CA in Jaipur | CA. Yogesh Jangid |ITR Filing 2023 | Company Registration | NGO Registration | Income Tax Raid Cases | Audit | Inc Incroporation | CPA in India | Subsidy | Project Funding | GST | GST Raid Cases | Income Tax Notice Faceless | DRI Cases | https://www.nyca.in ITR Filing 2023 | Company Registration | NGO Registration | Income Tax Raid Cases | Audit | Inc Incroporation | CPA in India | Subsidy | Project Funding | GST | GST Raid Cases | Income Tax Notice Faceless | DRI Cases Thu, 20 Jun 2024 06:18:27 +0000 en-US hourly 1 https://wordpress.org/?v=6.9.1 https://www.nyca.in/wp-content/uploads/2022/08/9060CA_logo_icai-1.jpg CA in Jaipur | CA. Yogesh Jangid |ITR Filing 2023 | Company Registration | NGO Registration | Income Tax Raid Cases | Audit | Inc Incroporation | CPA in India | Subsidy | Project Funding | GST | GST Raid Cases | Income Tax Notice Faceless | DRI Cases | https://www.nyca.in 32 32 Govt may raise tax exemption limit to Rs 5 lakh https://www.nyca.in/govt-may-raise-tax-exemption-limit-to-rs-5-lakh/ https://www.nyca.in/govt-may-raise-tax-exemption-limit-to-rs-5-lakh/#respond Thu, 20 Jun 2024 06:18:27 +0000 https://www.nyca.in/?p=11251 The government is considering raising the tax exemption limit to Rs 5 lakh in the new regime, aiming to boost consumption by providing more disposable income to lower earners.

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The government may raise the exemption limit under the new tax regime to Rs 5 lakh; relief unlikely for others.

To boost consumption and address weak middle-class spending, the government is considering lowering certain personal income tax rates, multiple officials have stated.

The Centre is contemplating increasing the income exemption limit to Rs 5 lakh from the current Rs 3 lakh in the upcoming budget, likely to be presented in mid-July. This adjustment would apply only to those filing returns under the new tax regime, aiming to provide more disposable income, particularly for lower earners.

A final decision on this will be made closer to the budget presentation.

If implemented, this move could reduce tax liability by Rs 10,400 (including a 4% Health & Education cess) for individuals with incomes between Rs 7.6 lakh and Rs 50 lakh.

For those earning above Rs 50 lakh and up to Rs 1 crore, the benefit would be Rs 11,440 (including cess and a 10% surcharge). Individuals earning more than Rs 1 crore and up to Rs 2 crore would see a reduction of Rs 11,960 (including cess and a 15% surcharge). For incomes above Rs 2 crore, the benefit would be Rs 13,000 (including cess and a 25% surcharge).

“Increasing the basic tax exemption limit to Rs 5 lakh under the new tax regime is a positive step. It would result in tax savings of at least Rs 10,000 for all individual taxpayers with income above Rs 5 lakh, except those already receiving a rebate on income up to Rs 7 lakh. This change would boost personal disposable income, stimulating spending and investment, which are essential for economic growth,” according to an expert.

Another expert noted that this change would particularly benefit individuals whose income exceeds the rebate limit under section 87A and who opt for the new tax regime.

Budget 2020 allowed individuals to choose between the existing structure with lower tax incidence via specified investments or a new system offering blanket lower tax rates while forgoing most deductions and exemptions.

Under the old tax regime, taxpayers can avail deductions for certain investments and exemptions like house rent allowance and leave travel allowance.

A second official indicated that the Centre is unlikely to reduce the highest individual income tax slab rate under the new tax regime from 30% to 25%.

“Changes in higher income tax slabs are unlikely because a consumption boost is needed for lower-income people,” the official added.

The government is also unlikely to adjust rates under the old tax regime, despite requests to increase the highest income tax threshold from Rs 10 lakh to Rs 20 lakh. This is to encourage more people to move to the new regime, which discourages exemptions and rebates.

Currently, those earning more than Rs 15 lakh annually fall under the highest 30% tax bracket in the new tax regime, while under the old regime, the highest slab applies to earnings above Rs 10 lakh.

The government is prioritizing potentially lowering personal income tax rates over sharply increasing spending on subsidies and other schemes prone to wastage, according to a third official.

“Tax rate cuts are a more effective way to boost consumption rather than splurging on welfare schemes, which are often affected by leakages, preventing the full benefit from reaching those in need,” the official added.

This discussion on measures to aid consumption comes as the country grapples with low private consumption growth of around 4%, a 20-year low outside the pandemic year, despite a world-leading GDP growth rate of 8.2% in FY24.

Source: Moneycontrol

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]]> https://www.nyca.in/govt-may-raise-tax-exemption-limit-to-rs-5-lakh/feed/ 0 Blocked Input Tax Credit (ITC) under GST: Key Points You Need to Know https://www.nyca.in/blocked-input-tax-credit-itc-under-gst-key-points-you-need-to-know/ https://www.nyca.in/blocked-input-tax-credit-itc-under-gst-key-points-you-need-to-know/#respond Thu, 25 Apr 2024 05:48:46 +0000 https://www.nyca.in/?p=9004 In the realm of Goods and Services Tax (GST) in India, understanding Input Tax Credit (ITC) is crucial for businesses to ensure compliance and optimize their tax liabilities.

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In the realm of Goods and Services Tax (GST) in India, understanding Input Tax Credit (ITC) is crucial for businesses to ensure compliance and optimize their tax liabilities. However, not all GST paid on purchases can be claimed as ITC. There are certain scenarios where the Input Tax Credit is blocked, preventing businesses from claiming it against their output tax liability. In this comprehensive guide, we delve into the concept of Blocked Input Tax Credit under GST, highlighting key points and recent rulings.

What is Blocked Input Tax Credit (ITC)?

Blocked Input Tax Credit, as per GST laws, refers to specific goods and services on which GST is paid but businesses are ineligible to claim them as Input Tax Credit. These items are deemed ineligible because they are not considered as inputs directly utilized in the production or provision of taxable goods or services.

Recent Rulings and Clarifications:

  • Maintenance Charges for Replacement of Existing Lift

Introduction:

In the complex landscape of Goods and Services Tax (GST) in India, the eligibility of Input Tax Credit (ITC) plays a significant role for businesses. The recent ruling by the Maharashtra Appellate Authority for Advance Ruling regarding Las Palmas Co-Op. Housing Society sheds light on crucial aspects of ITC denial. Let’s delve into the details to understand the implications of this ruling.

Facts of the Case:

Las Palmas Co-Op. Housing Society sought to avail Input Tax Credit for lift installation charges paid to the lift contractor. However, the Maharashtra Appellate Authority upheld the ruling of the Maharastra Advance Ruling Authority, denying the society’s eligibility for ITC. Citing sections 16(2)(b), 17(5)(c), and 17(5)(d) of the CGST Act, 2017, the authority emphasized that ITC would only be available for tax paid on works contract services when such services are utilized as input for further supply of works contract service.

Issue:

The central issue revolves around the eligibility criteria for Input Tax Credit under the CGST Act. The appellant, Las Palmas Co-Op. Housing Society, failed to fulfill the conditions outlined for availing ITC on works contract services. The authority highlighted that the society, not being a works contract service provider, did not provide any works contract service to its members, thereby rendering it ineligible for ITC.

Held:

The Maharashtra Appellate Authority for Advance Ruling affirmed the decision of the Maharastra Advance Ruling Authority, ruling that Las Palmas Co-Op. Housing Society is not eligible to avail Input Tax Credit in respect of the GST paid on lift installation charges. The authority emphasized that the appellant did not meet the criteria outlined in sections 16(2)(b), 17(5)(c), and 17(5)(d) of the CGST Act, 2017. Consequently, the appeal filed by the appellant was deemed not maintainable and liable to be rejected.

  • Hiring of Motor Vehicles for Employee Transportation

Introduction

The case of Malabar Cements Limited, brought before the Authority for Advance Ruling in Kerala, sheds light on the complexities surrounding input tax credit under the Goods and Services Tax (GST) regime in India. This case revolves around the eligibility of Malabar Cements Limited to claim input tax credit on the GST charged by a service provider for hiring buses or motor vehicles with a seating capacity of more than 13 persons for employee transportation. Understanding the outcome of this case is crucial for businesses navigating the nuances of GST regulations.

Facts of the Case

Malabar Cements Limited, a government-owned Public Sector Company in Kerala, sought an advance ruling regarding the admissibility of input tax credit on GST charged by a service provider for providing transportation facilities to its employees. The company operates its factory round-the-clock in remote areas where public transportation is limited. To ensure the commuting needs of its employees are met, Malabar Cements Limited engages a service provider to provide non-air-conditioned buses with a seating capacity exceeding 13 persons. The service provider levies a GST of 5% on the hiring charges, leading to the question of whether Malabar Cements Limited can avail input tax credit on this GST.

Issue

The central issue in this case is twofold. Firstly, it concerns the eligibility of Malabar Cements Limited to claim input tax credit on the GST charged by the service provider for hiring buses or motor vehicles with a seating capacity exceeding 13 persons for employee transportation. Secondly, it delves into the extent to which the input tax credit can be availed by Malabar Cements Limited, particularly considering the portion of the transportation cost borne by the company itself.

Held

Upon thorough examination of the relevant legal provisions and the arguments presented by Malabar Cements Limited, the Authority for Advance Ruling concluded that the company is indeed eligible to avail input tax credit on the GST charged by the service provider. However, the extent of this credit is restricted to the cost of transportation borne by Malabar Cements Limited. This ruling provides clarity on an important aspect of GST compliance for businesses engaged in employee transportation services and underscores the need for meticulous adherence to statutory provisions.

  • Water Slides and Structural Support in Water Park Construction

Introduction

The recent ruling by the Authority for Advance Ruling (AAR) in Madhya Pradesh has significant implications for businesses in the amusement park industry, particularly regarding Input Tax Credit (ITC) under the Goods and Services Tax (GST) regime. The case of Atriwal Amusement Park sheds light on the eligibility criteria for claiming ITC on various components and services utilized in the construction of water parks, offering crucial guidance to businesses operating in this sector

Facts of the Case

Atriwal Amusement Park, a company specializing in the construction of water parks, sought clarification from the AAR regarding the eligibility of Input Tax Credit (ITC) on several aspects of its construction activities. The key components and services under scrutiny included the purchase of water slides, site development services, and the construction of swimming pools or wave pools, all of which are subject to taxation under GST regulations.

Issue

The central issue in this case pertains to the eligibility of Atriwal Amusement Park to claim Input Tax Credit (ITC) on specific components and services utilized in the construction of water parks. The inquiry seeks clarification on whether these elements qualify as ‘Plant and Equipment’ under GST provisions, thus enabling the applicant to avail of ITC benefits.

Held

Upon careful consideration of the facts and legal provisions, the Authority for Advance Ruling (AAR) in Madhya Pradesh arrived at the following decisions:

Water Slides: The AAR ruled in favor of Atriwal Amusement Park, affirming its eligibility to claim Input Tax Credit (ITC) on the purchase of water slides made from durable PVC material. This decision is based on the classification of water slides as ‘apparatus, equipment, and machinery,’ thereby meeting the criteria for ITC under GST regulations.

Site Development Services: However, the AAR denied ITC claims on goods and services related to site development and preparation where water slides are installed. The rationale behind this decision lies in the exclusion of land-related services from the definition of ‘Plant and Equipment’ eligible for ITC benefits.

Swimming Pools or Wave Pools: Similarly, the AAR ruled against the eligibility of ITC on the construction of swimming pools or wave pools. Despite being integral components of amusement parks, these structures were deemed civil in nature and not considered part of the supportive framework or foundation of the plant, thus falling outside the scope of ‘Plant and Equipment’ for ITC purposes.

  • Solar Plant Installation for Captive Electricity Generation

Introduction

The integration of solar power systems has become increasingly common as businesses seek to adopt sustainable and eco-friendly energy solutions. This article examines a specific case, the ruling in the matter of Unique Welding Products Pvt. Ltd. vs. GST AAR Gujarat, to explore the eligibility of Input Tax Credit (ITC) for the installation and commissioning of a roof-top solar system.

Facts of the Case

Unique Welding Products Pvt. Ltd., a welding wires manufacturing and sales company based in Anand, Gujarat, installed a roof-top solar system with a capacity of 440 KW on its factory roof for captive power generation. The company sought clarification on its eligibility for ITC under the Central Goods and Services Tax (CGST) Act, 2017.

Issue

The main issues raised in the case were whether Unique Welding Products Pvt. Ltd. is eligible for ITC on the purchased roof-top solar system with installation & commissioning and whether the roof-top solar system, along with its installation and commissioning, constitutes plant and machinery, making it eligible for ITC under section 17(5) of the CGST Act.

Held

The ruling authority concluded that unique Welding Products Pvt. Ltd. is eligible to avail ITC on the roof-top solar system with installation & commissioning under the CGST/GGST Act and the roof-top solar system, with installation and commissioning, qualifies as plant and machinery for the company, making it eligible for ITC under section 17(5) of the CGST/GGST Act.

  • Expenses Capitalization and ITC Eligibility

Introduction

The West Bengal Appellate Authority for Advance Ruling recently tackled the question of Input Tax Credit (ITC) eligibility concerning the construction of immovable property subsequently leased out for commercial purposes. This article provides an overview of the ruling, its implications, and the legal context surrounding it.

Facts of the Case

M/s. Mindrill Systems and Solutions Private Limited, hereinafter referred to as “the Respondent,” constructed a warehouse and leased it to a commercial entity. GST was duly paid on this supply of service. Subsequently, the Respondent sought an Advance Ruling from the West Bengal Authority for Advance Ruling (WBAAR) regarding the availability of Input Tax Credit (ITC) for capital expenses incurred during the warehouse’s construction. The question pertained to whether these expenses could offset tax liabilities arising from renting out the warehouse.

Issue

The central issue at hand revolved around whether Input Tax Credit (ITC) could be claimed in relation to the construction of immovable property subsequently let out for commercial purposes.

Held

The West Bengal Appellate Authority for Advance Ruling, in Appeal No. 04/WBAAAR/Appeal/2023, deliberated on the matter. It observed that clauses (c) and (d) of sub-section (5) of Section 17 of the Central Goods and Services Act, 2017 (“the CGST Act”), dictate that ITC is not available for works contract services or goods or services received for the construction of immovable property. Therefore, such transactions fall within the purview of blocked credit.

Furthermore, the Authority noted that the explanation provided in clause (d) of Section 17 specifies that credit is also blocked for reconstruction, renovation, additions, alterations, or repairs capitalized in the books of accounts. However, it clarified that the condition of capitalization in the books of accounts applies solely to the mentioned activities related to immovable property.

In conclusion, the West Bengal Appellate Authority for Advance Ruling held that no Input Tax Credit (ITC) is available concerning the construction of the warehouse subsequently leased out by the Applicant.

  • Overhead Crane and Structural Support

Introduction

The recent ruling by the GST AAAR Tamilnadu has shed light on a crucial aspect of Input Tax Credit (ITC) concerning structural support for overhead cranes within an ‘Integrated Factory’ building. Coral Manufacturing Works India Private Limited brought forth an appeal challenging the existing orders of the Advance Ruling Authority, Tamil Nadu, seeking clarification on the applicability of ITC in this scenario.

Facts of the Case

Coral Manufacturing Works India Private Limited constructed a warehouse and let it out for commercial purposes, paying GST on the service provided. The company filed an application for Advance Ruling, questioning whether ITC could be availed for the capital expenses incurred on the construction of the warehouse. The West Bengal Authority for Advance Ruling held that ITC was not admissible for expenses capitalized in the books of account. Dissatisfied with this ruling, the Revenue Department appealed against it.

Issue

The primary issue revolved around the eligibility of Input Tax Credit (ITC) concerning structural support erected for overhead cranes within an ‘Integrated Factory’ building. Coral Manufacturing Works India Private Limited sought clarification on whether the Integrated Factory Building itself could be considered as plant and machinery under the CGST Act.

Held

The GST AAAR Tamilnadu held that while the overhead crane and its structural support qualified as plant and machinery, the Integrated Factory Building itself did not. Consequently, Coral Manufacturing Works India Private Limited was only eligible for an ITC proportional to the structural support for the overhead crane, but not for the construction of other civil structures like the building’s side walls and roof.

  • Purchase of Vehicles for Modification into Ambulances

Introduction

In the case of Raminfo Limited, the GST AAR Telangana has made a significant determination regarding the eligibility of Input Tax Credit (ITC) on the purchase of a 7-seater vehicle, which will be converted into an ambulance for onward supply. This article explores the details of the ruling, its implications, and the broader context of GST regulations.

Facts of the Case

Raminfo Limited has secured a work order from the Government of Tripura to supply ambulances, specifically Mobile Common Service Centres. To fulfill this order, they are procuring Maruti Suzuki Eeco (7 seater) vehicles and modifying them in their workshop located in Hyderabad, Telangana State. Seeking clarity on GST rates and ITC admissibility, Raminfo Limited filed an advance ruling before the AAR Telangana.

Issue

The primary issue at hand is whether Raminfo Limited is eligible to claim Input Tax Credit (ITC) on the purchase of Maruti Suzuki Eeco (7 seater) vehicles, which will be transformed into ambulances for onward supply to the Government of Tripura.

Held

The AAR Telangana, in its order TSAAR Order No.02/2023, concluded that Raminfo Limited is indeed eligible to avail ITC on the purchase of vehicles used for further supply. Citing Section 17(5)(a) of the CGST Act, the AAR noted that ITC on such purchases is not blocked. Therefore, Raminfo Limited can claim ITC on the tax paid for the purchased vehicles. Additionally, the AAR clarified that GST at the rate of 28% will be applicable on the supply of ambulances to the Government of Tripura.

Understanding Blocked Input Tax Credit under GST is paramount for businesses to avoid unnecessary tax liabilities and ensure compliance. By staying updated with recent rulings and clarifications, businesses can make informed decisions regarding their tax planning strategies. It’s imperative to consult with tax experts to navigate the complexities of GST laws effectively.

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]]> https://www.nyca.in/blocked-input-tax-credit-itc-under-gst-key-points-you-need-to-know/feed/ 0 Extended Period of Limitation: Understanding and Challenging Sec. 74 https://www.nyca.in/extended-period-of-limitation-understanding-and-challenging-sec-74/ https://www.nyca.in/extended-period-of-limitation-understanding-and-challenging-sec-74/#respond Sat, 20 Apr 2024 07:48:40 +0000 https://www.nyca.in/?p=8871 In the realm of taxation, navigating through various sections and provisions can be daunting.

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In the realm of taxation, navigating through various sections and provisions can be daunting. One such area of concern for taxpayers is the extended period of limitation, particularly concerning the issuance of notices and the implications under Section 74. Understanding the nuances of this provision and the scope for challenging it is crucial for taxpayers and professionals alike.

1. Supreme Court Precedents

  • Krishnaraj Shipping Co. Ltd: The Supreme Court's ruling in the case of Krishnaraj Shipping Co. Ltd. sheds light on the invocability of the extended period of limitation. It emphasized that demanding service tax involving interpretational disputes does not warrant the invocation of the extended period.

2. CESTAT Chandigarh Insights

  • Antares Services Pvt. Ltd: CESTAT Chandigarh's stance, as seen in the case of Antares Services Pvt. Ltd., underscores the necessity of providing evidence of suppression, misstatement, fraud, or collusion for the proper invocation of the extended period of limitation.

3. Precedents from CESTAT Ahmedabad

  • Dinesh Chandra R Agarwal Infracon Pvt. Ltd: The case of Dinesh Chandra R Agarwal Infracon Pvt. Ltd. highlighted the importance of proof of intentional revenue suppression or misdeclaration for the validity of orders under Section 73(1) of the Finance Act, 1994.
  • Arya Logistics: In line with the above, Arya Logistics emphasized that in the absence of suppression of fact, a show cause notice issued after the prescribed limit of one year is not sustainable.

4. Insights from CESTAT Delhi

  • State Bank of Patiala: CESTAT Delhi, in the case of State Bank of Patiala, clarified that activities not constituting suppression cannot warrant the invocation of the extended period of limitation.

5. Precedents from CESTAT Allahabad

  • Interarch Building Products Pvt. Ltd: Interarch Building Products Pvt. Ltd. case highlighted that when the department is aware of facts from audits and regular filing of returns, invoking the extended limitation period based on alleged misclassification becomes untenable.

6. Perspectives from Delhi High Court

  • ITD-ITD CEM JV: Delhi High Court's stance, as seen in the case of ITD-ITD CEM JV, emphasized the necessity of recording reasons to believe in writing for assessment orders passed within the extended period.
  • H.M. Industries: H.M. Industries reiterated that the absence of assertions regarding concealment or failure to disclose full particulars negates the applicability of the extended period of limitation.

7. Insights from Mumbai CESTAT

  • Bajaj Health & Nutrition Pvt. Ltd.: The case of Bajaj Health & Nutrition Pvt. Ltd. highlighted that failure by customs cannot be attributed to the taxpayer, absolving them from charges of misdeclaration and evasion.

Understanding these precedents is pivotal for taxpayers and professionals aiming to navigate through the intricacies of tax laws effectively.

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]]> https://www.nyca.in/extended-period-of-limitation-understanding-and-challenging-sec-74/feed/ 0 Identifying Instances Leading to Income Tax Notices in Real Estate Deals and Credit Card Transactions https://www.nyca.in/identifying-instances-leading-to-income-tax-notices-in-real-estate-deals-and-credit-card-transactions/ https://www.nyca.in/identifying-instances-leading-to-income-tax-notices-in-real-estate-deals-and-credit-card-transactions/#respond Sat, 13 Apr 2024 13:21:14 +0000 https://www.nyca.in/?p=8591 The Income Tax Department meticulously monitors all financial transactions carried out by individuals, utilizing various data sources to ensure adherence to tax regulations.

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Tracking Financial Activities:

The Income Tax Department meticulously monitors all financial transactions carried out by individuals, utilizing various data sources to ensure adherence to tax regulations. Certain transactions may trigger heightened scrutiny from tax authorities.

High-Value Cash Transactions:

The tax department pays particular attention to high-value cash transactions. For instance, if an individual receives a cash deposit exceeding Rs 10 lakh in a savings account within a fiscal year, this could prompt the department to issue a notice seeking clarification regarding the source of funds.

Mandatory Reporting by Banks:

As per the Central Board of Direct Taxes (CBDT) directives, banks are mandated to report instances where an individual deposits Rs 10 lakh or more across one or more time deposit accounts during a financial year, excluding deposits made through the renewal of another time deposit. Additionally, all banks, including cooperative banks, must report cash deposits of Rs 10 lakh or more across one or multiple accounts of an individual, excluding current accounts and time deposits.

Scrutiny of Securities Transactions:

Financial institutions and companies issuing bonds or debentures are obligated to report receiving Rs 10 lakh or more from any individual in a financial year for acquiring such securities. This measure is aimed at detecting potential instances of tax evasion or undisclosed income associated with significant cash movements.

Credit Card Transactions:

Several instances of credit card transactions may trigger Income Tax notices:

  • Cash deposits exceeding Rs 10 lakh for savings accounts and Rs 50 lakh for current accounts, along with substantial withdrawals, may prompt inquiries into the origin and intended use of the funds.
  • Real estate transactions exceeding Rs 30 lakh may come under the scrutiny of the tax department, which seeks detailed information about the transaction and involved parties.
  • Investments surpassing Rs 10 lakh in stocks, mutual funds, or bonds may attract scrutiny if the origin of funds appears inconsistent with reported income.
  • Although the Income Tax department does not actively monitor individual credit card transactions, cash payments exceeding Rs 1 lakh towards credit cards or substantial debt settlements exceeding Rs 10 lakh made in cash may undergo scrutiny and investigation. Ensuring transparency in significant transactions with verifiable fund sources is imperative, as unaccounted cash inflows may trigger investigations.

Mismatch of Declared Income:

Discrepancies between declared income and bank data may prompt notifications from the tax department, highlighting the importance of maintaining accurate financial records.

Foreign Exchange Transactions:

Any purchase of foreign exchange totaling Rs 10 lakh, including travelers’ checks, forex cards, or debit/credit card transactions, must be reported to ensure compliance with tax regulations.

Source: https://www.businesstoday.in/personal-finance/tax/story/real-estate-deals-credit-card-transactions-6-times-one-can-get-income-tax-notice-425280-2024-04-12

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]]> https://www.nyca.in/identifying-instances-leading-to-income-tax-notices-in-real-estate-deals-and-credit-card-transactions/feed/ 0 E-Invoicing Under GST https://www.nyca.in/e-invoicing-under-gst/ https://www.nyca.in/e-invoicing-under-gst/#respond Fri, 12 Apr 2024 11:41:19 +0000 https://www.nyca.in/?p=8532 E-invoicing within the GST framework refers to the electronic authentication of invoices as outlined by GST regulations.

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E-invoicing within the GST framework refers to the electronic authentication of invoices as outlined by GST regulations. It’s akin to how GST-registered businesses utilize e-way bills for transporting goods. Likewise, specific GST-registered entities are required to produce e-invoices for their Business-to-Business (B2B) transactions.

What is e-invoicing under GST?

  • E-invoicing, or electronic invoicing, refers to a system where B2B invoices and certain other documents are electronically authenticated by GSTN for further use on the common GST portal.
  • The GST Council decided to implement e-invoicing in its 35th meeting, initially covering specific categories of mostly large enterprises, which later expanded to include mid-sized and small businesses.

Who must generate e-invoice and its Applicability?

  • E-invoicing applies based on turnover criteria or e-invoice limits set by phases.
  • Taxpayers exceeding specified turnover limits in any financial year from 2017-18 to 2021-22 must comply with e-invoicing from FY 2022-23 onwards.
  • Certain notified businesses are exempt from e-invoicing, such as insurers, banking companies, and others as listed by CBIC notifications.

Transactions and documents criteria

  • Tax invoices, credit notes, and debit notes under Section 34 of the CGST Act fall under e-invoicing applicability for specific transactions like B2B sales, exports, supplies to SEZ, etc.

Systems before & after e-invoicing

  • Before e-invoicing, businesses manually uploaded invoice details for GSTR-1 returns and generated e-way bills.
  • With e-invoicing, invoice details are seamlessly transferred to GST portal and e-way bill portal, reducing manual data entry.

Time limit to generate e-Invoice

  • Until 30th April 2023, no time limit was set for e-invoice generation. From 1st May 2023 onwards, taxpayers with AATO equal to or more than INR 100 crore must generate e-invoices within 7 days of the invoice date.

Process of getting an e-invoice

  • Taxpayers can generate e-invoices by using reconfigured ERP systems, direct API integration, or bulk upload tools.
  • Mandatory details such as supplier information, recipient details, invoice items, and document totals are required for e-invoice generation.

Benefits of e-Invoicing to businesses

  • E-invoicing reduces data reconciliation errors, allows interoperability between software, enables real-time tracking of invoices, and automates GST return filing process.
  • It also facilitates faster availability of genuine input tax credit, reduces audits/surveys, and improves access to credit routes for small businesses.

How can e-invoicing curb tax evasion?

  • E-invoicing helps curb tax evasion by providing real-time access to transactions, reducing invoice manipulation, and preventing fake GST invoices.

What are the mandatory fields of an e-invoice?

  • Mandatory fields in an e-invoice include document type code, supplier details, recipient information, document number, IRN, item description, HSN code, GST rate, and total invoice value.

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]]> https://www.nyca.in/e-invoicing-under-gst/feed/ 0 Understanding the Mechanisms of Tax Relief: Remission and Extinguishment https://www.nyca.in/understanding-the-mechanisms-of-tax-relief-remission-and-extinguishment/ https://www.nyca.in/understanding-the-mechanisms-of-tax-relief-remission-and-extinguishment/#respond Wed, 10 Apr 2024 08:33:34 +0000 https://www.nyca.in/?p=8469 The concepts of remission and extinguishment of tax demand involve the cancellation or forgiveness of a taxpayer’s outstanding tax liabilities.

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Introduction:

The concepts of remission and extinguishment of tax demand involve the cancellation or forgiveness of a taxpayer’s outstanding tax liabilities. These legal mechanisms offer relief to taxpayers facing difficulties in settling their tax obligations fully. In this article, we will delve into the provisions of remission and extinguishment of tax demand, exploring their definitions, legal frameworks, and implications.

Government Initiatives:

  • Cleaning Up Records: Tax authorities may have old, unverified, or disputed tax demands. Remission helps clear these records, reducing administrative burdens.
  • Improving Taxpayer Services: Offering remission for smaller debts improves taxpayer relations and encourages future compliance.

Recent Example in India (as of March 2024):

In the 2024 Interim Budget, the Indian government announced a remission and extinguishment program for specific direct tax demands, waiving outstanding tax demands up to a certain limit depending on the tax year.

Key Points to Remember:

  • The forgiven amount is not considered income for the taxpayer.
  • It does not entitle the taxpayer to claim any refunds or credits for the waived amount.
  • Pending criminal proceedings related to the tax demand are not affected by the remission.

Remission of Tax Demand:

  • Remission is a legal process through which a tax authority forgives all or a portion of a taxpayer’s outstanding tax liabilities.
  • It aims to alleviate financial burdens on taxpayers genuinely unable to pay their taxes due to significant hardships or extraordinary circumstances.

Legal Framework:

  • The remission of tax demand is governed by specific laws and regulations in each jurisdiction, outlining conditions for granting remission and the authority responsible for making such decisions.

Grounds for Remission:

  • Tax authorities consider various grounds when assessing remission requests, including financial hardship, natural disasters, unforeseen events, or other exceptional circumstances.

Procedure for Remission:

  • Taxpayers typically file a formal request with the relevant tax authority, providing detailed information about their financial situation and reasons for seeking remission, along with supporting documents.
  • The tax authority reviews each request on a case-by-case basis before making a decision.

Extinguishment of Tax Demand:

  • Extinguishment of tax demand refers to the permanent termination of a taxpayer’s liability to pay taxes, erasing the tax liability and relieving the taxpayer of any obligation to pay.

Legal Basis:

  • Extinguishment of tax demand can occur through various legal mechanisms such as statutes of limitations, judicial decisions, settlements, or legislative enactments, depending on the jurisdiction.

Key Considerations:

  • It's not a refund; the forgiven amount is not returned to the taxpayer.
  • There may be limitations on the amount of tax that can be remitted or extinguished, as well as the reasons for doing so.
  • This concept typically applies to direct taxes like income tax and may not apply to indirect taxes like sales tax.

Conclusion:

Remission and extinguishment of tax demand are crucial legal mechanisms that provide relief to taxpayers facing financial difficulties. While remission offers relief through forgiveness of outstanding tax liabilities, extinguishment permanently terminates the taxpayer’s tax liability. Understanding the legal framework and procedures associated with these concepts is essential for taxpayers and professionals navigating the complexities of tax law. By comprehending the intricacies of remission and extinguishment, taxpayers can seek relief when appropriate, ensuring compliance and mitigating potential financial hardships. Additionally, tax authorities must administer these mechanisms judiciously, balancing relief for deserving taxpayers with revenue collection for the benefit of society as a whole.

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]]> https://www.nyca.in/understanding-the-mechanisms-of-tax-relief-remission-and-extinguishment/feed/ 0 Understanding the Tax Advantages of Section 115H for NRIs https://www.nyca.in/understanding-the-tax-advantages-of-section-115h-for-nris/ https://www.nyca.in/understanding-the-tax-advantages-of-section-115h-for-nris/#respond Wed, 10 Apr 2024 08:11:09 +0000 https://www.nyca.in/?p=8461 Section 115H of the Income Tax Act provides favorable tax rates for non-resident Indians (NRIs) on specific investments, encouraging them to invest in India and boosting the country's attractiveness as a financial destination.

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Overview of Section 115H:

Section 115H of the Income Tax Act provides favorable tax rates for non-resident Indians (NRIs) on specific investments, encouraging them to invest in India and boosting the country’s attractiveness as a financial destination.

Benefits Under Section 115H:

  • NRIs enjoy concessional tax rates even after becoming resident Indians in subsequent years.
  • The primary benefit is the reduced tax rate on income earned from specified assets, including long-term and short-term capital gains, as well as dividend income.

Claiming the Benefit Under Section 115H:

  • Entities such as corporate firms, LLPs, companies, or any other organizations cannot claim tax exemption under Section 54. The eligibility criteria for claiming benefits under this section are as follows:
  • Residency in a country with a Double Taxation Avoidance Agreement (DTAA) with India.
  • Furnishing a valid Tax Residency Certificate (TRC) issued by the tax authorities of their resident country.

Continuing Benefits After Becoming a Resident Indian:

  • NRIs turning into resident Indians in subsequent years can still enjoy concessional tax rates on income from specified foreign exchange assets by filing a declaration with their income tax return.

Key Considerations:

  • Tax benefits under Section 115H are applicable only to income earned from specific investments held by NRIs in India.
  • NRIs must file their income tax returns in India if their taxable income exceeds the basic exemption limit.
  • Seeking guidance from tax professionals is advisable to understand the nuances of Section 115H and maximize tax benefits.

Difference Between Section 115 and Section 115H:

  • Section 115 focuses on computing total income for residents and non-residents, while Section 115H specifically addresses concessional tax treatment for NRIs on income earned from specified foreign exchange assets.

Conclusion:

Understanding the eligibility criteria, benefits, and claiming process of Section 115H enables NRIs to make informed investment decisions and optimize their tax liabilities in India.

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]]> https://www.nyca.in/understanding-the-tax-advantages-of-section-115h-for-nris/feed/ 0 Reinstatement of GST Numbers Contingent on Clearing Dues Highlights Tax Adherence and Procedural Flexibility https://www.nyca.in/reinstatement-of-gst-numbers-contingent-on-clearing-dues-highlights-tax-adherence-and-procedural-flexibility/ https://www.nyca.in/reinstatement-of-gst-numbers-contingent-on-clearing-dues-highlights-tax-adherence-and-procedural-flexibility/#respond Tue, 09 Apr 2024 12:22:39 +0000 https://www.nyca.in/?p=8409 This case law concerns a judgment from the High Court of Jammu & Kashmir and Ladakh, which offers a lifeline for GST compliance by restoring GST registration upon the settlement of dues.

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Introduction:

This case law concerns a judgment from the High Court of Jammu & Kashmir and Ladakh, which offers a lifeline for GST compliance by restoring GST registration upon the settlement of dues.

Facts of the Case:

The petitioner’s GST registration was canceled following their failure to respond to a show cause notice issued by tax authorities on November 16, 2021. Subsequently, the petitioner’s appeal was dismissed due to their absence before the Appellate Authority.

Issue:

The main issue was whether the petitioner’s GST registration, canceled due to non-compliance with the show cause notice and absence during the appeal, could be reinstated upon their commitment to clear outstanding taxes, penalties, and interest as per GST laws.

Petitioner’s Argument:

The petitioner advocated for the restoration of their GST number, pledging to settle all dues, including taxes, penalties, and interest, in accordance with the GST Act, 2017, upon reinstatement.

Respondent’s Argument:

The Respondent, represented by the Advocate General, did not oppose the petitioner’s proposal to settle dues and reinstate the GST number.

Held:

Considering the unique circumstances and lack of objection from the Respondent, the High Court of Jammu & Kashmir and Ladakh disposed of the case by instructing the petitioner to approach the concerned Officer for GST number restoration within seven days. Upon restoration, the petitioner must settle taxes, penalties, and interest within another seven days, as mandated by the GST Act, 2017.

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]]> https://www.nyca.in/reinstatement-of-gst-numbers-contingent-on-clearing-dues-highlights-tax-adherence-and-procedural-flexibility/feed/ 0 Collaborative Audits by Central and State GST Authorities Targeting Businesses https://www.nyca.in/collaborative-audits-by-central-and-state-gst-authorities-targeting-businesses/ https://www.nyca.in/collaborative-audits-by-central-and-state-gst-authorities-targeting-businesses/#respond Tue, 09 Apr 2024 06:48:00 +0000 https://www.nyca.in/?p=8381 Beginning this fiscal year, there will be a collaborative effort between Central and State Goods and Services Tax (GST) authorities to conduct audits within the indirect tax framework.

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Beginning this fiscal year, there will be a collaborative effort between Central and State Goods and Services Tax (GST) authorities to conduct audits within the indirect tax framework.

This joint approach is expected to bring significant advantages to taxpayers by eliminating repetitive notifications and inquiries. Current industry data suggests that around 11,000 cases are either duplicated or entangled in legal disputes due to investigations by both Central and State agencies. Various Central GST zones have issued internal communications instructing officials to collaborate with their state counterparts on audits to ensure better coordination, as per sources.

The concept of conducting audits collaboratively was proposed during a national coordination meeting last month to streamline tax enforcement processes. The directives indicate that Central GST officers should also participate in audits conducted by State GST teams to improve SGST officers’ audit capabilities and facilitate the exchange of crucial compliance information. To support these joint audit efforts, the Central Board of Indirect Taxes and Customs (CBIC) has instructed each zone to devise a specific framework.

The responsibility for implementation, delegated to zonal heads, aims to optimize time and resources. Experts in the industry believe this initiative will enhance the fairness and efficiency of the audit process, providing a more comprehensive examination that benefits both tax authorities and taxpayers. It will help in avoiding redundant procedures and shield taxpayers from undergoing multiple audits for the same issues.

Furthermore, the CBIC has directed its officers to halt investigations into offenses already under scrutiny by state GST officials or for which notifications have been issued.

Source: https://economictimes.indiatimes.com/news/company/corporate-trends/central-state-gst-officials-to-conduct-joint-audits-of-firms/articleshow/109143298.cms?from=mdr

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]]> https://www.nyca.in/collaborative-audits-by-central-and-state-gst-authorities-targeting-businesses/feed/ 0 Tax Liability cannot be imposed merely because the financial statement did not provide State-wise turnover https://www.nyca.in/tax-liability-cannot-be-imposed-merely-because-the-financial-statement-did-not-provide-state-wise-turnover/ https://www.nyca.in/tax-liability-cannot-be-imposed-merely-because-the-financial-statement-did-not-provide-state-wise-turnover/#respond Thu, 04 Apr 2024 10:14:35 +0000 https://www.nyca.in/?p=8238 The imposition of tax liability solely based on the absence of state-wise turnover information in financial statements has been contested in the legal realm.

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The imposition of tax liability solely based on the absence of state-wise turnover information in financial statements has been contested in the legal realm. This matter was addressed by the Hon’ble Madras High Court in a recent case involving Tvl. Future General India Insurance Co. Ltd. versus Assistant Commissioner (State Tax) [WP No. 3534 OF 2024, dated February 16, 2024].

Facts:

Tvl. Future General India Insurance Co. Ltd. (“the Petitioner”) operated as a private general insurance firm, specializing in insurance services. On August 16, 2021, the Petitioner was served with an audit notice by the Assistant Commissioner (State Tax) (FAC) (“the Respondent”). In response, the Petitioner diligently furnished the necessary documents and addressed the discrepancies highlighted in the audit reports. Subsequently, after issuing both an intimation and a show cause notice (“the SCN”), the Competent Authority issued the assessment order on December 30, 2023 (“the Impugned Order”).

Within the Impugned Order, the issue of defect No. 10 arose, relating to variations in turnover between the Profit & Loss account and balance sheet, as opposed to the figures in GSTR-9. The Petitioner explained that these disparities stemmed from the inclusion of Pan-India operations in the financial statements, whereas GSTR-9 solely focused on turnover within Tamil Nadu. The Petitioner even provided a certificate from a Chartered Accountant, specifically outlining the turnover within Tamil Nadu, amounting to Rs. 80,89,05,068/-. However, despite this clarification and despite the Petitioner having already paid taxes on the stated turnover, the Respondent imposed State Goods and Services Tax (SGST) and Central Goods and Services Tax (CGST) at 18% each (36% combined) on the aforementioned turnover.

Dissatisfied with the assessment order, the Petitioner sought recourse by filing a writ petition before the Hon’ble High Court of Madras.

Top of Form

Issue:

The central question revolves around whether tax liability can be established solely due to the absence of state-wise turnover information in financial statements.

Held:

In its ruling on Writ Petition No. 3534 OF 2024, the Hon’ble Madras High Court made the following determinations:

  • The Court acknowledged the variation in turnover for entities operating across multiple states, emphasizing the importance of distinguishing total turnover from state-wise turnover.
  • It criticized the Competent Authority's decision to impose GST at a higher rate of 36% instead of the appropriate 18%, despite the Petitioner having already paid tax on the turnover in question.
  • The Impugned Order was deemed invalid and the case was remanded to the Respondent for reconsideration.
  • Furthermore, the Court directed the Respondent to afford the Petitioner a fair opportunity, including a personal hearing, and instructed issuance of a fresh assessment order within a maximum period of two months, in compliance with legal provisions.

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