TP COMPLIANCE CHART FOR FY 2019-20 (AY 2020-21)

Activity	Section/Rule	Form No.	Old Deadline	New Deadline	Remarks
Transfer Pricing Audit	Section 92E (Rule 10E)	Form 3CEB	30-Nov-2020	31-Oct-2020	Amended by Finance Bill, 2020
Transfer Pricing Study- Documentation	Section 92D (Rule 10D)	-	30-Nov-2020	31-Oct-2020	-
Return of Income (Having applicability of Transfer Pricing Provisions)	Section 139	Ø (ITR-1)- For Resident Individual                                 income having less than 50 Lakh and Agriculture Income upto 5000. Ø (ITR-2)-For Individual & HUF whose income more than 50 Lakh. Ø (ITR-3)-For Individual & HUF carry Profession Business. Ø (ITR-4)-For Individual, HUF & partnership Firm (Other than LLP) having income from business& profession. Ø (ITR-5)-For Firms, LLP, AOP, BOP, AJP, Business trust and Investment Fund. Ø (ITR-6)-For Companies having income from charitable or religious purpose                                     (Filed Electronically Only). Ø (ITR-7)-For person & company required to furnish u/s 139 (4A), 139 (4B), 139 (4C), 139 (4D), 139 (4E) & 139 (4F).	30-Nov-2020	30-Nov-2020	No Change
Master File	Section 92D (4) (Rule 10DA)	Form 3CEAA	30-Nov-2020	30-Nov-2020	No Change
Intimation by a designated Constituent Entity	Section 92D (4) (Rule 10DA)	Form 3CEAB	31-Oct-2020	31-Oct-2020	No Change
Intimation by Designated Constituent Entity	Section 286 (1) (Rule 10DB)	Form 3CEAC	Two months prior to the due date for furnishing of CBCR-Form 3CEAD	Two months prior to the due date for furnishing of CBCR-Form 3CEAD	No Change
CbCR	Section 286 (2) & (4) (Rule 10DB)	Form 3CEAD	12 months from the end of reporting Accounting Year	12 months from the end of reporting Accounting Year	No Change

Note 1: Accounting Year means

I.            a previous year, in a case where the parent entity is resident in India; or

II.            an annual accounting period, with respect to which the parent entity of the international group prepares its financial statements under any law for the time being in force or the applicable accounting standards of the country or territory of which such entity is resident, in any other case;

Note 2: Reporting Accounting Year means the accounting year in respect of which the financial and operational results are required to be reflected in the report referred to in sub-sections (2) and (4).

Know what is Buy-Back of Shares:

Buy Back of Shares # Meaning:

When a Company utilizes its accumulated profit which is supported by sufficient liquid funds in order to cancel a portion of its shares by purchasing either from the open market or by direct purchase from the shareholders. The primary object of the cancellation of shares is to distribute the surplus cash among the shareholders, i.e., the shareholder will get liquid cash for the shares that he purchased. The logic behind this principle is that so long as the earning remains constants, the cancellation or repurchase of share will, no doubt, reduce the total number of shares which, in other words, will increase the earning per share (EPS) as also the market price (MPS).

Challenges in GST from April 2020.

Given below we discuss that after how difficult is the life for taxpayer and professionals  from April 1, 2020 as there are number of changes going to be  impacted to us.

Indirect Taxation of Automobiles

Background

Humankind moved towards civilization when men ceased to produce all the goods to meet their requirements and instead looked towards others to provide items of need in exchange of other items. With the emergence of one commonly recognized valuable currency, the barter system gave way to the concept of ‘sale’. Today, sale of goods forms the backbone of a highly complex economy and nations have implemented taxation systems to efficiently tax these transactions.

In India, the taxation system is based on fiscal federalism i.e. the Centre and State have independent taxing powers. Further, some taxes are levied by the Centre but collected and assigned to States. One such example is that of sales tax. Sales tax is undisputedly, the greatest source of revenue for States. Therefore, States attempt to envelop most sales transactions within their taxing  jurisdiction, which at times conflict and compete with other States’ taxing powers. This article seeks to discuss these conflicts from the perspective of sale of automobiles.

FAQ on E invoicing

1.  Why E invoicing? 

·         From April 1^st 2020 onwards any enterprise having turnover exceeding Rs. 100 Crore mandatorily have to issue E invoice to their customer.

 

02.  Which invoices covered under E invoice system?

 

·         All business to business i.e B2B invoices which include domestic and export sale.

·         Debit and credit note 

 

03.  Which invoices not covered under E invoice system?

·         Business to consumer i.e  B2C invoices 

·         Onsite sale.

 

04.   How to generate E invoice?

·         The E invoice required to be generated in the Government portal.  

·         There are two ways of generating E-invoice

(i)                 Automatic

(ii)               Manual.  

 

05.  What is the difference between Automatic and Manual process.

SN	Manual	Automatic
1	No additional Technology cost.	There will be additional Technology cost.
2	E invoices will be generated outside SAP and  all additional data of E invoice will be stored  outside SAP  only	The E invoices will be generated in the SAP system only and all additional data of E invoices will be saved in SAP only
3	E invoice will be printed outside SAP in government format.	E invoice will be printed from SAP with our own customized format.
4	Reconciliation to be done manually.	Since data saved in SAP,   system itself will be able to provide the reconciliation.
5	There will be a time lag between  regular invoice and E invoice	Generation of regular invoice and E invoice can be done on real time basis.
6	Due to manual process, there is always scope for error.	Due to automatic flow of data from SAP, there will be 100 % accuracy.

Destination Mautitus to earn Dividend.

 Executive summary                                 

Abolishment of dividend distribution tax and make its taxable in hand of share- holders has stopped multi-level scheme of Taxation on dividend income and disallowance of expenses1 related to dividend income. Foreign Investor would also benefit from available foreign tax credit in home country on Income tax withholding in India.

Income Tax withholding for resident shareholder is 10% and 20% (plus applicable surcharge and cess) for foreign shareholder. Foreign shareholder can certainly avail Foreign Tax credit. Indian Income tax withholding tax would be further reduced to tax rate as per Tax treaty. Pre TCJA, 2017, Foreign Tax credit was available u/s 902 of IRC on Indian dividend distribution tax and corporate income tax. Now, India investment planning in most import for available lesser withholding tax rate 5% through Mauritius or Hongkong.

For availing tax treaty benefits, foreign investor is required to furnish income Tax return in India and establish substance in these jurisdictions Income Tax withholding in hand of Mauritius shareholder as 5%. However, income tax withholding in hand of UK and US shareholder is 10% and 15% respectively.2

Revised ‘Direct Tax Vivad se Vishwas Bill, 2020’

The Finance Minister, Smt. Nirmala Sitharaman, in her budget speech, has proposed to bring a scheme similar to the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 to reduce the litigation in the direct taxes. This will not only benefit the exchequer to recover the blocked revenue but also the taxpayers to save time, energy and resources to be spent on unwanted litigations.

The Finance Minister has introduced the Direct Tax Vivad se Vishwas Bill, 2020 ('the Scheme') in the Lok Sabha on 05-02-2020 for dispute resolution related to direct taxes. As per media report, numerous of changes are made in the bill.

The highlights of the revised bill are discussed in the below paragraphs:

Important Rulings on Duration/ Link between Cash Withdrawals & Deposits

All cases discussed below have as an important factor the time gap between cash withdrawals and deposits in different factual circumstances where the withdrawals have been cited as source  of  deposits.  It  also  includes  a  recent   ITAT   ruling   distinguishing   a   landmark ruling Bhaichand N. Gandhi to holds, that bank pass book could be treated as a book of the assessee; and an ITAT 5-member Special Bench ruling that held, that even if sec. 68 is not applicable, the assessee can be asked to explain cash deposit in bank account u/s 69 or sec. 69B of the Act.

Two important principles discussed are – on/ to whom the onus lies/ shifts, and the tests to be applied to decide whether the onus has been discharged or not.

Analysis of assessment of demonetisation cases

In its ongoing Operation Clean Money drive (OCM), Various cases were selected for scrutiny assessment for  AY  2017-18  where  large  amount  of  CASH  was  deposited  during  demonetisation  period  i.e. 9th  November 2016 to 31st  December 2016.

Changes for the company after budget 2020.

In the below article, we try to summarize the budget 2020 proposals which will have an impact on the operation of companies.  The first impact is levying tax on Dividend Income.  This change will have several impacts on the company. The below points to summarize the impact.

How Personal taxes creates more hassles after Budget 2020.

In the Budget Speech of 2020, The Finance Minister (FM)  proclaimed before the nation that she will simplify the process of taxation of Individuals and also reduce their tax expense. In this regard, she provided right to choose  by  Individual taxpayer to either select conventional tax slab with all exemptions and deductions or else go with new reduce slab without any exemptions or deductions.   Given below the new tax slab rate with various exemptions.

Tax on Dividend.

According to the Indian Income Tax Act, domestic companies declaring dividend out of its residual profits are required to pay dividend distribution tax (DDT) under section 115 O of the Income-tax act. The shareholder will receive their share of profit after the payment of DDT and same is tax-exempted in the hands of investors under section 10(34) of the Income-tax act.  From last two years shareholders who are receiving dividend more than Ten Lakhs are now require to pay tax @ Ten percent on the dividend income earned over and above Rs. Ten Lakhs.  Not only this, there are different ranges of surcharge on tax for different slabs

HC strikes down levy of Integrated tax on inbound ocean freight under GST

This Tax Alert summarizes a recent ruling ^[1] of Gujarat High Court (HC). The issue involved was whether Integrated Goods and Services Tax (IGST) can be separately levied and collected from Indian importer on ocean freight paid by the foreign exporter to a foreign shipping line, where Customs duty together with IGST has been already discharged on the value of imported goods.

Introduction to Vivad se Viswas Scheme.

Further to the proposal made by the Hon'ble Finance Minister in Union Budget 2020, for introduction of Vivad se Vishwas Scheme ('the Scheme'), the Direct Tax Vivad se Vishwas Bill, 2020 (‘the Bill’) has been tabled today at the Lok Sabha.

Compare Old tax regime with new tax regime

In Finance Bill, 2020 a new section 115BAC has been inserted to provide concessional slab rate of tax for individuals and HUFs. Further, this section is optional and option has to be exercised on or before the due date of filing return. However, to avail the benefit of concessional rate, following conditions needs to be satisfied.

Tax on Dividend.

In yet another bold move after the Ordinance announcements, the Finance Bill, 2020, inter alia, proposes to abolish dividend distribution tax (DDT), thereby, boosting investible funds and higher dividend payouts by corporates.

Key Highlights of Transfer Pricing Proposal in Union Budget 2020-21:

> As per amended provisions, Form 3CEB filing date is 31^st October 2020 for FY 2019-20.

> Dispute Resolution Panel forum is now not limited to Transfer Pricing disputes only but also allowed to non residents for all disputes.

TCS on Foreign Payments under LRS

In Para 3.3  of budget speech of FM, for widening the scope of TCS, it is proposed to provide for tax collection at source (TCS) on remittance under Liberalised Remittance Scheme of Reserve Bank of India exceeding seven lakh rupees.

BUDGET 2020 - OTHER DIRECT TAX PROVSION

·         In case of transfer of Land or Building held as stock in trade, Full Value of Consideration will be the sale value if the sale value plus 10% of the sale value (Previously 5%) is equal to the stamp duty value. Otherwise the stamp duty value shall be considered as Full Value of consideration. [Section 43CA]

·         Fair market value of immovable property under section 55 as on 1.4.2001 for computing cost of acquisition not to exceed circle rate value.

·         A specific preamble text along with adoption of MLI has been incorporated in Section 90 of the Act. 

·         Tax Audit thresholds increased from Rs 1 crore to Rs 5 crore with a rider that total receipts and total payments in cash should not exceed 5% of such total receipts and total payments made during the year. 

·         A new section 115BAD has been proposed to be inserted to provide an option to the co-operative societies to pay tax at the rate of 22% plus 10% surcharge and 4% cess. The income of such societies shall be computed without claiming specified exemption, deduction or incentive available under the Act. Provisions of Alternate Minimum Tax (AMT) shall not apply to such co-operative societies.

·         CO-operative societies now to do TDS in case their turnover exceeds  50% on interest payment exceeding 40K.

·         The scope of the provision which allows carrying forward of losses or depreciation in certain amalgamations of banks and the insurance company has been proposed to be extended in order to facilitate recent government bank and insurance companies mergers /amalgamations.

·         The Finance Bill 2020 has proposed that Business Trusts will not be required to get listed on a recognised stock exchange for availing the benefit of pass-through allowed under section 115UA.

·         It has been proposed that assesses can seek advance pricing agreement (APA) or SHR in respect of the determination of attribution of profits to PE.

·         To do away with the existing distinction between a working and a nonworking partner of a firm with respect to the due dates by amending dozens of relevant  provisions prospectively with effect from 1st April, 2020 to apply from the assessment year 2020-21 onwards.    

·         Allowing deduction for amount disallowed under section 43B, to insurance companies on payment basis.

·         Widening the scope of Commodity Transaction Tax

·         Rationalisation of the provisions of section 49 and clause (42A) of section 2 of the Act in respect of segregated portfolios.

BUDGET 2020 - START UPS

Start Ups.

·         Section 80-IAC has been proposed to be amended to provide that deduction to an eligible start-up shall be available for a period of 3 consecutive assessment years out of 10 years. Earlier, this deduction was available for 3 consecutive financial years out of first 7 years. Further, the turnover limit for claiming such exemption has been proposed to raised to Rs. 100 crore which was earlier Rs. 25 crore.

·         Deduction of tax from perquisite arising on the allotment of shares, under ESOP to an employee of a Start-up, shall be proposed to be made at the time of happening of any of the following events:

(i)            On expiry of 4 year from the end of the Assessment year in which ESOP are exercised;

(ii)           At the time the employee leaves the organization

(iii)          At the time of sale of shares allotted under ESOP

BUDGET 2020 - Charitable Trust

Charitable Trust

·         Charitable Trust Registration and 80 G exemption to be for 5 years . All existing trust to apply online again  and obtain the online unique number.

·         80 G exemption holder to submit annual statement of donation received . Failure to submit such statement , a fee of Rs 200 per day for each day of default under section 271G and penalty of Rs 10000 to Rs 1.00 lakh under new section 271J.