Department of Commerce issues clarification on newly inserted Rule 11B of SEZ Rules

 This Tax Alert summarizes a recent instruction issued by the SEZ Division, Department of Commerce, clarifying various concerns relating to Rule 11B of the Special Economic Zone (SEZ) Rules, 2006. The said rule provides for setting up of non-SEZ Information Technology (IT)/ IT Enabled Services (ITES) units in IT/ITES SEZs.

HC upholds validity of provisions restricting ITC where supplies are taxed under RCM

 This Tax Alert summarizes a recent judgement of the Delhi High Court (HC) ^[1] dealing with the issue of denial of input tax credit (ITC) where supplies are taxed on reverse charge basis under both Service tax and Goods and Services Tax (GST).

SEBI’s circular on Standardization of Private Placement Memorandum (PPM) Audit Report

Vide recent circular dated April 18, 2024, the Securities and Exchange Board of India (SEBI) mandates Alternative investment Funds (AIFs) to carry out an annual audit with the PPM and submit the audit report to the Trustee, Board of Directors and the Designated Partners of the AIF and SEBI within six months from the end of the financial year.

Understand Slump Sale

1. What is slump sale?

Slump sale also referred as business transfer is where the assessee transfers the entire undertaking/ division for lumpsum consideration without assigning value/ selling price of individual asset.

CBDT Circular on TDS Demand due to PAN Aadhar Linking.

The recent initiative by the Income Tax Department is a commendable step forward. It entails that no demands will be made in instances where the Tax Deducted at Source (TDS) was under-deducted by the deductor due to the non-linkage of PAN (Permanent Account Number) and Aadhar by the deductee. Moreover, if the transaction is recorded by March 31, 2024, and the PAN of the payee becomes active by May 31, 2024, then there will be no obligation to deduct TDS at a higher rate.

Amendment of BE on Payment of IGST for Advance Authorisation Default

 This is to update you about an important decision by Kerala Hon’ble High Court (HC) in the case of Travancore Cocotuft Private Limited v. DC,DGGI ,2024-VIL-344-KER-CU. The Court held that where IGST along with interest is paid on Advance Authorisation (‘AA’) default, customs must amend Bill of Entry (‘BE’) thereafter.

Taxability of online games

Introduction:

1. Taxability of online winnings before the introduction of section 115BBJ of the Income Tax Act and section 194BA of the Income Tax Act, was governed by section 115BB of the Income Tax Act – taxability of income from lottery, crossword puzzles, etc. and section 194B of the Income Tax Act– TDS on income from lottery, crossword puzzles, etc.

Impact of Supreme Court Judgement on Political Contributions

1. The Supreme Court had delivered a seminal judgement in the case of Association for Democratic Reforms & Anr v/s Union of India & Ors. declaring Section 182(3) of the Companies Act (as amended by Section 154 of the Finance Act 2017) violative of Article 19(1)(a) and unconstitutional.

RBI CIRCULAR ON AIF

 On December 19, 2023, the Reserve Bank of India (“RBI”) issued a circular (“Original Circular”) on investment in AIFs to address regulatory concerns w.r.t. investments made by banks, financial institutions, nonbanking financial companies (“Regulated Entities”/“REs”) in units of AIFs, during its regular investment operations. In order to address concerns on the possible evergreening through AIF route, the Original Circular aimed at clarifying that REs shall not invest in any scheme of AIF which has downstream investments either directly or indirectly in a debtor company of RE, and accordingly introduced further clarifications. However, many businesses in the industry raised concerns regarding difficulties in implementation of the Original Circular. Resultantly, some RE’s felt compelled to sell their interests in AIFs prematurely.

Know Form 10-IEA.

 Form 10-IEA is now available for filing, giving taxpayers the opportunity to choose the old tax regime for the financial year 2023-24. This is a significant decision that can impact your tax liabilities, so it's essential to understand the process and act promptly.

Here's what you need to know:

What is Form 10-IEA: Form 10-IEA provides taxpayers with the option to choose between the new and old tax regimes. The default regime is the New Tax Regime, but taxpayers who prefer the old regime must file Form 10-IEA to exercise this choice.

Mauritius tax treaty amended - Principal Purpose Test introduced

 Earlier this year, the Mauritius Government approved the amendment to the India – Mauritius tax treaty, aligning it with the proposal of the Organization for Economic Co-operation and Development (OECD) on the minimum standards of Base Erosion and Profit Shifting. Although the Protocol amending the tax treaty was signed on March 7, 2024, the text of the Protocol has now been made public (a copy of the same is attached herewith for your ready reference). An official notification in this respect is anticipated to be issued shortly.

Eligibility for GST Input Tax Credit (ITC) related to expenses on IPO/Bonus/Right Issues:

An eminent concern within the GST framework pertains to the entitlement of Input Tax Credit (ITC) concerning expenditures associated with Initial Public Offerings (IPOs), Bonus Issues, or Right Issues by either Listed Companies or those endeavoring to secure listing.

Electronic Furnishing of APA, MAP and Safe Harbor applications

 Central Board of Direct Taxes (CBDT) vide its notification no. 01/2024, dated 26^th Feb 2024 (Notification) has provided for the electronic filing of the applications for APA, MAP and Safe harbor. As per the Notification, following forms shall be filed online, on the Income tax portal, with effect from April 1, 2024. All the forms filed prior to 01^st April 24 shall not be impacted.

 

Sr No.	Form	Description
	3CED	Application for an Advance Pricing Agreement
	3CEE	Application for withdrawal of APA request
	34F	Form of application for an assessee, resident in India, seeking to invoke mutual agreement procedure provided for in agreements with other countries or specified territories.
	3CEFA	Application for opting for Safe Harbour

 

These forms are appearing on Income Tax portal under the tab “Income Tax Forms”. Accordingly, please make sure to electronically file the above Forms as per the updated guidelines.

 

Multiple representations were made to the government, for many years, to allow electronic filing of these applications so as to reduce the paperwork and for efficient processing of the applications. Thus, electronic filing is expected to assist in expediting the filing process.