Benefits for Senior Citizens Under Income Tax Act 1961- At a Glance

 

 

·         Senior Citizen must be of the age of 60 years or above but less than 80 years at any time during the respective year

·         Very Senior Citizen must be of the age of 80 years or above at any time during the respective year.

CBIC notifies lower turnover threshold for e-invoicing and Quarterly Return Monthly Payment scheme effective 1 January 2021

 

This Tax Alert summarizes recent notifications ^[1] and circular ^[2] issued by the Central Board of Indirect Taxes and Customs (CBIC) under the Goods and Services Tax (GST).

  

The key changes are:

  

Finance Minister announces Diwali bonanza for developers and new home buyers

 

 

Relevant provisions of Income-tax laws (ITL):

 

·         Where any person has received consideration for transfer of an immovable property^[1], being land or building or both, and such consideration is less than the value^[2] adopted or assessed by authorities for the purpose of stamp duty, for computing profits and gains on transfer, the value adopted by the authorities is deemed to be the consideration (deemed consideration provision).

Key changes and extensions notified with respect to several GST compliances – Notifications issued

We wish to update you on the recent notifications issued by Central Board of Indirect Taxes and Customs (“CBIC”) which have brought about several changes to the existing GST compliance system.

The summary of the notifications is as below:

 

·                E-invoicing shall be applicable from 1 January 2021 for registered tax payers whose turnover exceeds INR 100 crores in any preceding financial year from 2017-18 onwards (ref – Notification No. 88/2020 – Central tax). 

·                Introduction of Central Goods and Services Tax (Thirteenth Amendment) Rules, 2020: The rules have introduced an advanced version of the existing GST return filing system and brought about a series of changes in furnishing Form GSTR 1, Form GSTR 3B and other specified returns under the GST law. (ref – Notification No 82/2020 – Central Tax). Following are the key highlights of the notified changes:

 

-   New scheme prescribed for registered persons furnishing quarterly Form GSTR 1 in terms of reporting of outward supplies using an invoice furnishing facility (‘IFF’), manner of opting for furnishing quarterly return under the new scheme and monthly payment of tax;

 

-   Following details shall be made available to recipients in Form GSTR 2A:

 

·         Details of outward supplies reported by suppliers, including non-resident taxable persons;

·         Invoices furnished by an ISD;

·         TDS and TCS reported by deductors and e-commerce operators;

·         IGST paid on import of goods / goods brought in DTA from an SEZ unit or a SEZ developer under a bill of entry;

-   Notified Form GSTR 2B along with its format (Rule 60(7) of CGST Rules, 2017);

 

-   Notified due dates for furnishing Form GSTR 3B for categorized registered tax payers for the period October 2020 to January 2021;

 

·                Extension in time limit for furnishing monthly Form GSTR 1 till 11^th of the subsequent month and quarterly Form GSTR 1 till 13^th of the month succeeding the said quarter w.e.f. 1 January 2021 (ref – Notification No. 83/2020 – Central tax). 

·                New scheme introduced for registered persons furnishing returns on a quarterly basis in terms of exercising the option to file quarterly returns, mechanism of filing outward supplies and monthly payment of tax thereon (ref – Notification No. 84 & 85/ 2020 – Central Tax). 

·                Rescinds Notification No.76/2020 – Central tax dated 15 October 2020 which provided for due dates for filing Form GSTR 3B for the tax periods from October 2020 to March 2021 since the said due dates have been re-notified vide Notification No 82/2020 – Central Tax (ref – Notification No. 86/ 2020 -Central Tax);

·                Extension in time limit for furnishing declaration in Form ITC – 04 in respect of goods dispatched to / received from a job worker, during the period from July 2020 to September 2020 till 30 November 2020. Further, the extension in time limit is provided with a retrospective effect from 25 October 2020 (ref – Notification No. 87/2020 – Central tax). 

Surcharge on Dividend Income of Resident Individual-AY 21-22

 

Finance Act 2019 introduced the enhanced surcharge on Individuals (Resident or Non-resident), ranges from 10% to 37%, and through other amendments, the surcharge on Capital Gains taxable u/s 111A and 112A was restricted to 15%. In view of distinct rate of taxation of capital gains taxable u/s 111A and 112A, the separate surcharge amount can be computed on

Section 206C(1H) : TCS on Sale of Goods

Section 206C of the Income Tax Act provides for the collection of tax at source (TCS) on the business of trading in alcohol, liquor, forest produce, scrap, etc. In order to widen and deepen the tax net, two new sub-sections (1G) and (1H) to section 206C has been inserted by the Finance Act 2020 with effect from 1^st October 2020.

Taxation for Individual/HUF (Resident or Non-resident) Opting for taxation under Section 115BAC

a)      Concessional Tax rates

Total Income	Tax rate
Upto Rs. 2,50,000	NIL
From Rs 2,50,001 to Rs 5,00,000	5%
From Rs 5,00,001 to Rs 7,50,000	10%
From Rs 7,50,001 to Rs 10,00,000	15%
From Rs 10,00,001 to Rs 12,50,000	20%
From Rs 12,50,001 to Rs 15,00,000	25%
Above 15,00,000	30%

 

b)      Conditions to be full-filled for availing option u/s 115BAC

Allowability of Sec. 54 exemption if amount spent towards residential house after due date prescribed in Sec. 139(1)

 

Section 54 of the Income-tax Act, 1961 ("Act") provides for exemption of capital gains arising to a specified assessee from transfer of a long- term   capital   asset   to   the   extent   capital   gains   are   invested   in   a residential  house  within  a  prescribed  period.  The  said  exemption  is available if the residential house is purchased or constructed within the prescribed  period  of  one  year  before  or  two  years  after  (in  case  of purchase);  or  three  years  after  (in  case  of  construction)  the  date  of transfer of the long-term capital asset.

Invariably, a person is not able to utilize the entire amount of capital gains on or before the due date of filing of return for the year in respect of which such capital gains arose. Such a situation is addressed by sub- section  (2)  by  providing  for  deposit  of  unutilized  funds  in  a  Capital Gains Account Scheme before the prescribed date so that an assessee may  not  lose  upon  the  exemption  of  unutilized  funds.  Section  54(2) reads as under:

Government invites data from exporters for RoDTEP scheme

 

The Union Cabinet had approved a scheme for Remission of Duties and Taxes on Exported Products (RoDTEP) to boost exports and employment generation in various sectors in March 2020. It was announced that as and when the rates under the RoDTEP scheme were announced for a tariff line/item, the benefits under the Merchandise Export from India Scheme (MEIS) on such tariff line/item shall be discontinued.

GST on Legal Services Provided by Advocates

 

Meaning of Legal Services Prior to Corrigendum dated 25th Sep 2017, "Services supplied by an individual advocate including a senior advocate by way of representational services before any court, tribunal or authority, directly or indirectly, to any business entity located in the taxable territory, including where contract for provision of such service has been entered through another advocate or a firm of advocates, or by a firm of advocates, by way of legal services, to a business entity."

TDS on Rent of Casual Accommodation

 

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The Income Tax Appellate Tribunal (ITAT), Mumbai Bench held that TDS cannot be deducted on the rent if the accommodation services were taken on a casual basis. The assessee, Dadiba kali Pundole Esplanade House is engaged in the business of auctioning fine and decorative arts, promoting, publishing, documenting, executing, and selling arts. The assessee filed its return of income declaring his total income, which was processed under section 143(1) of the Act. Thereafter, the case of the assessee was selected under scrutiny and statutory notices were issued and served upon the assessee. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has paid Rs.4,68,543 towards rent of hotel accommodation to Royal Bombay Yacht Club on which no TDS was deducted. Accordingly, a show cause was given to the assessee as to why the same should not be disallowed under section 40(a)(ia) of the Act for non- deduction of Tax Deducted at Source. The assessee also submitted that no single payment was made in excess of Rs.1,80,000 at any point in time. The assessee also referred to Circular No.5 dated July 30, 2020, issued by CBDT, wherein it has clarified the provisions relating to tax deduction at source regarding changes introduced through Finance Act, 1995. The assessee also submitted that in the said Circular the Board clarified that the TDS is applicable to the payments made by persons other than individual and HUF for hotel accommodation taken on a regular basis which will be in the nature of rent would be subject to TDS under section 194-I of the Act. The AO disallowed and added the same under section 40(a)(ia) of the Act for non-deduction of TDS. The CIT(A) confirmed the addition by holding that the assessee has paid accommodation charges for the hotel accommodation which is on a regular basis from the club without deduction of TDS at source. The two-member bench headed by the Vice- President, Mahavir Singh observed that the accommodation was booked by the assessee in the club not on a regular basis but on casually and occasionally as and when the foreign consultants visited the assessee in connection with the assessee’s business. “We are quite convinced with the arguments of the learned Counsel that this accommodation is occasional/ casual as no specific accommodation is earmarked and the same is made available to the assessee on the availability basis,” the tribunal noted. Therefore, the tribunal while setting aside the order passed by CIT(A) held that the Circular has very clearly mentioned that the provision of section 194(I) is applicable where the accommodation is taken on a regular basis, which means that a specific accommodation is earmarked to be let out for the specific period but in the present case the facts are different

Government prescribes measures for timely faceless assessment under Customs

 

This tax alert summarizes a recent circular issued by the Central Board of Indirect Taxes and Customs (CBIC) prescribing measures to resolve issues impacting the pace of faceless assessments

Bangalore Tribunal explains approach for domestic transfer pricing in case of profit-linked tax holiday qualifying units

 

 

This Tax Alert summarizes a decision of the Bangalore Income Tax Appellate Tribunal (Tribunal), dated 5 October 2020, in the case of Wipro Limited (Taxpayer) on the issue of application of domestic transfer pricing (TP) provisions while computing profits of eligible units qualifying for profit-linked tax holiday under the Income Tax Act, 1961 (ITA).

Key takeaway from the Companies (Amendment) Act, 2020

 

The Government had introduced the Companies (Amendment) Bill 2020 in the Lok Sabha on March 17, 2020 and now the bill has been passed in the both houses of the Parliament. The key objective of the Amendment Act, 2020 is to decriminalise various offences, to declog National Company Law Tribunal (NCLT) Act and to provide further ease of doing business for corporates. The amendment legislation was approved by the Union Cabinet on March 4, 2020 and President passed it on Sept 28, 2020. The provisions in the Act will become effective from time to time after the issue a notification/s. The key amendments proposed in the Act are discussed hereunder:

CBIC relaxes applicability of e-invoice and defers dynamic QR code for B2C invoices under GST

 

 

This Tax Alert summarizes recent notifications and a Press Release^[1] issued by the Central Board of Indirect Taxes and Customs (CBIC).

 

The key changes are:

·         Invoice issued by a person during October 2020 without obtaining Invoice Reference Number (IRN) shall be deemed to be valid if IRN for such invoice is obtained within 30 days from the date of invoice. Further, penalty in such cases shall be waived.

·         Requirement of dynamic Quick Response (QR) Code on an invoice issued to an unregistered person (B2C invoice) has been deferred till 1 December 2020.

·         If the aggregate turnover of the person in any of the preceding financial year from FY 2017-18 onwards exceeds INR500 crores, they are required to issue e-invoice for B2B transaction or provide dynamic QR code on invoice for B2C transaction.

·         E-invoicing will be required for export transactions. Earlier, it was required only in respect of supply of goods or services made to a registered person.

·         Central Goods and Services Tax Rules, 2017 have been amended to provide that:

o    In case a registered person is required to issue e-invoice, the invoice shall contain QR code (having embedded IRN in it).

o    The Commissioner may exempt a person from issuance of e-invoice for a specified period subject to such conditions and restrictions as may be specified.

o    For verification by proper officer, invoice with QR code (and embedded IRN) can be produced electronically in lieu of physical copy of such invoice. 

 

Supply of common administrative services by HO to other units leviable to GST: Haryana AAR

 

 

Summary

The Haryana Authority for Advance Ruling (AAR), in a recent case, has held that the services supplied by a head office to its other units/offices by way of performing activities, such as accounting, marketing support, administrative support, IT support, sales planning, training, policy formation, is leviable to GST. 
 

TCS ON SALE OF GOODS.

 

Applicability:

 

All Seller of goods (Seller of Services not covered) whose turnover (Sales) during the preceding previous year i.e. FY 2019 – 2020 is more than INR 10 Crores, they have to collect the tax (TCS) at the time of raising of invoices to the buyer and pay such tax (TCS) on receipt of payment from the buyer to the government exchequer w.e.f. 1st October 2020. This provision would be applicable only after threshold exemption limit of INR 50 Lakhs sale to each buyer of the goods.

This provisions would not be applicable if seller sells the goods to –