Angel Tax – An Analysis

 

 The consideration received by a company for issue of its shares constitutes a capital receipt and thus should not be liable to income-tax in the hands of the issuer company. However, there are certain provisions in the (Indian) Income-tax Act, 1961 (‘Act’) which deem the same, either fully or a part of the same, as income liable to tax under the head ‘Income from Other Sources’. This may so happen where the assessing officer considers the transaction as not genuine or where the shares are issued at a premium and the issue price is in excess of the fair market value of those shares.

Purchase of shares – risk of the transaction being declared ‘void’

 

 

The Indian Income-tax Act, 1961 (‘Act’) contains a provision under which a transaction of sale of shares can be declared as ‘void’ by the Indian tax authorities under certain circumstances. The said provision, when invoked by the Indian tax authorities, may result in a loss to the purchaser. This may so happen notwithstanding that but for the said provision, the ‘title’ of the shares was clear at the time of sale by the seller.

 

The above referred provision is contained in section 281 of the Act. The section provides that where on the date of sale of shares by the seller, any tax demand is outstanding and payable or any tax proceeding is pending against the seller (which results in creation of a tax demand against the seller), the sale of shares shall be void to the extent of any tax claim raised against the seller. In other words, where the tax department cannot recover such taxes from the seller, they may invoke section 281 to declare the sale as void (so as to treat the asset as still belonging to the seller and recover taxes by attachment and sale thereof).

 

India’s Digital services tax discriminates against U.S. Companies: USTR

 

The US has recently held that India’s 2 per cent digital tax on e-commerce supply of services discriminates against US companies and is inconsistent with prevailing principles of international taxation, and restricts US commerce. These were part of the findings of the US Trade Representative’s investigations of India’a Digital Service Taxes (DST) under Section 301 of the US Trade Act, released on January 6.

GST on services provided by employers

 

The Authority for Advance Rulings (AAR) in GST, Maharashtra bench, has ruled that GST is not payable on amounts recovered from employees for transportation provided from their homes to the workplace. This was one of the issues decided in Order No. GST-ARA-23/2019-20/B-46-Mumbai, dated 25-8-2020 in Application No. 23 of Tata Motors Limited. The AAR had two reasons for its conclusion that the amount does not attract tax: (i) that the company was not providing the service of transportation to its employees; and (ii) that transactions in an employer-employee relationship do not attract GST in view of the first entry in Schedule III of the CGST Act. In the words of the AAR:

CBDT directs transfer of ongoing penalty proceedings to Faceless Penalty Scheme, 2021

 

This Tax Alert summarizes recent orders  issued by the Central Board of Direct Taxes  (CBDT) on 20 January 2021 (CBDT Orders), wherein the CBDT has directed that units established under Faceless Assessment Scheme, 2019  shall perform the functions of various units as required under the recently-introduced Faceless Penalty Scheme, 2021  (FPS) until the requisite units are formally formed in FPS. It also defines the scope of FPS to include all ongoing, as also future, penalty proceedings under the Income Tax Laws  (ITL), except for three cases (i.e., cases where penalty proceedings are assigned to central charges or international tax charges or arising in withholding cases).

Imp Case laws.

 

CIT vs. Shriram Ownership Trust (Madras High Court)

S. 2(24)(iia)/ 56(2)(vii)/160(1)(iv): (i) A private discretionary Trust has to be assessed in the status of an "individual" as the beneficiaries are individuals. It cannot be assessed as an "AOP" even though there are multiple trustees & beneficiaries. Even a non-human juristic entity can be assessed as an "individual". The fact that in the return filed in Form ITR-5, the status is that of a "trust" is irrelevant. Consequently, the contribution received by the assessee is assessable as "income" us 56.

(ii) U/s 260A, it is only the appellant who is entitled to raise a question of law. The respondent has no right to challenge a point which is decided against him by the Tribunal. The appellant cannot be worse off in its appeal at the instance of the respondent who has not filed an appeal over such finding of the Tribunal. 

Mumbai ITAT: mere change of opinion by the AO cannot be ground for reassessment

 

Issue: Issue examined under original assessment proceeding: Whether re-opening in such case is justified

The Tribunal noted that it was well settled that mere fresh application of mind to the same set of facts or mere change of opinion does not confer jurisdiction even under the post-1989 section 147. The consistent view is that even after amendment of section 147 (w.e.f. 01.04.1989) mere change of opinion does not confer jurisdiction on the Assessing Officer to initiate proceedings for re-assessment merely by resorting to Explanation 1 to that section on the basis of change of opinion. Where, on the same material, the succeeding officer wants to take a different view than taken by the predecessor Assessing Officer and wants to take action u/s 147, such action cannot be sustained because the view taken by the subsequent officer is nothing but a change of opinion. The Tribunal relied on the decision of Hon’ble Supreme Court CIT v. Kelvinator of India Ltd. wherein it was held that If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned. Seeing that the assessee in the instant case disclosed all the primary facts necessary for assessment of its case to the Assessing Officer, a mere change of opinion by the AO in the instant case cannot be a ground for reassessment. Issue Outcome: Assessee

Taxpayer is eligible for foreign tax credit in India on taxes paid in various foreign countries

 The Bangalore Bench of the Income-tax Appellate Tribunal (the Tribunal) in the case of ITTIAM Systems Pvt Ltd (the taxpayer) dealt with the issue of eligibility of Foreign Tax Credit (FTC) on the taxes paid in various foreign countries. The Tribunal held that the taxpayer is eligible for full credit of FTC, amounting to taxes paid in USA, Japan and Germany under respective tax treaties. However, in the case of Korea, FTC is limited to taxes paid in Korea or India, whichever is less.

With Taiwan, India does not have a tax treaty. Therefore, FTC is to be computed based on rate of tax applicable in India or Taiwan, whichever is less, on such doubly taxable income

Biden Tax Plan - Potential Implications for Indian Businesses with US operations

 

Corporate:

1.       Increase in the Federal Corporate rate from 21% to 28%. It may be pointed out that the US has 3 tier tax structure – Federal, State & City taxes.

2.       Minimum tax of 15% for corporations with greater than $100 million of book income (analogous to Minimum Alternate Tax on book profits in India)

3.       Minimum GILTI tax increases from 10.5% to 21% (affects U.S. corporations that own controlled foreign corporations)

IRP-generated QR Code on B2B Vs Self-generated Dynamic QR Code on B2C invoices

 

IRP-generated QR Code on B2B & Export Invoices, Credit & Debit Notes

Vs.

Self-generated Dynamic QR Code on B2C invoices

 

Delhi ITAT: deleting the addition made u/s 2(22)(e) was upheld

 

Issue: Loan advanced to a group company which is neither a registered shareholder nor a beneficial owner: Applicability of provisions of 'deemed dividend' under section 2(22)(e)

During the year under consideration, the assessee had received unsecured loan of Rs.5,99,55,000 from M/s Ritesh Spinning Mills Ltd. (‘RSML’), which bears interest of Rs.76,19,342 and was paid by the assessee thereon. Learned Assessing Officer was of the opinion that the loan advanced by RSML to the assessee is liable to taxed as deemed dividend under section 2(22)(e), on the ground that Mr. Sanjiv Arora is a common shareholder holding substantial interest in both the companies i.e., RSML and the assessee. Asessee pleaded before the Ld. CIT(A) that that the action of the learned Assessing Officer in bringing to tax Rs.3,27,71,164 as deemed dividend under section 2(22)(e) in the hands of the assessee was erroneous and legally unsustainable because the provisions of section 2(22)(e) were not applicable to the case of assessee inasmuch as neither the assessee company is a shareholder in RSML, nor there was any common shareholder holding the requisite percentage of shares in both companies. Ld. CIT(A) accepted the same. He further observed that the deemed dividend, if any, would otherwise be taxable in the hands of common shareholder in terms of the decision of Hon’ble Delhi High Court in CIT v. Ankitech.

Mumbai ITAT: remunerated at arm's length price by the assessee, no further profit could be attributed

 

Issue:  Relevance of determination of Permanent Establishment where the transactions were at Arm's Length Price between the Assessee and foreign enterprise

The assessee was a non-resident company, incorporated in the US. The assessee executed an Advertisement Sales Representation Agreement dated 29 February 2000 with News Television (India) Limited ('NTIL'), now known as Star India Private Limited ('SIPL') as its representative for marketing and collection of advertisement revenue for which SIPL was remunerated commission at 15%. The assessee submitted during the course of assessment proceedings that the income from advertisement air time was business income and in the absence of a Permanent Establishment (PE) of the assessee in India, the same was not taxable. The ld. AO however, held that SIPL constitutes PE of the assessee by holding it as a dependant agent as per para 4(c) of the Article 5 of India-USA DTAA and taxed the advertisement revenue earned by the assessee as business income on a net basis.

Kolkata ITAT: no reason found for the suo motu disallowance to be disturbed

 

Issue: Sec 14 A read with Rule 8D: Retrospective vs Prospective application of Rule

The ground of appeal related to disallowance made u/s. 14A read with rule 8D of the Income-tax Rules, 1962. During the assessment year under consideration, the appellant assessee had shown a dividend income of Rs. 74,25,000/- claimed as exempt income u/s. 10(34) of the Act. The suo motu disallowance computed by the appellant assessee in the return of income at Rs. 4,69,487/- u/s. 14. During the assessment proceedings the assessee was directed to file the details of tax free income earned by the assessee and to explain why provisions of section 14A of the Act should not be invoked. In response to that the assessee submitted its reply on 14-12-2016 along with calculation for such suo motu disallowance u/s. 14A as it also reflected from the order passed by the Ld. AO. However, such explanation as rendered by the assessee was not found acceptable and considering the CBDT Circular dated 11-02-2014 and the recent Amendment in Rule 8D vide Notification dated 02-06-2016, the disallowance of expenditure u/s. 14A of the Act the Ld. AO computed the disallowance of Rs. 2,67,07,781/- at 1% of the average monthly balance of the investment. Since the assessee had suo motu disallowed expenditure of Rs. 4,69,487/-, the balance amount of Rs. 2,62,38,194/- was disallowed/added back to the total income of the assessee by the AO.

Ambuja Housing & Urban Infrastructure Co.Ltd vs Dict, Cir.-11(1)

Imp Judgements.

 

THE Mavilayi Service Coop Bank Ltd vs. CIT (Supreme Court)

The three judges bench of Apex Court in the above matter was dealing with the issue regarding eligibility of the assessee to get deduction u/s 80P of the Income-tax Act 1961 in view of restrictions placed in Section 80P(4) of the Income-tax Act,1961 which provided that the provisions of this section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-cooperative agricultural and rural development bank. The Court noted its own decision in the case of *Citizen Co-operative Society [397 ITR 1] * by stating that It is settled law that it is only the ratio decidendi of a judgment that is binding as a precedent . Thereafter it observed that section 80P of the IT Act is a benevolent provision, which was enacted by Parliament in order to encourage and promote the growth of the co-operative sector generally in the economic life of the country and must, therefore, be read liberally and in
favour of the assessee. The court also relied upon the heading of the section by saying that the marginal note to Section 80P which reads “Deduction in respect of income of co-operative societies” is important, in that it indicates the general “drift” of the provision. Finally the court held that in the instant case the assessee was eligible to get the deduction u/s 80P of the Act by allowing the appeal.

This judgement will be helpful from interpretation points of view as several interpretational aspects have been dealt with in addition to deciding the interpretation of Section 80P.

 

Ireo Grace Realtech Private Limited Vs Abhishek Khanna (Supreme Court)

Issue-Whether one sided terms and conditions in the agreement for sale of flat amounts to unfair trade practice? The apex court held that the incorporation of one-sided and unreasonable clauses in the Apartment Buyer‘s Agreement constitutes an unfair trade practice under Section 2(1)(r) of the Consumer Protection Act. and held that the Developer cannot compel the apartment buyers to be bound by the one-sided contractual terms contained in the Apartment Buyer‘s Agreement. Among other issues the court decided that a disgruntled flat buyer had an option under the RERA as well as consumer protection act. An allottee may elect or opt for one out of the remedies provided by law for redressal of its injury or grievance. An election of remedies arises when two concurrent remedies are available, and the aggrieved party chooses to exercise one, in which event he loses the right to simultaneously exercise the other for the same cause of action.

 

Storewell Construction & Engineers Vs Pr. CIT -2 (ITAT Pune)

Pune ITAT held that the Commissioner of Income Tax is not empowered to invoke the revisionary jurisdiction u/s.263 of the Income Tax Act to look into the other issues relating to the assessee which were not within the purview of the limited scrutiny. The CBDT Circular vide its letter F-No.225/26/2006-ITA-II (Pt.), 8th September, 2010 has described the procedure for handling limited scrutiny cases wherein the Assessing Officer shall remain confined only to the specific reasons/issues for which case has been picked up for scrutiny. In this case, the Assessing Officer has already verified those issues for which limited scrutiny was conducted. The Ld. Pr. Commissioner of Income Tax wants the Assessing officer to look into various other issues of the assessee which were not covered within the purview of the limited scrutiny. This is not permitted within the framework of the Income Tax Act. Therefore, revisionary order u/s 263 quashed.

 

DCIT vs. Runwal Multihousing Pvt Ltd (ITAT Pune)

The assessee was initially following the Percentage completion method by showing income on the basis of percentage of work done. In contrast, the project completion method, which is an equally recognized method, mandates the determination of income at the time of completion of project. Both the methods are recognized methods. Whereas, in the first method, profit is considered on a year to year basis parallel with the progress of construction, in the latter, profit is considered when the project is completed. Under both the methods, the amount of income remains unchanged except for the effect that the profit shifts from one year to another. The assessee switched over from the Percentage completion method to the Project completion method by filing a revised return. Once it is seen that the assessee switched over from the Percentage completion method to the Project completion method in a bona fide manner and continued with the changed method in the years to come, it is allowed.

Section 292BB is applicable to an assessee and not to a legal representative

 

Lalita Agarwal (Legal Heir Of Late Subhash Chandra Agarwal) vs Addl. CIT

Issue:  Applicability of section 292BB to a legal representative

Reliance was placed on the decision of hon’ble Delhi High Court in the case of Savita Kapila Vs. ACIT, that section 292BB of the Act, 1961 is applicable to an assessee and not to a legal representative. Section 292BB is in place to take care of contingencies where an assessee is put on notice of the initiation of proceedings, but who takes advantage of defective notices or defective service of notice on him. It cannot be invoked in cases where the very initiation of proceedings is against a dead person.

Central Government announces Faceless Penalty Scheme, 2021 for conducting penalty proceedings in faceless mode

 

This Tax Alert summarizes the Faceless Penalty Scheme, 2021 (FPS), a recent scheme notified  and implemented by the Central Government (CG) for conducting penalty proceedings in a faceless manner under the Income Tax Laws  (ITL). FPS is largely in line with earlier schemes notified by the CG for conducting assessment  and appeal  proceedings and is intended to impart greater efficiency, transparency and accountability by eliminating the interface between taxpayers and the tax authority and by making optimal utilization of the administrative resources with dynamic jurisdiction. FPS involves a stepwise process to conduct penalty proceedings by harnessing the use of technology for communication between taxpayers and the tax authority and a team-based penalty process in lieu of the existing manual interface.

interest income could only be taxed under article 11, and not additionally under article 7

 

DZ Bank AG, a company incorporated under the laws of Germany and having its principal place of business in Germany, was engaged in the banking business, and it had, with the permission of the Reserve Bank, a representative office in India. The assessee filed an income tax return in the name of “DZ Bank AG- India Representative Office”, apparently treating the India Representative Office as a taxable entity, disclosing NIL taxable income. This return was subjected to scrutiny assessment proceedings, and, in the ensuing assessment proceedings, the Assessing Officer noticed that during the relevant previous year “DZ Bank AG provided foreign currency loans to Indian companies’ and “these loans were in the nature of external commercial borrowings (ECB) as permitted under the Indian Exchange Control Regulations”. He further noted that “On perusal of ITS details generated in the case of the assessee it was seen that huge sums of TDS has been made on the interest paid/payable by Indian customers to the assessees”. Thus, when the Assessing Officer probed the matter further, it was explained by the assessee that TDS on interest payable by the Indian borrowers was borne by them, and that, as per section 115A(5), a foreign company was exempt from furnishing a return of income in India when it only earns interest income from foreign currency loans provided to Indian companies, and the appropriate taxes have been deducted at source from the same.

Karnataka HC: Taxability of Bonus shares under section 56(2)(vii)?

 

The Assessing Officer held that the assessee had received 1,00,00,000/- bonus shares issued by M/s Manipal Education and Medical Group (India) Pvt. Ltd. The Assessing Officer invoked Section 56(2)(vii) of the Act and treated the receipt of bonus shares as income from other sources and assessed the fair market value of the bonus shares at Rs.12,49,00,000/-. The assessee thereupon filed an appeal before the Commissioner of Income Tax (Appeals) who allowed the appeal preferred by the assessee inter alia on the ground that conversion of reserve into capital did not involve release of profit and therefore, provisions of Section 56(2)(vii) of the Act were not applicable to the assessee and directed deletion of a sum of Rs.12.49 Crores. 

Paradox in Income Tax Act.

 

The Income-tax, Act, 1961 has in all 298 sections and many of these have cross reference to each other while interpreting the provisions. In such a scenario, when any amendment takes place in any of the sections, the corresponding effect and reference should be given to the relevant related sections as well. 

However, inconsistency exists at present in few of the sections of which 2 instances are listed below:-

1. Section 54, 54B, 54D & 54F:

The Finance Act, 2017 amended section 2(42A) so as to reduce the period of holding from the existing 36 months to 24 months in case of immovable property, being land or building or both, to qualify as long-term capital asset.

Consequential amendments for reducing the holding period of immovable property from 3 to 2 years is required to be made in sections 54, 54B, 54D & 54F in line with the amendment in section 2(42A). At present, these sections restrict transfer of new assets purchased for 3 years.

2. Section 94(7):

DDT u/s 115-O is abolished by Budget 2020 and so w.e.f 01.04.20, dividend is taxable in the hands of shareholder. Thus, Dividend stripping provisions stand redundant starting FY 20-21 & thus section 94(7) is no more relevant. However, no change in this section has been made yet.

payment for purchase of software did not fall in the definition of royalty

 

Deputy Commissioner of Income Tax, Circle-1(1)(1) vs ABB Global Industries and Services Pvt Ltd 

Issue: Payments made for purchase of software: Scope of definition of the term 'Royalty' as per India-USA tax treaty

The assessee was a company engaged in the business of software development services. The AO disallowed a sum of Rs.1,10,33,217 which was payment made by the assessee for acquiring software licence. The AO was of the view that payment in question was in the nature of royalty or fees for technical services and therefore taxable in India. Since the assessee had not deducted tax at source on the aforesaid payment, the AO disallowed the claim of assessee for deduction of the aforesaid sum for non-deduction of tax at source u/s. 195 and invoked the provisions of section 40(a)(i). The AO placed reliance on the decision of Hon’ble Karnataka High Court in the case of CIT v. Samsung Electronics Co. Ltd., wherein the Hon’ble Court held that when licence is granted to make use of software by making copy of the same and store it in hard-disk of designated computer and to take backup copy of the software, it will amount to a transfer of right to use software and would constitute royalty within the meaning of Article 12 of DTAA between India and USA. On appeal by the assessee, the CIT(Appeals) confirmed the order of the AO. Aggrieved the assessee filed appeal before the Tribunal.

Government issues Press Release on Liberalised AEO Package under Customs for MSMEs

 

This Tax Alert summarizes a recent Press Release issued by the Ministry of Finance regarding “Liberalised MSME AEO Package” scheme for Micro Small and Medium Enterprises (MSMEs).

Earlier, a Circular² was issued by the Central Board of Indirect Taxes and Customs (CBIC) in this regard.

The procedural modifications and relaxations for Authorized Economic Operator (AEO) accreditation of MSMEs under customs, having a valid certificate from their line Ministry, are as under:

 

·         The requirement of handling minimum 25 customs clearance documents during the immediately preceding financial year has been relaxed to 10 documents (subject to handling at least five documents in each half year period of the preceding financial year).

·         The requirement to have business activities for at least three financial years preceding the date of application has been relaxed to two financial years.

·         The qualifying period for legal and financial compliance has been reduced to two financial years.

·         The time limit for processing of AEO T1 and AEO T2 application has been reduced to 15 working days and three months respectively, after electronic submission of complete documents. 

·         Certain additional benefits, like further reduction in bank guarantee requirements, have also been granted and will be expanded subsequently.

 

Comments

The package is likely to benefit the MSME sector which is significantly impacted due to the COVID-19 pandemic.

Further, the relaxations provided may increase coverage of MSMEs under AEO scheme and facilitate ease of doing business. The success of the liberalised scheme may however depend on its effective implementation and execution. 

No service-tax on liquidated damages, earnest money, deposit & penalty for contract breach – CESTAT New

 

This is to update you on a recent judgment pronounced by CESTAT, New Delhi in the case of M/s South Eastern Coalfields Limited (‘Appellant’) wherein it has been held that no service tax shall be levied on liquidated damages, earnest money deposit & penalty charged for breach of contract.

 

Auto-population of e-invoice details into GSTR-1/2A/2B/4A/6A

 

• Certain notified taxpayers have been issuing invoices after obtaining Invoice Reference Number (IRN) from Invoice Registration Portal (IRP) (commonly referred as ‘e-invoices’). Details from such e-invoices shall be auto-populated in respective tables of GSTR-1. Update on the status of such auto-population was last published on 30/11/2020.

 

AAR allows GST input tax credit to manufacturer on certain promotional materials provided to franchisees, distributors and retailers

 

This Tax Alert summarizes a recent ruling^[1] of the Karnataka Authority for Advance Ruling (AAR). The issues involved were whether the materials used for marketing and promotion of brand can be considered as inputs and tax paid on procurement can be availed as input tax credit (ITC).

Remission of Duties and Taxes on Exported Products Scheme implemented from 1 January

 

With an aim to boost exports, Government of India has extended the benefit of the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme to all export goods with effect 1 January 2021.

The scheme would provide refund of central, state and local duties/taxes to exporters that were so far not being rebated/refunded and were therefore, placing exports at a disadvantage. The refund would be credited in the exporter’s ledger account with customs and can be used to pay basic customs duty on imported goods. Such credits can also be transferred to other importers.

The RoDTEP rates would be notified shortly and shall be applicable with effect from 1 January 2021 to all eligible exports of goods (subject to specified conditions and exclusions).

The government has also issued an advisory providing step by step guide for users to create a RoDTEP credit ledger account, generate scrips and transfer the scrips to any other user.

Key points for consideration 

1.       To avail benefits under the Scheme, user must login at the ICEGATE website and create RoDTEP credit ledger account. This can be done by IECs holder who have registered on ICEGATE with a Digital Signature Certificate (DSC).

2.       Exporters shall be required to furnish a declaration in the shipping bill to avail the benefit of RoDTEP.

Further, effective 1 January 2021, it shall be mandatory for the exporters to indicate in their shipping bill, whether or not they intend to claim RoDTEP on the export items.

GST Update.

 

• A registered person shall not be allowed to furnish the details of outward supplies of goods or services or both under section 37 in FORM GSTR-1, if he has not furnished the return in FORM GSTR-3B for preceding two months;
• 
  
• A registered person, required to furnish return for every quarter under the proviso to sub-section (1) of section 39, shall not be allowed to furnish the details of outward supplies of goods or services or both under section 37 in FORM GSTR-1 or using the invoice furnishing facility, if he has not furnished the return in FORM GSTR-3B for preceding tax period;
• 
  
• A registered person, who is restricted from using the amount available in electronic credit ledger to discharge his liability towards tax in excess of ninety-nine per cent. of such tax liability under rule 86B, shall not be allowed to furnish the details of outward supplies of goods or services or both under section 37 in FORM GSTR-1 or using the invoice furnishing facility, if he has not furnished the return in FORM GSTR-3B for preceding tax period.”.
• GST e-invoice system completed journey of 3 months; Enabled more than 37000 tax payers to generate more than 1680 Lakh Invoice Reference Numbers (IRNs), 603 Lakhs e-invoices generated in December 2020 as compared to 589 lakhs in November 2020

GSTN introduces communication facility between recipient and supplier on GST portal

 

This Tax Alert summarizes a recent update dated 25 December 2020 released by Goods and Services Tax Network (GSTN). It relates to the facility of ‘communication between taxpayers’ introduced on the GST portal.

 

This facility enables the taxpayer, both recipient and supplier to communicate with each other by sending a notification regarding missing documents, any shortcomings in the documents or any other related issue. The facility is available to all registered persons, except those registered as person liable to deduct or collect tax at source and non-resident taxable person.

 

The taxpayer will receive notification from counter party through an e-mail on registered email ID and SMS on registered mobile number.  Also, an alert will be given at the time of login on GST portal.

 

The recipient can upload the details of missing documents (not uploaded by the supplier in Form GSTR-1) and send a notification to the supplier. The supplier can then add such details in Form GSTR-1, if not reported earlier.

 

The manner of using the facility and sending notification has been detailed in the GSTN communication. User manual and frequently asked questions (FAQs) have also been issued in this regard.   

Important update for all exporter of goods : RoDTEP Declarations in Shipping Bill w.e.f. 01.01.2021

 

The government has been planning to introduce new benefit of ​​Remission of Duties and Taxes on Exported Products (RoDTEP) for export of goods as against the existing ​​Merchandise Exports from India Scheme (MEIS) Scheme.

The RoDTEP scheme would ​​refund to exporters the embedded duties/taxes that were so far not being rebated/refunded.

CBDT issues notifications to formalize extensions granted recently for various compliance under Income Tax Laws and VSV Act, 2020

 Recently, the Central Board of Direct Taxes  (CBDT) had issued a press release dated 30 December 2020^[

(Press Release) addressing various concerns of taxpayers and stakeholders in relation to the compliances under the Income Tax Laws (ITL). Amongst others, the Press Release includes extension in due dates for filing tax returns, tax audit report, transfer pricing report etc. for tax year 2019-2020 for various taxpayers. Additionally, the sunset date for filing declaration under The Direct Tax Vivad Se Vishwas Act, 2020 (VSV) has been extended to 31 January 2021.

 

The CBDT has now issued notification nos. 92 and 93 dated 31 December 2020 (CBDT Notifications) with a view to formalize the various announcements made in the Press Release. Please refer our alert dated 31 December 2020 titled as “CBDT grants further extension of due date for filing tax returns and audit reports for tax year 2019-20 and for filing declaration under VSV Act, 2020” for summary of the announcements made vide the Press Release.

 

The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act 2020^[  provides that completion of any proceedings or passing of any order or issuance of any notice/intimation/ notification/ sanction/ approval or such other action by any authority or commission or tribunal under a specified act^[4]  which is falling due between 20 March 2020 to 31 December 2020 (disruption period) can be done on or before 31 March 2021. Now, the CBDT Notifications extend the disruption period to 30 March 2021. The Notifications also state that the relevant compliances can be done by tax authority/ commission/tribunal under the specified acts on or before 31 March 2021. However, this general extension is not applicable to tax authority which is required to pass transfer pricing orders under the ITL. The disruption period for passing transfer pricing orders is extended only to 30 January 2021 and the said compliance needs to be done on or before 31 January 2021.  

  

Tax Due date - January 2021

Sr No	Due Date	Related to	Compliance to be made
1	11.01.2021	GST	Filing of GSTR 1 for the month of December, 2020
2	20.01.2021	GST	Payment of GST for the month of December, 2020 Filing of GSTR 3B for the month of December, 2020
4	07.01.2021	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 December 2020. · Deposit TDS from Salaries deducted during the month of December 2020 • Deposit TCS for collections made under section 206C including sale of scrap during the month of December 2020, if any
5	31.01.2021	TDS/TCS	Filing of TDS/TCS quarterly return for Q3 (Oct to Dec-2020).

 

Further due to extension, the due date of ITR is now 15-02-2020.