Key notes on Circular No. 183/15/2022-GST dated 27 December 2022 on GSTR-2A & GSTR-3B

 

The CBIC in the captioned circular  issued a clarification with respect to the following scenarios to deal with differences in Input Tax Credit (ITC) availed in FORM GSTR-3B vis-à-vis as per FORM GSTR-2A for FY 2017-18 and FY 2018-19.

Taxation of Online Gaming

Let us understand the online gaming ecosystem in India with reference to the applicability of the Indirect tax and direct tax provisions in India.

·         There are two types of gaming

Is Form 10F is mandatory?

While there has been a recent buzz in the industry over the government's move of mandating the furnishing of Form 10F electronically, many people are unaware of the basic fact that the aforesaid form [as per section 90(5)] is only required to be furnished if the Tax Residency Certificate (TRC) furnished by the Non-Resident payee in accordance with section 90(4), does not contain certain information as prescribed in Rule 21AB(1). This is also stated in rule 21AB(2).

48th GST Council meeting

 Given below the update with respect to relevant announcements made post the 48th GST Council Meeting held on 17 December 2022:

 

History of Global Transfer Pricing

 
The First World War ended way back in 1918/19. It was the first time when the different nations in the world collaborated to form the “League of Nations” in order to maintain peace and security, and take decisions in the matter of International Affairs.

UAE adopts Transfer Pricing Regulations

 

A corporate tax regime without transfer pricing provisions would be spineless. Transfer pricing is detailed and mention in the Federal Decree released on 9 December 2022. While we are undertaking detailed research on transfer pricing law in the UAE, here is our first take on the transfer pricing law in the UAE.

Compute Customer Acquisition Cost (CAC) and Lifetime Value (LTV)

Calculating Customer Lifetime Value (LTV):

- Suppose a company’s ARR (Annual Recurring Revenue)= $500K
- Total number of customers= 2500
- Average Revenue Per Customer= $500K/ 2500= $200

Know about “Form ITR-A

 

1. ITR-A is a form provided to furnish a modified return by a successor company to a business reorganization for an assessment year.

2. Where businesses go through a reorganization the successor entity, is required to file modified returns for the period between the date of effectivity of the order and the date of issuance of the final order of the competent authority. Form ITR-A is the prescribed form by the Income Tax Department for filing such a return.

3. When two or more business goes under remodeling, reconstruction, amalgamation, or merger the resulting business or entity is known as the successor entity, and the businesses going under reorganization are known as the predecessor entity.

4. The prescribed form should be furnished within six months from the end of the month in which said order was issued.

5. The ITR-6 (applicable for companies) has been modified to include information contained in FORM ITR-A.

6. In Appendix II, in Form ITR-6- PART A-GEN, entries of the serial number (A19)(a)(i), have been substituted, for every assessment year commencing on April 01, 2022, or any, earlier assessment year.

(Rule 12AD of the Income Tax Rules)

Comparing Indian GST with European VAT

 

It has been more than 5 years since GST has been introduced in India and with the passage of time, the process of GST has stabilized in the country and the government feels proud of the success of GST implementation in the country.  Being tax head of an MNC, I am being exposed to the GST or VAT process of other countries, especially  European countries, and in this article tries to compare the indirect tax process of both countries from my own experience.

GST input credit on Motor vehicles.

ITC is blocked on motor vehicles having seating capacity ≤ 13 persons (including the driver) used for the transportation of persons. Further, ITC is also blocked on certain services relating to motor vehicles namely, insurance, servicing, and repair and maintenance.

What would be the treatment of 𝐭𝐚𝐱𝐞𝐬 𝐩𝐚𝐢𝐝 𝐢𝐧 𝐟𝐨𝐫𝐞𝐢𝐠𝐧 𝐜𝐨𝐮𝐧𝐭𝐫𝐢𝐞𝐬 𝐟𝐨𝐫 𝐰𝐡𝐢𝐜𝐡 𝐜𝐫𝐞𝐝𝐢𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐚𝐯𝐚𝐢𝐥𝐚𝐛𝐥𝐞 𝐢𝐧 𝐈𝐧𝐝𝐢𝐚?

Indian Income Tax Act does not allow refund in such cases but based on various judgments 𝐭𝐡𝐞 𝐩𝐨𝐫𝐭𝐢𝐨𝐧 𝐨𝐟 𝐭𝐚𝐱 𝐟𝐨𝐫 𝐰𝐡𝐢𝐜𝐡 𝐜𝐫𝐞𝐝𝐢𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐚𝐯𝐚𝐢𝐥𝐚𝐛𝐥𝐞 𝐜𝐚𝐧 𝐛𝐞 𝐜𝐥𝐚𝐢𝐦𝐞𝐝 𝐚𝐬 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬 𝐝𝐞𝐝𝐮𝐜𝐭𝐢𝐨𝐧. For example, tax paid in say UK is Rs.1000/- whereas credit is only available for Rs.600/-, in this case Rs.400/- can be claimed as business deduction.
Various judgments in support of this view:
𝑉𝑖𝑟𝑚𝑎𝑡𝑖 𝑆𝑜𝑓𝑡𝑤𝑎𝑟𝑒 𝑎𝑛𝑑 𝑇𝑒𝑙𝑒𝑐𝑜𝑚𝑚𝑢𝑛𝑖𝑐𝑎𝑡𝑖𝑜𝑛 𝐿𝑡𝑑. 𝑣𝑠. 𝐷𝐶𝐼𝑇 [𝐼𝑇𝐴 𝑁𝑜.1826/𝐴𝐻𝐷/2019]
𝐵𝑎𝑛𝑘 𝑜𝑓 𝐼𝑛𝑑𝑖𝑎 𝑣𝑠 𝐴𝐶𝐼𝑇 [𝐼𝑇𝐴 𝑁𝑜.869/𝑀𝑢𝑚/2018]
𝑅𝑒𝑙𝑖𝑎𝑛𝑐𝑒 𝐼𝑛𝑓𝑟𝑎𝑠𝑡𝑟𝑢𝑐𝑡𝑢𝑟𝑒 𝐿𝑡𝑑. 𝑣𝑠. 𝐶𝐼𝑇 [𝐼𝑇𝑅 75 𝑜𝑓 1998, 𝐵𝑜𝑚𝑏𝑎𝑦 𝐻𝐶]

Understand foreign tax credit for USA ex-pats.

 

One of the most common problems US ex-pats face is double taxation—paying taxes twice on the same income. Fortunately, the IRS offers multiple tax credits and deductions to help expats avoid this costly burden. One example is the Foreign Tax Credit (Form 1116). Using this credit, many Americans living abroad are able to erase their US tax debt entirely.

Comparison of buy back with dividend

 

Section 94B of the Income-tax Act, 1961 – Unanswered Questions.

Section 94B of the Act was introduced by the Finance Act, 2017 to give effect to 'OECD BEPS Action Plan 4 - Limiting Base Erosion Involving Interest Deductions and Other Financial Payments.

Transfer Pricing Master File Form 3CEAA – Practical considerations

Master File (MF) in Form3CEAA to be e-filed by Indian entities of MNE Group by the due date of filing IT return i.e., 30 November. While Part A of Form has no threshold, Part B to be filed when a) consolidated group revenue >Rs 500 cr & b) aggregate value of international transactions >Rs 50 cr, or aggregate value of IP transactions >Rs 10 cr.

ITC on residential dwelling occupied by the employee is allowed to the employer?

With the withdrawal of the GST exemption on the services by way of renting of residential dwelling for use as a residence when provided to a registered person (RP), an important question that arises is whether the RP is eligible to claim ITC of the GST applicable therein if the residential dwelling is occupied by his employees.

UAE Corporate Tax wef. 01st June 2023

With effective from 01st June 2023, the new corporate tax will apply to businesses across all Emirates, with an exception for the extraction of natural resources, which will remain subject to Emirate level corporate taxation. Foreign entities and individuals will be subject to corporate tax only if they conduct a trade or business in the UAE in an ongoing or regular manner. It is important that businesses evaluate the impact of the introduction of UAE CT early on and proactively plan for a smooth implementation.  Examples:

What is GST Notice.

 Adjudication is adversarial, and Revenue is not willing to backdown from the 'view' canvassed merely because taxpayer has declined to subscribe to it. Revenue will want to exhaust every remedy available in law to 'save the demand'. Justifiably so.

What is Rule 132 of the Income Tax Rules?

 

1. Rule 132 is a beneficial clause allowing assessees to comply with the provision of Section 155 which allows Assessing Officers to re-compute the total income for such previous years in which the assessee would have claimed deduction of surcharge or cess subject to be disallowed u/s 40(a)(ii).

 

CAN TAX AUDIT REPORT BE REVISED?

Section 44AB read with rule 6G prescribes provisions relating to revision of the tax audit report
The Income Tax (Eighth Amendment) Rules, 2021 has inserted sub-rule (3) in rule 6G that provides for reasons to revise tax audit report.

Registration procedure for Casual Taxable persons under GST

According to Section 2(20) of the CGST Act, a Casual taxable person” means a person who occasionally undertakes transactions involving supply of goods or services or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in a State or a Union territory where he has no fixed place of business; This can be easily explained through this following example:- A is participation in a fair/expo in another state. When a taxable person participates in a fair/expo outside the state where his usual place of registration is, then he should register as a casual taxable person in order to undertake the sale and purchase of goods in that other state.

No Interest or Penalty on CVD or SAD Defaults - Customs and GST Implications

 In a major bombshell dropped on the Revenue, the Bombay High Court (‘HC’) in the case of Mahindra and Mahindra Limited v. Union of India, 2022 (10) TMI 2022, held that there is no provision under the Customs Tariff Act, 1975 ('CTA 1975') to levy interest or penalty on Countervailing Duty ('CVD') or Special Additional Duty ('SAD').

Government extends the scope of Customs IGCR Rules

 In our update dated September 12, 2022, we apprised you about the introduction of new Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022 [‘IGCRS Rules’]

 

Reiteration on FEMA Regulations.- Capital Account Transactions

 

As you would be aware that Foreign Exchange Transactions in India, are governed by Foreign Exchange Management Act, 1999 (FEMA, 1999) and Rules & Regulations, Notifications, Circulars and Directions (FEMA Regulations) issued thereunder by Reserve Bank of India in consultation with Government of India.

CBDT notifies rules providing manner for filing application for re-computation of income for disallowing claim for cess deduction

 This Tax Alert summarizes a recent Notification No. 111/2022 dated 28 September 2022 issued by the Central Board of Direct Taxes (CBDT) prescribing rule and forms for taxpayers to make voluntary application with the tax authority for re-computation of total income to avoid deeming penal consequences for under-reported income on account of disallowance, on retrospective basis, of surcharge or cess as business deduction which was claimed and allowed in the past.

Outbound/export freight is liable to GST from 1st October

 This is to apprise you about the withdrawal of following two exemptions* from October 1, 2022:

 

-               Services by way of transportation of goods by a vessel from customs station of clearance in India to a place outside India

CBIC notifies effective date for amendments in CGST Act and modifies CGST Rules

 This Tax Alert summarizes recent Notifications issued by Central Board of Indirect Taxes and Customs (CBIC).

Vide Finance Act, 2022, Government had proposed various amendments in the Central Goods and Services Tax Act, 2017 (CGST Act). The following amendments have been now made effective from 1 October 2022:

CBIC issues clarification on Customs (IGCRS) Rules, 2022

 This Tax Alert summarizes a recent Circular issued by Central Board of Indirect Taxes and Customs (CBIC) on Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022 (IGCRS Rules). These rules supersede the existing Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 (IGCR Rules).

The key clarifications are as follows:

• Basic contours of IGCR Rules have been retained. Changes made are to broaden the scope of IGCR and capture additional useful data fields in forms.
• The scope of IGCRS Rules is widened to include cases where imported goods are utilized for specified end use which can be other than manufacturing or providing output services.
• Where time period for utilization of goods is specified in respective notifications, the said period will apply. If the same is not specified, time period of six months will apply. Jurisdictional Commissioner can extend such period by another three months in cases where the delay in utilization is beyond importer’s control.
• Procedures have been prescribed for immediate re-credit of Bonds by jurisdictional AC/DC, rather than waiting till the time of filing the monthly statement.

CBDT issues additional guidelines on withholding provision on payment of business perquisites to residents

This Tax Alert explains Circular No. 18 dated 13 September 2022 (Circular) issued by the Central Board of Direct Taxes (CBDT) with a view to remove difficulties and provide guidance on various issues on interpretation and application of a withholding provision, Section (S.) 194R, under the Income Tax Law (ITL).

GST reporting in Income Tax Audit Report (Form 3CD) - Clause-44

 Since the inception of cross-sharing of information between Direct Tax authorities and Indirect Tax authorities, the taxpayers are at the receiving end. One of the major challenges is the GST reporting in Income Tax Audit Report i.e., Form 3CD.

Reform on Japan consumption tax return.

 

Below the  facts towards reform on Japan consumption tax return.

·         Currently consumption tax is being computed purely based on accounting transaction

Eg: If vendor has not charged consumption tax, but the item qualifies to be consumption tax then we can go ahead and claim consumption tax (That was how accounting system was done) . Even though there was no consumption tax in the invoice, just by seeing accounting entries input was being claimed.

CESTAT holds GST ITC cannot be utilized towards pre-deposit for appeals under earlier regime

 

This Tax Alert summarizes a recent ruling of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Allahabad on utilization of Input Tax Credit (ITC) under Central Goods and Services Tax Act, 2017 (CGST Act) for payment of mandatory pre-deposit under Central Excise Act, 1944 (CEA).

Amendment in Customs IGCR Rules to include imports for specific end use

 The Government vide. Notification No. 74/2022-Customs (NT) dated September 9, 2022, has notified the Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022 ('IGCR-SEU Rules').

CBIC issues guidelines for claim of transitional credit pursuant to SC ruling

 This Tax Alert summarizes recent Circular issued by Central Board of Indirect Taxes and Customs (CBIC) providing guidelines for filing/ revising TRAN-1/ TRAN-2 pursuant to the Supreme Court (SC) ruling. Reference is invited to our earlier tax alerts dated 26 July 2022 and 5 September 2022.

The key clarifications are:

CBIC issues guidelines for launching prosecution under the GST law

 Section 132 of the Central Goods and Services Tax Act, 2017 (CGST Act) codifies the offences under the Act which warrant the institution of criminal proceedings and prosecution. Recently, CBIC has issued Instruction No. 04/2022-23 [GST-Investigation] dated 1 September 2022 which provides the guidelines for launching prosecution proceedings. The gist of the guidelines is as follows:

GST Activities due by September 2022

 

We have highlighted some of key activities under GST that need attention and action by the forthcoming due dates prescribed for the FY 2021-22.

 

Re-Charge Without Markup vs Reimbursement

  

 The taxability of reimbursements has always been a contentious issue in India. However, before the taxability of reimbursements is discussed, it is important to understand when an amount constitutes reimbursement. The term reimbursement is not defined in the Income-tax Act, 1961 (‘ITA’), however, the same has been explained by the Indian courts.

Is TDS u/s 194R applicable on Liquidated Damages?

 

 

With effect from July 1, 2022, a new obligation to deduct tax has been introduced in Section 194R. This provision now requires any person providing a benefit or perquisite to deduct tax at 10% of the value or aggregate value of such benefit or perquisite. Since its introduction, the applicability of this provision has been debated and discussed in great detail in different fora. Readers of this Article would therefore be aware that the expression 'benefit or perquisite' though not defined in the Section, is not a phrase that is new to the Income Tax Act and finds place in Section 28(iv) of the IT Act.

ITC changes in Form GSTR-3B

 that the changes in manner of reporting in GSTR 3B (i.e. ITC reversal and ineligible ITC details etc), as notified earlier vide Notification No. 14/2022 – Central Tax dated 5 July 2022 and subsequent Circular No 170/02/2022-GST dated 6 July 2022, have now been made available on the GST portal. Screenshot of the GSTN portal w.r.t. Input tax credit has been attached herewith for your reference.

 

Suggestions to improve GST

 

Following are the suggestions to improve & make GST more taxpayer friendly.

1.     Input Credit: – Sellers should be made responsible for Deposit of Tax and in case of Mismatch sufficient time should be given to the dealers to settle it but ultimate liability should be of sellers. 

Taxability of ‘free’ supplies in the privacy/ information framework

 The Supreme Court in the landmark judgment of Puttaswamy recognized that right to privacy is a fundamental right, the notions of which amplified in the Aadhar case. This followed up with the tabling of Personal Data Protection Bill, 2019 (PDPB) before the Parliament. But after the criticism and its inadequacies, the PDPB has recently been withdrawn, with reported placement of a new draft in due course. All things said and done, the privacy framework is not only going to shake up the internet traffic, but depending upon how its worded may leave its marks on the tax laws as well. In this backdrop, the present piece discourses the potential taxability of information collected by the service providers.

Electronic furnishing of Form 10F – Flowchart for Payer/Deductor

  

While Form 10F has been notified for electronic filing, the income-tax portal allowed filing for only AY 2022-23. However, now the income-tax portal has been updated to file Form 10F online for AY 2023-24 (i.e. FY 2022-23).

IGST on import of goods – ‘duty of customs’ or IGST

 

1. The case concerned classification of imported goods and application of IGST rate thereon. The customs officer went with the what a layman would do, trace goods into IGST rate notification and do the rest of the math (right or wrong)

New Features in GST Portal.

 Various new functionalities are implemented on the GST Portal, from time to time, for stakeholders. In the month of July 2022, the following changes are made:

1. Registration:

i. Allow taxpayers to enter multiple trade names
ii. Mandating mobile number for applying for persons applying for Temp ID for Advance Ruling

2. Return:

i. Addition of new GST Rate slab of 6%
ii. Auto population of data in Form GSTR-4 from Form GSTR-1 in Table 4A & 4B

3. Refund: Option in Form RFD-01 to get refund arising out of excess payment in GSTR 4, for Taxpayer under Composition levy

4. Advance Ruling: Functionality to search and view Advance Ruling Orders

5. Payments:

i. The limit of cash payment in Over the Counter (OTC) mode has is now restricted to Rs 10,000
ii. Updated generic messages on GST PMT-06 challan page

Guidelines for arrest and bail relating to punishable offences under the CGST Act, 2017

 

The GST Investigation Wing of CBIC has released Guidelines for arrest and bail relating to punishable offences under the CGST Act, 2017 on 17 August 2022 vide Instruction No.02/2022-23(GST Investigation).

The above instruction is aimed to ensure the judicious use of power to arrest an accused during the course of investigation by the officers in the backdrop of Supreme Court judgement dated 16 August 2021 in Criminal Appeal No.838 of 2021 arising out of SLP (Crl) No. 5442/2021.

Guidelines for the issuance of summons under Section 70 | Instruction No.03/2022-23

 

The GST Investigation Wing of CBIC has released Guidelines for the issuance of summons under Section 70 of the CGST Act, 2017 on 17 August 2022 vide Instruction No.03/2022-23(GST Investigation). The instruction is aimed to ensure diligent use of power by the officers while issuing of summons to the tax payers during routine requisition of information and documents.

Mumbai Tribunal rules MAT provisions are not applicable to foreign bank despite having branch in India

 This Tax Alert summarizes a ruling of the Mumbai Income Tax Appellate Tribunal (Tribunal) dated 3 August 2022 in the case of Credit Suisse AG ^[1] (Taxpayer), wherein one of the issues was whether minimum alternate tax (MAT) provisions under the Indian Tax Laws (ITL) will be applicable to a foreign company having permanent establishment (PE) in India and also independently earning incomes not attributable to such PE.

CBDT notifies books of account and other documents to be maintained by charitable institutions

This Tax Alert summarizes Notification No. 94/2022 dated 10 August 2022 (Notification) issued by the Central Board of Direct Taxes (CBDT) which notifies a new rule as prescribed by the enabling provisions of the Income Tax Law (ITL).The Finance Act 2022 had amended the enabling provisions for the charitable institutions to maintain books of account and other documents and it is one of the pre-conditions for availing exemption under the ITL. The new rule provides that charitable trust and other eligible institutions (charitable institutions) are required to maintain books of account and other documents. The documents prescribed require maintenance of record exhaustively in respect of different segments such as sources of income, application, investment or deposit of money etc. It also includes maintenance of details such as name, address, PAN, Aadhar number of every donor, as also of every person in respect of whom application is made or claimed. The books of account and other documents are to be maintained at the registered office for a period of ten years from the end of the relevant tax year. It may be kept at any other place as decided by the management by way of a resolution. It may be maintained in written or electronic form. Furthermore, if the charitable institutions are subjected to reassessment for any tax year, the books of account are to be maintained till the reopened assessment is finalized.

Interest on Delayed Refund Not Hit by SC Suo Moto Extension

 

It is to apprise you that the Hon'ble Delhi High Court ('HC') in the case of Ankush Auto Deals v. Commissioner of Delhi GST, 2022-VIL-561-DEL, held that the Hon'ble Supreme Court ('SC') suo moto extension order does not apply to interest on delayed refund under Section 56 of the Central / Delhi GST Act, 2017 ('Act').

SEZ WFH Rules

 

The SEZ Division of the Ministry of Commerce has issued Instruction No. 110 today providing guidelines on standard operating procedure (SoPs) for Work from Home (WFH) for implementation of Rule 43A of the SEZ (Third Amendment) Rules, 2022.

 

CBIC Circulars issued post 47 Council Meeting

 

 

Certain circulars have been issued by the Ministry of Finance yesterday to provide clarifications on various aspects/ transactions ranging from tax treatment, rate of tax, exemptions etc.

CBIC lowers e-invoice turnover threshold to INR10 crore with effect from 1 October 2022

 This Tax Alert summarizes a recent Notification^[1] issued by the Central Board of Indirect Taxes and Customs (CBIC) under goods and services tax (GST).

With effect from 1 October 2022, e-invoicing will be applicable to taxpayers having aggregate turnover exceeding INR10 crore in any preceding financial year from 2017 to 2018 onwards.

Earlier, the threshold limit for e-invoicing was reduced from time to time, as under:

• INR500 crore to INR100 crore (w.e.f. 1 January 2021),
• INR100 crore to INR50 crore (w.e.f. 1 April 2021) and
• INR50 crore to INR20 crore (w.e.f. 1 April 2022).

As per media reports, we understand that the government is contemplating to further reduce the threshold to INR5 crore in the future.

The move to reduce turnover threshold and increase the ambit of e-invoicing is mainly aimed at resolving mis-match errors and to check tax evasion.

Considering the timelines, concerned businesses will have to ramp up their IT systems in order to comply with the e- invoicing norms.

Tax Due Date - Aug 22

 

Sl No	Due Date	Related to	Compliance to be made
1	11.08.2022	GST	Filing of GSTR – 1 for the month of July 2022
2	20.08.2022	GST	- Payment & filing of GST return for the Month of July 2022- Form GSTR 3B
5	07.08.2022	TDS/TCS (Income Tax)	· Deposit TDS for payments of Salary, Interest, Commission or Brokerage, Rent, Professional fee, payment to Contractors, etc. during the month of July 2022. · Deposit TDS from Salaries deducted during the month of July 2022 • Deposit TCS for collections made under section 206C including sale of scrap during the month of July 2022, if any • Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of July 2022, if any

Foreign Payments Dikkat.

 

Foreign payments are an important part of business nowadays and with #Foreign_Payments come increased compliances.

 

China allows a company to register as "dormant” to allow companies to be maintained if no activity

 

In March 2022, new policies came about, allowing companies to go into dormant mode. This was in response to companies that wanted to remain in China but were struggling during the current economic conditions because of Covid.

Bombay HC holds International inbound roaming and long-distance telecom services billed to foreign operators qualify as export of services

 

This Tax Alert summarizes recent ruling[1] of the Bombay High Court (HC) on zero-rating of International Inbound Roaming (IIR) and International Long Distance (ILD) services provided by Indian telecom operator to foreign telecom operators (FTO)s.

Process of disclosing Interest on PF in Income tax returm.

From FY 2021-22, salaried taxpayer whose contribution in PF more than Rs. 2.5 Lakhs requires to pay tax on the interest income on PF contribution exceeds Rs. 2.5 Lakhs per annum.  This interest income is taxable at applicable slab rate which in most cases will be 30% plus applicable surcharge & cess.

GST on Pre-packing foods.

 

FAQ dt 17-7-2022 confirms now:

NN 6/2022 and 7/2022 have now w.e.f.18-07-2022*  made edible items taxable @ 5%/12% if these items are pre packaged and labled i.e. items are placed in package, whether sealed or not, carrying  pre determined quantity. The items must be placed in package without the purchaser being present to be called pre packaged. Further package or its label must be required to bear declarations under Legal Meteorology Act to bring it under taxation net. In other words if package is not intended to carry pre- determined quantity or is not required to bear statutory declarations, then gst shall not be imposed.

RCM GST on Residential Houses.

 

Renting of residential dwelling for use as residence is exempt from GST. Residential dwelling rented for use as residence may  be used for purposes other than residence  but that does not wean off the exemption under law. Residential dwelling rented for use other than residence was never exempt and continues to be taxable.  Hence it not the actual use but the terms of  agreement that might decide taxability of residential dwelling.  Law till 17-07-2022 does not make distinction whether residential dwelling is rented to registered person or unregistered person. However vide NN 4/2022 dated 13-07-2022, where residential dwelling  for use as residence is rented to a registered person, exemption from gst shall not be available and gst shall be applicable.

Mandatory online filing of Income tax forms.

 

CBDT (DGIT Systems) vide notification no. 03/2022 dated 16.07.2022 has prescribed the following forms to be filed electronically :

Club Membership Fees

 

Is club membership fees is a capital or revenue expenditure?  

Provisions of the Income Tax Act, 1961

As per section 37(1), “Any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head "Profits and gains of business or profession".

Notification No 3/2022 - Form 10F to be filed electronically

 

Foreign payments are an important part of our business and with Foreign Payments come compliances.

In case of a payment to any of our foreign vendor from STL India, we are required to obtain the documents mentioned below, to analyze the withholding obligation and withheld taxes before making the payment:

Notification No 3/2022 Form 10-IA to be filed electronically

 

As per the Income Tax Act, 1961, in case of person with disability, deduction is allowed u/s 80U and incase of a dependent with disability, deduction is allowed u/s 80DD.

 

“Consideration” for the issue of shares for the purpose of section 56(2)(viib) of the IT Act encompasses the conversion of CCD

 

BACKGROUND

Section 56(2)(viib) of the Income-tax Act 1961 (IT Act) is attracted when a closely held company issues shares at a premium and the consideration exceeds Fair Market Value (FMV). It provides that the difference between the actual consideration and the FMV of the shares or Face value of shares (in case FMV is lower than Face Value) shall be deemed to be the income of such a closely held company and accordingly taxable under the head ‘Income from other Sources’. Apart from the issue of equity shares, the Company can also raise funds through the issue of Preference Shares, hybrid instruments such as Compulsorily Convertible Debentures (CCDs), Compulsorily Convertible Preference Shares (CCPS), Non-Convertible Debentures (NCDs) etc. Whether section 56(2)(viib) of the IT Act gets attracted when the funds are raised through hybrid instruments like CCDs is open to interpretation.

GST Latest summary of Notification and Circulars

 

§  Clause (c) of Section 110 of the Finance Act 2022 through Section 49(10) of the CGST Act, provides for any amount of tax, interest, penalty, fee or any other amount in an Electronic Cash Ledger can be transferred to a distinct person.

§  Extended time for issuing any demand orders for non-fraud cases for the Financial Year 2017-18 upto September 30, 2023.

§  Value of duty credit scrip’s shall be not included in the aggregate value of exempt supplies for the reversal of common credits in respect of inputs or inputs services or capital goods.  

§  A formula amended to consider utilization of ITC on account of inputs and input services on the pro-rata ratio basis.

§  The registered person shall report non-GST supply separately and shall have an option to either separately report his supplies as exempted and nil-rated supply or report consolidated for the two heads in the exempted column.

§  Six-digit HSN code is mandatory for taxpayers having annual turnover in the preceding year upto 5 Cr for both inward and outward supplies and four-digit HSN Code for taxpayers having annual turnover in the preceding year upto 5 Cr.

§  Scope of ITC is being widened and would now be made available in respect of goods or services which are obligatory for an employer to provide to its employees, under any law for the time being in force.

§  Balance in the electronic credit ledger can be used for making payment of any tax under the GST Law

§  Balance in electronic credit ledger cannot be used for making payment of any liability other than tax under the GST Laws.