Understand Bank Realization certificate.

 Exporters who want to avail benefits under various export-related schemes offered by the government of India are required to provide the Bank Realisation Certificate (BRC) or Export Realisation Certificate (ERC). This certificate confirms that the exporter has received payment from the buyer in foreign currency, and it is issued by authorized dealer banks (AD banks) in India.

Which is better - Superannuation vs NPS

 The National Pension Scheme has been available to the public for over eight years, and more and more investors, business owners, and self-employed people are showing interest in it. This article aims to discuss why this is happening and also compare NPS to superannuation, which is a kind of pension benefit provided by employers but often ignored by employees.

SEBI revised guidelines for AIF

 

The Securities and Exchange Board of India (SEBI) has issued guidelines for 'excuse and exclusion' of investors in an Alternative Investment Fund (AIF) to mitigate inconsistency in industry practices and prescribe adequate disclosure to investors in AIFs.

The guidelines now prescribe the following for excluding an investor from participating in a particular investment proposed to be made by an AIF:

1. The investor should confirm that its participation in the investment opportunity would be in violation of an applicable law or regulation, based on the opinion of a professional/legal advisor.

2. The investor, as part of contribution agreement (or other agreement with the AIF), should disclose to the manager that participation of the investor in such investment opportunity would be in contravention to the internal policy of the investor. The said agreement should provide a condition that the investor must report any change in the disclosed internal policy to the AIF within 15 days of such change.

3. An AIF (for reasons to be recorded by the manager) may exclude an investor from participating in a particular investment opportunity, if the manager of the AIF is satisfied that the participation of such investor in the investment opportunity would lead to the AIF being in violation of applicable law or regulation or would result in material adverse effect on the AIF.

4. In the context of an investor in an AIF or other investment vehicle that in turn is an investor in an AIF, such investor may be partially excused or excluded from participation in an investment opportunity, to the extent of the contribution of the AIF/investment vehicle’s underlying investors who are to be excused or excluded from such investment opportunity (for reasons to be recorded by the manager).

The proposed guidelines are broadly consistent with the industry’s current practices. It would be helpful if other regulators, especially the insurance regulator, taking a cue from this SEBI circular, formally clarifies that insurance companies can contribute capital to AIFs that may invest in overseas companies as part of their investment strategy so long as the insurance company is excused from participation in those specific overseas investment opportunities. This would release the much needed capital for investments in AIFs that is awaiting such formal clarity from the IRDAI.

Which one should I opt. old or new tax regime.

 

There is a lot of uncertainty among taxpayers about which tax regime to choose following the recent 2023 Budget. The government has included several incentives in the budget to encourage taxpayers to adopt the new tax regime. This suggests that the government's aim is to have taxpayers switch to the new regime and gradually phase out the old one. While the new regime is now the default option, the old tax regime will still be available. Let's examine both regimes and determine which one to select in 2023.

Owner's equity

 Owner's equity, also known as shareholders' equity or capital, refers to the portion of a company's assets that is owned by the owners or shareholders. It represents the residual interest in the assets of the company after deducting liabilities.

Queries to pose to HR during ESOPs negotiation?

When negotiating ESOPs (Employee Stock Ownership Plans) with an HR representative, it's essential to ask the right questions to ensure that you understand the terms and conditions of the plan fully. Here are some important questions to consider:

Time limit to report E Invoicing.

 Government has decided to impose a time limit on reporting ‘old invoices’ on the e-invoice (IRP) portal for taxpayers having aggregate annual turnover (AATO) greater than or equal to INR 100 crores. 

Understand customer of section 194R.

 Although the issue discussed in this article is almost a year old, its effects are still significant for trade and industry, and thus is being highlighted again. The Indian Income Tax Act, 1961, was amended by the Finance Ministry, by inserting sub section 2 to Section 194 R, with effect from 1st July 2022. The objective of this amendment was to plug revenue leakage on various kinds of payments, perks, gifts, incentives, and discounts that are prevalent in the normal course of business. However, subsequent Guidelines and Additional Guidelines issued by the Finance Ministry have not clarified one aspect of the amendment, which is highlighted in this article.

Green Deposit.

 

Green Deposits, a fixed deposit for a specific tenure, where the amount deposited by you will be used for lending to renewable energy projects, green building projects and projects in smart agriculture, water or waste management projects etc.

Questions you should ask HR while Negotiating ESOPs

 When negotiating ESOPs (Employee Stock Ownership Plans) with an HR representative, it's essential to ask the right questions to ensure that you understand the terms and conditions of the plan fully. Here are some important questions to consider:

1. What percentage of the company's ownership will the ESOP represent?
2. How long will it take for the ESOP to fully vest?
3. Will there be any performance metrics or milestones that need to be achieved before vesting occurs?
4. How will the value of the ESOP be determined?
5. What happens to the ESOP if the company is acquired or goes public?
6. Can the ESOP be transferred or sold?
7. What are the tax implications of participating in the ESOP?
8. Are there any restrictions on when the ESOP can be exercised or sold?
9. What happens if the employee leaves the company before the ESOP fully vests?
10. What are the risks associated with investing in the ESOP, and how can those risks be mitigated?

Remember that ESOPs are complex financial instruments, and it's crucial to fully understand the terms and conditions before accepting an offer. Don't hesitate to ask questions and seek professional advice if necessary.

JUSTIFYING THE GLOBAL CORPORATE MINIMUM TAX

 

In October 2021, the Global Corporate Minimum Tax (GLoBE) rate was set at 15% for Multinational Enterprises (MNEs) under the Pillar 2 of the OECD/IF BEPS 2.0 proposal. The same rate and base were adopted for the new US corporate alternative minimum tax (CAMT). Although the Single Tax Principle suggests that the rate should be around 23%, this compromise was justified as it aligns with the three goals of the corporate tax: revenue, redistribution, and regulation.

Understand ESOP & RSU.

An ESOP, short for Employee Stock Option Plan, and an RSU, short for Restricted Stock Unit, are forms of compensation provided to employees in exchange for their services rendered to an organization. These schemes also grant the employee ownership in the organization they work for. ESOPs and RSUs are typically granted at a discounted rate to employees, with the differential amount between the exercise price and the fair market value (FMV) being borne by the organization. After the grant of an ESOP or RSU, a certain vesting period is required before the employee can exercise their options. It is important to note that these options can only be exercised if the employee remains on the organization's payroll during the vesting period.  

Biometric Based Aadhaar Authentication and Risk-Based Physical Verification in GST Registration

 Important Update on CBIC notifies Amendments to implement Biometric Based Aadhaar Authentication and Risk-Based Physical Verification in GST Registration

The Central Board Of Indirect Taxes and Customs (CBIC) has notified amendments to implement biometric based aadhaar authentication and risk-based physical verification in GST registration. The amendments to the Central Goods and Services Tax (Amendment) Rules, 2023 aim to enhance the efficiency and security of the GST registration.

By the latest amendment, the Board has substituted Rule 8(4A) of the CGST Act, 2017 which suggested that the date of submission of the application in cases shall be the date of authentication of the Aadhaar number, or fifteen days from the submission of the application in Part B of FORM GST REG-01 under sub-rule(4), whichever is earlier.

As per sub-section 4A of Rule 8, the application undergoes authentication of the Aadhaar number for the grant of GST registration.

The notification stated that every application made under sub-rule (4) by a person, other than a person notified under section 25 (6D), who has opted for authentication of an Aadhaar number and is identified on the common portal, based on data analysis and risk parameters.

The above-said procedure shall be followed by biometric-based Aadhaar authentication and taking photographs of the applicant where the applicant is an individual about the applicant where the applicant is not an individual, along with the verification of the original copy of the documents uploaded with the application in FORM GST REG-01 at one of the Facilitation Centres notified by the Commissioner.

It is important to note that as per the CBIC notification the application shall be deemed to be complete only after the completion of the process laid down under the above-said provision.

Legal submission to counter 14A disallowance

 “Expenditure incurred in relation to income not includible in total income.

14A. (1) For the purposes of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act.

Decoding PAN, TAN and GST Numbers.

 

Our endeavor is to comprehend the underlying structure of tax identification numbers such as PAN, TAN, and GST, and explore the methods to extract pertinent information from these numbers.

Cash Flow Analysis

 Cash flow is the amount of money that flows in and out of a business or individual's bank account over a certain period. It is an important financial metric that indicates the amount of cash a business or individual has available to meet its financial obligations, such as paying bills, salaries, and taxes.

Amortisation of SPV debt” by REITs/INVITs will be taxed.

 Key amendment include the changes to the way in which the distribution component “Amortisation of SPV debt” by REITs/INVITs will be taxed. At a high level, the changes proposed are extremely friendly.

10 Anti investment proposals.

 Given below is the list of 10 proposals from the government which is actually Anti investment. 

1. Grandfathering introduced
2. Flat LTCG introduced
3. Dividend taxation at tax slab
4. All tax saving sections nullified in new regime
5. Structure Products taxed at STCG retrospectively
6. Insurance proceeds taxed incl ULIP and Traditional
7. Debt Funds getting taxed at STCG
8. NPS is of no use
9. PF already taxed for higher contributions
10. Tax increased on FnO selling by 25%

Marginal Relief Proposal in Finance Bill 2023

It has been proposed to provide marginal relief for taxpayers adopting new tax regime and having income exceeding ₹ 7.00 lakhs.

Tax Amendments Proposed at Lok Sabha

The Finance bill 2023 has been passed in Lok Sabha yesterday with few new proposals which were not there in bill presented on February 1, 2023.  The important points are summarized below for your reference.

 

Maharashtra Government introduces the Bill for amnesty scheme for indirect taxes in the Legislative Assembly

 This Tax Alert summarizes the Maharashtra Settlement of Arrears of Tax, Interest, Penalty or Late Fee Bill, 2023 introduced in Maharashtra Legislative Assembly.

The Government had proposed an amnesty scheme for various taxes levied before the introduction of Goods and Service Tax (GST) in the State Budget 2023-24 presented on 9 March 2023.

The scheme shall apply to all pending dues under specified state legislations for the period upto 30 June 2017, i.e., before the introduction of GST. Duration for submission of application under the scheme shall commence on 1 May 2023 and end on 14 November 2023. Option for payment in instalments has been made available in cases where arrears are in excess of INR50 lakhs.

The payment of dues under the scheme is summarized below:

Denied duty deferment benefit of Integrated Tax (‘IGST’) and Compensation Cess on import of goods

 In an important update, the Government has proposed amendment to Finance Bill 2023 to deny duty deferment benefit of Integrated Tax (‘IGST’) and Compensation Cess on import of goods.

 

e-Form 10F for claiming treaty benefits

 As you may already know, in order to claim treaty benefits, a non-resident would need to provide Form 10F along with the Tax Residency Certificate (TRC) if all the necessary details were not available in the TRC. However, on July 16, 2022, the Directorate of Income Tax (Systems) introduced a list of various forms that must be filed electronically, including Form 10F.

New Accounting Rule for Private Ltd Co

We wish to bring to your attention the recent government update regarding the maintenance of an audit trail for all transactions by companies starting from 1st April 2023. This new rule has been introduced to enhance transparency in financial reporting and prevent any tampering with accounting entries.

REVISED RETURN – Section 139(5) of Income Tax Act

 This note pertains to the time limit available for revising an Income Tax Return (ITR) that has already been filed within the statutory time limit as specified under Section 139(1) of the Income Tax Act or within the time limit specified for belated return under Section 139(4) of the Act.

Income Tax Department launches AIS app for Taxpayers: Mobile App for AIS

If you are a taxpayer, there is some good news. The Income Tax Department has released a new app called the AIS App for getting Annual Information Statement (AIS). Taxpayers will receive detailed information about each transaction through this app.

FREQUENTLY ASKED QUESTIONS (FAQs) ON FCRA

.1  What is foreign contribution?

 

Ans. As defined in Section 2(1)(h) of FCRA, 2010, "foreign contribution" means the donation, delivery or transfer made by any foreign source, ─

 

Orissa High Court allowed rectification of GSTR-1 return filed for the period September 2017 and March 2018.

 Assessee in the present case had inadvertently reported supplies to a particular recipient as B2C supplies instead of B2B in its GSTR-1 return. This error resulted in recipient holding up the running bill amount of the assessee.

Assessee requested Revenue to permit it to correct its GSTR-1 return, but the same was rejected on the ground that the timeline to apply for rectification was over. Aggrieved, assessee filed a writ petition before the Orissa HC.

International Tax update

·         In 2023 at Portugal, companies must print ATCUD and QR codes on all their invoices. They will need valid codes from the government and tax authority-certified software before they can start generating the invoices.

·         From July 2024 to January 2026, France will implement mandatory B2B e-invoicing, as well as an e-reporting obligation. This mandate impacts all companies operating in France.

· Do you know that:

 

1.     Interest paid under section 234B and 234C of the Income Tax Act is not Tax Expense under AS 22   

2.     Advance paid for import purchases is non-monetary item under AS 11

INTRODUCTION TO FEMA

The Foreign Exchange Management Act, 1999 (FEMA) came into force by an act of Parliament. It was enacted on 29 December 1999. This new Act is in consonance with the frameworks of the World Trade Organisation (WTO). It also paved the way for the Prevention of Money Laundering Act, 2002 which came into effect from July 1, 2005.

Overseas Direct Investment (ODI).

 

What is ODI ?

Overseas Direct Investment or ODI stands for investments, by way of contribution to the capital or subscription to the memorandum of a foreign entity, or by way of purchase of existing shares of a foreign entity, either by market purchase or private placement or through stock exchange but does not include Portfolio Investment. 

Income Tax case laws update.

 

·         Mumbai ITAT held that to opt for concessional tax rate Form 10-1C has to be filed within the due date.

Understand your CTC

 Do you know what lies behind those impressive CTC packages? Let me reveal the truth about inflated salaries and actual take-home pay.

Service of notice by AO by email:

1. Rule 127 of Income Tax Rules require that for communications delivered or transmitted electronically under section 282, the e-mail address to which a notice or summons or requisition or order or any other communication may be delivered or transmitted shall be –

Understanding Section 194O of the Income Tax Act

E-commerce operators facilitating electronic platforms for the sale of goods and services shall comply with Section 194O. This provision mandates the deduction of TDS on payments made to e-commerce sellers. It applies to e-commerce operators with an annual gross turnover of over Rs. 10 crores.

Transfer of Undertakings (Protection of Employment) Regulations

 

The Transfers of Undertakings Directive 2001/23/EC is a European Union law that protects the contracts of employment of people working in businesses that are transferred between owners It replaced and updated the law previously known as the Acquired Rights Directive 77/187/EC

Foreign Investment Reporting and Management System (FIRMS)

The Reserve Bank of India (RBI) has implemented its own Foreign Investment Reporting and Management System (FIRMS) to track foreign investments in the country. The system is an online portal that enables foreign investors to report their investments in compliance with regulations and allows the RBI to monitor and analyze foreign investment data.

Cost & Profit Optimization and Cost reduction.

 What is cost optimization?

Cost optimization is the process of finding the most cost-effective way to accomplish a particular goal or task. It involves identifying ways to reduce costs without sacrificing quality or efficiency. Cost optimization can apply to a wide range of industries and activities, from manufacturing and supply chain management to software development and cloud computing.

UNDERSTAND ZERO COUPON BOND

Generally, bonds are issued at face value and a fixed interest is paid on them. But in case of Zero-Coupon Bonds (ZCB), no interest is paid to the holder. Rather, such bonds are issued at a heavy discount on the face value of the bond. On maturity, the bondholder gets back the face value of the bond. These bonds are therefore, also known as ‘Discount Bonds’. For example: - Suppose Face Value of the bond is Rs. 150 to be matured after 5 years. It is issued at Rs. 100. Thus, the bondholder initially pays Rs. 100. After 5 years, he will get back Rs. 150 

𝘼𝙣𝙣𝙪𝙖𝙡 𝘾𝙤𝙢𝙥𝙡𝙞𝙖𝙣𝙘𝙚 𝘾𝙖𝙡𝙚𝙣𝙙𝙖𝙧 𝙛𝙤𝙧 𝙇𝙇𝙋

 

The Limited Liability Partnership (LLP) is a business structure that merges the characteristics of a conventional partnership with limited liability. The LLP is regulated by the Limited Liability Partnership Act of 2008.

EPFO: PENSION ON HIGHER WAGES:

 

OUR UNDERSTANDING AS PER EPFO NOTIFICATION DT.20.02.2023:👇🏻

Cash Ratio

“Cash is king” still holds. But how do you use cash to analyze your company’s financial health? Consider these seven ratios:

Tax efficient salary structure under old regime.

 

49th GST Council Meeting Recommendations

This is to update you regarding the 49^th GST Council Meeting concluded on February 18, 2023.  Kindly note that the below proposals/ recommendations shall be given effect by way of issuance of relevant notifications/ amendments in the GST law, which could be issued in due course of time.

International Tax update

·         In 2023 at Portugal, companies must print ATCUD and QR codes on all their invoices. They will need valid codes from the government and tax authority-certified software before they can start generating the invoices.

CBDT notifies income-tax return forms (ITR) for tax year 2022-23

 

This Tax Alert summarizes the key amendments made to the Income Tax Return (ITR) forms for tax year 2022-23, vide Notifications No. 4 and 5 of 2023 dated 10 and 14 February 2023 (Notifications) issued by the Central Board of Direct Taxes (CBDT).

GST on RWA

GST is payable only if the aggregate turnover including exempt supplies like property tax and water tax and also third-party goods/ services exempt up to Rs 7500 per month per member exceed Rs 20 Lakhs annually. Even in cases where the monthly receipts are below Rs 7,500 but the annual turnover of the society crosses Rs 20 Lakhs, in such cases GST is payable. Tax is payable at @18% on the entire taxable proceeds. For example, in cases where monthly proceeds exceed Rs 8000, GST is payable on the entire 8000 Rs and not just on 500 Rs as clarified by CBI&C circular dated 22-7-2019. Corpus, contribution to repair fund, and sinking fund collections are viewed as advance for future contingencies which may lead to the rendering of services and hence may be argued as taxable. There are few contrary advance rulings where the view taken is that these do not lead to a supply of services and hence should not be taxable. Many societies contribute heavily to repair funds to be future ready and as such, there is no service involved by way of value creation/addition. Also if we compare this entry on the monthly maintenance bill with others, all the others that are taxable also have associated input tax credit opportunity. Since this is merely a deposit, taxing this would mean taxing non-profit making societies @18 % without any input tax credit which seems unfair. Since the corpus and sinking fund contributions are mandatory in nature, taxing these would mean it is mandatory to pay 18% tax on the members own funds. It would still be acceptable if the interest earned by society from the repair and sinking fund deposit are charged GST instead of the principal.  

Conditions for availing ITC in GST- A small note.

 

1.   Goods or services brought should only be used for further business purposes.
2.   Buyer shall retain such tax invoice, debit note, or other documents as evidence of such payment.
3.   Such tax invoice or debit note is filed by the supplier in Form GSTR-1, and it appears in the Buyer’s GSTR-2B form.
4.   The goods or services must have been delivered to the buyer.
5.   The buyer must furnish the GST returns in Form GSTR-3B.
6.   Where the goods are received in lots or installments, ITC will be allowed to be availed when the last lot or installment is received.
7.   The buyer must pay towards the supply of goods and/or services within 180 days from the invoice date. If they fail to do so, then the ITC already claimed will be added back to output tax liability and interest must be paid on such tax. ITC claim will be reinstated once the payment is made to the supplier.
8.   If depreciation has been claimed on the tax portion of a capital goods (Assets) purchase, no ITC will be permitted.
9.   Input tax credit can be claimed only before 30th November of the following year or before the filing of Annual GST returns whichever is earlier. That means to avail of the Input tax credit for Financial Year 2022-23, ITC for this year can only be claimed on or before 30th November 2023.
10. If Goods are lost or stolen or confiscated after the purchase, then ITC on such inward supply of goods are not eligible for an Input tax credit.

In house tax department – Mission & Vision.

The mission of an in-house tax department is to ensure compliance with all tax laws and regulations, minimize tax liability, and identify and manage tax-related risks.

The vision of an in-house tax department is to become a trusted partner to other departments within the company and provide strategic tax planning guidance to help the company achieve its business goals.

CBDT notifies Centralised Processing of Equalisation Levy Statement Scheme, 2023

 The Finance Act, 2016 introduced Equalisation Levy (EL) at the rate of 6 per cent on the amount of consideration for online advertisement, any provision for digital advertising space or any other facility or service for the purpose of online advertisement with effect from 1 April 2016. This EL is applicable on the consideration received by a non-resident, from a person resident in India and carrying on business or profession or a non-resident having a Permanent Establishment in India.

The Finance Act, 2020 expanded the scope of the EL and introduced a 2 per cent levy on the amount of consideration received or receivable by an e-commerce operator from e-commerce supply or services. An ‘e-commerce operator’ is defined to mean a non-resident who owns, operates or manages a digital or electronic facility or platform for the online sale of goods or online provision of services or both.

Section 167 of the Finance Act, 2016 provides that the assessee or e-commerce operator should furnish a statement with the Assessing Officer. Further, Section 168 provides for a processing of such statement. However, the Scheme for processing of such statement was awaited.

Recently, the Central Board of Direct Taxes has notified the Centralised Processing of Equalisation Levy Statement Scheme, 2023 (the Scheme). The Scheme shall come into force on the date of its publication in the Official Gazette i.e. 7 February 2023.

India Budget 2023 first cut

Personal Tax

Ø  No change in tax rate under the old regime.

Ø  Receipts from Life insurance are taxable if the gross annual premium payment exceeds Rs. 5 Lakhs. The net amount is taxable under the head Income from other sources for new policies taken after March 23.

Ø  Limit of Leave encashment of Rs. 3 Lakhs increase to Rs. 25 Lakhs. (to  be verified not available in the Memorandum but was there in the budget speech)

Understand Deep Discount Bond.

Deep discount bonds, as the name suggests, are bonds that are sold at a significant discount to their face value. However, they also offer lower interest rates compared to other types of bonds. In this article, we will explain the concept of deep discount bonds, provide examples, and discuss their advantages and calculation methods.

𝐓𝐨𝐩 𝐬𝐢𝐠𝐧𝐬 𝐨𝐟 𝐟𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐬𝐭𝐚𝐭𝐞𝐦𝐞𝐧𝐭 𝐦𝐚𝐧𝐢𝐩𝐮𝐥𝐚𝐭𝐢𝐨𝐧

Financial statements are reports that provide information about a company's financial performance and position. The three main financial statements are the balance sheet, income statement, and cash flow statement. The balance sheet shows a company's assets, liabilities, and equity at a specific point in time. The income statement shows a company's revenue, expenses, and profit over a specific period. The cash flow statement shows a company's cash inflows and outflows over a specific period. Together, these statements provide a comprehensive picture of a company's financial situation and can be used to analyze its performance and make informed decisions about investing in the company. It is not necessary to be a financial market analyst to identify signs of manipulation in companies' financial statements of companies.

Income Escaping Assessment – The Legal Analysis

 There are various reasons why litigation arises between the assessees and the income tax department including TDS, disallowance of certain expenditures, exemptions, and deductions, etc. One of the major reasons for litigations is when the department finds a certain income that has escaped assessment and therefore proceeds to tax the same. This is known as income escaping assessment or Reassessment under section 147 of the income tax act & Section 148. Here, we have covered everything regarding income escaping assessment, what is covered in this assessment and why it is a major contributor in litigations.

How To Incorporate A USA Company As A Founder In India?

Indian startups seem to prefer Delaware for their business. Not only does register your Delaware corporation from India gives access to venture capital firms and startup investors, but you will also get tax benefits. Delaware has no state sales tax, and the state’s franchise tax for small US businesses is also less. Additionally, the state also allows non-residents to pay no separate corporate income tax.

One has to follow six steps in order to have a USA Company Registration from India:

Choose the right entity type for your business. As Investors highly prefer C corporations, most Indian companies choose this type.

Decide the state in which you want to register your company. Delaware is the most preferred state and is the home to the majority of US tech companies. 70% of Fortune 1000 companies are registered in Delaware.

File to incorporate.

The next step is to get an employer identification number (EIN) from the Internal Revenue Service (IRS).

Registering with the Internal Revenue Service also sets your company to pay taxes. Also, you need an EIN to open a US bank account.

Once you have an EIN, open a US bank account, which is essential for doing business in the US.
In the state of Delaware, you are required to file annual reports every year. So, keep your company in a sound situation by filing reports.