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.

CHAT GPT - how to save tax in India

 

1. Invest in tax-saving investments such as Public Provident Fund (PPF), National Savings Certificate (NSC), Equity-Linked Savings Scheme (ELSS), and Tax-Saving Fixed Deposits (FD).

2. Utilize deductions and exemptions available under Section 80C of the Income Tax Act, such as tuition fee for children, principal repayment of home loan, and contributions to pension plans.

3. Take advantage of deductions available under Section 80D for health insurance premiums, and Section 80E for interest paid on education loans.

4. Consider renting out a property and claim deductions for interest on a housing loan and repairs and maintenance expenses.

5. Use exemptions available for long-term capital gains on sale of property and equity shares.

6. Take advantage of tax benefits available for charitable donations under section 80G.

7. Keep records of all investments and expenses to claim deductions and exemptions at the time of filing taxes.

8. Consult with a tax professional or financial advisor for personalized advice on tax-saving strategies.

It's important to note that the tax laws and regulations in India are subject to change, and it's always a good idea to keep yourself updated with the latest tax laws and regulations

Social Stock Exchange

 

A Social Stock Exchange allows the listing of a Non-Profit Organization on stock exchanges that provide an alternative fund-raising structure.   As per the draft of the SEBI report, a Social Stock Exchange may be helpful in rebuilding the livelihoods of people who are affected during the COVID-19 pandemic. According to experts SSEs will aim at unlocking large pools of social capital and encourage a mixed financial structure so that conventional capital can partner with social capital to meet the serious challenges of COVID-19.

IFRS 2: SHARE-BASED PAYMENT TRANSACTIONS

Grant of shares or share options to employees and directors is a common feature with most companies. Besides, companies may sometimes issue share options to creditors as well. Transactions, where is granting of shares or share options, may generically be referred to as “share-based payment transactions”. These transactions mostly involve the company receiving employment services, directorial services, or other goods or services, and the company in turn settling the supply of goods or services in the form of shares or share warrants. The shares are mostly equities of the company (note that the meaning of “equity” under accounting standards is not the same as the legal meaning of equity).

Understand Section 338(h)(10) of the federal tax code.

 

In simple terms, a 338(h)(10) is a tax election for a qualified stock purchase (QSP), which recharacterizes a stock purchase as an asset purchase for federal tax purposes. It remains a stock purchase for all other legal purposes, such as contracts and licensing 

 

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

 

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

Taxation of Online Gaming

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

·         There are two types of gaming

Is Form 10F is mandatory?

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

48th GST Council meeting

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

 

History of Global Transfer Pricing

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

UAE adopts Transfer Pricing Regulations

 

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

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

Calculating Customer Lifetime Value (LTV):

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