Recommendations of 55th GST council meeting | 21 December 2024

 

Summary of the relevant updates is provided below for ease of your reference:

 

A)    Proposals relating to GST law, Compliances and Procedures

CBDT issues second round of frequently asked questions in relation to Direct Tax Vivad Se Vishwas Scheme, 2024

 This Tax Alert summarizes Circular No. 19/2024 dated 16 December 2024 (VSV 2- December Circular) issued by the Central Board of Direct Taxes^[1] (CBDT) which contains second round of 27 frequently asked questions (FAQs) on the operation of Direct Tax Vivad Se Vishwas Scheme, 2024 (VSV 2). The Circular is issued in continuation of an earlier Circular No. 12/2024 dated 15 October 2024^[2] (VSV 2 - October Circular) which contained the first round of 35 FAQs.

DIN not mandatory on GST refund related documents

 This is to update you about a recent decision passed by Delhi High Court in the case of Centrans Logistics Pvt Ltd (W.P.(C) 7983/2023, dated December 09, 2024) wherein it was held that a separate Document Identification Number (‘DIN’) is not required for issuance of communications related to processing of refund claims under the GST laws.

Switzerland revokes unilateral MFN benefit under India-Switzerland Tax Treaty w.e.f. 1 January 2025

 This Tax Alert summarizes a recent Statement issued by Switzerland Competent Authority^[1] (Swiss CA) on 11 December 2024 (2024 Statement) withdrawing Switzerland’s unilateral application through earlier Statement published on 13 August 2021 (2021 Statement) of Most Favored Nation (MFN) Clause in India- Switzerland (I-S) Double Taxation Avoidance Agreement (DTAA or Treaty) w.e.f. 1 January 2025.

The 2024 Statement acknowledges the interpretation given by the Supreme Court (SC) of India in the case of Nestle SA ^[2], wherein the SC held that the benefit of MFN Clause is not applicable in absence of a notification granting such benefit in accordance with the provisions of the Indian Tax Law (ITL). Further, the SC held that the term ‘third State which is a member of the OECD’ is to be interpreted as being limited to the member states of the Organisation for Economic Co-operation and Development (OECD) at the time when such treaties were entered into with India. Hence, the 2024 Statement acknowledges that the interpretation of MFN clause by Swiss CA through its 2021 Statement is not shared by India. Accordingly, in terms of the right reserved in 2021 Statement to reverse the unilateral interpretation if there is no reciprocity by the Indian CA, the 2024 Statement waives its unilateral application prospectively from 1 January 2025.

Further, the 2024 Statement clarifies the effect of such withdrawal w.e.f. 1 January 2025 on Indian and Swiss tax residents deriving dividend income from Switzerland and India respectively. Indian residents deriving dividend income from Switzerland, on or after 1 January 2025, shall be taxed @10% on such income without giving effect to the MFN clause. However, benefit of lower tax rate of 5% on such incomes as per MFN clause may continue to apply for dividend income earned during the tax years from 2018 to 2024.

Correspondingly, Swiss residents deriving dividend income from India w.e.f. 1 January 2025 shall get higher foreign tax credit up to 10% instead of 5%.

How to Tackle Penalty Notices in the Case of Transfer Pricing Adjustments

 A. Introduction: Section 270A of the Income Tax Act classifies variations in income into two categories: under-reporting and misreporting. Penalties for under-reported income are 50% of the tax payable, while for misreported income, they escalate to 200% of the tax base calculated on such income.

Tax Tribunal Special Bench upholds applicability of transfer pricing rules to transactions between foreign enterprise and its Indian permanent establishment

 This Tax Alert summarizes a recent decision of the Special Bench (SB) of the Ahmedabad Income-tax Appellate Tribunal (ITAT), in the case of TBEA Shenyang Transformer Group Company Limited  (Taxpayer or the Head Office or HO).

The question before the SB was whether transactions between a foreign enterprise and its Indian permanent establishment (PE) can be considered an international transaction for the purpose of section 92 of the Income-tax Act, 1961 (the Act) and accordingly subject to the transfer pricing (TP) provisions of the Act. The SB ruled that a PE is a separate enterprise distinct from the HO for the purpose of the Act as well as under Article 7 of the applicable Double Taxation Avoidance Agreement (DTAA). The SB thereafter concluded that transactions between a foreign enterprise and its PE in India can be considered an international transaction and be subject to transfer pricing provisions. The SB however left the questions on whether the HO and its Indian PE are Associated Enterprises (AE) as defined in section 92A(2) of the Act and whether the transactions of the PE could be deemed international transactions under section 92B(2) of the Act for the Division Bench of the ITAT to decide based on the facts and circumstances of the case and the provisions of applicable law.

India RBI MPC Review – December 6, 2024

 The Reserve Bank of India (RBI) announced its monetary policy review on December 6, 2024, leaving the repo rate unchanged at 6.5%. However, it implemented non-conventional measures, including a phased 50 basis points (bps) reduction in the Cash Reserve Ratio (CRR) to 4.0% from 4.5%. This move is expected to inject INR 1.1 trillion ($13 billion) into the banking system, addressing liquidity concerns.

Optimizing Tax Savings for Indian SMEs

 Small and Medium Enterprises (SMEs) are a cornerstone of India’s economy, driving employment and contributing to growth. However, they often operate with limited margins while navigating complex regulations. Effective tax planning can alleviate financial pressure, allowing SMEs to maximize savings through appropriate tax deductions and credits.

CBDT Clarifies Key Points on PAN 2.0 via FAQs

 The Central Board of Direct Taxes (CBDT) has issued a press release providing clarifications on the newly introduced PAN 2.0 system. Among the Frequently Asked Questions (FAQs) shared, two stand out for their importance: FAQ 3 and FAQ 7. These address concerns about the continued validity of existing PAN cards and the functionality of QR codes in PAN 2.0.

Taxability of Transfers Between HUF Members and the HUF

 The taxation of transactions within a Hindu Undivided Family (HUF) is governed by specific provisions under the Income Tax Act, 1961. This article examines the tax implications of transfers from HUF members to the HUF and vice versa, focusing on income derived, gifts, and the treatment of HUF partition.

TAX DUE DATE - DECEMBER 2024.

 

S No	Due Date	Related to	Compliance to be made
1	11.12.2024	GSTR – 1	Filing of GSTR – 1 for the month of November 2024
2	20.12.2024	GST	Payment of GST for the month of November, 2024 Filing of GSTR 3B for the month of November, 2024
3	07.12.2024	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 November 2024. · Deposit TDS from Salaries deducted during the month of November 2024 • Deposit TCS for collections made under section 206C including sale of scrap during the month of November 2024, if any • Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of November 2024, if any
4	15.12.2024	Income tax	Payment of Advance tax for the Corporate and Non Corporate assesses –Amount not less than 75% and 60% of advance tax respectively.
5	31.12.2024	GST	Filing of Annual Return -  GSTR 9 & 9C.

SC holds CENVAT credit is eligible on mobile towers and pre-fabricated buildings

 This Tax Alert summarizes a recent ruling of the Supreme Court (SC) ^[1] on availability of CENVAT Credit on mobile towers and pre-fabricated buildings (PFBs) owned by mobile service providers (MSPs) and passive infrastructure support service providers.

Earlier, Bombay High Court (HC) ^[2] disallowed credit on the above items on the premise that the items do not qualify as "capital goods" or "inputs". Subsequently, Delhi HC ^[3] rendered a divergent ruling and allowed credit on the same. The matter reached SC.

The key observations of the SC are:

Bombay HC upholds levy of GST on advances and allows ITC in the hands of recipient basis receipt voucher

 This Tax Alert summarizes a recent ruling of the Bombay High Court (HC)1 on admissibility of input tax credit (ITC) w.r.t GST on advance paid for procuring services.

The issue in the writ petition was regarding non-admissibility of ITC as per Section 16(2)(a) and (b) of the Central Goods and Services Tax Act, 2017 (CGST Act), on advances paid by consortium (petitioner) to its member entities against receipt voucher. Consequently, petitioner challenged the above provisions together with Sections 7, 9, 12 and 13 in the context of levy of tax on advances.

The key observations of the HC are:

How to Claim Foreign Tax Credit in Australia as a Company

Claiming a foreign tax credit (FTC) in Australia allows companies to offset foreign taxes paid on income earned overseas against their Australian tax liability for the same income. This system, regulated by the Australian Taxation Office (ATO), is designed to prevent double taxation and primarily applies to companies that are residents of Australia for tax purposes.

Here’s a practical breakdown of how Australian companies can claim FTCs:

Can GST Under RCM Not Charged and Paid from FY 2017-18 to October 2024 be Settled in FY 2024-25?

 In a recent and significant update to GST regulations, registered persons in India can now clear unpaid Reverse Charge Mechanism (RCM) liabilities incurred from July 2017 up to October 2024. This opportunity arises from amendments made to Section 31(3)(f) of the GST Act and new regulatory guidelines outlined in Notification No. 20/24, issued on October 8, 2024. According to these updates, registered entities are permitted to issue self-invoices for unpaid RCM liabilities retroactively and claim the related Input Tax Credit (ITC).

HC upholds levy of GST on royalty paid for mining rights basis SC nine-judge bench ruling

 This Tax Alert summarizes the recent Himachal Pradesh High Court (HC) ruling ^[1] regarding levy of Goods and Services Tax (GST) on royalty paid by the taxpayer for mining concession granted by the State.

Understanding Section 150 of the Finance (No. 2) Act, 2024: Implications for Taxpayers

Section 150 of the Finance (No. 2) Act, 2024, specifies that taxpayers will not receive refunds for taxes paid or input tax credits (ITC) reversed that would not have been required had Section 16(5) been in effect during the relevant time periods.

Kerala HC strikes down Rule 96(10) of CGST Rules since its inception

 This tax alert summarizes a recent ruling of the Kerala High Court (HC)  on the validity of Rule 96(10) of the Central Goods and Services Tax Rules, 2017 (CGST Rules).

CBIC mandates virtual hearing in all quasi-judicial and appeal proceedings

In an important update, Central Board of Indirect Taxes and Customs (‘CBIC’) has made virtual mode of hearing mandatory. The judicial cell of CBIC vide. Instruction F. No. 390/Misc/2019-JC dated November 5, 2024, has instructed that all hearings under current Indirect Tax laws, whether current or erstwhile, shall be conducted in virtual mode.

 

HC validates “Nil value” for import of services absence self-invoice in light of CBIC Circular

 This Tax Alert summarizes the recent Delhi High Court (HC) ruling disposing Writ Petitions in a batch matter on valuation of import of services relating to secondment of employees from overseas entity.

Tax Implications of Employee Gifts: Cash, Gift Cards, and Branded Products

 Companies often give gifts to their employees to boost morale, celebrate achievements, and promote a positive work environment. Such gifts are common during festivals like Diwali and Christmas, or for special occasions like work anniversaries, birthdays, or company milestones. However, the taxability of these gifts can vary significantly depending on the nature of the gift and the circumstances under which it is given.

The Rise of the Indian APA Programme

 In the evolving landscape of transfer pricing, India’s Advance Pricing Agreement (APA) programme has emerged as a beacon for multinational enterprises (MNEs) seeking tax certainty. Launched in 2012, the APA programme offers MNEs an opportunity to preemptively resolve transfer pricing disputes by establishing an agreed-upon transfer pricing methodology for a specified period.

Transfer Pricing Challenges in India
India's transfer pricing environment has historically been contentious, with prolonged litigation often arising from audit triggers like profit shifts, cost allocations, or royalty payments. Many cases take years to resolve in tax tribunals, adding to the uncertainty MNEs face. However, the APA programme provides a proactive solution, allowing MNEs to avoid retrospective disputes and secure tax stability.

Types of APAs
The APA regime in India includes three types:

1. Unilateral APAs - Between an Indian taxpayer and the Indian tax authority.
2. Bilateral APAs - Involving the Indian and a foreign tax authority, helping prevent double taxation.
3. Multilateral APAs - Covering multiple countries, providing the most comprehensive tax certainty.

Impact and Growth
The APA programme’s impact is notable, with over 1,800 applications filed since inception and a record 125 APAs signed in 2024 alone. As of March 2024, the programme has concluded 641 APAs, including 506 Unilateral and 135 Bilateral agreements, underscoring its growth and effectiveness. Key sectors benefiting from APAs include software, BPO, KPO, and engineering, highlighting the programme's alignment with India’s service-oriented economy.

Conclusion
India’s APA programme is a robust tool for MNEs to achieve tax certainty and minimize double taxation risks. The government’s commitment to APA expansion strengthens India’s position as an attractive destination for foreign investment, ensuring a fair and predictable tax landscape for cross-border transactions.

Prevention of Money Laundering Act (PMLA)

Some of the recent significant judgments of the Supreme Court pertaining to the Prevention of Money Laundering Act (PMLA) include:

Supreme Court Ruling on MFN Clause in Tax Treaties – A Compelling Case for Review

 Overview

The Supreme Court of India recently ruled on the applicability of the Most Favoured Nation (MFN) clause in tax treaties involving India, specifically in Assessing Officer vs. M/s Nestle SA and Others. The Court determined that an Indian government notification is a mandatory prerequisite for the MFN clause to be enforceable in India’s Double Tax Avoidance Agreements (DTAAs). This ruling restricts certain benefits within these treaties and conflicts with previously understood international principles of good faith in treaty enforcement.

India Tax Due date - November 2024

 

S No	Due Date	Related to	Compliance to be made
1	11.11.2024	GSTR – 1	Filing of GSTR 1 for the month of October 2024
2	20.11.2024	GST	-Payment of GST for the month of October, 2024 -Filing of GSTR 3B for the month of October, 2024
3	07.11.2024	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 October 2024. ·Deposit TDS from Salaries deducted during the month of October 2024 • Deposit TCS for collections made under section 206C including sale of scrap during the month of October 2024, if any • Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of October 2024, if any
4	30.11.2024	Filing of returns for the Company	Filing of Master File data in Form 3CEAA for FY 2023-24.   Filing of income tax return for the Corporate assesses with Transfer Pricing .

ADDITIONAL NOTICES" Tab on GST Portal: Issues and High Court Decisions

 

On the GST portal, taxpayers have access to two sections for important updates from the department:

1. Notices
2. Additional Notices

CBDT Circular No. 12 of 2024 Providing Guidance on the Direct Tax Vivad se Vishwas Scheme, 2024

 The Central Board of Direct Taxes (CBDT) has recently released Circular No. 12 of 2024, which provides timely clarification in the form of FAQs on the Direct Tax Vivad se Vishwas (DTVsV) Scheme, 2024. This prompt clarification is commendable, as it helps to address questions from taxpayers and ensures smooth implementation of the scheme. The 2024 scheme bears resemblance to the previous DTVsV Scheme of 2020, though it introduces three notable differences:

Some of the Recent Important Judgements of the Supreme Court Pertaining to PMLA

 The Supreme Court of India has issued several key judgments in recent years concerning the Prevention of Money Laundering Act (PMLA). These rulings provide important clarifications on various aspects of money laundering, procedural safeguards, and the scope of the law. Below are some of the landmark judgments:

Partition of a Hindu Undivided Family (HUF):

1. Legal Framework: Section 171 of the Income Tax Act, 1961, governs the partition of a Hindu Undivided Family (HUF). This section provides the legal basis for dividing the assets and liabilities of the HUF among its members.

How GST Affects Transfer Pricing

When India introduced the Goods and Services Tax (GST), it created a big change in the way companies handle their taxes. Earlier, businesses just focused on following income tax rules for setting prices between related companies. Now, they have to balance both income tax and GST rules, which makes things a bit tricky, especially for big international companies. This article explains why GST and transfer pricing matter and what companies do to follow the rules.

Fetching of document from Tax Service Platform available with Depository by listed companies for giving tax claim relief to Foreign Portfolio Investor

 Please find below communication for your information and necessary action:

1. Pursuant to the amendments made in the Income Tax Act by the Finance Acts, 2020, 2021 and 2023, dividend and interest paid by companies are taxable in the hands of shareholders and bond holders. Companies are required to deduct tax at source (TDS) at the rates applicable to each category of the shareholder. Certain categories of domestic Investors are exempted while for other categories like Foreign Portfolio Investor (FPls), tax has to be deducted at 20% (plus surcharge and cess) or at a beneficial tax rate applicable under Double Taxation Avoidance Agreement (DTAA).

Taxation of Deferred Compensation – A Continuing Conundrum

In the world of mergers and acquisitions (M&A), determining the value of a transaction can be complex, especially when involving deferred compensation. This article delves into the taxation challenges surrounding such compensations, highlighting judicial interpretations and the ongoing uncertainties faced by both buyers and sellers.

GSTN issues advisory on hard-locking of auto-populated values in Form GSTR-3B

 This Tax Alert summarizes the recent advisory issued by Goods and Services Tax Network (GSTN) on hard-locking of auto populated values in GSTR-3B.

The highlights of the advisory are:

• GSTN has improved the GST return filing process by providing a pre-filled GSTR-3B form with auto-populated tax liability from GSTR-1/ 1A/ invoice furnishing facility (IFF) and input tax credit (ITC) from GSTR-2B, along with a detailed pdf report.
• Taxpayers can now amend incorrect outward supplies in GSTR-1/ IFF through GSTR-1A before filing GSTR-3B and manage inward supplies for accurate ITC claims using the Invoice Management System (IMS).
• Starting tentatively from January 2025, the GST Portal will restrict changes in auto-populated tax liability in pre-filled GSTR-3B to improve accuracy. Necessary changes should be made through GSTR-1A.
• However, locking of auto-populated ITC in GSTR-3B will be implemented after IMS rollout, with a separate advisory to be issued post addressing IMS-related issues.

CBIC issues clarifications pertaining to amnesty scheme under GST

 This Tax Alert summarizes recent Circular issued by Central Board of Indirect Taxes and Customs (CBIC) clarifying various issues relating to the provisions of waiver of interest and penalty (amnesty scheme) under Section 128A of the Central Goods and Services Tax Act, 2017 (CGST Act).

The key clarifications are:

Demystifying Transfer Pricing of Intangibles: Challenges and Solutions

Introduction Transfer pricing involving intangibles is one of the most complex areas in international taxation. Multinational enterprises (MNEs) heavily depend on intellectual property (IP) and other intangible assets such as patents, brands, and technological know-how, which are difficult to value due to their non-physical nature. Ensuring proper transfer pricing of intangibles is critical for compliance and to avoid disputes with tax authorities.

EPFO circular on utilization of reserves and surplus by private Provident Fund Trusts of exempted establishments

The Employees Provident Fund Organisation (EPFO) has issued a circular dated 7 October 2024 (No. E.III/10(122)/ 2024/Circular/Exemption/5435) regarding the manner of utilization of Reserves and Surplus by private Provident Fund Trusts of exempted establishments, for distribution of interest among members.

This circular is issued by the EPFO Head Office after observing instances of exempted establishments seeking permission to utilize Reserves and Surplus lying in the Provident Fund Trusts by crediting interest to existing beneficiaries at a much higher rate (as compared to the EPFO notified interest rate) during / just prior to surrender of exemption and transition to the EPFO. As per the circular, the EPFO has given a thoughtful consideration to the issue and its legal ramifications and has the set out the following principles:

Notifications pursuant to 54th GST Council Meeting

 This is to update you on the notifications issued by the Ministry of Finance, which seeks to give effect to certain recommendations/ amendments proposed in the 54^th GST Council meeting.

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: