Recent tax updates

Dear All

We are pleased to enclose our special edition 'Tax Highlights'. It summarises recent key direct tax and indirect tax related developments . . Hope you will find it useful and informative.   The details were provided in very short description and in case you need any additional information for any particular issue we are happy to share the same on your request.

TAX HIGHLIGHTS

INCOME TAX

·     Delhi High Court  recently held that deduction u/s 10A which was not claimed in the return of Income should be allowed to assesse during the assessment proceedings. 

·         Space provided to foreign entity for rendering services constitutes PE in India. 

·         Services provided by seconded employees does not constitute PE

·         Fees received for domain name registration are taxable as Royalty

·         Payment made to Google for advertisement is Royalty

·         CBDT Issues final notification on special transitional provisions of POEM.

·         DTAA benefit cannot be denied in absence of TRC.

·         CBDT Notified rules of conversion of inventory into capital assets

·         Gujarat High Court held that no disallowance on year end provisions of expenses for non deduction of TDS

·         Waiver of loan for purchase of capital assets is not business income but capital receipts.

·         CBDT: Withdraws circular on Sec. 56(2)(viia) applicability to ‘fresh’ issuance of shares

·         Mumbai High court held that Settlement of ESOP-shares by settlor, assessable as ‘capital-gains’ in Trust’s hands. 

·         IT Department specifies procedure for online application for nil/lower TDS / TCS

·         India signs DTAA agreement with Hong Kong.

Indirect Tax

·     

    Mumbai CESTAT held that CENVAT credit available on CSR expenses.

·         Supreme court held that ITC in a statute does not violate the rights guaranteed under the constitution.

·         CBEC Clarifies that no GST on export of back office services

·         In the 32^nd GST Council Meeting, state government has been provided to fix the threshold limit of registration and annual turnover limit for composition dealer increased to Rs. 1.5 Corers. 

·         Input tax credit on FY 2017-18 invoices can be claimed until due date of GSTR-3B of March 2019

·         Government has notified security services under reverse charge w.e.f 1st Jan 2019.

·         GST Annual audit for FY 2017-18 date extended till June 30, 2018. Also the new forms has been notified.

·         Appellate authority upholds GST advance ruling in case of Columbia Asia - Cost of employees at head office to be cross charged to other branches

International Tax

Important Changes to Malaysian Withholding Tax (WHT) Regulations

Please be informed of the following changes to Malaysian Withholding Tax (WHT) regulations with effect from December 28, 2018:

Category	Before December 28, 2018	On or After December 28, 2018	General WHT Rate *
Technical service fees (essentially covers most types of services, including, marketing, consulting, legal, etc.	WHT is only applicable for technical services rendered in Malaysia	WHT is applicable for all services rendered in Malaysia excluding freight charges General WHT Rate *	10%

* WHT rate could be reduced based on the Double Taxation Agreement (“DTA”).