Key notes on Circular No. 183/15/2022-GST dated 27 December 2022 on GSTR-2A & GSTR-3B

 

The CBIC in the captioned circular  issued a clarification with respect to the following scenarios to deal with differences in Input Tax Credit (ITC) availed in FORM GSTR-3B vis-à-vis as per FORM GSTR-2A for FY 2017-18 and FY 2018-19.

Taxation of Online Gaming

Let us understand the online gaming ecosystem in India with reference to the applicability of the Indirect tax and direct tax provisions in India.

·         There are two types of gaming

Is Form 10F is mandatory?

While there has been a recent buzz in the industry over the government's move of mandating the furnishing of Form 10F electronically, many people are unaware of the basic fact that the aforesaid form [as per section 90(5)] is only required to be furnished if the Tax Residency Certificate (TRC) furnished by the Non-Resident payee in accordance with section 90(4), does not contain certain information as prescribed in Rule 21AB(1). This is also stated in rule 21AB(2).

48th GST Council meeting

 Given below the update with respect to relevant announcements made post the 48th GST Council Meeting held on 17 December 2022:

 

History of Global Transfer Pricing

 
The First World War ended way back in 1918/19. It was the first time when the different nations in the world collaborated to form the “League of Nations” in order to maintain peace and security, and take decisions in the matter of International Affairs.

UAE adopts Transfer Pricing Regulations

 

A corporate tax regime without transfer pricing provisions would be spineless. Transfer pricing is detailed and mention in the Federal Decree released on 9 December 2022. While we are undertaking detailed research on transfer pricing law in the UAE, here is our first take on the transfer pricing law in the UAE.

Compute Customer Acquisition Cost (CAC) and Lifetime Value (LTV)

Calculating Customer Lifetime Value (LTV):

- Suppose a company’s ARR (Annual Recurring Revenue)= $500K
- Total number of customers= 2500
- Average Revenue Per Customer= $500K/ 2500= $200

Know about “Form ITR-A

 

1. ITR-A is a form provided to furnish a modified return by a successor company to a business reorganization for an assessment year.

2. Where businesses go through a reorganization the successor entity, is required to file modified returns for the period between the date of effectivity of the order and the date of issuance of the final order of the competent authority. Form ITR-A is the prescribed form by the Income Tax Department for filing such a return.

3. When two or more business goes under remodeling, reconstruction, amalgamation, or merger the resulting business or entity is known as the successor entity, and the businesses going under reorganization are known as the predecessor entity.

4. The prescribed form should be furnished within six months from the end of the month in which said order was issued.

5. The ITR-6 (applicable for companies) has been modified to include information contained in FORM ITR-A.

6. In Appendix II, in Form ITR-6- PART A-GEN, entries of the serial number (A19)(a)(i), have been substituted, for every assessment year commencing on April 01, 2022, or any, earlier assessment year.

(Rule 12AD of the Income Tax Rules)

Comparing Indian GST with European VAT

 

It has been more than 5 years since GST has been introduced in India and with the passage of time, the process of GST has stabilized in the country and the government feels proud of the success of GST implementation in the country.  Being tax head of an MNC, I am being exposed to the GST or VAT process of other countries, especially  European countries, and in this article tries to compare the indirect tax process of both countries from my own experience.

GST input credit on Motor vehicles.

ITC is blocked on motor vehicles having seating capacity ≤ 13 persons (including the driver) used for the transportation of persons. Further, ITC is also blocked on certain services relating to motor vehicles namely, insurance, servicing, and repair and maintenance.

What would be the treatment of 𝐭𝐚𝐱𝐞𝐬 𝐩𝐚𝐢𝐝 𝐢𝐧 𝐟𝐨𝐫𝐞𝐢𝐠𝐧 𝐜𝐨𝐮𝐧𝐭𝐫𝐢𝐞𝐬 𝐟𝐨𝐫 𝐰𝐡𝐢𝐜𝐡 𝐜𝐫𝐞𝐝𝐢𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐚𝐯𝐚𝐢𝐥𝐚𝐛𝐥𝐞 𝐢𝐧 𝐈𝐧𝐝𝐢𝐚?

Indian Income Tax Act does not allow refund in such cases but based on various judgments 𝐭𝐡𝐞 𝐩𝐨𝐫𝐭𝐢𝐨𝐧 𝐨𝐟 𝐭𝐚𝐱 𝐟𝐨𝐫 𝐰𝐡𝐢𝐜𝐡 𝐜𝐫𝐞𝐝𝐢𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐚𝐯𝐚𝐢𝐥𝐚𝐛𝐥𝐞 𝐜𝐚𝐧 𝐛𝐞 𝐜𝐥𝐚𝐢𝐦𝐞𝐝 𝐚𝐬 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬 𝐝𝐞𝐝𝐮𝐜𝐭𝐢𝐨𝐧. For example, tax paid in say UK is Rs.1000/- whereas credit is only available for Rs.600/-, in this case Rs.400/- can be claimed as business deduction.
Various judgments in support of this view:
𝑉𝑖𝑟𝑚𝑎𝑡𝑖 𝑆𝑜𝑓𝑡𝑤𝑎𝑟𝑒 𝑎𝑛𝑑 𝑇𝑒𝑙𝑒𝑐𝑜𝑚𝑚𝑢𝑛𝑖𝑐𝑎𝑡𝑖𝑜𝑛 𝐿𝑡𝑑. 𝑣𝑠. 𝐷𝐶𝐼𝑇 [𝐼𝑇𝐴 𝑁𝑜.1826/𝐴𝐻𝐷/2019]
𝐵𝑎𝑛𝑘 𝑜𝑓 𝐼𝑛𝑑𝑖𝑎 𝑣𝑠 𝐴𝐶𝐼𝑇 [𝐼𝑇𝐴 𝑁𝑜.869/𝑀𝑢𝑚/2018]
𝑅𝑒𝑙𝑖𝑎𝑛𝑐𝑒 𝐼𝑛𝑓𝑟𝑎𝑠𝑡𝑟𝑢𝑐𝑡𝑢𝑟𝑒 𝐿𝑡𝑑. 𝑣𝑠. 𝐶𝐼𝑇 [𝐼𝑇𝑅 75 𝑜𝑓 1998, 𝐵𝑜𝑚𝑏𝑎𝑦 𝐻𝐶]

Understand foreign tax credit for USA ex-pats.

 

One of the most common problems US ex-pats face is double taxation—paying taxes twice on the same income. Fortunately, the IRS offers multiple tax credits and deductions to help expats avoid this costly burden. One example is the Foreign Tax Credit (Form 1116). Using this credit, many Americans living abroad are able to erase their US tax debt entirely.

Comparison of buy back with dividend