Synopsis of GST Circulars

Circular No. 207/1/2024-GST I Date: 26-06-2024

Subject: Reduction of Government Litigation - Fixing Monetary Limits for Filing Appeals

Key Points:

GST Circulars pursuant to recommendations of 53rd GST council meeting

 This is to update that Ministry of Finance has recently issued various circulars pursuant to the recommendations/ proposals made in the 53^rd GST council meeting.

India Tax Due Date - July 2024

 

Sr No	Due Date	Related to	Compliance to be made
1	11.07.2024	GST	Filing of GSTR – 1 for the month of June 2024
2	20.07.2024	GST	Payment and Filing the GSTR – 3B for the month of June 2024
3	07.07.2024	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 June 2024. Deposit TDS from Salaries deducted during the month of June 2024 Deposit TCS for collections made under section 206C including sale of scrap during the month of June 2024, if any Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of June 2024, if any
4	31.07.2024	TDS/TCS (Income Tax)	Furnish quarterly statement of tax deducted at source (TDS) and tax collected at source (TCS) for the quarter ended June 2024 in Form 24Q / 26Q / 27Q / 27EQ.
5.	31.07.2024	Income Tax	Filing of Income tax return by non audit cases.

Understanding the Taxation of Global Income for Residents and Non-Residents

Overview of Section 5(1) of the Income-tax Act

Section 5(1) of the Income-tax Act stipulates that the global income of an individual who qualifies as a resident and ordinarily resident in India is subject to taxation in India. This includes income earned both within and outside the country.

Resident Indians Purchasing Immovable Property Outside India Through Loans

 In recent times, there has been a significant rise in interest among Indian residents, particularly the nouveau riche, in acquiring immovable property outside India. The Indian foreign exchange law does allow resident Indians to make such acquisitions. Currently, the prime market for these investments is the United Arab Emirates (UAE). With lenders offering customized financial products, Indian buyers are finding great value in overseas deals compared to the soaring real estate prices in metropolitan cities like Mumbai. However, this enthusiasm for lucrative investment options and accessible financial products may lead to some regulatory oversight under Indian exchange control laws, which could be costly. This article aims to highlight the grey areas that may pose concerns in the near future.

Subject to possible taxation

 “Maybe taxed” terminology used in DTAA:

1. There are instances under the Double Taxation Avoidance Agreements (DTAA)s signed with various countries, where the terminology used is ‘shall be taxed’. In such cases there cannot be any doubt as to the position that the income has to be taxed in that state only.

Non payment of tax due to uncertain legal position is out of the scope of ‘Mis Reporting’

 GE Capital Us Holdings Inc Vs DCIT

Case Number: W.P.(C) 1646/2022 Facts:

Do you under Companies Act.

 When GST ITC is availed and utilised by the Company for meeting its GST Output Liability, then the Statutory Auditor has to make enquiry under section 143(1)(b) of the Companies Act, 2013 and report accordingly. 

·       Remuneration paid to independent directors primarily is considered as "employee benefits" under Ind AS,

Recommendations of 53rd GST council meeting | 22 June 2024

 We wish to update you about various recommendations proposed by the GST Council in its 53^rd meeting held on 22 June 2024. Summary of the same is provided below for ease of your reference:

Key Recommendations made by 53rd GST council meeting held today -

1. Waver of interest and penalty on demand notices issued under section 73 for Fy 17-18, 18-19, 19-20. Applicable in cases where tax is paid entirely by March 2025.

Know all forms required to file before Income Tax returns.

 Before filing your Income Tax Return (ITR) for Assessment Year 2024-25, it's essential to be aware of various forms you may need, based on your income sources and financial transactions during the year. Here are some crucial forms to consider:

Interest liability on Erroneous GST Refund

 Madras High Court (HC) in the case of Razack Trading Company, W.P.(MD) No.15302 of 2022. The Court held that interest is liable to be paid on erroneous GST-ITC refund where ITC was wrongly availed.

 

Kerala HC holds 30 November time limit for claiming ITC applies retrospectively from 1 July 2017

 This Tax Alert summarizes a recent judgement of the Kerela High Court (HC) on the constitutional validity of Section 16(2)(c) and Section 16(4) of the Central Goods and Services Tax Act, 2017 (CGST Act).

TDS on payment to resident contractors and professionals under Sec 194M:

1. Introduced in 2019, Section 194M of the Income Tax Act extends the scope of the payments made by individuals and HUFs not subject to tax audit to resident contractors and professionals.

Documents Required to Apply for NR PAN Card

 Non Resident applicants are required to submit the following documents when applying for a PAN card:

Do you under IND AS?

 Transactions controlled by the Companies Act, 2013 may in most of the cases remain material accounting policy information   

·       ICDS reconciliation in Clause 13 of Form 3CD also gets triggered due to the differences in the accounting policies

CBIC issues guidelines for initiation of recovery proceedings under GST

 This Tax Alert summarizes recent guidelines¹ issued by the Central Board of Indirect Taxes and Customs (CBIC) on initiation of recovery proceedings under the Central Goods and Services Tax Act, 2017 (CGST Act).

Recent ITAT judgements.

 ·       Mumbai ITAT in the case of Mukesh Harilal Mehta held that Exemption U/S 54 cannot be denied merely due to mistake by the developer.   

 

·       In the case of Lupin Limited, Mumbai ITAT held that The difference between the fair market value of the equity shares on the date of vesting of option and the date of exercise of option is an allowable expenditure.   

 

·       Mumbai ITAT, in the case of Khushaal C. Thackersey  wherein the issue before the ITAT was whether the excess amount realized by the Taxpayer on redemption of debentures is in the nature of capital gains or in the nature of interest income under the Indian Tax Laws and it was held that same is IOS.

 

·       No Disallowance shall be made u/s 14A of Income Tax Act when assessee have own funds more than Investments earning Exempt Income: Mumbai ITAT grants relief to macro tech Developers

 

·       Mumbai ITAT in the case of Gopalkrishna Pandu Shetty held that Sec 54 deduction is available when new residential property is purchased in spouse’s name.

 

·       Delhi ITAT in the case of AB Sciex Pte Ltd. held that Since the 𝐈𝐧𝐝𝐢𝐚𝐧 𝐀𝐄 of the foreign company is 𝐚𝐥𝐫𝐞𝐚𝐝𝐲 𝐫𝐞𝐦𝐮𝐧𝐞𝐫𝐚𝐭𝐞𝐝 𝐨𝐧 𝐚𝐫𝐦’𝐬 𝐥𝐞𝐧𝐠𝐭𝐡 𝐩𝐫𝐢𝐜𝐞 by conducting a detailed transfer pricing analysis of the functions performed, assets used and risk assumed, there is 𝐧𝐨 𝐧𝐞𝐞𝐝 𝐟𝐨𝐫 𝐚𝐭𝐭𝐫𝐢𝐛𝐮𝐭𝐢𝐨𝐧 𝐨𝐟 𝐚𝐧𝐲 𝐚𝐝𝐝𝐢𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐫𝐨𝐟𝐢𝐭𝐬 𝐢𝐧 𝐈𝐧𝐝𝐢𝐚.

 

·       In the case of Dhruv Milkose, Delhi ITAT has reiterated that Angel Tax provisions will not be applicable when a subsidiary is issuing shares to its 100% holding company. 

 

·       In another case, Delhi ITAT held that Tax Officer cannot retest allocation methods already accepted by the Transfer Pricing Officer. 

 

·       𝐏𝐚𝐲𝐦𝐞𝐧𝐭𝐬 for use of 𝐥𝐢𝐜𝐞𝐧𝐬𝐞𝐝 𝐬𝐨𝐟𝐭𝐰𝐚𝐫𝐞 products 𝐛𝐞𝐢𝐧𝐠 𝐢𝐧𝐭𝐚𝐧𝐠𝐢𝐛𝐥𝐞 𝐢𝐧 𝐧𝐚𝐭𝐮𝐫𝐞 cannot be taxed as 𝐞𝐪𝐮𝐢𝐩𝐦𝐞𝐧𝐭 𝐫𝐨𝐲𝐚𝐥𝐭𝐲. Same was held by Delhi ITAT in the case of 𝗛𝗼𝗺𝗲 𝗖𝗿𝗲𝗱𝗶𝘁 𝗜𝗻𝘁𝗲𝗿𝗻𝗮𝘁𝗶𝗼𝗻𝗮𝗹 𝗮.𝘀. 𝗖𝘇𝗲𝗰𝗵 𝗥𝗲𝗽𝘂𝗯𝗹𝗶𝗰.    

 

·       Delhi Tribunal in Genus Power Infrastructure Ltd held that If tax liability under MAT [115JB] is higher than income assessed under normal provisions-No reassessment is allowed.

 

·       Amendment in Section 14A cannot have retrospective operation, thus no disallowance can be made if the exempt income does not form part of the total income – Mumbai Tribunal in the case of Teamlease Digital Pvt. Ltd. v. National E-assessment Centre (I.T.A. No. 2101 / Mum /2023) (Relates to AY 2018-19). The Tribunal followed the decision of the Hon’ble Delhi High Court in the case of PCIT vs. Era Infrastructure (India) Ltd (448 ITR 674) while deciding the above issue.

 

·        The phraseology of clause (a) to sub-rule (2) of Rule 11UA read with Explanation (a) to Section 56(2)(viib) do not thrust the requirement of Valuation Report for substantiation of valuation under NAV method. Therefore, No addition can be made when the assessee issue the share at NAV.  Delhi ITAT in case of DCIT VS. Continental Corrugators Pvt. Ltd. 

 

·       𝐍𝐨 𝐝𝐢𝐬𝐚𝐥𝐥𝐨𝐰𝐚𝐧𝐜𝐞 𝐨𝐧 𝐫𝐞𝐢𝐦𝐛𝐮𝐫𝐬𝐞𝐦𝐞𝐧𝐭 𝐨𝐟 𝐬𝐚𝐥𝐚𝐫𝐲 𝐜𝐨𝐬𝐭 by the Branch office to the Head office can be made 𝐛𝐲 𝐢𝐧𝐯𝐨𝐤𝐢𝐧𝐠 𝐒𝐞𝐜𝐭𝐢𝐨𝐧 𝟒𝟎(𝐚)(𝐢) since the 𝐭𝐡𝐞 𝐓𝐃𝐒 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐝𝐮𝐥𝐲 𝐝𝐞𝐝𝐮𝐜𝐭𝐞𝐝 𝐨𝐧 𝐞𝐧𝐭𝐢𝐫𝐞 𝐬𝐚𝐥𝐚𝐫𝐲 𝐩𝐚𝐲𝐦𝐞𝐧𝐭𝐬 to the expats and 𝐝𝐞𝐩𝐨𝐬𝐢𝐭𝐞𝐝 𝐢𝐧𝐭𝐨 𝐭𝐡𝐞 𝐆𝐨𝐯𝐭. 𝐚𝐜𝐜𝐨𝐮𝐧𝐭 𝐰𝐢𝐭𝐡𝐢𝐧 𝐭𝐡𝐞 𝐩𝐫𝐞𝐬𝐜𝐫𝐢𝐛𝐞𝐝 𝐭𝐢𝐦𝐞 𝐥𝐢𝐦𝐢𝐭 – 𝐷𝑒𝑙ℎ𝑖 𝑇𝑟𝑖𝑏𝑢𝑛𝑎𝑙 𝑖𝑛 𝑡ℎ𝑒 𝑐𝑎𝑠𝑒 𝑜𝑓 𝐴𝑦𝑒𝑠𝑎 𝐼𝑛𝑔𝑒𝑛𝑖𝑒𝑟𝑖𝑎 𝑌 𝐴𝑟𝑞𝑢𝑖𝑡𝑒𝑐𝑡𝑢𝑟𝑎 𝑆.𝐴

 

·       The ITAT Ahmedabad held that for NPS, here is no date prescribed in PFRDA Act, 2013 as to the due date when payment is required to be made to the NPS Account so question of disallowance u/s 36(1)(va) does not arise. 

 

·       The Kolkata bench of the ITAT ruled that passing intimation under Section 143 of the Income Tax Act, 1961 without affording the taxpayer a reasonable opportunity is deemed unlawful, opposing the action of the Assessing Officer (AO).    

 

·       In the case of ITC Limited, the Kolkata ITAT held that  Liquidated damages received for delay in supply of assets are capital receipts.

 

·       The ITAT Bangalore ruled in favor of Plural Sight LLC in a significant decision regarding the taxation of subscription revenue from Indian clients. The dispute centered around whether the receipts from online video sales should be taxed as 'Royalty' under the India-USA Double Taxation Avoidance Agreement (DTAA). Plural Sight LLC challenged the Assessing Officer's decision, and the ITAT carefully analyzed the nature of the transactions, the business model, and relevant legal provisions. The Tribunal interpreted the term 'Royalty' in the DTAA and concluded that the subscription fees did not constitute payment for the use of copyright, thus not falling under 'Royalty'. This ruling clarifies that subscription revenues from online video sales to Indian clients are not taxable as 'Royalty', setting a precedent for similar cases and emphasizing the importance of understanding digital transactions in international tax agreements.

 

·       The Bangalore bench of the ITAT held that deduction under section 36(1)(va) of the Income Tax Act, 1961 is not allowable if employees’ contributions are not paid within due dates specified under Provident Fund (PF) Act. Shri. Trimbak Konher Patil.

·       In another case, the Bangalore ITAT allowed section 54F exemption on interior decoration cost.

·       Bangalore ITAT in the case of Amazon held that Warranty Costs Are Not Part Of AMP Expenditure.     

 

·       Amritsar Tax Tribunal held that such factual mistakes and errors in the dates mentioned on the notice, and that of date of issue and date of service discussed in the assessment order rendered the basic foundation of the assessment erroneous and void ab-initio