Insights

“AMENDMENT TO THE PROVISIONS OF INCOME-TAX RULES, 1962 FOR PRESCRIBING FEES UNDER SECTION 234H OF THE INCOME-TAX ACT, 1961”

 

In order to mitigate the inconvenience to the taxpayers, as per Notification No.17/2022 dated 29th March, 2022, a window of opportunity has been provided to the taxpayers upto 31st of March, 2023 to intimate their Aadhaar to the prescribed authority for Aadhaar-PAN linking without facing repercussions. As a result, taxpayers will be required to pay a fee of Rs. 500 up to three months from 1st April, 2022 and a fee of Rs.1000 after that, while intimating their Aadhaar.

Sr.

No.

AADHAR Linked between following PeriodFees to

payable

101/04/2022 to 30/06/2022500/-
201/07/2022 to 31/03/20231000/-

 

 

 

 

 

After 31st March, 2023, the PAN of taxpayers who fail to intimate their Aadhaar, as required, shall become inoperative and all the consequences under the Act for not furnishing, intimating or quoting the PAN shall apply to such taxpayers.

You can check whether your PAN-AADHAR linked or not by using below link.

https://eportal.incometax.gov.in/iec/foservices/#/pre-login/bl-link-aadhaar

Maharashtra Settlement of Arrears of Tax, Interest, Penalty or Late Fee Act, 2022

  1. Maharashtra Settlement of Arrears of Tax, Interest, Penalty or Late Fee Act, 2022 has been introduced in State Budget by Maharashtra State Government in the month of March 2022
  2. This scheme has been introduced to provide relief to the industry and business sector which is adversely affected by an unprecedented pandemic since last two years.
  3. It is applicable to all the pending dues pertaining to any statutory order passed under various tax laws implemented by the state department for the periods up to 30/06/2017e. before the introduction of the Goods and Services Tax.
  4. Payment of requisite amount will have to be made during 1st April 2022 to 30th September 2022
  1. Lump sum payment is required to be made at one time within above stated period by the dealer opting for the scheme, however, dealers having arrears more than Rs.50,00,000/- (fifty Lacs) are given option to pay the requisite amount in instalments.
  2. Dealer has to unconditionally withdraw Appeals filed in order to avail the benefit of the above said scheme.
  3. Refer table below for further detailed information of the scheme.
  • Detailed information of the scheme :

 

Sr no

(a)

 

Arrears amount

 

(b)

Arrears for the period

(c)

Amount to be paid

(d)

Waiver available of  amount

(e)

 

1.

 

 

Up to Rs.10,000/-

 

 

Per year

 

Nil

 

Complete  waiver

 

2.

 

Up to Rs.10,00,000/- (ten lacs)

 

Up to 1st April 2022

 

Lump sum payment of 20% of total arrears

 

 

Remaining 80 % of total arrears

 

3.

 

Exceeding Rs.10,00,000/- (ten lacs)

 

OR

 

Dealers not opting for lump sum payment option

 

Up to 31st March 2005

 

Following all arrears

a.      100% of undisputed tax

b.       30% of disputed tax

c.       10% of interest

d.       5% of penalty

 

 

Balance of total arrears after payment as per column (4) of this table

 

4.

 

Exceeding Rs.10,00,000/- (ten lacs)

 

OR

 

Dealers not opting for lump sum payment option

 

For the period from 1st April 2005 to 30th June 2017

 

Following all arrears

a.           100% of undisputed tax

b.       50% of disputed tax

c.       15% of interest

d.       5% of penalty

 

  • The Goods and Services Tax Network (GSTN) has enabled new feature of Geo location for picking address for new GST registration and amendment of address for existing registration
  • Geo location has to be selected while providing address during GST registration procedure or amendment of existing address in addition to existing procedures for the same.

Notification issued on 25th February 2022

 

1. Notification has been issued by Finance Department of Government of Maharashtra on 25th February 2022

2. As per the above said notification, , all Profession Tax Returns (PTRC returns) pending up to December 2021 can be without late fee after payment of tax and interest,

3. This waiver is applicable for pending PTRC returns filed on or before 31st March 2022

KEY DECISIONS TAKEN IN 45th GST COUNCIL MEETING

 

  • RECOMMENDATIONS RELATING TO GST LAW AND PROCEDURE

 

  1. Measures for Trade facilitation:

 

  1. Relaxation in the requirement of filing FORM GST ITC-04:

Requirement of filing FORM GST ITC-04 under rule 45 (3) of the CGST Rules has been relaxed as under:

  1. Taxpayers whose annual aggregate turnover in preceding financial year is above Rs. 5 crores shall furnish ITC-04 once in six months;
  2. Taxpayers whose annual aggregate turnover in preceding financial year is up to Rs. 5 crores shall furnish ITC-04

 

  1. Interest on liability:

In the spirit of earlier Council decision that interest is to be charged only in respect of net cash liability, section 50 (3) of the  CGST Act  to be amended retrospectively, w.e.f. 01.07.2017, to provide that interest is to be paid by a taxpayer on “ineligible ITC availed and utilized” and not on “ineligible ITC availed”. It has also been decided that interest in such cases should be charged on ineligible ITC availed and utilized at 18% w.e.f. 01.07.2017.

 

  1. Transfer of unutilized CGST and IGST cash ledger balance:

Unutilized balance in CGST and IGST cash ledger may be allowed to be transferred between distinct persons (entities having same PAN but registered in different states), without going through the refund procedure, subject to certain safeguards.

 

  1. Measures for streamlining compliances in GST :

 

  1. Late fee for delayed filing of FORM GSTR-1 to be auto-populated and collected in next month’s FORM GSTR-3B.

 

  1. Refund to be disbursed in the bank account, which is linked with PAN on which registration has been obtained under GST.

 

  1. Rule 59(6) of the CGST Rules to be amended e.f 01.01.2022 to provide that a registered person shall be allowed to furnish FORM GSTR-1, only after FORM GSTR-3B for the preceding month is filed

 

  1. Rule 36(4) of CGST Rules, 2017 to be amended, once the proposed clause (aa) of section 16(2) of CGST Act, 2017 is notified, to restrict availment of ITC in respect of invoices/ debit notes, to the extent the details of such invoices/ debit notes are furnished by the supplier in FORM GSTR-1/ IFF and are communicated to the registered person in FORM GSTR-2B.

 

  1. Clarification on circulars to remove ambiguity :

 

Issuance of the following circulars in order to remove ambiguity and legal disputes on various issues, thus benefiting taxpayers at large:

 

  1. Clarification on scope of “intermediary services”;

 

Clarification relating to interpretation of the term “merely establishment of distinct person” in condition (v) of the Section 2 (6) of the IGST Act 2017 for export of services.

A person incorporated in India under the Companies Act, 2013 and a person incorporated under the laws of any other country are to be treated as separate legal entities and would not be barred by the condition (v) of the sub-section (6) of the section 2 of the IGST Act 2017 for considering a supply of service as export of services;

 

  1. Clarification in respect of certain GST related issues:

 

  1. e.f. 01.01.2021, the date of issuance of debit note (and not the date of underlying invoice) shall determine the relevant financial year for the purpose of section 16(4) of CGST Act, 2017

 

  1. There is no need to carry the physical copy of tax invoice in cases where invoice has been generated by the supplier in the manner prescribed under rule 48(4) of the CGST Rules, 2017

 

  1. Only those goods which are actually subjected to export duty i.e., on which some export duty has to be paid at the time of export, will be covered under the restriction imposed under section 54(3) of CGST Act, 2017 from availment of refund of accumulated ITC.

 

  1. Provision to be incorporated in in CGST Rules, 2017 for removing ambiguity regarding

Procedure and time limit for filing refund of tax wrongfully paid as specified in section

77(1) of the CGST/SGST Act and section 19(1) of the IGST Act.

 

 

 

 

 

 

  • RECOMMENDATIONS RELATING TO GST RATES ON GOODS AND SERVICES

 

  1. COVID-19 relief measure in form of GST rate concessions

           

  1. Extension of existing concessional GST rates (currently valid till 30th September, 2021) on following Covid-19 treatment drugs, up to 31st December, 2021, namely-
    1. Amphotericin B – NIL
    2. Remdesivir – 5%
    3. Tocilizumab – NIL
    4. Anti-coagulants like Heparin – 5%

 

  1. Reduction of GST rate to 5% on more Covid-19 treatment drugs, up to 31st December, 2021, Namely
    1. Itolizumab
    2. Posaconazole
    3. Infliximab
    4. Favipiravir
    5. Casirivimab & Imdevimab
    6. 2-Deoxy-D-Glucose
    7. Bamlanivimab & Etesevimab

 

Major recommendations on GST rate changes in relation to Goods [w.e.f 1.10.2021 unless otherwise stated]

 

Sr.no.DescriptionFromTo
1.Retro fitment kits for vehicles used by the disabledApplicable Rate5%
2.Fortified Rice Kernels for schemes like ICDS etc.18%5%
3.Medicine Keytruda for treatment of cancer12%5%
4.Biodiesel supplied to OMCs for blending with Diesel12%5%
5.Ores and concentrates of metals such as iron, copper, aluminum, zinc and few others5%18%
6.Specified Renewable Energy Devices and parts5%12%
7.Cartons, boxes, bags, packing containers of paper etc.12 % /18%18%
8.Waste and scrap of polyurethanes and other plastics5%18%
9.All kinds of pens12 % / 18%18%
10.Railway parts, locomotives & other goods in Chapter 8612%18%
11.Miscellaneous goods of paper like cards, catalogue, printed material (Chapter 49 of tariff)12%18%
12.IGST on import of medicines for personal use, namely
i. Zolgensma for Spinal Muscular Atrophy
ii. Viltepso for Duchenne Muscular Dystrophy
Other medicines used in treatment of muscular atrophy recommended by Ministry of Health and Family Welfare and Department of Pharmaceuticals.
12%Nil
13.IGST exemption on goods supplied at Indo-Bangladesh Border haatsApplicable RateNil
14.Unintended waste generated during the production of fish,meal except for Fish OilNil (for the period 1.7.2017 tomeal except for Fish Oil 30.9.2019)

 

  1. Other changes relating to GST rates on goods :

 

  1. Supply of mentha oil from unregistered person has been brought under reverse charge.

Further, Council has also recommended that exports of Mentha oil should be allowed only against LUT and consequential refund of input tax credit.

 

  1. Brick kilns would be brought under special composition scheme with threshold limit of Rs. 20 lakhs, with effect from 1.4.2022. Bricks would attract GST at the rate of 6% without ITC under the scheme. GST rate of 12% with ITC would otherwise apply to bricks.

 

  1. Correction in Inverted Duty structure in Footwear and Textiles sector :

GST rate changes in order to correct inverted duty structure, in footwear and textiles sector, as was discussed in earlier GST Council Meeting and was deferred for an appropriate time, will be implemented with effect from 01.01.2022.

 

  1. In terms of the recent directions of the Hon’ble High Court of Kerala, the issue of whether

     Specified petroleum products should be brought within the ambit of GST was placed for consideration before the Council. After due deliberation, the Council was of the view that it is not appropriate to do so at this stage.

 

  1. Major GST changes in relation to rates and scope of exemption on Services [w.e.f 1.10.2021 unless otherwise stated] :

 

Sr.no.DescriptionFromTo
1Validity of GST exemption on transport of goods by vessel and air from India to outside India is extended up to 30.9.2022.Nil
2Services by way of grant of National Permit to goods carriages on payment of fee18%Nil
3Skill Training for which Government bears 75% or more of the expenditure [presently exemption applies only if Government funds 100%].18%Nil
4Services related to AFC Women’s Asia Cup 202218%Nil
5Licensing services/ the right to broadcast and show original films, sound recordings, Radio and Television programmes [ to bring parity between distribution and licensing services]12%18%
6Printing and reproduction services of recorded media where content is supplied by the publisher (to bring it on parity with Colour printing of images from film or digital media)12%18%

     

  • Exemption on leasing of rolling stock by IRFC to Indian Railways withdrawn.

 

  • E Commerce Operators are being made liable to pay tax on following services provided through them
  1. Transport of passengers, by any type of motor vehicles through it [w.e.f. 1st January, 2022]
  2. Restaurant services provided through it with some exceptions [w.e.f. 1st January, 2022]

 

  • Certain relaxations have been made in conditions relating to IGST exemption relating to import of goods on lease, where GST is paid on the lease amount, so as to allow this exemption even if (i) such goods are transferred to a new lessee in India upon expiry or termination of lease; and (ii) the lessor located in SEZ pays GST under forward charge.

 

 

  1. Clarification in relation to GST rate on Goods :

 

  1. Pure henna powder and paste, having no additives, attract 5% GST rate under Chapter 14.

 

  1. Scented sweet supari and flavored and coated illachi falling under heading 2106 attract GST at the rate of 18%.

 

  1. Carbonated Fruit Beverages of Fruit Drink” and “Carbonated Beverages with Fruit Juice” attract GST rate of 28% and Cess of 12%. This is being prescribed specifically in the GST rate schedule.

 

  1. Tamarind seeds fall under heading 1209, and hitherto attracted nil rate irrespective of use. However, henceforth they would attract 5% GST rate (w.e.f. 1.10.2021) for use other than sowing. Seeds for sowing will continue at nil rate.

 

  1. External batteries sold along with UPS Systems/ Inverter attract GST rate applicable to batteries [28% for batteries other than lithium-ion battery] while UPS/inverter would attract 18%.

 

  1. GST on specified Renewable Energy Projects can be paid in terms of the 70:30 ratio for goods and services, respectively, during the period from 1.7.2017 to 31.12.2018, in the same manner as has been prescribed for the period on or after 1st January 2019.

 

  1. Due to ambiguity in the applicable rate of GST on Fibre Drums, the supplies made at 12% GST in the past have been regularised. Henceforth, a uniform GST rate of 18% would apply to all paper and paper board containers, whether corrugated or non corrugated.

 

  1. Distinction between fresh and dried fruits and nuts is being clarified for application of GST rate of “nil” and 5%/12% respectively;

 

  1. It is being clarified that all pharmaceutical goods falling under heading 3006 attract GST at the rate of 12% [ not 18%].

 

  1. Essentiality certificate issued by Directorate General of Hydrocarbons on imports would suffice; no need for taking a certificate every time on inter-state stock transfer.

 

  1. Brewers’ Spent Grain (BSG), Dried Distillers’ Grains with Soluble [DDGS] and other such residues, falling under HS code 2303 attract GST at the rate of 5%.

 

  1. All laboratory reagents and other goods falling under heading 3822 attract GST at the rate of 12%.

 

  1. Clarification in relation to GST rate on services :

 

  1. Coaching services to students provided by coaching institutions and NGOs under the central sector scheme of ‘Scholarships for students with Disabilities” is exempt from GST.

 

  1. Services by cloud kitchens/central kitchens are covered under ‘restaurant service’, and attract 5% GST [without ITC].

 

  1. Ice cream parlor sells already manufactured ice- cream. Such supply of ice cream by parlors would attract GST at the rate of 18%.

 

  1. Overloading charges at toll plaza are exempt from GST being akin to toll.

 

  1. The renting of vehicle by State Transport Undertakings and Local Authorities is covered by expression ‘giving on hire’ for the purposes of GST exemption

 

  1. The services by way of grant of mineral exploration and mining rights attracted GST rate of 18% w.e.f. 01.07.2017.

 

  1. Admission to amusement parks having rides etc. attracts GST rate of 18%. The GST rate of 28% applies only to admission to such facilities that have casinos etc.

 

  1. Alcoholic liquor for human consumption is not food and food products for the purpose of the entry prescribing 5% GST rate on job work services in relation to food and food products.

 

  1. On the issue of compensation scenario, a presentation was made to the Council wherein it was brought out that the revenue collections from Compensation Cess in the period beyond June 2022 till April 2026 would be exhausted in repayment of borrowings and debt servicing made to bridge the gap in 2020-21 and 2021-22. In this context various options, as have been recommended by various committees/ forums were presented. The Council deliberated at length on the issue. The Council decided to set up a GoM to examine the issue of correction of inverted duty structure for major sectors; rationalize the rates and review exemptions from the point of view of revenue augmentation, from GST. It was also decided to set up a GoM to discuss ways and means of using technology to further improve compliance including monitoring through improved e-way bill systems, e-invoices, FASTag data and strengthening the institutional mechanism for sharing of intelligence and coordinated enforcement actions by the Centre and the States.

 

Nature of Compliance

 

 

 

 

(1)

Original Due Dates

 

 

 

 

(2)

1st Extended dates vide Circular No. 9/2021 dated 20.5.2021

 

(3)

New Extended due dates vide Circular No. 17/2021 dated 20.5.2021

 

(4)

IT Returns (Non-Audit)31st Jul-202130th Sept-202131st Dec-2021
Filing an Audit Report30th Sept-202130th Nov-202115th Jan-2022
IT Returns (Audit Case)31st Oct-202130th Nov-202115th Feb-2022
Audit reports u/s 92E31st Oct-202130th Nov-202131st Jan-2022
Filing of ROI for 92E entities30th Nov-202131st Dec-202128th Feb-2022
Belated/revised Return31st Dec 202131st Jan-202231st Mar-2022

 

Note:

The Extension of Due Date is subject to Interest U/s 234 A if net tax payable is above ₹ 1 Lakh as per original due dates (as mentioned in column 2)

EXTENSION OF TIME LIMITS FOR EASE OF TAX COMPLIANCE

Compliances related to uploading of declaration/exercising of option/ other compliancesSection of Income-tax Act, 1961/Rule or Form of Income-tax Rules, 1962Existing Due DateExtended due date
Uploading of the declarations received from recipients during the quarter ending 30th June, 2021Form No. 15G/SH15 July, 202131 August, 2021
Exercising of option to withdraw pending application (filed before the erstwhile Income Tax Settlement Commission)Sub-section (1) of Section 245M of the Act in Form No. 348827 June, 202131 July, 2021
Linkage of Aadhaar with PANSection 139AA30 June, 202130 Sept. 2021

 

Compliances related to filing of Application/Investment, deposit etc.Section of Income-tax Act, 1961/Rule or Form of Income-tax Rules, 1962Existing Due DateExtended due date
The application for registration/ provisional registration/ intimation/ approval/ provisional approval of Trusts/ Institutions/Research Associations etc.Section 10(23C), 12AB, 35(1/a)/) and 80C/ Form No. 10A/ Form No.10AR.30 June, 202131 Aug. 2021
The compliances to be made by the taxpayers such as investment, deposit, payment, acquisition, purchase. construction or such other action, by whatever name called, for the purpose of claiming any exemptionSection 54 to 54CBThe last date of such compliance falls between 1st April 2021 to 29th September 2021 (both days inclusive)May be completed on or before 30th September, 2021

 

Compliances related to filing of StatementsSection of Income-tax Act, 1961/Rule or Form of Income-tax Rules, 1962Existing Due DateExtended due date
The Quarterly Statement to be furnished by authorized dealer in respect of remittances made for the quarter ending on 30th June, 2021Form No. 15CC/ Rule 37 BB15 July, 202131 July, 2021
The Equalization Levy Statement for the Financial Year 2020-21Form No. 130 June, 202131 July, 2021
The Annual Statement required to be furnished by the eligible investment fund for the Financial Year 2020-21sub-section (5) of section 9A/Form No. 3CEK29 June, 202131 July, 2021

 

Compliances related to passing of order/processing of returnsExisting Due DateExtended due date
Time Limit for passing assessment order30 June, 202130 Sept, 2021
Time Limit for passing penalty order30 June, 202130 Sept, 2021
Time Limit for processing Equalisation Levy returns30 June, 202130 Sept, 2021

 

Compliances related to filing of Objections to DRP and Assessing OfficerSection of Income-tax Act, 1961/Rule or Form of Income-tax Rules, 1962Existing Due DateExtended due date
The last date to file the objections to Dispute Resolution Panel (DRP) and Assessing Officer (AO)Section 144C1 June 2021 or thereafterWithin the time provided in Section 1440 of by 31 August 2021, whichever is later

 

Compliances related to filing of Statements/CertificateSection of Income-tax Act, 1961/Rule or Form of Income-tax Rules, 1962Existing Due DateExtended due date
The Statement of Deduction of Tax for the last quarter of the Financial Year 2020-21Rule 31A30 June, 202115 July, 2021
The Certificate of Tax Deducted at Source required to be furnished to the employeeForm No. 16/Rule 3115 July, 202131 July, 2021
The Statement of Income paid or credited by an investment fund to its unit holder for the Previous Year 2020-21Form No 64D/Rule 12CB30 June, 202115 July, 2021
The Statement of Income paid or credited by an investment fund to its unit holder for the Previous Year 2020-21Form No. 64C/Rule 12CB15 July, 202131 July, 2021

 

Compliances related to Vivad Se Vishwas Act, 2020ActExisting Due DateExtended due date
Last date of payment of Amount under Vivad se Vishwas without additional amount)Vivad se Vishwas Act, 202030 June, 202131 August, 2021
Last date of payment of Amount under Vivad se Vishwas with additional amount)Vivad se Vishwas Act, 2020Notified as 31 October, 2021

CBDT HAS ISSUED CIRCULAR REGARDING USE OF FUNCTIONALITY UNDER SECTION 206AB AND 206CCA OF THE INCOME-TAX ACT, 1961.

With respect to Applicability of new TDS and TCS Provisions, i.e.

 

  • Special provision for deduction of Tax at Source (TDS) for non-filers of Income Tax Return – Section 206AB – Applicable w.e.f. 1st July 202.

 

  • Special provision for collection of Tax at Source (TCS) for non-filers of Income Tax Return -Section 206CCA – Applicable w.e.f. 1st Jul 2021

 

CBDT has issued Circular regarding use of functionality under Section 206AB and 206CCA of the Income-tax Act, 1961.

To ease compliance burden the Central Board of Direct Taxes is issuing a new functionality “Compliance Check for Sections 206AB & 206CCA”. This functionality is made available through reporting portal of the Income-tax Department. The tax deductor or the collector can feed the single PAN (PAN search) or multiple PANs (bulk search) of the deductee or collectee and can get a response from the functionality if such deductee or collectee is a specified person.

For PAN Search, response will be visible on the screen which can be downloaded in the PDF format. For Bulk Search, response would be in the form of downloadable file which can be kept for record.

 

The logic of the functionality is as under: 

  • List contains name of taxpayers who did not file return of income for both AY 2019-20 & 2020-21 and have aggregate of TDS and TCS of fifty thousand rupees or more in each of these two previous years.

 

  • During the financial year 2021-22, no new names are added in the list of specified persons. This is a taxpayer friendly measure to reduce the burden on tax deductor a collector of checking PANs of non-specified person more than once during the financial year.

 

  • If any specified person files a valid return of income (filed & verified) for AY 2019-20 or 2020-21 during the financial year 2021-22, his name would be removed from the list of specified persons. This would be done on the date of filing of the valid return of income during the financial year 2021-22.

 

  • If any specified person files a valid return of income (filed & verified) for assessment year 2021-22, his name would be removed from the list of specified persons. This will

 

 

 

be done on the due date of filing of return of income for AY 2021-22 or the date of actual filing of valid return (filed & verified) whichever is later.

 

  • If the aggregate of TDS and TCS, in the case of a specified person, in the previous year 2020-21, is less than fifty thousand rupees, his name would be removed from the list of specified persons. This would be done on the first due date under sub-section (I) of section 139 of the Act falling in the financial year 2021-22.
  • Belated and revised TCS & TDS returns of the relevant financial years filed during the financial year 2021-22 would also be considered for removing persons from the list of specified persons on a regular basis

CBDT has notified the Cost Inflation Index (CII) for AY 2022-2023 as “317” via notification dated 15th June’2021. For AY 2021-2022 it was notified as 301.

At the time of filing of Income Tax Returns for AY 2022-2023, this CII will be helpful to ascertain long-term capital gains.

KEY DECISIONS TAKEN IN 44thGST COUNCIL MEETING

  • Recommended Reductions / Exemptions in GST rates to remain effective till 30th September 2021 as follows :
ParticularsExisting RateRate Recommended

in meeting

A)     Testing kits and Machines  
–          Covid Testing Kit12 %5 %
–          Specified Inflammatory Diagnostic Kits, namely D-Dimer, IL-6, Ferritin and LDH12 %5 %
  
B)     Oxygen, /oxygen Generation Equipment and related medical devices  
–          Medical Grade Oxygen12 %5 %
–          Oxygen Concentrator/ Generator, including personal imports thereof12 %5 %
–          Ventilators12 %5 %
–          Ventilator masks / canula / helmet12 %5 %
–          BiPAP Machine12 %5 %
–          High flow nasal canula (HFNC) device12 %5 %
  
C)     Medicines  
–          Tocilizumab5 %Nil
–          Amphotericin B5 %Nil
–          Anti-Coagulants like Heparin12 %5 %
–          Remdesivir12 %5 %
–          Any other drug recommended by Ministry of Health and Family Welfare (MoHFW) and Dept. of Pharma (DoP) for Covid treatmentApplicable rate5 %
  
D)      Other Covid-19 related relief material  
–          Pulse Oximeters, incl personal imports thereof12 %5 %
–          Hand Sanitizer18 %5 %
–          Temperature check equipment18 %5 %
–          Gas/Electric/other furnaces for crematorium, including their installation, etc.18 %5 %
–          Ambulances28 %12 %

 

  • GST on Vaccines remain same as earlier i.e.5 %
  • The Centre will buy the 75 per cent vaccine as announced and will pay its GST too. But 70 per cent of income from GST will be shared with States.

KEY DECISIONS TAKEN IN 43rd GST COUNCIL MEETING

  • Amnesty Scheme for filing pending/delayed return

Time Period to Avail GST Amnesty Scheme 2021 benefit: 1st June, 2021 to 31st August, 2021 – Benefit of reduced rate of late fees for the period, July, 2017 to April, 2021 if filed on or before 31st August, 2021

Taxpayers can avail the benefits of Amnesty Scheme for returns pending from July 2017- April 2021

Return TypeRelaxation in Late Fees
1.                  In case of Nil ReturnMaximum Late fee – Rs. 500/- (Rs. 250- each for CGST & SGST) per return
2.                  In case of Tax LiabilityMaximum Late fee – Rs.1,000/- (Rs. 500- each for CGST & SGST)

 

  • Rationalization of Late Fees from June 2021 Onwards
  1. Late fee leviable on account of delay in furnishing return in FORM GSTR-3B and FORM GSTR-1 from June 2021 onwards
Taxpayer’s categoryRelaxations in Late Fees
1.      In case of Nil ReturnRs. 500/- (Rs. 250/- each for CGST & SGST)

per return

2.      In case of Tax Liability
a.                  For taxpayers having turnover below Rs. 1.5 croresRs. 2,000/- (Rs. 1,000/- each for CGST & SGST) per return
b.                  For taxpayers turnover in between Rs. 1.5 crores to Rs. 5 croresRs. 5,000/- (Rs. 2,500/- each for CGST & SGST) per return
c.                   For taxpayers having turnover above Rs.  5 croresRs. 10,000/- (Rs. 5,000/- each for CGST & SGST) per return

 

  1. Late fee leviable on account of delay in furnishing return in FORM GSTR-4 by Composition Taxpayers from FY 2021-2022 onwards
Taxpayer’s categoryRelaxations in Late Fees
1. In case of Nil ReturnRs. 500/- (Rs. 250/- each for CGST & SGST) per return
2. For Other TaxpayersRs. 2,000/- (Rs. 1,000/- each for CGST & SGST) per return

 

  1. Late fee leviable on account of delay in furnishing return in FORM GSTR-7 by Tax Deductors at Source from June 2021 onwards
Taxpayer’s categoryRelaxations in Late Fees
1. Late Fee payable for delayed furnishing of Return in Form GSTR – 7Rs. 50 Per day (Rs. 25/- each CGST & SGST) per return subject to Maximum of Rs.2,000/- (Rs. 1,000/- each for CGST & SGST) per return

 

  • Covid-19 related relief measures
  1. Relaxation in availment of ITC under GST

105% cap on availment of ITC to be applicable on cumulative basis of tax periods April, May and June 2021, to be applied in the return GSTR – 3B for the Tax Period June, 2021

  1. For Small Taxpayers (aggregate annual turnover upto Rs. 5 crore)
Sr. No.Return/FormMonthsConditionsRelief
(a)GSTR 3B / Challan PMT 06March 2021, April 2021 & May 2021Filed within 15 days from the due dateNil rate of interest
(b)GSTR 3B / Challan PMT 06March 2021Filed within 60 days from the due dateReduced Rate of Interest @ 9%
(c)GSTR 3B / Challan PMT 06April 2021Filed within 45 days from the due dateReduced Rate of Interest @ 9%
(d)GSTR 3B / Challan PMT 06May 2021Filed within 30 days from the due dateReduced Rate of Interest @ 9%
(e)GSTR 3BMarch 2021 , April 2021 & May 2021Filed within 60/45/30 days respectively from the due dateNil Late Fees
(f)CMP-08 (For Composition Dealers)QE March 2021Filed within 15 days from the due dateNil rate of interest
(g) CMP-08 (For Composition Dealers)QE March 2021Filed within 60 days from the due dateReduced Rate of Interest @ 9%

 

  1. For Large Taxpayers (Annual turnover above Rs.5 Crore)
Sr. No.Return/FormMonthsConditionsRelief
(a)GSTR 3B / Challan PMT 06May 2021Filed within 15 days from the due dateNil Late Fees
(b)GSTR 3B / Challan PMT 06May 2021Filed within 15 days from the due dateReduced Rate of Interest @ 9%

 

  1. Relaxations under section 168A of the CGST Act : Time limit for completion of various actions, by        any  authority or by any person, under the GST Act, which falls during the period from 15th April,        2021 to 29th June, 2021, to be extended upto 30th June, 2021, subject to some exceptions.

 

  • Other Covid-19 related relief measures
  1. Extension of due date of filing GSTR-1/ IFF for the month of May 2021 by 15 days
  2. Extension of due date of filingGSTR-4 for FY 2020-21 to 31/07/2021
  3. Extension of due date of filingITC-04 for QE March 2021 to 30/06/2021
  4. Cumulative application of rule 36(4)for availing ITC for tax periods April, May and June, 2021 in the                    return for the period June, 2021
  5. Allowing filing of returns by companies also using Electronic Verification Code (EVC) till 31/08/2021

TAX ALERT

NEW TDS PROVISIONS APPLICABLE FROM 1ST JULY, 2021

  1. Deduction of TDS (Tax deduction at source) on payment of purchase of goods-Section 194Q. Section 206AA-Applicable w.e.f. 1st July 2021

Who is responsible for deducting Tax?

  • Tax is deductible by buyer of the goods.
  • “Buyer” for this purpose, means a person whose total sales, gross receipts or turnover from the business carried on by him exceed Rs. 10 crores during the financial year immediately preceding the financial year in which the purchase of goods is carried out.

When Tax is to be deducted?

  • Any person being a buyer who is responsible for paying any sum to any resident seller for purchase of any goods of the value (or aggregate of such value) exceeding Rs. 50 lakhs in any previous year, is required to deduct tax at source u/s 194Q
  • Tax should be deducted by the buyer, at the time of credit of such sum to the account of the seller in the books of accounts or at the time of payment thereof by any mode, whichever is earlier.

When Tax is not to be deducted?

Tax is not deductible under this section if

  • If tax is deductible (TDS) under any other section of the Act, or
  • If TCS provisions u/s 206C of the Act is applicable [except u/s 206C(1H)]*

“If tax is deductible under any other section, then tax shall be deducted under that section and not u/s 194Q, even though actually not deducted by the payer under any other section.

If any transaction is covered by the provisions of TCS u/s 206C [Other than section 206C(1H)], then tax shall be deductible by the seller u/s 206C and TDS u/s 194Q will not be applicable. If any transaction is covered by the provisions of TCS u/s 206C(1H) as well as by the provisions of TDS u/s 194Q; then TDS u/s 194Q shall be applicable

TDS Rate?

  • TDS rate is 0.1% of the amount paid or payable in excess of Rs. 50 lakhs
  • If seller or the recipient does not provide valid PAN to the buyer then 5% TDS rate shall be applicable as per Section 206AA.
  • Further, if seller or the recipient provides valid PAN but has not filed Income tax returns for immediately past 2 years for which due date prescribed u/s 139(1) has expired, then also buyer need to deduct tax at source @5% u/s 206AB of the Act.

Summary

  1. Payer is “buyer” of goods.
  2. Total sales, gross receipts or turnover from the business carried on by buyer exceed Rs 10 crores during the financial year immediately preceding the financial year in which the purchase of goods is carried out.
  3. Payment/credit is on or after July 1, 2021.
  4. Payment/credit pertains to purchase of goods from seller
  5. Aggregate payment/credit during the financial year exceeds Rs. 50 lakhs

If all above conditions are satisfied, the buyer is required to deduct tax at source u/s194Q.

 

  1. Special provision for deduction of Tax at Source (TDS) for non-filers of Income Tax Return – Section 206AB – Applicable w.e.f. 1st July 2021

Section 206AA of the Act provides for higher rate of TDS for non-furnishing of PAN. It is seen that while this provision has served its purpose is ensuring obtaining and furnishing of PAN by various person, there is need to have similar provisions to ensure filing of return of income by those people who have suffered reasonable amount of TDS/TCS Hence, it is proposed to insert a new section 206AB in the Act as a special provision providing for higher rate for TDS for the non-filers of income-tax return

Newly inserted section 206AB of the Act would apply on any sum or income or amount paid, or payable or credited, by a person (herein referred to as deductee) to a specified person

“Specified person means a person who has not filled the returns of income for both of the 2 assessment years relevant to the two previous years immediately prior to the previous year in which tax is required to be deducted, for which the time limit of filling return of income u/s 139(1) has expired; and the aggregate of tax deducted at source (TDS) and tax collected at source (TCS) in his case is rupees fifty thousand or more in each of these two previous years.

The specified person shall not include a non-resident who does not have a permanent establishment in India. For the purposes of this sub-section, the expression “permanent establishment includes a fixed place of business through which the business of the enterprise is wholly or partly carried on.

This section shall not apply where the tax required to be deducted under sections 192, 192A, 194B, 194BB, 194LBC or 194N of the Act

 

The TDS rate in this section is higher of the following rate:

  • Twice the rate specified in the relevant provision of the Act; or
  • Twice the rate or rates in force, or
  • 5%

If the prevision of section 206AA of the Act is applicable to a specified person, in addition to the provision of this section, the tax shall be deducted at higher of the two rates provided in this section and in section 206AA of the Act.

 

III. Special provision for collection of Tax at Source (TCS) for non-filers of Income Tax Return -Section 206CCA – Applicable w.e.f. 1st Jul 2021

Similar to newly inserted section 206AB for TDS, government has introduced new section 206CCA wherein higher TCS rates are prescribed for non-filers of Income Tax return.

Newly inserted section 206CCA of the Act would apply on any sum or amount received by a person (herein referred to as collectee) from a specified person

“Specified person means a person who has not fled the returns of income for both of the 2 assessment years relevant to the two previous years immediately prior to the previous year in which Tax is required to be collected, for which the time link of filing return of income u/s 139(1) has expired; and the aggregate of tax deducted at source (TDS) and tax collected at source (TCS) in his case is rupees fifty thousand or more in each of these two previous years.

The specified person shall not include a non-resident who does not have a permanent establishment in India. For the purposes of this sub-section, the expression “permanent establishment” includes a fixed place of business through which the business of the enterprise is wholly or partly carried on.

The TCS rate in this section is higher of the followings rates:

  • Twice the rate specified in the relevant provision of the Act; or
  • 5%

If the provision of section 206CC of the Acts applicable to a specified person, in addition to the provision of this section, the tax shall be collected at higher of the two rates provided in this section and in section 206CC of the Act.

Government Announces Relief Measures For Taxpayers under GST in View of COVID Pandemic

 

Reduced rate of Interest

  • For an aggregate turnover above Rs. 5 crore of registered persons – A lower rate of interest of 9 per cent for the first 15 days from the due date of payment of tax and 18 per cent afterwards has been announced – For periods March and April 2021.
  • For an aggregate turnover upto Rs. 5 crore of registered persons – 0% rate of interest for the first 15 days from the due date of payment of tax, 9 per cent for the next 15 days, and 18 per cent afterwards, for both normal taxpayers and those under QRMP scheme has been notified  – For periods March and April 2021.
  • For registered persons who have opted to pay tax under the Composition scheme- NIL rate of interest for first 15 days from the due date of payment of tax and 9 per cent for the next 15 days, and 18 per cent thereafter has been notified – For tax payable for quarter ended 31st March 2021

Waiver of late fee (For periods March and April 2021) –

  • For an aggregate turnover above Rs. 5 crore of registered persons – Late fee is waived off for 15 days in respect of returns in FORM GSTR-3B furnished post the due date.
  • For registered persons having aggregate turnover upto Rs. 5 crore- Late fee waived off for 30 days in respect of the returns in FORM GSTR-3B furnished post the due date for tax periods March, 2021 and April, 2021.

Extension of due date for filing of GSTR-1, IFF, GSTR-4 and ITC-04.

The Due date of filing FORM GSTR-1 and IFF for the month of April (due in May) has been extended by 15 days, while that of FORM GSTR-4 for FY 2020-21 has been extended to 31st May,2021 from 30th April, 2021. Meanwhile, the due date of furnishing FORM ITC-04 for Jan-March, 2021 quarter has been extended from 25th April, 2021 to 31st May, 2021.

Timelines Extension for compliances under Income Tax Act.

On Account of the surge in COVID cases, the following dates have been extended by the CBDT

  • Filing Belated Return of Income u/s 139(4) and Revised Return u/s 139(5) for AY 2020-21 (FY 2019-20) – Extended to 31st May, 2021
  • Filing SFT (Form 61) extended to 31st May, 2021 (where the due date was 30th April, 2021)
  • Return filed in response to notice u/s 148 of the Income Tax Act – where return of income had to be filed on or after 1st April, 2021 – can now be filed upto 31st May, 2021
  • Relaxation of Filing Appeal dates for Appeals to CIT (Appeals) extended to 31st May, 2021 (where such last date was 1st April, 2021 or after)
  • Payments of TDS deducted u/s 194IA, 194IB and 194M and filing of challan-cum-statement on the same extended to 31st May, 2021 (earlier date 30th April, 2021)
  • Last date for filing objections to DRP u/s 144C extended to 31st May 2021.
DUE DATECOMPLIANCEAPPLICABILITY
COMPLIANCE – GST
11 May 2021GSTR 1Dealers having turnover more than five crores or those who have opted for monthly GSTR filing
13 May 2021GSTR 1Dealers who have opted for QRMP scheme
20 May 2021GSTR 3BDealers having turnover more than five crores
22 May 2021GSTR 3BDealers having turnover less than five crores and those who have opted for monthly GSTR filing
25 May 2021GST challan paymentDealers who have opted for QRMP scheme GST Challan Payment if sufficient ITC not available
COMPLIANCE – INCOME TAX
07 May 2021Due date for deposit of TDS & TCS for the month of April, 2021.
15 May 2021Quarterly statement of TCS deposited for the quarter ending March 31, 2021
31 May 2021Quarterly statement of TDS deposited for the quarter ending March 31, 2021
31 May 2021Due date for furnishing of statement of financial transaction (in Form No. 61A) as required to be furnished under sub-section (1) of section 285BA of the Act respect of a financial year 2020-21
COMPLIANCE – LLP
30 May 2021Form-11-Annual Return of an LLP for F.Y-2020-2021.

Central Government extends the last date for linking of AADHAAR number with PAN from 31st March, 2021 to 30th June, 2021

Analysis of Changes Made In the Finance Bill, 2021 As Passed By the Lok Sabha
Click here for more information – https://bit.ly/2PpKBN4
For PTEC holders 

31st March 2021

For PTRC holders (Monthly Taxpayers- for March 2021)
For PTRC holders (Annual taxpayers)

Commencing 1st April, 2021, every company which uses accounting software for maintaining its books of account, shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled.

Requirement of HSN Code for Goods and Services on Tax Invoices is mandatory w.e.f April 01, 2021.

Aggregate Turnover is up to Rs. 5 crores in the preceding Financial Year

HSN code of 4 digits is mandatory for all the B2B tax invoices and optional for B2C tax invoices on the supplies of Goods and Services.

Aggregate Turnover is more than Rs. 5 crores in the preceding Financial Year

HSN code of 6 digits is mandatory for both B2B and B2C tax invoices on the supplies of Goods and Services.

Registered persons with aggregate turnover exceeding 50 crores will be required to generate e-invoice on the GST portal from 1 April 2021 onwards

Here’s the circular – https://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-13-central-tax-english-2020.pdf;jsessionid=DCCB7335C1BD6C22C66DEE7A2885819C

Due date for furnishing GSTR-9 & GSTR-9C for the FY 2019-20 has been further extended to 31st March 2021

TABLE OF CONTENTS

§  DIRECT TAX
–         Income Tax Rates
–         Basis of Charge
–         Income not Forming Part of Total Income
–         Income from Business and Profession
–         Capital Assets and Capital Gains
–         Deductions
–         Provisions in Relation to Administration and Assessment
–         Procedural Aspects
–         Withholding Tax Provisions
–         Constitution of Dispute Resolution Committee for Small and Medium Taxpayers
–         Others
§  INDIRECT TAX
–         Central Goods and Services Tax Act, 2017
–         Integrated Goods and Services Tax Act, 2017
–         Agriculture Infrastructure and Development Cess
–         Customs – Legislative Changes
–         Changes to Notification No 50/2017 – Customs
§  INTERNATIONAL TRADE
–         Amendment to Section 9A of the CTA
–         Amendment to AD Rules
–         Amendment to Section 9 of the CTA
–         Amendments to Customs (Import of Goods at Concessional Rate of Duty) Rules 2017
§  CORPORATE LAWS
–         Small Companies’ Gamut Set to be Widened under the CA2013
–         MCA-21 3.0 – New MCA Portal
–         Strengthening of NCLT and Implementation of E-Courts
–         Foreign Direct Investment – Increase in FDI Limit in the Insurance Sector From 49% To 74%
§  MISCELLANEOUS
–         Relief to Small Charitable Trusts Running Educational Institutions and Hospitals
–         Implementation of Labour Codes
§  FINANCIAL MARKETS
–         Debt Financing of InVITs and REITs by FPIs
–         Universal Securities Market Code
–         Fin-Tech Hub at GIFT-IFSC
–         “Pooled Investment Vehicle” Introduced to Borrow and Issue Debt Securities
–         Gold Exchanges – SEBI to be Notified as Regulator
–         Investor Charter
–         Disinvestment Policy in Non-Strategic and Strategic Sectors
–         Disinvestment and Strategic Sale of LIC & Other Government Corporations
–         Amendments to the LIC Act
§  BANKING & FINANCE
–         Development Financial Institution (DFI)
–         Deposit Insurance
–         Corporate Bond Market
–         Issue of Zero Coupon Bonds by Notified Infrastructure Debt Funds (IDFs)
–         Public Sector Disinvestment
–         Digital Modes of Payment
§  STRESSED ASSET RESOLUTION
–         Resolution of Stressed Assets by Setting up of Bad Bank
–         SARFAESI-Reduction in Thresholds
–         Strengthening the Dispute Resolution Framework
–         Measures for Msme Sector
§  INFRASTRUCTURE
–         Introduction
–         Investments in Infrastructure Sector
–         Power, Oil and Gas
–         Roads
–         Railways
–         Airports
–         Ports Waterways
–         Logistics and Urban Infrastructure
–         Water Infrastructure
§  REAL ESTATE
–         Debt Financing of InvITs and REITs by Foreign Portfolio Investors
–         Increase in Safe Harbor Limit for Primary Sale of Residential Units
–         Textile Parks
–         Affordable Housing/Rental Housing
–         Growth of Infrastructure
–         Centre Forming an SPV to Monetize Land Owned by PSU’s
–         Swachch Bharat, Swasth Bharat
–         Record of Rights Being Given to Property Owners in Villages
–         Scrapping Policy
§  DEFENCE & AEROSPACE
–         India’s Defence Budget Analysis
–         Share of Capital & Revenue Expenditure

DIRECT TAX

INCOME TAX RATES

FOR INDIVIDUALS, HUF, AOP, BOI

No changes have been proposed in the personal tax rate. Accordingly, the rate of tax as applicable for AY 2022-23 is as under:

 

Income (INR)

Existing and Proposed Rates (%)
Individuals (Age < 60 years) and HUF, BOI, AOPIndividual senior citizens (Age > 60 years < 80 years)Individual super senior

citizens (Age > 80 years)

0 – 250,000NILNILNIL
250,001 – 300,0005NILNIL
300,001 – 500,00055NIL
500,001 – 1,000,000202020
1,000,001 and above303030

No changes have been proposed in the new regime of taxation under Section 115BAC of the IT Act. Accordingly, the rate of tax as applicable for AY 2022-23 is as under:

 

Income (INR)

 

Existing and Proposed Rates (%)

 

Individuals and HUF

0 – 250,000NIL
250,001 – 500,0005
500,001 – 750,00010
750,001 – 1,000,00015
1,000,001 – 1,250,00020
1,250,001 – 1,500,00025
1,500,001 and above30

BASIS OF CHARGE

AMENDMENT TO DEFINITIONS

A new clause 29A is proposed to be added to Section 2 of the IT Act to define the term ‘liable to tax’ to mean a person in relation to whom there is a liability of tax on such person under any law for the time being in force in any country, and shall include a case where subsequent to imposition of tax liability, an exemption has been provided.

This amendment is proposed to come into effect from April 1, 2021, and accordingly would apply in relation to AY 2021- 22 and thereafter.

Amendment is proposed in clause 42C of Section 2 of the IT Act, which defines ‘slump sale’. As per the proposed amendment, transfer of an undertaking by any means (and not only by way of sale) will qualify as slump sale. An explanation is inserted to provide that the term ‘transfer’ shall have the same meaning as provided in clause 47 of Section 2. This amendment is proposed to come into effect from April 1, 2021, and accordingly would apply in relation to AY 2021-22 and thereafter.

By virtue of the said amendment, all types of transfer of undertaking are sought to be covered by the provisions of slump sale under Section 50B of the IT Act.

INCOME NOT FORMING PART OF TOTAL INCOME

AMENDMENT TO SECTION 10(5) OF THE IT ACT

  • Section 10(5) of the IT Act is proposed to be amended to provide tax exemption to cash allowance in the hands of individuals if any value or assistance is received by or due to such individual in lieu of any travel concession subject to fulfilment of conditions as may be prescribed.
  • This amendment is proposed to come into effect from April 1, 2021, and accordingly would apply in relation to AY 2021-22 and thereafter.

AMENDMENT TO SECTION 10(10D) OF THE IT ACT

  • Section 10(10D) of the IT Act is proposed to be amended to provide for exemption on receipt of any sum under a ULIP issued on or after February 1, 2021, only if the amount of premium payable for any of the previous years during the term of the policy do not exceed INR 2.5 lakhs. However, any sum received from a ULIP shall be exempt if the same is received pursuant to death irrespective of the amount of the premium.
  • If the premium payable by a person for more than one ULIPs issued on or after February 1, 2021, exemption under this clause shall be available only with respect to such policies, the aggregate premium whereof does not exceed the amount of INR 2.5 lakhs for any previous years during the term of any of the policy.
  • Section 2(14) and Section 45 of the IT Act are proposed to be amended to provide for deemed taxation of profit and gains from the redemption of ULIP (to which exemption under Section 10(10D) does not apply) as capital gains and shall be deemed to be income of the previous year in which such amount was received and the income taxable shall be calculated as may be prescribed.
  • These amendments are proposed to come into effect from April 1, 2021, and accordingly would apply in relation to AY 2021-22 and thereafter.

AMENDMENT TO SECTION 10(11) AND 10(12) OF THE IT ACT

  • Section 10(11) of the IT Act deals with the exemption with respect to any payment from a provident fund to which the Provident Funds Act, 1925 applies or any provident fund set up by Central Government. Similarly, Section 10(12) of the IT Act provides for exemption with respect to the accumulated balance due and becoming payable to an employee participating in a recognized provident fund.
  • Section 10(11) and Section 10(12) are proposed to be amended to provide that these provisions will not be applicable to interest income accrued to the extent it relates to the amount or aggregate of the amounts of contribution made on or after April 1, 2021 by the person exceeding INR 2.5 lakhs in the previous year in that fund.
  • These amendments are proposed to come into effect from April 1, 2022 and shall apply to the AY 2022-23 and subsequent AYs.

BSMART COMMENTS –

The equalisation levy of 2% on the non-resident e-commerce operators was effective from 1 April 2020. Earlier Section 10(50) provided that any transaction covered by such levy would not be subjected to withholding tax from 1 April 2021. So, for one year any transaction could be subjected to both EL 2.0 and withholding tax. This drafting anomaly was addressed. A clarificatory amendment was introduced wherein such mutual exclusion shall be effective from 01 April 2021 itself.

Further, the amendment in the explanation specifically excludes income which is chargeable to tax as royalty or FTS in India under the IT Act read with relevant DTAA.

INCOME FROM BUSINESS AND PROFESSION

AMENDMENT TO SECTION 2(11), 32, 50 AND 55 OF THE IT ACT

  • Clause (11) of Section 2 of the IT Act, which defines ‘block of assets’, is proposed to be amended to exclude ‘goodwill of business or profession’ from such definition.
  • Similarly, Section 32 of the IT Act is proposed to be amended to exclude goodwill of a business or profession from the category of depreciable assets.
  • Further, a proviso is proposed to be inserted in Clause (2) of Section 50 of the IT Act, to provide that in a case where goodwill of a business or profession formed part of a block of asset for the AY beginning on the April 1, 2020 and depreciation has been obtained by the assessee under the IT Act, the written down value of that block of asset and short term capital gain, if any, shall be determined in the manner as may be prescribed.
  • This amendment is proposed to come into effect from April 1, 2021 and accordingly would apply in relation to AY 2021-22 and thereafter.

BSMART COMMENTS –

This proposal would severely impact pay-back calculations in every commercial M&A deal. Depreciation on goodwill was an essential element in calculating post tax return of an acquisition proposal.

AMENDMENT TO SECTION 36(VA) AND 43B OF THE IT ACT

  • Section 43B of the IT Act is proposed to be amended by introducing an Explanation after Explanation 4 to clarify that Section 43B of the IT Act shall not apply to sum received by an assessee from his employees as contributions to any provident fund or superannuation fund or any fund set-up under the Employees State Insurance Act, 1948.

BSMART COMMENTS –

The present amendment intends to overturn the decision of Apex Court by denying the benefit of deduction, if the employer does not deposit employee’s contribution to the welfare funds within the due dates prescribed under the respective legislations.

AMENDMENT TO SECTION 43CA AND 56 OF THE IT ACT

  • It is proposed to insert a new proviso in Section 43CA(1) of the IT Act, to increase the safe harbour limit from 10% to 20% in case of transfer of a ‘residential unit’ subject to fulfilment of the following conditions:
  • Transfer takes place between November 12, 2020 to June 30, 2021;
  • The transfer is by way of first-time allotment to any person; and
  • The consideration should not exceed INR 20 million.
  • Consequential relief also provided to the buyers of these ‘residential units’ by way of an amendment to Section 56(2)(x) of the IT Act by increasing the safe harbour limit from 10% to 20%.

AMENDMENT TO SECTION 44AB OF THE IT ACT

  • Section 44AB of the IT Act, requires every person carrying on business to get its accounts audited, if the total sales, turnover or gross receipts exceed INR 10 million in any previous year.
  • Further, the threshold limit for a person carrying on business is increased from INR 10 million to INR 50 million, where aggregate of all receipts in cash during the previous year does not exceed 5% of such receipt and aggregate of all payments in cash during the previous year does not exceed 5% of such payment.
  • It has been proposed to increase the threshold limit of tax audit in specified cases from INR 50 million to INR 100 million.

AMENDMENT TO SECTION 44ADA OF THE IT ACT

  • Section 44ADA(1) of the IT Act is proposed to be amended to clarify that the presumptive taxation of profits and gains for profession shall not apply to LLP as defined under Section (1)(n) of the LLP Act.

AMENDMENT TO SECTION 44DB AND 47 OF THE IT ACT

  • Section 44DB of IT Act provides for computing deductions under Section 32, Section 35D, Section 35DD and Section 35DDA in case of business re-organization of cooperative banks.
  • Section 44DB of the IT Act is proposed to be amended to extend the benefit of various deductions available under this provision in case of business re‑organization of co-operative banks, to a case where a primary co-operative bank is converted to a banking company covered under Section 5(c) of the Banking Regulation Act, 1949
  • Further, Section 47 is also proposed to be amended to include transfer of capital asset by a primary co-operative bank to a banking company as a result of such conversion within its ambit. Accordingly, such transaction shall not be treated as a transfer under Section 47 of the IT Act.
  • Consequentially, the allotment of shares of the converted banking company to the shareholders of the predecessor primary co-operative bank shall also not be treated as a transfer under the Section 47 of the IT Act.

CAPITAL ASSETS & CAPITAL GAINS

AMENDMENT TO SECTION 45 (4) AND 45(4A) AND SECTION 48 OF THE IT ACT

  • It is proposed to substitute Section 45 (4) of the IT Act and insert new Section 45(4A) to compute tax on capital gains arising from dissolution or reconstitution of firms in the hands of firms.
SectionIn case of transfer ofFull Value of consideration for the purpose of Section 48Cost of Acquisition
45(4)Capital AssetFair Market value of capital asset on the date of such receiptCost of acquisition of such capital asset
45(4A)Money    and                  Other AssetsValue of money and fair market value of other assets on the date of such

receipt

Balance in Capital Account of the Partner at the time dissolution or

reconstitution

  • Balance in capital account of the Partner to be calculated without taking into account increase in the capital account due to revaluation of any asset, or due to self-generated goodwill or any other self-generated assets.

BSMART COMMENTS –

The Government of India has set an aggressive target of INR 175,000 crores from disinvestment in public sector companies for FY 2021-22. There are number of public sector companies which are loss making like Air India, BPCL, SCI etc. Accordingly, in order to facilitate strategic disinvestment of loss-making public sector companies, it is proposed to allow carry forward and set-off of losses of public sector companies upon their amalgamation.

DEDUCTIONS

EXTENSION OF TIME-LIMITS FOR EXPIRY OF TAX HOLIDAY/DEDUCTIONS

SectionOriginal due date to claim tax holidayRevised due date to claim tax holiday
Section 80EEA- Deduction in respect of interest on loan taken for residential propertyMarch 31, 2021March 31, 2022
Section 80-IAC- Incorporation of start-up companyApril 1, 2021April 1, 2022
Section 80-IBA- Approval of Affordable Housing ProjectMarch 31, 2021March 31, 2022

 BSMART COMMENTS –

If a person has opened a retirement benefit account in a notified country while being non-resident in India, it is proposed to shift the taxation of such retirement benefit account from accrual basis to receipt basis in India. Such tax treatment is in line with most foreign countries. The aforesaid relief will mainly benefit the NRIs returning to India.

The government has been promoting IFSC and making it attractive for foreign investors. Accordingly, during the past few years, a number of benefits has been introduced under the IT Act to make IFSC more attractive as a business enterprise. In this Budget, it is proposed to provide the following tax incentives:

  • Section 9A – Relaxations in certain conditions for relocation of eligible fund manager
  • Section 10(4D) – Exemption to investment division of offshore banking unit
  • Section 10(4E) – Exemption to non-resident on transfer of non-deliverable forward contracts
  • Section 10(4F) – Exemption to non-resident on royalty income by way of lease of an aircraft by an IFSC unit
  • Section 10(23FF) – Exemption of capital gains on account of relocation of fund
  • Section 80LA – Extension of income-based tax holiday for units located in IFSC
  • Section 79(2) – Carry forward and set off of losses in case of relocation of fund to IFSC
  • Section 115AD – Exemption extended to investment division of offshore banking unit

AMENDMENT TO SECTION 115JB OF THE IT ACT

  • Section 115JB of the IT Act is proposed to be amended to provide that dividend income earned by foreign companies shall be reduced from the book profit and expenditure in relation to such dividend earned by foreign companies shall be added to its book profit
  • It is further proposed to provide that in cases where past year income is included in books of account during the previous year on account of an APA or a secondary adjustment, the Assessing Officer shall, on an application made to him in this behalf by the assessee, recompute the book profit of the past year(s) and tax payable, if any, during the previous year, in the prescribed manner.

PROVISIONS IN RELATION TO ADMINISTRATION AND ASSESSMENT

AMENDMENT TO SECTION 139 OF THE IT ACT

  • Section 139 of the IT Act is proposed to be amended to provide the following:

Explanation 2 to Section 139(1) is proposed to be amended to align the due date of filing of the return of income of the spouse of the partner with the partner and firm, if the account of such spouse are required to be audited under the IT Act or under any other law, if the provisions of Section 5A of the IT Act are applicable to such spouse.

Section 139(4) and (5) of the IT Act are proposed to be amended wherein the last date for filing of the belated and revised return can be filed three months before the end of the relevant AY or before the completion of the assessment whichever, is earlier.

A proviso to Section 139(9) of the IT Act dealing with defective return of income is proposed to be inserted, to provide the conditions provided under Section 139(9) of the IT Act shall not apply such class of assessee or shall apply with modifications, as may be specified.

AMENDMENT TO SECTION 142

  • Section 142 of the IT Act is proposed to be amended to provide that any pr