GSTR-9 & GSTR -9C more simplified & last dates of submission extended

The Government has decided today to extend the due dates of filing of Form GSTR-9 (Annual Return) and Form GSTR-9C (Reconciliation Statement) for

Financial Year 2017-18 to 31 st December 2019 and for Financial Year 2018-19 to 31 st March 2020.

The Government has also decided to simplify these forms by making various fields of these forms as optional.

Central Board of Indirect Taxes & Customs (CBIC) today notified the amendments regarding the simplification of GSTR-9 (Annual Return) and GSTR-9C (Reconciliation Statement) which inter-alia allow the taxpayers to not to provide split of input tax credit availed on inputs, input services and capital goods and to not to provide HSN level information of outputs or inputs, etc. for the financial year 2017-18 and 2018-19.

CBIC expects that with these changes and the extension of deadlines, all the GST taxpayers would be able to file their Annual Returns along with Reconciliation Statement for the financial years 2017-18 and 2018-19 in time. Various representations regarding challenges faced by taxpayers in filing of GSTR-9 and GSTR-9C were received on which by the Government has acted in a very responsive manner.

It may be noted that earlier the last date for filing of GSTR-9 and GSTR-9C for Financial Year 2017-18 was 30 th November 2019 while that for Financial Year 2018-19 was 31 st December 2019. Notifications implementing the decisions as above have been issued today

Make Inter unit bank payment to claim ITC.

Make  Inter unit bank payment to claim ITC.

Following had been ruled recently by the Tamil Nadu Authority for Advance Ruling ("AAR") for the applicant, M/s. Sanghvi Movers Limited.

The issue for consideration before AAR was to examine the admissibility of Input Tax Credit ("ITC") wherein the underlying supply was between distinct persons. Despite the fact that GST law acknowledges such supplies to be without consideration, AAR held that branch office will not be eligible for the ITC on services provided by head office as it was not paying full consideration for the services provided by the head office.  

Incorrect collection of GST: Way out

Given the federal structure, India has adopted a dual model of GST with simultaneous levy of GST by the Central and the State. For intra-state transactions, CGST & SGST shall be levied by the Centre and the state respectively; and for inter-state transaction, IGST shall be levied by the Centre and it shall be adjusted among the States internally.   

Whether a fresh claim can be made in return filed under section 153 A , which was not claimed in original return ?

Hon'ble Bombay High Court in the case of CIT vs B.G Shirke Construction Technology Pvt Ltd [2017] 79 taxmann.com 306 (BOM) held that:

"A return filed u/s 153A is a return furnished u/s 139 and therefore, provisions of the Act which apply to return filed in regular course u/s 139(1), would also continue to apply in case of return filed u/s 153A."  

Tax Alert: Delhi Tribunal admits taxpayer’s additional ground on applying treaty rate to dividend distribution tax

Background

Indian Companies are required to pay Dividend Distribution Tax (DDT), currently at an effective rate of 21.71%, under section 115-O of the Income-tax Act, 1961 (the IT Act) in respect of dividend declared, distributed or paid by them. Under most of the Tax Treaties, taxation of dividends [Article 10(2) of OECD model treaty] is restricted to 5%/10%/15% of the gross amount of dividend. In light of this, the Indian Companies are exploring arguments to cap the rate of DDT, in respect of dividends paid to their overseas investor(s), at the Tax Treaty rate (i.e. 5%/10%/15% as the case may be). In this regard, recently, Delhi Tribunal had an occasion to consider whether an additional ground raised for applying treaty rate to dividend distribution tax rate should be admitted or not. We, at BDO, have summarized this ruling and provided our comments on the impact of this decision.  

ITAT power to increase demand.

Introduction

 1.    A controversy has cropped up due to conflicting decisions of the Hon'ble Karnataka High Court in Karnataka  Instrade  Corporation Ltd.

v. Asstt. CIT [2015]  62  taxmann.com  239/235  Taxman  374, wherein it was  held  that  where  a  claim  of  assessee  is  allowed  by  the  AO,  the Tribunal    does    not    have    power    to    withdraw    such    claim    and, consequently,  enhance  assessed  income.  But  in  the  other  decision  in Fidelity   Business   Services   India   (P.)   Ltd.   v.   Asstt.   CIT   [2018]   95 taxmann.com 253/257 Taxman 266 (Kar.), it was held that "The higher

and final appellate authority under the Act cannot be intended by the

Madras High Court allows accumulated credit of cesses from CENVAT regime to be transitioned to GST

Facts The issue involved whether unutilised and accumulated CENVAT credit of the cesses (namely Education Cess, Senior and Higher Education Cess and Krishi Kalyan Cess collectively referred to as “cesses”) can be transitioned and subsequently utilised for paying GST. The claim for transition was rejected on the ground that the Explanations to section 140 of the CGST Act, 2017 (CGST Act) do not include cesses as “duties and taxes” eligible to be carried forward to GST. The taxpayer approached the Madras High Court via a writ with a prayer to quash the order of rejection and for direction towards carry forward of cesses.1 High Court’s decision The Madras High Court upon examining a plethora of judgements and while referring mainly to the Supreme Court and Delhi High Court’s decisions in Eicher Motors2 and Cellular Operators Association of India3 respectively, held that the credit of the cesses could be transitioned and utilised for payment under the GST. The High Court decided in favour of the taxpayer, challenging the denial of carry forward of credit of cesses for the following reasons: The intention of the Government, while introducing GST, was to provide a seamless model for transitioning all CENVAT credits hitherto availed by taxpayer under the erstwhile law by subsummation of historical taxes. Credits continue to be available till such time that they are expressly stated to have lapsed by the statute. Additionally, the Revenue was not able to provide any mention of a policy document by Central Board of Indirect Taxes and Customs indicating complete lapse of such cess credit. Availment of credit and the utilisation thereof is a substantive right of the taxpayer and should be denied only in the event of an express legal prohibition to this effect. Sections 140(1) and 140(8) of the CGST Act allow transition of credit carried forward in a return furnished under the erstwhile law, subject to fulfilment of certain conditions. The credit of cesses reflected in the return cannot be denied in the event all such conditions are satisfied by the taxpayer. TBM   comments This decision of the Madras High Court is based on the principles of vested rights accruing to a taxpayer to avail credit and the seamless flow of credit as envisaged under GST, in the absence of specific provisions providing for lapse of credit. However, the judgment does not clearly examine the implication of Explanation 3 to section 140 of the CGST Act that came into force from 1 February 2019 with retrospective effect from 1 July 2017. Explanation 3 categorically states that the credit of cesses would not be allowed as transitional credit under GST. Accordingly, the Revenue could still continue to deny transition of credit of the cesses and further litigate this issue.

1 Writ Petition No.4773 of 2018 & WMP Nos.5916 & 13148 of 2018 2  Eicher Motors Limited & Anr. v. Union of India [1999] (106) E.L.T. 3 (SC) 3  Cellular Operators Association of India & Others v. Union of India [W.P (Civil) No. 7837 of 2016]

G ST MONTHLY UPDATE :

1.  . Brief of Recent Circulars Under GST:-

(A)   A) Clarification on GST rates & classification of goods:

Ind AS Technical Facilitation Group Clarification Bulletin 22

Ind AS Technical Facilitation Group (ITFG) of Ind AS Implementation Committee has been constituted for providing clarifications on timely basis on various issues related to the applicability and /or implementation of Ind AS under the Companies (Indian Accounting Standards) Rules, 2015, and other amendments finalised and notified till March 2019, raised by preparers, users and other stakeholders. Ind AS Technical Facilitation Group (ITFG) considered some issues received from members and decided to issue following clarifications¹ on October 14, 2019:

Changes in Job Work rates – Differently Decoded

Effective from 1st October 2019 vide Notification no.20/2019-Central Tax (rate) dated 30th September 2019, a few entries have been inserted/amended with regard to job work rates in the primary rate Notification no. 11/2017-Central tax (rate) dated 28th June 2017. The extract of all the entries within Heading 9988 as amended are given below:  

RECENT IN TAX JUDICIARY

1.             Can an assessee who has set up a new industrial undertaking and availed deduction@100% of profits under section 80-IC for the five years, once again claim deduction@100% of profits on the basis of having undertaken substantial expansion thereafter?

CLASSIC BINDING INDUSTRIES [2018] (SUPREME COURT)

GST Best Judgement

Why best judgement assessment on failure to file return under GST is more dangerous?

It has been two years since the inception of GST and there has been a steady decline in compliance of GSTR-3B return filing from 92.6% in August 2017 to just 71.25% in November 2018.  This article analyses  the legal consequences of non filing of returns.    

Managing GST for cross- border transactions

Cross-border transactions are intricate and complex in terms of indirect tax conse- quences in India. It is important to under- stand and analyse the applicability of goods and services tax (GST) on cross-border transactions. This is an analysis of the GST implications of some pertinent situations and advance rulings.   

High Court provide relief for pending tax refund

Background

Over the past few years, taxpayers have faced multiple challenges in obtaining income-tax refunds, in part due to tight fiscal situation of the Government treasury. In the recent past, there have been several High Court orders1 (especially the Bombay High Court) pursuant to writ petitions filed by taxpayers across the country for grant of tax refund claimed in the Return of Income (‘ROI’).  

Digital Service Tax: Overview of the progress of implementation by EU Member States

For several years there have been efforts at international, EU and national levels to reform taxation to ensure that profits are taxed where economic value is created. Most recently this work has centred on the digital economy but it has its roots in the scrutiny of tax planning strategies used by multinationals that operate across multiple jurisdictions.

Are you ready for E Assessment.

Landscape of tax assessment / scrutiny is going to change dramatically, as age-old assessment procedure is all set to transform with introduction of 'E-assessment Scheme, 2019'. Faceless assessment was announced by Hon'ble Finance Minister in her Budget speech on 5th July 2019 and based thereon E-assessment scheme was notified on 12th September 2019. India Government is trying its best to infuse greater efficiency and transparency in the assessment process by introducing e-assessment procedure in phased manner with objective to reduce the interface between the tax department and the taxpayers.   

Decriminalise the Offences under Income tax.

Apart from levy of interest & penalty for various defaults by the taxpayer, the Income-tax Law also contains provisions for launching prosecution for offences committed by the taxpayer.  The idea of undergoing imprisonment if convicted of offences can be a strong deterrent from brazen tax evasion and non- compliance, but sometimes the tax department use this to harass citizen and government should make sure that bureaucrats should not misuse this special power of law on citizen.

New Tax Rate: Facts required to be considered.

1.   The Taxation Laws (Ordinance), 2019 has been promulgated by the President of India to amend the Income-tax Act, 1961 and the Finance (No. 2) Act, 2019. The Ordinance has introduced two new corporate tax rates, i.e., at 15% and 25% for the domestic companies. However, the benefit of reduced tax rate shall be available only when total income of the company is computed without claiming specified deductions, incentives, exemptions and additional depreciation available under the  Income-tax  Act.  

INSIGHT: The Arm’s-Length Standard Is Not the Problem

Next year is the 85th anniversary of the adoption of the arm’s-length standard (ALS) by the U.S. government as the norm to be used for pricing transactions among related parties for the purpose of calculating their U.S. corporate income tax (CIT).   

I mportant Clause in TAR Vs ITR

S No.	Clause in TAR	Particulars	Schedule in ITR
1	Form 3CA	In Statutory Audit was carried out by other Audit Firm, mention statutory audit was conducted by "M/s" otherwise "US"	NA
2	3CD-9(b)	Change in Partners / Members	PartA-General 2
3	3CD-10	Nature of Business, Change in Business	PartA-General 2
4	3CD-12	Presumptive Profits	PartA-P&L, Schedule BP
5	3CD-13e	Adjustmemts to ICDS	Schedule ICDS
6	3CD-14	Valuation of Stock U/s 145A	Schedule Part A - OI
7	3CD-16	Amount not credited to P&L A/c a.  Items falling U/s 28 b.  Proforma Credits, drwbacks, refund c.  Escalation claims, Capital Receipts etc	Schedule Part A - OI
8	3CD-18	Depreciation U/s I T Act	Schedule BP, DPM, DOA (Compare last year closing WDV with TAR and ITR)
9	3CD-19	Amounts admissible U/s 32AC - 35E	Schedule BP, ESR, RA
10	3CD-20	Amounts admissible U/s 36(1)(va) (Employee contribution to PF, ESI)	Schedule Part A - OI
11	3CD-21(a)	In TAR, it is only a disclosure. Don’t try to link all disallowance U/s 37 in ITR	Schedule Part A - OI
12	3CD-21(b)	Details of payments on TDS not deducted, TDS unpaid Vs Clause 34(a) of TAR	Schedule Part A - OI
13	3CD-21(c)	Salary, commission, interest paid to partner U/s 40(b)	Schedule Part A - OI
14	3CD-21(d)	Disallowance U/s 40A(3)/(3A)	Schedule Part A - OI
15	3CD-21(e)	Disallowance U/s 40A(7)	Schedule Part A - OI
16	3CD-21(f)	Disallowance U/s 40A(9)	Schedule Part A - OI
17	3CD-21(h)	Disallowance U/s 14A	Schedule Part A - OI
18	3CD-21(i)	Disallowance U/s 36(1)(iii)	Schedule Part A - OI
19	3CD-23	Disclosure of PAYMENTS made to persons covered U/s 40A(2)(b) (Have to disclose all payments made to above parties and it is not limited to expenses)	PartA-BS, Schedule AL (Verify with Related Party Disclosures in Financials)
20	3CD-24	Deemed Profits U/s 32AC, 32AD, 33AB, 33AC, 33ABA	Schedule Part A - OI Schedule BP
21	3CD-25	Deemed Profits U/s 41	Schedule Part A - OI
22	3CD-26(i)(A)(a)	Disallowed U/s 43B in earlier years and paid in current year	Schedule Part A - OI
23	3CD-26(i)(A)(b)	Disclose amounts disallowed U/s 43B in earlier years and not paid in current year	Schedule Part A - OI
24	3CD-26(i)(B)(a)	Disclose payments related to current PY and paid in current PY - U/s 43B	Schedule Part A - OI
25	3CD-26(i)(B)(b)	Disclose payments related to current PY and UNPAID upto filing of ROI - U/s 43B	Schedule Part A - OI
26	3CD-26(i)(A)(a)	Disallowed in earlier years and paid in current year	Schedule Part A - OI
27	3CD-27(a)	Provide details of ITC as per books of accounts	NA
28	3CD-27(b)	Details of Prior Period Income / Expenses	Schedule Part A - OI
29	3CD-29B(a)	Income U/s 56(2)(x)	Schedule OS
30	3CD-30	Amounts borrowed / repaid U/s 69D	Schedule OS
31	3CD-32(a)	Details of Brought Forward Losses	Schedule CFL, UD
32	3CD-32(b)	Change in shareholding U/s 79	PartA-General 2
33	3CD-32(c)	Losses in Speculative Business U/s 73	Schedule BP, BFLA, CFL
34	3CD-32(d)	Losses in Specified Business U/s 73A	Schedule BP, BFLA, CFL
35	3CD-32(e)	Deemed Speculative Business U/s 73	Schedule CFL, UD
36	3CD-33	Deduction U/s Chapter VIA, Section 10A, 10AA	Schedule 10AA, 80G, 80GGA, 80, VIA
37	3CD-34a,b	Details of payments on TDS not deducted, TDS unpaid Vs Clause 34(a) of TAR (verify with Financials, TDS returns)	NA
38	3CD-34c	Interest paid U/s 201(1A), 206C(7)	Schedule Part A - OI
39	3CD-35	Quantitative details of Inventory	Schedule Part A - OD
40	3CD-36	Details of Distributed Profits U/s 115O	Schedule DDT
41	3CD-36A(a)	Details of deemed dividends U/s 2(22)e	Schedule AL
42	3CD- 40	Details of various ratios	PartA-Trading A/c, P&L