“We can’t supply the material” – a shock given to the managing director of a leading pharmaceutical company which supplies lifesaving drugs to all big hospitals in the country. The reason – GST registration was cancelled, and e-way bills cannot be generated. The company has no clue, nor received any notice of any default or department intention to cancel the registration. The business so critical to healthcare services in the country has come to a standstill. What suddenly happened?
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:
1.
Through Finance Act, 2020, sub-section (1H) in section
206C was introduced in the
I.T Act,1961 (the Act) for collection of tax by the seller of goods from financial year 2020-21, however due to Covid-19,Pandemic the applicability of the provision deferred to 01.10.2020.
The CBIC has recently notified certain changes related
to claiming input tax credit (ITC). Please find below the key changes notified:
Filing of details of outward supplies (Form GSTR-1) to be blocked in certain cases
Key changes notified
Process
for obtaining GST registration
The application shall deem to be
complete after the process laid down below has been followed:
Important Changes introduced CGST(Fourteenth Amendment) Rules 2020
Time limit for system-based GST Registration increased
1. The time for system-based registration has been enhanced from 3 days to 7 days. That means, now department shall be required to review and grant registration within 7 days against 3 days as provided earlier from the date of filing of registration application. Where the applicant does not do adhaar authentication or where department feels fit to carry out physical verification the time limit for grant of registration shall be 30 days instead of 7 days.
This Tax Alert summarizes a ruling of the Mumbai Income
Tax Appellate Tribunal (Tribunal), dated 18 December 2020, in the case of
Amarchand & Mangaldas & Suresh A Shroff & Co. (Taxpayer), a
partnership firm in India, on the issue of whether foreign tax credit (FTC)
should be granted in India on the Taxpayer’s professional income earned
and taxed in Japan under the India-Japan Double Taxation Avoidance Agreement
(DTAA).
In the present case, the Taxpayer’s income from
professional services was subject to tax withholding as fees for technical
services (FTS) in Japan under the DTAA. The Indian tax authority denied FTC
stating that the income of the Taxpayer qualified as income from personal
services (IPS) under the DTAA, not subject to tax in Japan in the absence of
the Taxpayer’s fixed base in Japan. Hence, taxes withheld in Japan are not in
accordance with the DTAA and FTC was denied.
The Tribunal observed that the DTAA has to be read as a whole and its provisions should be construed in harmony with each other. Basis this, income from professional services of individuals qualifies as IPS under the DTAA and that of the partnership firm is rightly taxed as FTS in Japan under the DTAA. Furthermore, if the source jurisdiction has adopted a reasonable and bona fide view which is not ”manifestly erroneous”, the same may be followed in the resident country to achieve a uniform interpretation of the DTAA. Accordingly, taxes withheld in Japan are in accordance with the DTAA and, hence, eligible for FTC in India
This Tax Alert summarizes a ruling of the Madras High
Court (HC), dated 8 December 2020, in the case of Shriram Ownership Trust
(Taxpayer/Trust) on the issue of applicability of the gift tax provision of the
Income Tax Laws (ITL), which was applicable to individuals/Hindu Undivided
Families (HUFs).
The Taxpayer is a private discretionary trust settled for
distribution of retirement benefit to the owners, senior leaders and top-level
executives chosen from Shriram group entities when they attain superannuation.
During tax year 2013-14, the Trust received a sum of
INR250m from Shriram group of companies. Considering that the amount was
received without any consideration and all the beneficiaries of the Trust were
individuals, the tax authorities held that the sum of money received by the
Trust was income and, hence, subject to tax under the gift tax provision of the
ITL.
The various contentions raised by the Taxpayer viz., (i.)
It is an Association of Persons (AOP) and not an individual. (ii.) In any case,
gift tax is applicable only to living persons. (iii.) For the tax year under
reference, no amount was received by the individual beneficiaries, were
rejected.
The HC upheld gift taxation on the premise that: (i.) The
status of the Taxpayer was that of an individual considering that all the
beneficiaries were individuals. (ii.) The status of the Taxpayer was not that
of an AOP as neither the trustees nor the beneficiaries had come together with
the common purpose of earning income–an element essential for emergence of an
AOP. (iii.) The gift tax provision is not restricted to living persons but
extends to artificial persons also.
“We can’t supply the material” – a shock given to the managing
director of a leading pharmaceutical company which supplies lifesaving drugs to
all big hospitals in the country. The reason – GST registration was cancelled,
and e-way bills cannot be generated. The company has no clue, nor received any
notice of any default or department intention to cancel the registration. The
business so critical to healthcare services in the country has come to a
standstill. What suddenly happened?
Service of a
notice or an order is an extremely critical event in tax litigation and has
been a matter of dispute
over past many years. Introduction of technology based GST
has just added another dimension to it.
Until now,
taxpayers have, in many cases, argued non receipt of a notice or an order as a
bonafide ground of delay in responding to the notice or filing of appeal. In a
few cases, such arguments were made even to cover the lapse on part of the
taxpayer in responding to the notice or filing the appeal within the stipulated
timeline. The revenue authorities were generally not able to establish service
of notice/ order and that too to the authorized person and hence, the said
arguments were generally upheld.
Two recent decisions by the Kerala High Court and one by the Madhya Pradesh High Court are going to change this landscape completely. The GST law, as much as it is driven by the technology, has specified manner of service of notice/ order. The high courts have held that uploading of a notice or an order on the common portal maintained by GSTN is not only valid buy the only mode permissible under the law. If this is the legal position, the argument of non-receipt of a notice/ order simply goes out of the discussion. Now, if a taxpayer defaults in responding to the notice or delays in filing of an appeal within the prescribed statutory timelines, the legal consequences would follow. If delay is beyond the maximum period allowed to be condoned under the GST law, the taxpayer would have no choice but to approach the jurisdictional
It is to apprise you that recently
the High Court of Madhya Pradesh (‘HC’)
in the case of Akash Garg /
Shri Shyam Baba Edibal Oils v. CC, 2020-VIL-576-MP, has held that where a Show Cause Notice (‘SCN’)
is not uploaded on the Goods
and Services Tax (‘GST’) portal, merely e-mailing it to the taxpayer will not
make it a valid service of notice.
We respectfully disagree with the view HC has taken. In
this update, we have briefly explained how the decision has failed to
appreciate various provisions given under the Central Goods and Services Tax
Act, 2017 (‘CGST Act’).
This Tax Alert summarizes a recent notification[1] issued by
the Central Board of Indirect Taxes and Customs (CBIC) extending the time limit
for completing anti-profiteering related actions by the Authority constituted
under GST.
The Central Goods and Services Tax Rules, 2017 provide
time limits for the examination of anti-profiteering applications by the
Standing committee, completion of investigation by the Director General of
Anti-profiteering (DGAP) and passing of order by the National Anti-profiteering
Authority (NAA).
As per the Notification, where the time limit for
completion or compliance of any anti-profiteering related action by any
Authority, falls during the period 20 March 2020 to 30 March 2021, the same
shall be extended till 31 March 2021.
In view of Covid-19 pandemic, the CBIC had earlier
extended the time limit till 30 November 2020. [2]
The payer of income does tax deduction as per the law in force when she makes remittance. The Indian legislature has powers to make retrospective amendment to the statutes. Similarly, a judicial decision, which is always retrospective, may reverses a settled position on taxability of income in the hands of payee.
Quarterly Return Monthly Payment Scheme or QRMP as it is called is a recently introduced initiative by the Government in its initiative to simplify compliance for taxpayers. The Central Board of Direct Taxes (CBDT) issued notification 82/2020, 83/2020, 84,2020 and 85/2020 Central Tax dated 10-11-2020 and Circular 143/2020 on 10th November, to allow certain taxpayers to furnish their GST returns on a quarterly basis along with monthly payment of tax under QRMP Scheme, with effect from 1st January, 2021, i.e. from last quarter of FY 2020-21.
·
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.
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:
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).
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 11th of the
subsequent month and quarterly Form GSTR 1 till 13th 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).
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 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 1st October 2020.
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
