Impact of 2022 SC judgement of New Noble Education Society:

A. What is charitable purpose?

1. As per 2(15) of the Income Tax Act, the term “charitable purpose” includes relief of the poor, education, medical relief, and any other object of general public utility.
2. However, after the 2008 amendment to the Income Tax Act, an additional condition was introduced. If any entity involved in activities related to “general public utility” engages in commercial activities for profit, it cannot be treated as a charitable institution.

Analysis of decision of the Delhi HC in the case of Tiger Global

Analysis of decision by the Delhi High Court in Tiger Global International III Holdings v. AAR, which reinforces the legal status of Tax Residency Certificates (TRCs) issued by Mauritius under the Double Taxation Avoidance Agreement (DTAA) between India and Mauritius. Key points include:

SC upholds validity of almost 90,000 reassessment notices issued during COVID-19 times and grants big relief to tax department

 This Tax Alert summarizes a significant decision of 3 Judge Bench of Supreme Court^[1] (SC) addressing the interplay between the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA), which extended certain time limits under Income Tax Law^[2] (ITL), and the provisions of ITL as amended vide Finance Act (FA) 2021 dealing with reassessment of past years.

SC holds ITC should be eligible on goods and services used for construction of building, if qualifies as a ’plant’

 This Tax Alert summarizes a recent ruling of the Supreme Court (SC)¹ on the eligibility of input tax credit pertaining to goods and services used in construction.  The Court has held that the functionality test would need to be applied to determine whether the construction is of a “plant or machinery” to determine credit eligibility.

 

Government notifies effective date for amendments made in GST law vide Finance (No.2) Act 2024

 This Tax Alert summarizes recent Notification^[1] issued by Central Board of Indirect Taxes and Customs (CBIC) notifying effective date for the amendments made in Central Goods and Services Tax Act, 2017 (CGST Act) and allied laws vide Finance (No.2) Act, 2024.

TDS Changes from 1st October, 2024

The TDS rate for payments under sections *194DA, 194H, 194-IB, and 194M* is reduced from 5% to 2%.
*Section 194DA* - Payment in respect of life insurance policy is reduced from 5% to 2%.

India Tax Due Tax - October 2024.

S. No	Due Date	Related to	Compliance to be made
1	11.10.2024	GST	Filing of GSTR 1 for the month of September 2024
2	20.10.2024	GST	-Payment of GST for the month of September, 2024 -Filing of GSTR 3B for the month of September, 2024
3	07.10.2024	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 September 2024. · Deposit TDS from Salaries deducted during the month of September 2024 • Deposit TCS for collections made under section 206C including sale of scrap during the month of September 2024, if any • Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of September 2024, if any
4	31.10.2024	TDS Return	·       Filing of 2nd Quarter (1st July to 31st September) TDS return.
5	15.10.2024	TCS Return	·       Filing of 2nd Quarter (1st July to 31st September) TCS return.
6	31.10.2024	Tax Audit	Filing of Audit Reports 3CA, 3CD, 3CEB for the financial year 2023-24
7	31.10.2024	Income tax	Filing of income tax return for the Corporate assesses (or) non-corporate assesses (Whose books of accounts are required to be audited U/s 44AB of IT act 1964 (or) working partner (of a firm whose books of accounts required to be audit (in case of Assesses not having international or specified domestic transaction). (All Sasken Trusts Return & SSTPL must be filed  )

                                                                                    

GSTN to not retain return data for view of taxpayers beyond 7 years

 This is to apprise you of a recent advisory issued by GSTIN on 24 September 2024 regarding archival of GST returns data on GST portal. In this regard, below key points are worth noting:

HC quashes Notification 56/2023 extending time limit to pass order under GST

 This Tax Alert summarizes a recent ruling of the Gauhati High Court (HC) ^[1] on the validity of notifications extending the time limit to pass order under section 73(10) of Central Goods and Services Tax Act, 2017 (CGST Act).

The key observations of the HC are:  

Taxation of Transfer Fees in Co-operative Housing Societies: An Examination of the Principle of Mutuality

 1. Understanding Co-operative Housing Societies

A co-operative housing society (hereinafter referred to as ‘Society’) includes all types of societies, whether residential, commercial, or industrial. These societies are formed to collectively manage the affairs of a community, typically focusing on maintaining common amenities, property management, and ensuring shared responsibilities among members.

Transfer Pricing Compliance in India: Common Mistakes and Key Insights

Transfer Pricing (TP) compliance is a significant source of tax litigation worldwide, with India being no exception. The complexities of TP laws, coupled with evolving judicial interpretations, create an environment where even minor compliance errors can lead to substantial tax adjustments and prolonged disputes. This article explores common mistakes businesses make in TP compliance, highlights critical case laws, and offers actionable insights to avoid these pitfalls.

HC holds State tax authority cannot transfer GST proceedings once initiated on a particular issue to DGGI

 This Tax Alert summarizes a recent ruling of the Punjab and Haryana High Court (HC)  on validity of transfer of proceedings under the Goods and Services Tax (GST) law.

The key observations of the HC are:

Indirect Tax Case Laws - Sep 24.

 ·       Hon’ble SC recently reiterated that the doctrine of promissory estoppel does not apply to the exercise of legislative powers by the Stat 

 

Direct Tax Case Laws - Sep 24.

 SC

·       Supreme Court Upholds Vodafone Idea’s Non-Liability for TDS on Payments to Non-Resident Telecom Operators 

Understanding the Nuances of Section 43CA

 1.      Applicability: Section 43CA specifically applies to land or buildings held as stock-in-trade (i.e., by builders). It seeks to address undervaluation in property transactions by relying on the SVA-assessed value, which is the basis for calculating stamp duty according to state government rules.

CBIC issues clarifications pursuant to recommendations made in the 54th GST Council meeting

 This Tax Alert summarizes recent Circulars^[1] issued by Central Board of Indirect Taxes and Customs pursuant to the recommendations made in the 54th Goods and Services Tax (GST) Council meeting.

CBIC Circulars 230 to 233 dated September 10, 2024 issuing various clarifications

 Pursuant to the 54^th GST Council meeting held on 9 September 2024, CBIC has issued clarificatory circulars on various issues.  We have prepared a summary of the circulars below for your ready reference.

A Shift in Tax Law: GST Circular Highlights Intent-Based Interpretation

 In the realm of tax law, the conventional method of interpreting legal provisions is a literal reading, where the words of the statute are taken at face value to ensure clarity and predictability. However, a recent GST circular introduces a subtle yet significant shift in approach, offering an interpretation based not just on the text, but on the underlying intent of the law. This circular brings into focus the availability of Input Tax Credit (ITC) for demo vehicles—a decision driven by the purpose of the law rather than a strict literal interpretation.

TDS Section 194IA payment on transfer of immovable property

Introduction:

Any sum paid by way of consideration for transfer of any immovable property (other than agricultural land) is covered under section 194-IA, provided the consideration for transfer of an immovable property is not less than Rs. 50 lakhs.

GST Council recommendation in the 54th Meeting

 Hereinbelow the relevant announcements made in the meeting for your reference.  Kindly note that the below proposals/ recommendations shall be given effect by way of issuance of relevant notifications, circulars and/or amendments in the GST law, which will be issued in due course of time.

Higher rate of TDS in the case of Sec 206AA and 206AB:

Sec 206AA:

1. Section 206AA provides that where any person is entitled to receive any income on which tax is deductible at source, he is required to furnish his PAN to the deductor. In case the PAN is not furnished, the tax shall be deducted at a higher rate under section 206AA.

2. If the recipient fails to furnish his PAN to the deductor then tax shall be deducted at the highest of the following rates:
(a) At the rate specified in the relevant provision of the Income-tax Act.
(b) At the rate or rates in force; or
(c) At the rate of 20%

Introduction of Invoice Management System (IMS)

This is to inform you about the advisory issued by GSTN regarding the launch of a new ‘Invoice Management System (IMS)’ on the GST portal, effective from October 1, 2024. This system aims to assist taxpayers in reconciling their purchase records (invoices, credit/debit notes) with the documents issued by their suppliers, helping in the formulation of GSTR 2B and the claim of Input Tax Credit (ITC)

EUROPEAN UNION AI ACT

 

The Artificial Intelligence Act (AI Act) is a European Union regulation concerning artificial intelligence (AI). It establishes a common regulatory and legal framework for AI within the European Union (EU).

GST Reporting Changes from September 1, 2024

This is to update you that w.e.f. September 1, 2024, following changes are taking place in GST return filing process:

 

Tax Due Date - September 2024.

 

S. No	Due Date	Related to	Compliance to be made
1	11.09.2024	GST	Filing of GSTR-1 for August 2024.

Would bonafide mistake of non disclosure of foreign assets in ITR, result into penalty under Black Money Law?

1. What is undisclosed foreign asset?

Section 2(11) of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act [‘The Black Money Act’] defines an undisclosed foreign asset as an asset located outside India, for which the assessee has no explanation for or the explanation so provided is unsatisfactory in the Assessing Officer’s Opinion.
The disclosure of foreign assets in Schedule FA (Foreign Assets) is an integral part of the Income Tax Return Forms (ITR) starting from the assessment year 2012-13.

Political contributions U/S 80GGC:

Introduction:
1. Section 80GGC of the Income Tax Act provides an opportunity for the taxpayers to claim deductions on contributions made to political parties.

Contract Boundary under Ind AS 117

Contract boundary under Ind AS 117 defines the scope of a contract for accounting purposes. It determines which cash flows should be included in the measurement of the contract's financial performance.

Transfer of Benami property to a third person

Meaning of Benami Transaction:

The following situations/ transcations fall under the definition of Benami transactions as per the provisions of Prohibition of Benami Property Transactions Act, 1988 (PBPT Act):

1. Where a property is transferred to or is held by a person, and the consideration for such property has been provided, or paid by, another person

2. Where a property related transaction is carried out under a fictitious name.

3. Where the owner of the property has no knowledge / denies having any knowledge of the ownership of such property.

4. Where the person providing the consideration is untraceable or fictitious – the identity of the beneficial owner may also be unknown.

Some definitions:
1. Benamidar means a person in whose name the benami property is held. Benamidar is only an alias for the actual owner, the ‘Beneficial Owner’.

2. A Beneficial owner means a person, whether his identity is known or not, for whose benefit the benami property is held by a Benamidar.

3. Property means assets of any kind, whether movable or immovable, tangible or intangible, corporeal or incorporeal.

Some pertinent queries on transfer of Benami Property:
1. Can a Benamidar re-transfer the Benami property to the beneficial owner or any other person?
Ans: No. Re-transfer of the Benami property by the Benamidar to the beneficial owner or any other person acting on his behalf is prohibited, and such a re-transfer is deemed to be null and void.

2. Can a Benamidar sell away Benami property to avoid confiscation?
Ans: Section 27(2) of the PBPT Act protects the interests of a genuine purchaser/holder of property by providing that Adjudi­cating Authority shall not confiscate property adjudicated to be benami property if such property was held or acquired by a person from the Benamidar for adequate consideration prior to the issue of notice by Initiating Officer and without his having knowledge of the Benami transaction.

However, Section 57 of the PBPT Act provides that where, after the issue of a notice under Section 24, any property referred to in the said notice is transferred by any mode whatsoever, such transfer shall, for the purposes of the proceedings under this Act, be ignored. If such property is subsequently confiscated by the Central Government then the transfer of such property shall be deemed to be null and void

Income Tax Clearance Certificate (ITCC) not for everyone

  

 

Since 2004 there is a provision in the Income-tax Act, 1961 which provides for obtaining an income tax clearance certificate (ITCC) under Section 230 of Income-tax Act, 1961 (‘IT Act’). It prescribes that a person domiciled in India who plans to leave India shall at the time of departure declare in prescribed form and manner (Form 30C) following details to the prescribed income tax authority:

SC decides on timelines for operationality of tax on mineral rights and waiver of interest and penalty

 This Tax Alert summarizes a recent ruling of the Supreme Court (SC) to decide whether the majority ruling of nine-judge bench of SC in case of Mineral Area Development Authority vs. Steel Authority of India (MADA) should be given prospective effect.

TDS Rate Chart for Financial Year 2024-25 and Assessment Year 2025-26:

 

Section

Particulars

TDS Rate Individual/ HUF (Indian Resident)(in %)

TDS Rate for (NRI) in India (in %)

Domestic Company (in %)

Other than domestic Company (in %)

Penalty for under reporting and misreporting of income

1. According to Section 270A of the Income Tax Act, if an individual underreports or misreports their income, an assessing officer (AO), a commissioner (appeals), a principal commissioner, or a commissioner may order them to pay a penalty of 50% and 200% of the tax due for under reporting and misreporting respectively.

Liasion office Income tax compliance

 Liaison office ("LO") - Annual compliance under Income Tax Act, 1961 ("IT Act") and related proposed amendment via The Finance (No. 2) Bill, 2024

Summary of changes in GST rules as amended by Notification No. 12/2024 CT dated 10.07.2024

 

Rule	Original Provision	Amended Provision	Impact/Notes
Rule 8	Application process under rule 8 including Aadhaar authentication.	Insertion of additional proviso for application process where applicant has not opted for an Aadhaar authentication, to undergo photograph and document verification at facilitation centers.	Ensures proper verification of applications with additional documentation and photograph requirements.

Transfer Pricing Documentation Requirements for Companies in Finland

Transfer pricing (TP) documentation is essential for companies engaged in inter-company transactions to ensure that their pricing aligns with the arm's length principle, which is critical for tax compliance. In Finland, the obligation to prepare and maintain transfer pricing documentation is subject to specific criteria and thresholds. This article outlines these requirements and provides insights into the simplified documentation process for smaller transactions.

What is a defective return?

Defective notice:

1. When any important information is missing or reported wrongly on the return, it is known as a defective return.

2. In any of the above cases, the income tax department issues a defective notice u/s 139(9) to the taxpayers, intimating them about the same and asking them to correct the inaccuracies present in the return.

How Veeru of Sholay explains new capital gain tax on property to Mousi.

Mousi to Jai: Beta, I have got this WhatsApp message that they have restored the indexation benefit. Is it correct Beta?

Allowing TDS credit to a person other than the recipient:

Need for allowance of TDS credit in the hands of person other than recipient:

1. As per Sec 199 of the Income Tax Act read with Rule 37BA of the Income Tax Rules, TDS credit shall be given to the person to whom payment is made or credit has been given.

Levy of Interest & Penalty on IGST on Import of Goods

 In an important update, the Finance Bill 2024 passed by Lok Sabha has proposed to substitute Section 3(12) of the Customs Tariff Act, 1975 (‘CTA 1975’) to provide for interest and penalty on Integrated Tax (‘IGST’) levied on import of Goods.

 

Key amendments to Finance (No.2) Bill 2024 at the enactment stage

 The Finance (No. 2) Bill, 2024 [FB (No. 2) 2024 or Bill] was presented by the Hon’ble Finance Minister (FM) Nirmala Sitharaman on 23 July 2024^[1]. While moving the Bill for approval by the Lok Sabha^[2] on 7 August 2024, the FM introduced amendments to FB (No, 2) 2024 (Amended Bill). The amendments are generally intended to address certain ambiguities/uncertainties arising from the proposals as contained in the Bill.

FM proposes Indirect tax related amendments to Finance (No. 2) Bill, 2024

 This Tax Alert summarizes indirect tax related amendments to Finance (No. 2) Bill, 2024, proposed by the Hon’ble Finance Minister and introduced in Lok Sabha.

Provisions of Customs Tariff Act, 1975 are amended to postulate that the provisions of Customs Act, 1962 including those relating to the date of determination of rate of duty, assessment, non-levy, short-levy, refunds, exemptions, interest, recovery, appeals, offences and penalties shall apply to duty or tax or cess as they apply to duties under Customs Act.

Similar provisions have been inserted under the relevant Finance Acts for National Calamity Contingent Duty (NCCD), Special additional excise duty, Additional duty of excise, Social Welfare Surcharge, Road and Infrastructure Cess, Health Cess, and Agriculture Infrastructure and Development Cess.

For the abovementioned duties, surcharge and cesses, the provisions of Customs Act, 1962 and Central Excise Act, 1944, as the case may be, shall apply accordingly.


Comments:

GST Appellate Tribunal - Recent Developments with Brief Landscape

 This update intends to provide you a brief landscape and recent developments w.r.t. GST Appellate Tribunal. The details are as under:

 

Key points on Filling Appeal before GST Appellate Tribunal

Q1. Who can file an appeal to GSTAT?

A1. S.112(1) any person aggrieved by an Order passed against him U/s 107 (First Appellate Authority) or S.108 (Revisional Authority) may file appeal to GSTAT against such order

TDS on partner’s remuneration introduced in the Budget:

 Introduction:

1. Budget 2024 proposes a deduction of TDS @ 10% on payment by a partnership firm or a LLP to their partners, which may be in form of Salary or remuneration or commission or bonus or interest, when the aggregate amount exceeds Rs. 20,000 in a financial year.

Slump sale more attractive post budget.

"The reduction in tax rates to 12.5 percent is significant. Companies may increasingly opt for slump sales, especially when there is a need to redeploy cash within the transferor company. Slump sales might also become more common for entering into strategic joint ventures or facilitating staggered private equity buyouts, where the transferor continues for a few years before eventually exiting through the sale of shares. The lower rate of 12.5 percent on the sale of shares would facilitate joint venture structures, particularly when cash needs to be redeployed within the transferor company.

Amendments made in Form 3CD effective from AY 2024-25:

Below are the clauses in which changes are made:

1. Clause 8a (Whether company has opted for the special tax regime with lower tax rates)-
Clause 8a adds the reference to Section 115BAE.

Supreme Court Upholds Vodafone Idea’s Non-Liability for TDS on Payments to Non-Resident Telecom Operators

 Vodafone Idea Ltd (TS-547-SC-2024)

Facts:
1. The Assessing Officer (AO) issued a notice to Vodafone, asserting that the company failed to deduct TDS on payments made to the NTOs and Belgacom for the years 2008–09 to 2015–16, as mandated by Section 195 of the Income Tax Act, 1961.

Due Date for claiming credits under GST

 Section 16(4) provides the last date within which the credit for any particular FY can be claimed. Post the 53rd GST Council meeting, changes have been announced wrt the last date for claiming credit

SC upholds legislative power of States to impose taxes on mineral rights

 This Tax Alert summarizes a recent ruling of the Supreme Court (SC) on the distribution of legislative powers between Union and States on the taxation of mineral rights.

Tax due date - August 2024.

 

Sl No	Due Date	Related to	Compliance to be made
1	11.08.2024	GST	Filing of GSTR – 1 for the month of July 2024
	31.08.2024	Income Tax	Filing of Form 10 of Charitable Trust
2	20.08.2024	GST	- Payment & filing of GST return for the Month of July 2024- Form GSTR 3B
5	07.08.2024	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 July 2024. · Deposit TDS from Salaries deducted during the month of July 2024 • Deposit TCS for collections made under section 206C including sale of scrap during the month of July 2024, if any • Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of July 2024, if any