FORM GSTR-9A and FORM GSTR-9C till 31st March, 2019.
• The large number of small firms registered under Goods and Services Tax (GST) has made it possible to attract the working population so far not covered by any retirement savings schemes to pensions, chairman of Pension Fund Regulatory and Development Authority Hemant Contractor said.
• GST has pulled up the no. of taxpayers by 3.4 million, According to the Economic Survey of FY 17-18. By the requirement of maintaining books of accounts and becoming part of the Digital tax return system, they have become new potential to customers the National Pension System.
• Contractor said GST has addressed one of the major challenges in getting small firms to join NPS lack of proper maintenance of accounts. More firms getting registered under GST, small firms operating in the informal sector are becoming part of the formal sector.
• India may soon offer some relief to the back-office support sector that is rattled by the recent Authority for Advance Ruling decision that services rendered to overseas clients did not qualify as exports and would face GST of 18%.

RBI Updates:

• Urjit Patel has resigned as Governor Reserve Bank of India. His resignation comes against the backdrop of increasing tensions between the Finance ministry and the Reserve Bank of India. Shri Hasmukh Adhia appointed as RBI Governor with immediate effect.
• The benchmark reached down 13 points as prices rose. The benchmark paper Thursday reached 7.43% the lowest since April 10. Bond prices are yield move in opposite direction. “It seems, India is heading towards a comparatively lower interest rate scenario,” said Kamal Mahajan, head of treasury and global markets at Bank of Baroda. “Banks are about to show higher profits because of the fact that they have heavy provision against treasury losses made between March to June will now get a scope of reversal amid dipping yields.”
• Banks incur losses they are mandated to make provisions against such losses. Now onwards they are not allowed to book mark-to-market profits, already made against earlier losses. The central bank lowered the inflation forecast for the second time to 2.7-3.2% for second half of FY19, from 3.9-4.5% forecast made in the October policy meeting in the first Fiscal Year 2020, inflation is projected at 3.8-4.2%, with Risk.
• It’s a positive development as lower bond will reduce MTM provisions in banks which have not fully provided and in other cases write-backs could be there in third quarter earnings,” said Ashutosh K Mishra, head of research, institutional equity at Ashika Stock Broking.
• The changing global environment may impose further pressure on domestic yield. Traders mostly expect the benchmark yield to trade in the range of 7.20-7.70% with an element of risk emanating from domestic elections. “There could be some uncertainty over domestic elections,” said Mahajan. Moreover, trading activity has gone up in the sovereign debt market giving banks opportunity to tap trading profits.
• The efficacy of central banking lies in how much fast a central bank can get lenders to pass on changes in policy rates to the economy, by altering their loan rates. In India’s case, it has been a Herculean task to make banks give borrowers the benefit of monetary policy changes and most of the Reserve Bank of India’s (RBI’s) efforts have been lost in transmission.
• The central bank wants to remove deposits from the formulae, banks simply cannot. Lenders are allowed to charge a spread over the market benchmark to compensate for the credit risk of the borrower and a premium for the tenure.
• The RBI may introduce new modes for the electronic verification of customers for all the financial institution. In last week a meeting with industry executive the officials of RBI indicated they were keen on rolling out a digital authentication method that would use the XML internet format to extract limited information on customers from the Aadhaar database. It wouldn’t include Biometric collection while generating Aadhaar digital identities for Indian resident.
• RBI is more wishes to on starting off with XML-based Aadhaar authentication instead of offline QR code based verification.

Other Updates:

Concept of Intermediary:

• A levy of 18% on these services would completely derail the cost dynamics of the back-office model that operates on thin margins and increasingly face challenges from other low-cost jurisdiction such as the Philippines. The issue could be taken up by the GST Council or even clarified by the GST Implementation Council once the law committee firms up its view, said the official quoted earlier. Industry bodies such as Nasscom have represented to the government on the issue.

Frequently Asked Questions on Banking, Insurance and Stock Brokers Sector:

Ques.1. Whether Banks are required to capture the details of ATMs in registration certificate as a ‘place of business’?

Ans.  No. Banks are not required to provide the details of ATMs while applying for registration. For the purposes of registration, ATM on its own does not constitute a place of business, as defined in the CGST Act, 2017.

Ques.2. As per RBI guidelines, Banks can use third party ATMs, Business Correspondents (BC), Customer Service Points (CSP) or third party warehouses. Are Banks required to include these third party places also in their GST registration?

Ans.No. Third party places are neither places of business nor fixed establishments from where Banks ordinarily carry on their business. These are independent service providers to the Bank which are subject to GST. Thus, these places are not required to be declared as place of business by the Bank.

Ques.3. What will be the time of supply in respect of services rendered upto 30th June, 2017 where the invoices are raised or payments are received after 30th June, 2017?

Ans. Where the services are rendered upto 30th June, 2017 and invoices in respect thereof are also raised on or before 30th June, 2017, the point of taxation would be as per the earlier service tax law and the services will be subject to service tax. Where the services are rendered upto 30th June, 2017 and the services are liable to be taxed under the reverse charge mechanism, the point of tax for such services as per the Point of Taxation Rules, 2011 shall be the date of payment. If the payment is made on or after 1st July, 2017, the supply of services shall be liable to GST.

Ques.4. Which tax is to be applied by the service provider on invoice issued on or after 1st July 2017 for services rendered up to 30th June 2017?

Ans. The time of supply being issuance of invoice under the CGST Act, 2017, the supplier of services must charge GST in this case. However, where the payment for such supplies has been made (prior to issuance of invoice) as advance before the 1st of July, 2017, the tax would be payable under the law prevalent prior to 1st July, 2017, as the point of taxation had arisen before this date to the extent of advance.

KEY DUE DATES:

• GSTR Return summary for November is 20/12/2018.
• Return of inward supplies by Non Resident foreign taxable person is 20/12/2018.
• Payment of TDS for purchase of property for Nov. is 30/12/2018.
• Annual return for registered tax payers is 31/12/2018.
• Annual accounts filling on MCA is 31/12/2018.