This is to update you on the recent
clarifications issued by the CBIC vide
Circular No. 146/02/2021 dated February 23, 2021 regarding clarification in respect on applicability of Dynamic
Quick Response (QR) Code on B2C invoices and compliance of Notification 14/2020 - Central Tax, dated March 21, 2020.
The LTC Cash Voucher Scheme has been notified by the government in Budget 2021. Even though the scheme was initially announced for central government employees, the scheme was extended to private sector, PSU and state government employees by way of Press release.
Background
INDIA was amongst the first set of major economies to introduce Digital Services Tax ('DST') in the form of Equalisation Levy (EQL) in 2016. The scope of EQL was initially restricted to provision of digital advertising space by non-resident. The liability to discharge the EQL and undertake compliances was on the Indian residents making the payment to such non- residents, and hence, the EQL did not affect most of non-residents due to its restricted applicability and also because of the fact that practically the cost of EQL was passed on to Indian service receivers.
Please refer the below extract of law from GST.
As per Section
77 (1) of CGST Act, 2017 – “A registered person who has paid the Central
tax and State tax or, as the case may be, the central tax and the Union
territory tax on a transaction considered by him to be an intra-State supply,
but which is subsequently held to be an inter-State supply, shall be refunded
the amount of taxes so paid in such manner and subject to such conditions as
may be prescribed.”
Further, as per Section
19 (2) of IGST Act, 2017 - “A registered person who has paid
central tax and State tax or Union territory tax, as the case may be, on a
transaction considered by him to be an intra-State supply, but which is
subsequently held to be an inter-State supply, shall not be required to pay any
interest on the amount of integrated tax payable.”
Thus in case taxpayer by mistake paid GST under RCM under wrong head means IGST under CGST/SGST or vice versa then this mistake cannot be rectified and taxpayer again require to pay tax under correct head. Thus for simple clerical error taxpayer require to pay tax twice which is a genuine hardship for tax payer.
Superannuation is one of the retirement benefit
offered to employees by their employers.
Employers contribute a fixed percentage upto a
maximum of 15% of employees basic pay plus dearness allowance. This
contribution is part of Cost to the company of employees.
When an employee can withdraw the money from the
Superannuation Fund?
Employees are eligible to withdraw the money from
the fund either at the time of retirement (or) at the time of resignation .
At any point of time, full amount available in the
fund can not be withdrawn , since this is also known as pension plan. One third
can be withdrawn at the time of exit from the organization and balance two
third can be opted as pension. Even entire fund amount can be opted as pension.
If one third of the fund withdrawn at the time of
retirement , the same is tax exempted. If the same is withdrawn before
retirement , the same is taxable.
If an employee resigns and moving to other
Organisation , it is possible to transfer the fund to other organization also.
Otherwise , it is recommended to keep in the fund
itself till 58 years , since the fund will earn a interest based on the total
fund available with the Service provider.
In USA, the government had announced employee retention tax credit in case there is a reduction in revenue of the US company during the covid period which start from April 1, 2020.
The credit is available against payroll taxes if the company qualifies for 2020 and 2021. See the links below and follow the flow chart to see if US Company would qualify based on 50% reduction in gross receipts for any quarter in 2020 vs 2019. For 2021 the decline is 20%
The credit is per employee basis so will need each employees wages for the 3 quarters. The maximum wages per employee for the year for this credit is capped at $10,000 and the maximum credit per employee is 50% of the wages so a max of $5,000 per employee.
The credit is claimed on the quarterly payroll tax returns (Form 941) by reducing the employer’s share of social security and medicare taxes.
Companies who had availed PPP loan during covid lockdown cannot claim credit
Understand section 80EEA.
Given below the extract of
the law.
(1) In computing the total income of an assessee, being an individual
not eligible to claim deduction under section 80EE, there shall be deducted, in accordance with and
subject to the provisions of this section, interest payable on loan taken by
him from any financial institution for the purpose of acquisition of a
residential house property.
(2) The deduction under sub-section (1) shall not exceed one lakh and
fifty thousand rupees and shall be allowed in computing the total income of the
individual for the assessment year beginning on the 1st day of April, 2020 and
subsequent assessment years.
(3) The deduction under sub-section (1) shall be subject to the
following conditions, namely:—
(i) the loan has been sanctioned by the
financial institution during the period beginning on the 1st day of April, 2019
and ending on the 31st day of March, 23[2020];
(ii) the stamp duty value of
residential house property does not exceed forty-five lakh rupees;
(iii) the assessee does not own any
residential house property on the date of sanction of loan.
(4) Where a deduction under this section is allowed for any interest
referred to in sub-section (1), deduction shall not be allowed in respect of
such interest under any other provision of this Act for the same or any other
assessment year – This means that the deduction for the
same interest cannot be claimed twice.
(5) For the purposes of this section,—
(a) the expression "financial
institution" shall have the meaning assigned to it in clause (a) of
sub-section (5) of section 80EE;
(b) the expression "stamp duty
value" means value adopted or assessed or assessable by any authority of
the Central Government or a State Government for the purpose of payment of
stamp duty in respect of an immovable property.
1.
Deduction u/s 80EEA is allowable over even if deduction u/s
section 24(b) has been claimed and it is allowable for the same loan.
However, when making the claim for deduction, the assesse has to first exhaust
the limit u/s 24 and then if there is any unclaimed interest balance left, that
can be claimed u/s 80EEA.
Where a deduction under this section is allowed for any interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provision of this Act for the same or any other assessment year – This means that the deduction for the same interest cannot be claimed twice. As per below example, entire Rs. 3 Lakh cannot be claimed twice – once u/s 24 and the u/s 80EEA. First claim has to be upto the maximum limit u/s 24 and if there is any unclaimed balance, the same has to be claimed u/s 80EEA, subject to a maximum of Rs. 1.50 Lakhs.
The
Central Board of Indirect Taxes and Customs (CBIC) noticed several pendency
in sanctioning of refund claims of Integrated Goods and Services Tax (IGST) due
to non-transmission of data from GSTN to ICEGATE systems because of mismatch in returns filed in Form GSTR-1 and GSTR-3B.
In
order to overcome this refund blockage, the CBIC had provided an interim
solution subject to undertakings/submission of CA certificates by the exporters
and post refund audit scrutiny.
The
CBIC has now notified that the said solution shall be applicable mutatis
mutandis for the shipping bills filed during
the financial year 2019- 20 and 2020-21 (i.e., in respect of all shipping
bills filed/to be filed up to 31 March 2021).
Further, it prescribed that the CA certificate should evidence no discrepancy between IGST amount refunded on exports and actual IGST amount paid on export of goods for periods April 2019 to March 2020 and April 2020 to March 2021 shall be furnished by 31 March 2021 and 30 October 2021, respectively
1. The Union Budget 2021 has proposed taxing the income on provident fund contributions of over Rs. 2.5 lakh a year. As per clause 5 of Finance Bill 2021, the interest on any contribution above Rs 2.5 lakh by an employee to a recognized provident fund will be taxable from 01 April 2021.
For any enterprise, GST input credit is an equivalent to cash. Thus, it’s important for every enterprise to claim correct amount of GST input credit. However, it has been observed that due to complexity in law, the enterprises are losing their genuine GST input. Given below few such instances.
Provision of warranty and warranty expenses and same is being provision or contingent in nature. The same is being classified as contingent as enterprise know about the occurrence of the expenses in future but cannot estimate the exact amount of expenses which going to be incurred in future. As per IND AS 37, there is no need to recognise contingent liabilities and just disclose the estimate liability in the notes of the financials. Further as per IND AS 37 provision of warranty is not a contingent liability and provision of expenses. For source of the information refer the link below.
This update you on the following instructions issued on 5 February 2021
which covers certain aspects in relation to various transactions and operations
undertaken by SEZ units.
1.
Addressing
mismatch in taxation of income from notified overseas retirement fund [Section
89A]
Proposed section 89A seeks to provide relief from double
taxation due to mismatch of taxation on income from withdrawal of retirement
benefit account maintained by a specified person in a notified country on
account of the amount being taxable in
the notified State on receipt basis while being taxable in India on
accrual basis (hereinafter referred to as
“Specified Account”). The details of the application of the provision are
to be prescribed by the Central Government.
TDS on Purchase of Goods
Provision:-
Government inserted new TDS Section 194Q which will be effective from 01-July-2021, which say Any person, being a buyer who is responsible for paying any sum to any resident (hereafter in this section referred to as the seller) for purchase of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year, shall, at the time of credit of such sum to the account of the seller or at the time of payment thereof by any mode, whichever is earlier, deduct an amount equal to 0.1 per cent. of such sum exceeding fifty lakh rupees as income-tax.
1. Transactions between an Organisation and Members deemed to be a
supply.
Proposal
Any activity with respect to goods and services for cash between an organization like Club and its members is constituted as a supply. Also, an Explanation has been inserted to hold that the ‘Organisation’ and its members are two distinct persons under GST.
Income Tax
Corporate Tax
·
TDS
@ 0.1 percent on purchase of goods from a buyer exceeding Rs. 50 Lakhs in a FY.
This will increase the compliance burden.
·
TDS
required to be deducted at higher rate for vendor not filing return of Income.
This again become a compliance challenge
as required to obtain ITR of two years from each vendor.
·
Disallow
late deposit of employee contribution to fund (PF, ESI Superannuation etc).
