Corporate & Professional Updates on 9th January 2019

Direct Tax Updates:

• The Details of the Income tax circular is asked by the Government. The Circular was issued and then Reverted By the CBDT (Central Board Of Direct Tax) showing the ongoing case on Rahul Gandhi and Sonia Gandhi. A latest assessment order is asked By the Government Form the Income Tax Department Stating the latest assessment order.
• The Representing lawyer of Gandhi’s is asked to send their reply on the CBDT circular which was issued on 31st December 2018 and then withdraw on 4th January 2019.
• A Group of Lawyers including P. Chidambaram, kapil Sibal, Arvind P Datar and Kavita Jha, are there for Representing Gandhi in the case. The Lawyers explains court about how the Circular was issued and Withdraw by the Government. The circular that was issued and then withdrawn was for applicability of section 56 (2) (viia) of the income tax act that deals with black money transactions in investment situations. The lawyer of Income Tax Department Tushar Mehta said that even the first circular that was issued on December 31, is not relevant to the case and this income tax section was not applied in the ongoing cases including Gandhi Chidambaram asked for one week time from the Supreme Court for replying in this regard.
• The Experts Recommended that the circular withdrawn has made certain confusions in the mind of the companies that has received tax demands on valuations and added that some tax regulations has been modified in 2010 for the prevention from money Laundering The government had inserted a regulation-Section 56(2)(viia)-in the income tax Act to tackle black money transactions in the situation of investment.

Indirect Tax Updates:

• The applicability of GST in the Indian taxation system was a move aimed towards ‘one nation, one tax’. Post land abetment, the applicable GST for under-construction properties was 12% while ready-to-move-in flats were kept out of the GST ambit. Even for under-construction properties, there was a ruling of Input Tax Credit (ITC) pass-over to the buyer to ensure that it becomes a tax neutral proposition. While calculations and ITC pass-over still remain a challenge after 1.5 years of GST regime, a recent announcement stated that there is no GST applicable only on ready-to-move-in flats wherein sales took place after the issue of completion certificate. This is likely to add woes to buyers as well as developers.
• The fee for late filing of the returns is Rs 25 per day for Central GST and an equal amount under State GST. The government has waived late fees for non-filers of summary and final sales returns for the July 2017-September 2018 period by businesses registered under the goods and services tax (GST). However, these businesses would have to file their returns for the 15-month period by March 31, 2019, the Central Board of Indirect Taxes and Customs (CBIC) said.
• The fee for late filing of the returns is Rs 25 per day for Central GST (CGST) and an equal amount under State GST (SGST). However, those businesses who have to file returns but have ‘nil’ tax liability would have to pay a fine of Rs 10 under CGST law, and an equal amount under SGST law. The CBIC said “the amount of late fee payable under Section 47 of the said (CGST) Act shall stand waived for the registered persons who failed to furnish the return” in Form GSTR-3B GSTR-1, for the months between July 2017 and September 2018, by the due date but furnishes the said return between the period from December 22, 2018 to March 31, 2019.

RBI Updates:

• The RBI may introduce a new Committee which will work for the state of Digitalisation of payment in the country to identify gaps and how to bridge them. The idea is to encourage digitisation of payments and enhancing of financial inclusion through digitalisation.
• The payments space has seen much of change in the past year, on rules and in other aspects, from data localisation to wallet interoperability. And, the Supreme Court’s (SC’s) Aadhaar judgment which barred private companies from using that database for paperless verification of customers. Payments executives say the regulator needs to come up with a solution for electronic Know Your Customer (KYC) norms. Leading banks and wallet companies have been unable to perform KYC verification since that October order of the SC, and unable to digitally enroll customers. The panel will also assess the current levels of digital payments in financial inclusion and suggest a medium-term strategy for deepening of digital payment.
• The Card transactions in December saw a drop of four per cent in volume against November and five per cent in volume, to 1.3 billion transactions and Rs 3.8 trillion respectively. The Unified Payments Interface saw growth of 18 per cent in volume and 12 per cent in value to 620 million transactions worth Rs 1 trillion in the same period. The committee would suggest measures to strengthen the safety and security of digital payments, and how to raise customer confidence and trust while accessing financial services through digital modes. Last week, RBI extended the limited liability of customers to payment entities not covered by previous guidelines. In December, it had said it would implement an ombudsman scheme for digital transactions, to be notified by the end of January.

FAQ’s on financial sector:

QUES.  Can a Bank / insurer defer the availment of input tax credit for a month or quarter and avail of the same in subsequent months?

ANS.   Yes. As per section 16(4) of the CGST Act, 2017, availment of input tax credit can be deferred and availed upto the due date of furnishing of return for the month of September following the end of financial year to which relevant invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.

QUES. Would intermediary services provided to an offshore client and services provided by a banking company to its offshore account holders be treated as an intra-State supply or an inter-State supply for payment of GST?

ANS.  Under clause (b) of section 13(8) of the IGST Act, 2017 the place of supply of such services is the location of the provider of services. As the location of supplier and place of supply are in same State, such supplies will be treated as intra-State supply and Central tax and State tax or Union territory tax, as the case may be, will be payable.

QUES. Who is the ‘supplier’ of service of purchase or sale of foreign currency?

ANS. The ‘supplier’ of service of purchase or sale of foreign currency is the Authorised Dealer or authorized moneychangers who are getting the commission. For example, in case of a purchase or sale of foreign currency between a Bank and a Corporate, the bank is the ‘supplier’ of the service.

Key Due Dates:

• TDS return of December Quarter for all buyers is 31st January 2019.
• Issue of TDS Certificate in case of payment made in November for purchase of property under 194IA is 14th January 2019.
• Issue of TDS Certificate in case of payment made in November for purchase of property under 194IB is 14th January 2019.

QUOTE OF THE DAY:

“….a professional is someone who can do his best work when he doesn’t feel like it.”