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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 personin 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.

Description

From

To

1.

Retro fitment kits for vehicles used by the disabled

Applicable Rate

5%

2.

Fortified Rice Kernels for schemes like ICDS etc.

18%

5%

3.

Medicine Keytruda for treatment of cancer

12%

5%

4.

Biodiesel supplied to OMCs for blending with Diesel

12%

5%

5.

Ores and concentrates of metals such as iron, copper, aluminum, zinc and few others

5%

18%

6.

Specified Renewable Energy Devices and parts

5%

12%

7.

Cartons, boxes, bags, packing containers of paper etc.

12 % /18%

18%

8.

Waste and scrap of polyurethanes and other plastics

5%

18%

9.

All kinds of pens

12 % / 18%

18%

10.

Railway parts, locomotives & other goods in Chapter 86

12%

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 haats

Applicable Rate

Nil

14.

Unintended waste generated during the production of fish,meal except for Fish Oil

 

Nil (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.

Description

From

To

1

Validity of GST exemption on transport of goods by vessel and air from India to outside India is extended up to 30.9.2022.

--

Nil

2

Services by way of grant of National Permit to goods carriages on payment of fee

18%

Nil

3

Skill Training for which Government bears 75% or more of the expenditure [presently exemption applies only if Government funds 100%].

18%

Nil

4

Services related to AFC Women's Asia Cup 2022

18%

Nil

5

Licensing 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%

6

Printing 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-2021

30th Sept-2021

31st Dec-2021

Filing an Audit Report

30th Sept-2021

30th Nov-2021

15th Jan-2022

IT Returns (Audit Case)

31st Oct-2021

30th Nov-2021

15th Feb-2022

Audit reports u/s 92E

31st Oct-2021

30th Nov-2021

31st Jan-2022

Filing of ROI for 92E entities

30th Nov-2021

31st Dec-2021

28th Feb-2022

Belated/revised Return

31st Dec 2021

31st Jan-2022

31st 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 compliances

Section of Income-tax Act, 1961/Rule or Form of Income-tax Rules, 1962

Existing Due Date

Extended due date

Uploading of the declarations received from recipients during the quarter ending 30th June, 2021

Form No. 15G/SH

15 July, 2021

31 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. 3488

27 June, 2021

31 July, 2021

Linkage of Aadhaar with PAN

Section 139AA

30 June, 2021

30 Sept. 2021

 

Compliances related to filing of Application/Investment, deposit etc.

Section of Income-tax Act, 1961/Rule or Form of Income-tax Rules, 1962

Existing Due Date

Extended 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, 2021

31 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 exemption

Section 54 to 54CB

The 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 Statements

Section of Income-tax Act, 1961/Rule or Form of Income-tax Rules, 1962

Existing Due Date

Extended due date

The Quarterly Statement to be furnished by authorized dealer in respect of remittances made for the quarter ending on 30th June, 2021

Form No. 15CC/ Rule 37 BB

15 July, 2021

31 July, 2021

The Equalization Levy Statement for the Financial Year 2020-21

Form No. 1

30 June, 2021

31 July, 2021

The Annual Statement required to be furnished by the eligible investment fund for the Financial Year 2020-21

sub-section (5) of section 9A/Form No. 3CEK

29 June, 2021

31 July, 2021

 

Compliances related to passing of order/processing of returns

Existing Due Date

Extended due date

Time Limit for passing assessment order

30 June, 2021

30 Sept, 2021

Time Limit for passing penalty order

30 June, 2021

30 Sept, 2021

Time Limit for processing Equalisation Levy returns

30 June, 2021

30 Sept, 2021

 

Compliances related to filing of Objections to DRP and Assessing Officer

Section of Income-tax Act, 1961/Rule or Form of Income-tax Rules, 1962

Existing Due Date

Extended due date

The last date to file the objections to Dispute Resolution Panel (DRP) and Assessing Officer (AO)

Section 144C

1 June 2021 or thereafter

Within the time provided in Section 1440 of by 31 August 2021, whichever is later

 

Compliances related to filing of Statements/Certificate

Section of Income-tax Act, 1961/Rule or Form of Income-tax Rules, 1962

Existing Due Date

Extended due date

The Statement of Deduction of Tax for the last quarter of the Financial Year 2020-21

Rule 31A

30 June, 2021

15 July, 2021

The Certificate of Tax Deducted at Source required to be furnished to the employee

Form No. 16/Rule 31

15 July, 2021

31 July, 2021

The Statement of Income paid or credited by an investment fund to its unit holder for the Previous Year 2020-21

Form No 64D/Rule 12CB

30 June, 2021

15 July, 2021

The Statement of Income paid or credited by an investment fund to its unit holder for the Previous Year 2020-21

Form No. 64C/Rule 12CB

15 July, 2021

31 July, 2021

 

Compliances related to Vivad Se Vishwas Act, 2020

Act

Existing Due Date

Extended due date

Last date of payment of Amount under Vivad se Vishwas without additional amount)

Vivad se Vishwas Act, 2020

30 June, 2021

31 August, 2021

Last date of payment of Amount under Vivad se Vishwas with additional amount)

Vivad se Vishwas Act, 2020

-

Notified 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 :

Particulars

Existing Rate

Rate Recommended

in meeting

A)     Testing kits and Machines

 

 

-          Covid Testing Kit

12 %

5 %

-          Specified Inflammatory Diagnostic Kits, namely D-Dimer, IL-6, Ferritin and LDH

12 %

5 %

 

 

 

B)     Oxygen, /oxygen Generation Equipment and related medical devices

 

 

-          Medical Grade Oxygen

12 %

5 %

-          Oxygen Concentrator/ Generator, including personal imports thereof

12 %

5 %

-          Ventilators

12 %

5 %

-          Ventilator masks / canula / helmet

12 %

5 %

-          BiPAP Machine

12 %

5 %

-          High flow nasal canula (HFNC) device

12 %

5 %

 

 

 

C)     Medicines

 

 

-          Tocilizumab

5 %

Nil

-          Amphotericin B

5 %

Nil

-          Anti-Coagulants like Heparin

12 %

5 %

-          Remdesivir

12 %

5 %

-          Any other drug recommended by Ministry of Health and Family Welfare (MoHFW) and Dept. of Pharma (DoP) for Covid treatment

Applicable rate

5 %

 

 

 

D)      Other Covid-19 related relief material

 

 

-          Pulse Oximeters, incl personal imports thereof

12 %

5 %

-          Hand Sanitizer

18 %

5 %

-          Temperature check equipment

18 %

5 %

-          Gas/Electric/other furnaces for crematorium, including their installation, etc.

18 %

5 %

-          Ambulances

28 %

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 Type

Relaxation in Late Fees

1.                  In case of Nil Return

Maximum Late fee - Rs. 500/- (Rs. 250- each for CGST & SGST) per return

2.                  In case of Tax Liability

Maximum 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 category

Relaxations in Late Fees

1.      In case of Nil Return

Rs. 500/- (Rs. 250/- each for CGST & SGST)

per return

2.      In case of Tax Liability

 

a.                  For taxpayers having turnover below Rs. 1.5 crores

Rs. 2,000/- (Rs. 1,000/- each for CGST & SGST) per return

b.                  For taxpayers turnover in between Rs. 1.5 crores to Rs. 5 crores

Rs. 5,000/- (Rs. 2,500/- each for CGST & SGST) per return

c.                   For taxpayers having turnover above Rs.  5 crores

Rs. 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 category

Relaxations in Late Fees

1. In case of Nil Return

Rs. 500/- (Rs. 250/- each for CGST & SGST) per return

2. For Other Taxpayers

Rs. 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 category

Relaxations in Late Fees

1. Late Fee payable for delayed furnishing of Return in Form GSTR – 7

Rs. 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/Form

Months

Conditions

Relief

(a)

GSTR 3B / Challan PMT 06

March 2021, April 2021 & May 2021

Filed within 15 days from the due date

Nil rate of interest

(b)

GSTR 3B / Challan PMT 06

March 2021

Filed within 60 days from the due date

Reduced Rate of Interest @ 9%

(c)

GSTR 3B / Challan PMT 06

April 2021

Filed within 45 days from the due date

Reduced Rate of Interest @ 9%

(d)

GSTR 3B / Challan PMT 06

May 2021

Filed within 30 days from the due date

Reduced Rate of Interest @ 9%

(e)

GSTR 3B

March 2021 , April 2021 & May 2021

Filed within 60/45/30 days respectively from the due date

Nil Late Fees

(f)

CMP-08 (For Composition Dealers)

QE March 2021

Filed within 15 days from the due date

Nil rate of interest

(g) 

CMP-08 (For Composition Dealers)

QE March 2021

Filed within 60 days from the due date

Reduced Rate of Interest @ 9%

 

  1. For Large Taxpayers (Annual turnover above Rs.5 Crore)

Sr. No.

Return/Form

Months

Conditions

Relief

(a)

GSTR 3B / Challan PMT 06

May 2021

Filed within 15 days from the due date

Nil Late Fees

(b)

GSTR 3B / Challan PMT 06

May 2021

Filed within 15 days from the due date

Reduced 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 DATE

COMPLIANCE

APPLICABILITY

COMPLIANCE - GST

11 May 2021

GSTR 1

Dealers having turnover more than five crores or those who have opted for monthly GSTR filing

13 May 2021

GSTR 1

Dealers who have opted for QRMP scheme

20 May 2021

GSTR 3B

Dealers having turnover more than five crores

22 May 2021

GSTR 3B

Dealers having turnover less than five crores and those who have opted for monthly GSTR filing

25 May 2021

GST challan payment

Dealers who have opted for QRMP scheme GST Challan Payment if sufficient ITC not available

COMPLIANCE - INCOME TAX

07 May 2021

Due date for deposit of TDS & TCS for the month of April, 2021.

15 May 2021

Quarterly statement of TCS deposited for the quarter ending March 31, 2021

31 May 2021

Quarterly statement of TDS deposited for the quarter ending March 31, 2021

31 May 2021

Due 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 2021

Form-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, AOP

Individual senior citizens (Age > 60 years < 80 years)

Individual super senior

citizens (Age > 80 years)

0 – 250,000

NIL

NIL

NIL

250,001 – 300,000

5

NIL

NIL

300,001 – 500,000

5

5

NIL

500,001 – 1,000,000

20

20

20

1,000,001 and above

30

30

30

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 - 250,000

NIL

250,001 - 500,000

5

500,001 - 750,000

10

750,001 - 1,000,000

15

1,000,001 - 1,250,000

20

1,250,001 – 1,500,000

25

1,500,001 and above

30

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.

Section

In case of transfer of

Full Value of consideration for the purpose of Section 48

Cost of Acquisition

45(4)

Capital Asset

Fair Market value of capital asset on the date of such receipt

Cost of acquisition of such capital asset

45(4A)

Money    and                  Other Assets

Value 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

Section

Original due date to claim tax holiday

Revised due date to claim tax holiday

Section 80EEA- Deduction in respect of interest on loan taken for residential property

March 31, 2021

March 31, 2022

Section 80-IAC- Incorporation of start-up company

April 1, 2021

April 1, 2022

Section 80-IBA- Approval of Affordable Housing Project

March 31, 2021

March 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 prescribed authority may issue a notice to conduct inquiry before the assessment, instead of empowering only the assessing officer.

AMENDMENT TO SECTION 143

  • Section 143 of the IT Act is proposed to be amended to provide the following:

Adjustment on account of increase in income indicated in the audit report but not taken into account in computing the total income.

Reduction in time limit for sending intimation under Section 143(1) is reduced from one year to nine months from the end of the financial year in which the return of income is furnished.

INSERTION OF NEW SECTION 147, 148, 148A, 149, 151, AND AMENDMENT TO 151A, 153A, 153C

  • The Finance Bill, 2021, has proposed to re-vamp the law relating to re-assessment proceedings. The salient features of the proposed amendments are as follows:
  • Substituted Section 147 of the IT Act proposes to allow the Assessing Officer to assess or re-assess or re-compute any income escaping assessment for any AY (subject to the time limit for issuance of notice).

Substituted Section 148 of the IT Act proposes that before making any assessment or re-assessment or re- computation, a notice is required to be issued under Section 148 of the IT Act, which can be issued only when there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant AY. Prior approval of specified authority is also required to be obtained before issuance of such notice by the Assessing Officer. The information for this purpose means any information which has been flagged in the case of an assessee by the risk management strategy formulated by the CBDT. Further, a final objection raised by the Comptroller and Auditor General of India to the effect that the assessment in the case of the assessee has not been in accordance with the provisions of the IT Act shall also be considered as information. Additionally, in search, survey or requisition cases initiated or made or conducted, on or after April 1, 2021, it shall be deemed that the Assessing Officer has information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the three AYs immediately preceding the AY relevant to the previous year in which such search is initiated or requisition is made or any material is seized or requisitioned or survey is conducted.

New Section 148A of the IT Act is proposed to be introduced which provides that before issuance of notice under Section 148 of the IT Act, the Assessing Officer shall conduct enquiries, if required, and provide an opportunity of being heard to the assessee. After considering his reply, the Assessing Office shall decide, by passing an order, whether it is a fit case for issue of notice under Section 148 of the IT Act and serve a copy of such order. The process of conducting enquiry and providing opportunity shall be undertaken after obtaining prior approval of the specified authority. The procedure as provided in Section 148A shall not be applicable to search or requisition cases. Once assessment or reassessment or re-computation has started the Assessing officer is proposed to be empowered to assess or reassess the income in respect of any issue which has escaped assessment and which comes to his notice subsequently in the course of the proceeding under this procedure notwithstanding that the procedure prescribed in Section 148A was not followed before issuing such notice for such income.

Substituted Section 149 of the IT Act proposes to provide for timelines for issuance of notice under Section 148 of the IT Act:

  • No notice shall be issued if three years have elapsed from the end of the relevant AY unless the case fall in the specific cases;
  • If the Assessing Officer has in his possession evidence which reveals that the income escaping assessment, represented in the form of asset, amounts to or is likely to amount to INR 50 lakhs or more, the notice can be issued beyond three years but not beyond ten years of the relevant AY. Notice under Section 148 of the IT Act cannot be issued at any time in a case for the relevant AY beginning on or before April 1, 2021, if such notice could not have been issued at that time on account of being beyond the time limit prescribed under this provision, as they stood immediately before the proposed amendment. Further, the above provisions will not be applicable in a case, where a notice under Section 153A or 153C is required to be issued in relation to a search or requisition. At the time of computing the period of limitation for issuance of notice under Section 148 of the IT Act, the time or extended time allowed to the assessee for providing an opportunity of being heard shall be excluded.

Specified authority shall mean Principal Commissioner or Principal Director or Commissioner or Director, if three years or less than three years have elapsed from the end of the relevant AY and Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant AY.

The provisions of Section 153A and Section 153C, of the IT Act are proposed to be made applicable to only to search initiated under section 132 of the IT Act or books of accounts, other documents or any assets requisitioned under Section 132A of the IT Act, on or before March 31, 2021.

AMENDMENT TO SECTION 153

  • Section 153 of the IT Act is proposed to be amended to reduce the time period for completion of assessment proceedings to nine months from the end of AY in which the income was first assessable.

PROCEDURAL ASPECTS

ITSC PROPOSED TO BE DISCONTINUED W.E.F. FEBRUARY 1, 2021 (SECTIONS 245A TO SECTION 245M)

  • It is proposed to discontinue the ITSC with effect from February 1, 2021 and to constitute one or more Interim Board(s) for Settlement of pending applications.
  • All provisions pertaining to the exercise of powers and performance of functions by the ITSC including that of provisional attachment, exclusive jurisdiction, inspection of reports, power to grant indemnity etc. are proposed to be made applicable mutatis mutandis to the Interim Board for the purposes of disposal of pending applications and in respect of functions like rectification of orders for all orders passed under sub-Section (4) of Section 245D of the IT Act. However, where the time-limit for amending any order or filing of rectification 1st application under Section 245(6B) of the IT Act expires on or after February 1, 2021, in computing the period of limitation, the period commencing from February, 2021 and ending on the end of the month in which the Interim Board is constituted shall be excluded and the remaining period shall be extended to sixty days, if less than sixty days

PROVISION FOR FACELESS PROCEEDINGS BEFORE THE ITAT IN A JURISDICTION LESS MANNER

  • Section 255 of the IT Act is proposed to be amended to provide powers to the Central Government to notify a scheme for disposal of appeals by the ITAT so as to impart greater efficiency, transparency and accountability by eliminating interface between the ITAT and parties to the appeal in the course of proceedings to the extent technologically feasible, optimizing utilization of the resources through economies of scale and functional specialization Introducing an appellate system with dynamic jurisdiction
  • It is proposed to empower the Central Government, for the purpose of giving effect to the above scheme, to direct that any of the provisions of the IT Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification. Further, the said directions shall be issued on or before March 31, 2023.
  • It is proposed that every notification issued shall, as soon as may be after the notification is issued, be laid before each house of Parliament.

WITHHOLDING TAX PROVISIONS

AMENDMENT TO SECTION 194 OF THE IT ACT

  • Section 194 of the IT Act prescribes withholding of tax on payment of dividends to a person resident in India.
  • Section 194 of the IT Act is proposed to be amended to provide for exemption with respect to withholding tax on dividend paid by a SPV {as referred to in Explanation to Section 10(23FC) of the IT Act} to a business trust {as defined under Section 2(13A) of the IT Act} or any other person as may be notified by the Central Government in the official gazette.

 AMENDMENT TO SECTION 194A OF THE IT ACT

  • Section 194A of the IT Act prescribes withholding of tax on payment of interest to a person resident in India.
  • Currently, the provisions of Section 194A of the IT Act are not applicable on interest paid or payable by an infrastructure capital company or infrastructure capital fund or a public sector company or scheduled bank in relation to a zero coupon bond issued by them.

INTRODUCTION OF SECTION 194P OF THE IT ACT

  • With a view to ease compliance for senior citizens, Section 194P is proposed to be inserted in the IT Act to provide for relaxation from furnishing/ filing of return of income to a senior citizen in the year in which tax has been deducted by the specified bank after giving effect to the deduction allowable under Chapter VI-A and rebate under Section 87A of the IT Act. The said provisions shall apply to senior citizens who is/ has:
  • Resident in India;
  • Aged 75 years or more during anytime in the previous year;
  • No income other than pension and interest income from the same specified bank in which he is receiving his pension income; and
  • Furnished a declaration to the specified bank containing particulars, in such form and verified in such manner, as may be prescribed.

INTRODUCTION OF SECTION 194Q OF THE IT ACT

  • A new Section 194Q is proposed to be inserted in the IT Act to provide for withholding tax @0.1% on payment made by a buyer to a person resident in India for purchase of goods exceeding INR 5 million in a previous year. The buyer is required to withhold tax @0.1% on the sum exceeding INR 5 million (i.e. over and above INR 5 million).
  • ‘Buyer’ is defined to mean a person whose total sales, gross receipts or turnover from the business carried on by him exceed INR 100 million during the FY immediately preceding the FY in which the purchase of goods is carried out.
  • Further, the proposed provision shall not apply to a transaction on which:
  • Tax is deductible under any other provisions of the IT Act; and
  • Tax is collectible under the provisions of Section 206C of the IT Act (other than a transaction covered under Section 206C(1H) of the IT Act)

AMENDMENT TO SECTION 196D OF THE IT ACT

  • Section 196D of the IT Act prescribes withholding of tax @20% on dividend paid to FIIs from securities referred to in Section 115AD(1)(a) of the IT Act.
  • Since the provision prescribes for a specific rate of withholding tax, the withholding is required to be made @20% and there were divergent views regarding applicability of beneficial rate of tax prescribed under the DTAAs.
  • In view of the above, various representations were received wherein it was requested that the benefit of DTAAs under Section 90 or Section 90A of the IT Act may be considered at the time of withholding of tax on dividend paid to FIIs.
  • Accordingly, Section 196D of the IT Act is proposed to be amended to provide that where DTAAs under Section 90 or Section 90A of the IT Act applies to a payee and where such payee has furnished the TRC, then the tax shall be withheld @20% or the rate of tax provided in the DTAA for such income; whichever is lower.

INTRODUCTION OF SECTION 206AB AND SECTION 206CCA OF THE IT ACT

  • Section 206AA of the IT Act provides for a higher rate of withholding tax for non-furnishing of PAN. Further, Section 206CC of the IT Act provides for higher rate of collection of tax for non-furnishing of PAN.
  • In order to have similar provisions to ensure filing of return of income by taxpayers who have suffered a reasonable amount of withholding tax/ collection of tax, a new Section 206AB and Section 206CCA of the IT Act is proposed to be inserted in the IT Act to provide for a higher rate of withholding tax/ collection of tax for taxpayers not furnishing/ filing return of income.
  • Section 206AB of the IT Act would apply on any sum paid/ payable/ credited by a deductee to a specified person (other than any sum where tax is required to be withheld under Sections 192, Section 192A, Section 194B, Section 194BB, Section 194LBC or Section 194N of the IT Act). The proposed withholding tax rate shall be higher of the followings:
  • Twice the rate specified in the relevant provision of the IT Act; or
  • Twice the rate or rates in force; or
  • The rate of five per cent
  • Section 206CCA of the IT Act would apply on any sum or amount received by a collectee from a specified person. The proposed tax collection rate in the said section shall be higher of the following:
  • Twice the rate specified in the relevant provision of the Act; or
  • The rate of five percent
  • Further, if the provisions of Section 206AA or Section 206CC of the IT Act is applicable to a specified person in addition to the proposed Sections (i.e. Section 206AB and Section 206CCA), the tax shall be deducted/ collected at higher of the two rates provided in the proposed Sections and in Section 206AA or Section 206CC of the IT Act.
  • The ‘specified person’ is defined to mean a person:
  • Who has not filed the returns of income for preceding two AYs immediately prior to the PY in which tax is required to be deducted and for which the time limit for furnishing/ filing return of income under Section 139(1) of the IT Act has expired; and
  • Aggregate of withholding tax is INR 50,000 or more in each of these two PYs.
  • The ‘specified person’ shall not include a non-resident who does not have a permanent establishment in India.
  • This amendment is proposed to come into effect from July 1, 2021.

CONSTITUTION OF DISPUTE RESOLUTION COMMITTEE FOR SMALL AND MEDIUM TAXPAYERS

  • Section 245MA of the IT Act is proposed to be inserted to provide for constitution, eligibility to claim benefit and threshold limit to be considered by the Dispute Resolution Committee.
  • The committee shall resolve disputes of such persons or class of person which shall be specified by the Board. The assessee would have an option to opt for or not opt for the dispute resolution through the Dispute Resolution Committee. Only those disputes where the returned income is INR 50 lacs or less (if there is a return) and the aggregate amount of variation proposed in specified order is INR 10 lacs or less shall be eligible to be considered by the Dispute Resolution Committee.
  • If the specified order is based on a search initiated under Section 132 or requisition made under Section 132A or a survey initiated under Section 133A or information received under an agreement referred to in Section 90 or Section 90A of the IT Act, such specified order shall not be eligible for being considered by the Dispute Resolution Committee. Further, Assessee would not be eligible for benefit of the aforesaid provision if there is detention, prosecution or conviction under various laws as specified in the proposed Section.
  • Further, Dispute Resolution Committee has the powers to reduce or waive any penalty imposable under the IT Act or grant immunity from prosecution for any offence under the IT Act in case of a person whose dispute is resolved.
  • The Central Government has also been empowered to make a scheme by notification in the Official Gazette for the purpose of dispute resolution. The scheme shall impart greater efficiency, transparency and accountability by eliminating interface to the extent technologically feasible, by optimising utilisation of resources and introducing dynamic jurisdiction.
  • The Central Government may, for the purposes of giving effect to the scheme, by notification in the Official Gazette, direct that any of the provisions of the IT Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification.
  • However, no such direction shall be issued after March 31, 2023. Every such notification shall, as soon as may be after the notification is issued, be laid before each House of Parliament.

OTHERS

PROVISIONAL ATTACHMENT OF ASSETS IN PROCEEDINGS FOR IMPOSITION OF PENALTY UNDER SECTION 271AAD

  • Section 281B of the IT Act is proposed to be amended to permit provisional attachment of property to protect interest of the revenue during pendency of proceeding for imposition of penalty under Section 271AAD of the IT Act (penalty for false entry or omission of entry in books of accounts to evade tax liability) where the amount or aggregate amounts of penalty likely to be imposed exceeds INR 20,000,000.

INDIRECT TAX

CENTRAL GOODS AND SERVICES TAX ACT, 2017   

THE FOLLOWING CHANGES SHALL COME INTO EFFECT FROM A DATE TO BE NOTIFIED.

SCOPE OF SUPPLY

  • A new sub-section (aa) in Section 7 is proposed to be inserted retrospectively with effect from July 1, 2017 to levy tax on supply of services/goods by a person (other than an individual) to its members/constituents or vice-versa for a consideration.
  • An Explanation is proposed to be inserted to the aforesaid sub-section to clarify that the person and its members/constituents shall be deemed to be two separate persons.
  • Consequently, Entry 7 of Schedule II is proposed to be omitted retrospectively i.e. from July 1, 2017. The said Entry provided that supply of goods between unincorporated association/ body of persons to its members for a consideration would be liable to GST.

CONDITIONS FOR AVAILING ITC

  • Section 16(2) of the CGST Act prescribes the conditions for availment of ITC by a registered person. Clause(a) [amongst others] provides for availment of ITC when in possession of a tax invoice/ debit note/ other such tax paying document issued by a supplier.
  • A new sub-section (aa) is proposed to be inserted in Section 16(2) to provide that ITC on invoice or debit note may be availed only when the details of such invoice or debit note have been furnished by the supplier in the statement of his outward supplies i.e. in GSTR 1 and such details have been communicated to the recipient of such invoice or debit note.

BSMART COMMENTS –

With this proposed amendment, ITC entitlement will be restricted to the extent of ITC matched with GSTR 2A.

NON- REQUIREMENT OF FILING GSTR 9C AND SELF-CERTIFICATION

  • Section 35(5) of the CGST Act is proposed to be omitted to remove the mandatory requirement of getting annual accounts audited and submission of certified GSTR 9C i.e. reconciliation statement by a CA/ Cost Accountant.
  • Corresponding amendments are proposed to be made in Section 44 of the CGST Act to remove the mandatory requirement for filing GSTR-9C with an option to file self-certified reconciliation statement.
  • Further, Section 44 of the CGST Act is proposed to be amended to grant powers to the Commissioner to exempt a class of taxpayers from the requirement of filing the annual return.
  • Interest on delayed payment of tax
  • Section 50(1) of the CGST Act levies interest on delayed payment of taxes by registered persons.
  • A proviso to the said Section is proposed to be inserted with effect from July 1, 2017 to charge interest on late payment of tax on output tax liability debited through the electronic cash ledger i.e. on the net cash liability.

SELF-ASSESSED TAX

  • An Explanation is proposed to be included to Section 75(12) of the CGST Act [which deals with recovery of self - assessed tax] to include tax payable on outward supplies reflected in return filed under Section 37 (i.e. through GSTR-1) but not paid while filing return under Section 39 (i.e. GSTR-3B).

POWERS OF THE AUTHORITY TO PROVISIONALLY ATTACH PROPERTY/ BANK ACCOUNTS

  • Section 83(1) of the CGST Act is proposed to be substituted in order to expand the powers of Authorities to provisionally attach property/ bank accounts in case of assessments, inspection, search and seizure and all demand/ recovery proceedings.
  • Further, the provisional attachment shall remain valid for the entire period starting from initiation of any proceedings till the expiry of one year from the date of order.

PRE-DEPOSIT WHILE FILING AN APPEAL AGAINST DETENTION/SEIZURE OF GOODS & CONVEYANCES

  • A proviso is proposed to be inserted to Section 107(6) of the CGST Act which requires an assessee to pay an amount equal to 25% of the penalty before filing an appeal against the order passed under Section 129(3) of the CGST Act (i.e. order for detention/seizure of goods and conveyances in transit).

DETENTION/SEIZURE OF GOODS & CONVEYANCES

  • Section 129(1) of the CGST Act is proposed to be amended to increase the penalty quantum where any person transports/stores goods in contravention of the CGST Act while they are in transit and such goods/ conveyances are liable to detention or seizure. Proposed penalty is as under:

Sr. No.

Scenario

Existing Penalty

Proposed Penalty

1

The owner of the goods comes forward for payment of such penalty

·         Exempted goods: 2% of value of goods or INR 25,000 whichever is less

·         Goods other than above: tax and penalty equal to 100% of tax payable on such goods

·          Exempted goods: 2% of value of goods or INR 25,000 whichever is less

·          Goods other than above: penalty equal to 200% of tax payable on such goods

2

The owner of the goods does not come forward for payment of such penalty

·         Exempted goods: 5% of value of goods or INR 25,000 whichever is less

·         Goods other than above: Tax and penalty equal to 50% of the value of goods reduced by tax paid thereon

·          Exempted goods: 5% of value of goods or INR 25,000 whichever is less

·          Goods other than above: Penalty equal to 50% of the value of goods or 200% of tax payable on such goods, whichever is higher

 

  • Section 129(6) of the CGST Act is proposed to be amended wherein the powers have been given to the Authorities to sale/ dispose off the seized goods/ conveyances in the prescribed manner, where the penalty has not been paid within a period of 15 days from the date of receipt of order. An option has been given to the transporter to pay the penalty as determined above or INR 1 lakh, whichever is less, for release of conveyance.

QUANTUM OF PENALTY PAYABLE FOR CONFISCATION OF GOODS

  • The phrase ‘Notwithstanding anything contained in this Act’ is proposed to be removed from Section 130(1) of the CGST Act to remove superseding effect qua confiscation provisions.
  • Lower limit of aggregate of fine and penalty leviable for confiscation of the goods is proposed to be increased to 100% of tax payable on such goods which was earlier limited to penalty leviable under Section 129 of the CGST Act.

INTEGRATED GOODS AND SERVICES TAX ACT, 2017

THE FOLLOWING CHANGES SHALL COME INTO EFFECT FROM A DATE TO BE NOTIFIED.

ZERO RATED SUPPLY

  • Section 16(1)(b) of the IGST Act is proposed to be amended to restrict the scope of “zero-rated supply” to the extent of such goods or services which are used for authorized operations in the context of supplies made to Special Economic Zone developer or a Special Economic Zone unit.
  • Section 16(3) of the IGST Act is proposed to be substituted wherein the option of export on payment of IGST has been omitted. Consequentially, Section 16(4) is proposed to be inserted which restricts the option of zero-rated supply on payment of IGST to notified class of persons or notified supplies of goods/services.
  • Further, a proviso is proposed to be inserted which provides that in case of non-realization of sale proceeds on account of export of goods, the exporter shall deposit the refund received on account of export under LUT along with applicable interest within 30 days from the date of expiry of time limit for collection of foreign exchange remittance as prescribed under FEMA.

AGRICULTURE INFRASTRUCTURE AND DEVELOPMENT CESS

Agriculture Infrastructure and Development Cess is proposed to be introduced on specified excisable goods. Accordingly, effective taxes are as under:

Sr. No.

Commodity

Duty rates applicable with effect from February 2, 2021 (Rs. Per liter)

BED

SAED

RIC

AIDC

Total

1

Petrol (Unbranded)

1.4

11

18

2.5

32.9

2

Petrol (branded)

2.6

11

18

2.5

34.1

3

Diesel (Unbranded)

1.8

8

18

4

31.8

4

Diesel (branded)

4.2

8

18

4

34.1

CUSTOMS - LEGISLATIVE CHANGES

CONDITIONAL CUSTOMS DUTY EXEMPTIONS WOULD HENCEFORTH BE VALID ONLY FOR A LIMITED PERIOD

Presently, exemption notifications issued under Section 25 of the Customs Act are valid unless specified otherwise or withdrawn. The Bill proposes to amend the said section to provide as under:

  • Conditional exemptions are valid only up to 31st day of March falling immediately after two years from the date of grant or variation of the exemption, unless otherwise specified or varied or rescinded on any other date.
  • With respect to such exemptions which will be in force as on date on which the Bill will receive the assent of the President, the said period of two years shall be calculated from February 1, 2021.

TIME LIMIT OF TWO YEARS INTRODUCED FOR COMPLETION OF ANY INQUIRY OR INVESTIGATION INITIATED UNDER THE CUSTOMS ACT

  • The Bill proposes to insert Section 28BB to the Customs Act, whereby it has been provided that a show cause notice under Section 28(1) or Section 28(4) of the Customs Act, is to be mandatorily issued by the Customs authorities within a period of two years from the date of initiation of audit, search, seizure or summons, etc.
  • This period of two years may further be extended for one year by the Principal Commissioner or the Commissioner of Customs for a sufficient cause and reasons to be recoded in writing.

 BILL OF ENTRY TO BE FILED BEFORE THE END OF THE PRECEDING DAY OF ARRIVAL OF GOODS

  • Section 46(3) of the Customs Act is proposed to be amended to prescribe for mandatory filing of bill of entry before the end of the day (including holidays) preceding the day of arrival of goods at a customs station.
  • Presently, an importer can present the bill of entry before the end of the next day (excluding holidays) following the day of such arrival. However, going forward, the bill of entry will have to be presented by end of the preceding day of the arrival except for specified cases where different time limit may be notified, which shall not be later than the end of the day of such arrival.

PROCEDURE FOR PRE-TRIAL DISPOSAL OF SEIZED GOLD REVISED

  • Presently, in terms of sub-section (1B) of Section 110 of the Customs Act, for disposal of any notified seized goods (including gold), an application inter alia for certifying the correctness of inventory or taking photographs or allowing to draw representative samples of such goods is required to be made by the proper officer before the Magistrate. Henceforth, in case of "seized gold", such application is to be made to the jurisdictional Commissioner (Appeals) instead of the Magistrate in terms of sub-section (1D) as proposed to be newly inserted under the said Section 110.
  • Consequently, such inventories, photographs and lists as certified by the Commissioner (Appeals) would also be considered as ‘document’ having evidentiary value in terms of the amendment proposed in explanation to Section 139. Also, the powers and duties conferred to the Commissioner (Appeal) under Section 5(3) of the Customs Act has been accordingly proposed to be extended.

WRONGFUL CLAIM OF REMISSION OR REFUND ON EXPORTS TO RENDER SEVERE CONSEQUENCES

The Customs Act has been proposed to be amended to incorporate provisions relating to the confiscation and imposition of penalty on goods exported with wrongful claim of remission or refund of any duty or tax.

  • Section 113 of the Customs Act provides for various scenarios where goods attempted to be improperly exported are liable to be confiscated. It has been now proposed to include clause (ja), wherein a wrongful claim of remission or refund of any duty or tax or levy on export of goods, in contravention of the provisions of the Customs Act or any other law for the time being in force, shall be liable to confiscation.
  • A new Section 114AC has been proposed to be inserted under the Customs Act to prescribe for imposition of penalty in cases where input tax credit under GST is claimed on the basis of invoices obtained fraudulently for discharging duty or tax on export of goods under a claim of refund. The penalty can extend up to five times the amount of refund claimed

AMENDMENT IN DOCUMENTS SUCH AS BILLS OF ENTRY, SHIPPING BILLS ETC, PERMITTED TO BE UNDERTAKEN ELECTRONICALLY

Section 149 of the Customs Act is proposed to be amended to permit “electronic amendment” of documents such as bill of entry, shipping bill etc. as under:

  • The authorisation or amendment may be done electronically through the Customs Automated System on the basis of risk evaluation through appropriate selection criteria.
  • Further, in specified cases, such amendment can also be done by the importer or exporter on the common Customs Electronic Portal

NOTICES, ORDERS, SUMMONS, ETC. CAN HENCEFORTH BE SERVED ON THE COMMON CUSTOMS ELECTRONIC PORTAL

Section 153(1) is proposed to be amended by way of insertion of sub-clause (ca), whereby any order, decision, summons, notice or any other communication under the Customs Act may be served by making it available on the Common Customs Electronic Portal. Till now, the general modes of service included personal delivery to authorized representative, post, email, etc.

IMPORT OF GOODS AT CONCESSIONAL RATE OF CUSTOMS DUTY ALLOWED FOR USE IN MANUFACTURE OF FINISHED GOODS ON JOB WORK BASIS

  • The Customs (Import of Goods at Concessional Rate of Duty) Rules, 2007, which are applicable in cases where the benefit of concessional rate of Customs duty is availed in specified cases have been amended to provide for the following relaxation:
  • To allow imported goods to be used for manufacture of finished goods on job-work basis
  • To allow 100% outsourcing for manufacture of goods on job-work
  • To allow clearance of imported “capital goods” after having been used for specified purpose, on payment of differential duty, along with interest, on the depreciated value. The depreciation norms have been prescribed similar to as applied to EOUs as per the FTP.
  • Detailed procedure has been prescribed in this regard under the amended rules, for sending imported materials at the premises of the job worker, return of processed goods to the importer or to another job worker as directed by the importer, the maximum period (i.e. six months) for which goods can be sent to the job worker, etc.
  • Gold, jewellery & articles thereof, and other precious metals are not permitted to be sent on job work
  • The above rules have been amended vide Notification 09/2021 – Customs (N.T.) effective from February 2, 2021.

CHANGES TO NOTIFICATION NO 50/2017 – CUSTOMS

  • Presently, certain end use exemptions under Notification No. 50/2017 - Customs have been extended without the need to follow the procedure under IGCR Rules. With an intention to provide uniformity of enforcement of end-use provisions, the condition of IGCR Rules has now been made applicable to some of the end use exemptions under Notification No. 50/2017 - Customs. Few of such exemption entries have been listed below:

Sr. No.

CTH

Description of Goods

1

3208, 3815, 3901, or

3920

Specified goods for use in the manufacture of EVA (Ethylene Vinyl Acetate) sheets or back sheet, which are used in the manufacture of solar photovoltaic cells or modules

2

3815 90 00, 3909 40 90,

7326 90 99, 84 or any other Chapter

Specified goods for use in the manufacture of cast components of Wind Operated Electricity Generator

3

84 or any other Chapter

All goods, imported by a manufacturer- supplier for the manufacture and supply of machinery and equipment to a power generation plant (other than captive power generation plant)

4

88 or any other Chapter

Parts of gliders or simulators of aircrafts (excluding rubber tyres and tubes of gliders)

5

4707

(A)  All goods imported for use in, or supply to, a unit for manufacture of paper or paper board other than newsprint;

(B)  All goods, imported for use in, or supply to, a unit for manufacture of newsprint

 

  • Union Budget 2021 continued the trend of the past years, of carrying out the thematic tariff changes that aims at supporting India’s flagship Make in India program and vision of Atmanirbhar Bharat. A gamut of changes has been made which are aimed at making imports dearer, where corresponding manufacturing capacities exist indigenously. Others aim at checking anomalies of inverted duty structures. The proposed changes could alter supply chain qua cross- border jurisdictions eventually, leading to more value addition being done in India.
  • Tariff rate changes for BCD are effective from February 02, 2021, unless otherwise specified, such as other amendments made vide Customs Notification No. 02/2021 dated February 01, 2021.

Sr. No.

CTH

Description of Goods

Existing Rate (%)

Revised Rate (%)

AIDC (%)

1.

0713 10

Peas (Pisum sativum)

50

10

40

2.

0713 20 10

Kabuli Chana

40

10

30

3.

0713 20 20

Bengal Gram (desichana)

60

10

50

4.

0713 20 90

Chickpeas (garbanzos)

60

10

50

5.

0713 40 00

Lentil (Mosur)

30

10

20

6.

0808 10 00

Apples

50/70

15/35

35

7.

1507 10 00

Crude Soya-bean Oil

35

15

20

8.

1511 10 00

Crude Palm Oil

27.5

15

17.5

9.

1512 11 10

Crude Sunflower Seed Oil

35

15

20

10.

2204, 2205,

2206, 2208

All goods

150

50

100

11.

2701, 2702,

2703

All goods

2.5

1

1.5

12.

3102 30 00

All goods

10

2.5

5

13.

3102 10 00

Urea

5

Nil

5

14.

31

Muriate of potash, for use as manure or for the production of complex fertilisers

5

Nil

5

15.

3105 30 00

Diammonium phosphate, for use as manure or for the production of complex fertilisers

5

Nil

5

16.

5201

Cotton, not carded or combed

Nil

5

5

17.

7106

Silver

12.5

7.5

2.5

18.

7106

Silver Dore

11

6.1

2.5

19.

7108

Gold

12.5

7.5

2.5

20.

7108

Gold Dore

11.85

6.9

2.5

OTHER TARIFF CHANGES

Sr. No.

CTH

Description of Goods

Existing Rate (%)

Revised Rate (%)

1.

1206 00 90

All goods for the purpose of extraction and refining of oil

10

30

2.

2207 20 00

Denatured ethyl alcohol (ethanol) for use in manufacture of excisable goods

2.5

5

3.

28, 29, 30 or

38

Veterinary drugs and other goods specified in List 2 (Refer Note 1)

10

5 to 50

4.

Chapter 23 (except

2309 10 00)

All goods

Nil to 30

15

5.

2528

All goods

Nil to 10

2.5

6.

Any Chapter (except 2501)

Common salt (including Rock Salt, Sea Salt and Table Salt)

Nil

Applicable BCD as per tariff

7.

2709 00 10

Petroleum Crude (Refer Note 2)

-

5

8.

2709 00 20

Other (Refer Note 2)

-

5

9.

2710

Naphtha

4

2.5

10.

2803 00 10

Carbon Blacks

5

7.5

11.

2907 2300

Bis-phenol A

Nil

7.5

12.

2910 3000

Epichlorohydrin

2.5

7.5

13.

2929 10 90

Diphenylmethane 4, 4-diisocyanate (MDI) for use in the manufacture of spandex yarn

Nil

7.5

14.

293371 00

Caprolactam

7.5

5

15.

3925

Builders’ ware of plastics, not elsewhere specified or included

10

15

16.

3907 40 00

Polycarbonates

5

7.5

17.

3908

Nylon chips

7.5

5

18.

3920 99 99

All goods other than the following parts or sub-parts or accessories of cellular mobile phones, namely: -

(i)  Battery cover

(ii)  Front cover

(iii)  Front cover (with Zinc Casting)

(iv)  Middle cover

(v)  Back Cover

(vi)  Main Lens

(vii)  Camera Lens

10

15

19.

4016 95 90

 

 

39, 74 and

85

Toy Balloons made of natural rubber latex

Former, bases, bobbins, brackets; CP wires; P.B.T.; Phenol resin moulding powder; Lamination/ El silicon steel strips for use in manufacture of

transformers

10

 

 

Nil

20

 

 

Nil to 20

20.

32, 34, 38,

83 or any other

Goods covered under entry 229 (Serial No. a to zzs) of Notification No. 50/2017 – Customs (Refer Note 2)

Nil

Applicable BCD as per tariff

21.

8504 90 90

or

3926 90 99

Moulded plastics for manufacture of charger or Adapter

10

15

22.

32, 84 or 96

Ink cartridges, ribbon assembly,

ribbon gear assembly, ribbon gear carriage, for use in printers for computers

5

7.5 to 20

23.

41

Wet blue chrome tanned leather,

crust leather, finished leather of all kinds, including split sand sides

Nil

10

24.

5002

Raw Silk (not thrown)

10

15

25.

5004

Silk Yarn (Other Than Yarn Spun from Silk Waste) Not Put Up for Retail Sale

10

15

26.

5005

Silk Yarn Spun from Silk Waste, Not Put Up for Retail Sale

10

15

27.

5006

Silk Yarn and Yarn Spun from Silk Waste, Put Up for Retail Sale; Silk- Worm Gut

10

15

28.

5202

Cotton waste (Including yarn waste and garneted waste)

Nil

10

29.

5402     to

5406

All goods of nylon

7.5

5

30.

5501     to

5510

All goods of nylon

7.5

5

31.

7007

Safety glass, consisting of

toughened (tempered) or laminated glass – when used with motor

vehicles

10

15

32.

7104

Cut and polished synthetic stones, including cut and polished Cubic Zirconia

7.5

15

33.

7107  00 00,

7109  00 00,

7111 00 00

Base metals or precious metals clad with precious metals

12.5

10

34.

7110

Other precious metals like Platinum, Palladium etc.

12.5

10

35.

7112

Waste and scrap of precious metals or metals clad with precious metals

12.5

10

36.

7112

Spent catalyst or ash containing precious metals

11.85

9.17

37.

7113

Gold or silver findings

20

10

38.

7118

Coin

12.5

10

39.

7204

Iron and steel scrap, including

stainless steel scrap [upto March 31, 2022]

2.5

Nil

40.

7206, 7207

Primary/Semi-finished products of iron or non-alloy steel

10

7.5

41.

7208, 7209,

7210, 7211,

7212,  7225

(except

7225 11 00)

and       7226 (except

7226 11 00)

Flat products of non-alloy and alloy steel

10/12.5

7.5

42.

7213, 7214,

7215, 7216,

7217, 7221,

7222, 7223,

7227     and

7228

Long product of non-alloy, stainless and alloy steel

10

7.5

43.

7225

Raw materials for use in manufacture of CRGO steel [upto 31.03.2023]

2.5

Nil

44.

7318

Screw, bolts, nuts, etc. of iron and steel

10

15

45.

7404

Copper scrap

5

2.5

46.

8430

Tunnel boring machines (TBMs)

Nil

7.5

47.

8431

Parts & components for manufacture of TBMs

Nil

2.5

48.

84143000

Compressors of a kind used in refrigerating

Equipment

12.5

15

49.

84148011

Compressors of a kind used in air- conditioning

Equipment

12.5

15

50.

850440

Solar Inverters

5

20

51.

85129000

Parts of electrical lighting or

signaling equipment, windscreen

wipers, defrosters and demisters, of a kind used for motor

10

15

 

 

vehicles)

 

 

52.

Any Chapter

All parts for use in the

manufacture of LED lights or fixtures including LED

Lamps

5

10

53.

Any Chapter

All inputs for use in the

manufacture of LED (Light Emitting Diode) driver or MCPCB (Metal

Core Printed Circuit Board) for LED lights and fixtures or LED Lamps

5

10

54.

8544

(except

8544  30 00

and       8544

70)

All goods (other than USB Cable for cellular mobile phone)

7.5

10

55.

8544 30 00

Ignition wiring sets and other wiring sets of a kind used in vehicles,

aircraft or ships

10

15

56.

8443 32 90

Other machines capable of connecting to an automatic data

processing machine or to a network

Nil

2.5

57.

8443 99 51

Ink cartridges, with print head assembly

Nil

2.5

58.

8443 99 52

Ink cartridges, without print head assembly

Nil

2.5

59.

8443 99 53

Ink spray nozzle

Nil

2.5

60.

Any Chapter

Components or parts, including engines, of aircraft of heading 8802

(a)  for manufacture of aircraft falling under heading 8802;

(b)  for manufacture of parts of aircraft at (a), imported by Public Sector Units under the Ministry of Defence

-

Nil

61.

94055040

Solar lanterns or solar lamps

5

15

62.

9503

Parts of electronic toys for manufacture of electronic toys.

5

15

63.

9801

High speed rail projects

-

5

Note 1: The said entry in the Notification No. 50/2017 – Customs has been omitted and therefore, goods in List 2 will now attract applicable tariff rate.

Note 2: Will come into effect from April 01, 2021.

SOCIAL WELFARE SURCHARGE – RATE CHANGE

Sr. No.

CTH

Description of Goods

Existing Rate (%)

Revised Rate (%)

1.

2515 11 00

Marble and travertine, Crude or roughly trimmed

10

-

2.

2515 12 10

Marble and travertine Blocks

10

-

3.

7106

Silver, including silver dore*

3

10

4.

7108

Gold, including gold dore*

3

10

*Social Welfare Surcharge on the value of Agriculture Infrastructure and Development Cess on gold and silver has been exempted.

AD DUTY

AD Duty on the following products of steel is being revoked:

Sr. No.

CTH

Description of Goods

Exporting/Originating Country

1.

7228

Straight Length Bars and Rods of Alloy Steel

(Temporarily revoked for the period February 02, 2021 to September 30, 2021)

China PR

2.

7210, 7212,

7225      and

7226

Flat rolled product of steel, plated or coated with alloy of Aluminum and Zinc

(Temporarily revoked for the period February 02, 2021 to September 30, 2021)

China PR, Vietnam, and Republic of Korea

3.

7228  10 10

or  7228  10

90

High-Speed Steel of Non-Cobalt Grade

(Temporarily revoked for the period February 02, 2021 to September 30, 2021)

China PR, Brazil, and Germany

4.

7219

Cold-Rolled Flat Products of Stainless Steel of width 600mm to 1250mm and above 1250mm of non-bonafide usage

China PR, Republic of Korea,

European Union, South

Africa, Taiwan, Thailand and USA

CVD/PROVISIONAL CVD

CVD/Provisional CVD on the following products of steel is being revoked:

Sr. No.

CTH

Description of Goods

Exporting/Originating Country

1.

7219, 7220

Flat Rolled Products of Stainless Steel

Indonesia

2.

7219         or

7220

Certain Hot Rolled and Cold Rolled Stainless Steel Flat Products

(Temporarily revoked for the period February 02, 2021 to September 30, 2021)

China PR

INTERNATIONAL TRADE

AMENDMENT TO SECTION 9A OF THE CTA

Section 9A of the CTA, which relates to imposition of “Anti-dumping Duty” by the Central Government, is being amended to include certain provisions pertaining to anti-absorption, retrospective levy in anti-circumvention cases, revocation of AD duty for a period not exceeding one year, imposition of AD duties for a period of upto five years and aligning AD duty provisions with those in safeguard measures in respect of levy on goods cleared from EOU and SEZ into Domestic Tariff Area.

It has been clarified that AD duty will not be imposed on a unit from special economic zone unless the concerned notification specifically makes the duty applicable to such unit or such article is cleared into the Domestic Tariff Area or used in manufacture of any goods that are cleared into the Domestic Tariff Area.

AMENDMENT TO AD RULES

AD Rules provides the procedure for investigating dumping of the goods causing injury to the domestic industry. Certain procedural changes pertaining to the period of investigation, time period for completion of review investigations have been introduced as well as provisional assessment of imports of article alleged to be circumventing AD duty in force by way of seeking a guarantee from importer.

In Rule 5 of the AD Rules, after sub-rule (3), a provision pertaining to the period of investigation has been inserted. According to the said introduction, the period of investigation shall not be more than six months old as on the date of initiation. Also, the period of investigation shall be for a period of 12 months. However, a period of investigation of 6 months or upto 18 months may be considered with reasons recorded in writing. The same provision has been removed from Rule 22 of the AD Rules.

In Rule 23 of the AD Rules, a sub-rule (2) has been inserted to introduce a new requirement to complete the review investigation at least three months prior to the expiry of the AD duties.

AMENDMENT TO SECTION 9 OF THE CTA

Section 9 of the CTA relates to imposition of “Countervailing Duty” in cases when an article is imported into India at subsidized prices so as to cause injury to the domestic industry. This Section is being amended to include certain provisions pertaining to anti-absorption, retrospective levy in anti-circumvention cases, revocation of AD duty for a period not exceeding one year, imposition of AD duties for a period of upto five years and aligning AD duty provisions with those in safeguard measures in respect of levy on goods cleared from EOU and SEZ into Domestic Tariff Area. These changes are largely similar to that of the changes made in the AD Rules.

AMENDMENTS TO CUSTOMS (IMPORT OF GOODS AT CONCESSIONAL RATE OF DUTY) RULES 2017

Sr.

No.

Name of the Product

Change in the Basic Customs Duty rate

1

Carbon Black

5% to 7.5%

2

Caprolactam

7.5% to 5%

3

Nylon Fibre and Yarn

7.5% to 5%

4

Iron and Steel Products (excluding scrap)

10%/12.5% to 7.5%

 CORPORATE LAWS

SMALL COMPANIES’ GAMUT SET TO BE WIDENED UNDER THE CA2013

It is proposed that the definition of “small company” under Section 2(85) the CA2013 be revised by increasing their thresholds for paid-up capital from existing INR 5,000,000 to INR 20,000,000 and turnover from INR 20,000,000 to INR 200,000,000.

MCA-21 3.0 – NEW MCA PORTAL

It is proposed that during the year 2021-22, MCA21 Version 3.0 will be launched which will be driven by data analytics, artificial intelligence and machine learning.

STRENGTHENING OF NCLT AND IMPLEMENTATION OF E-COURTS

The Government proposes to strengthen the NCLT framework, implement e-Courts system and introduce an alternate method of debt resolution and special framework for MSMEs.

FOREIGN DIRECT INVESTMENT - INCREASE IN FDI LIMIT IN THE INSURANCE SECTOR FROM 49% TO 74%

The Government proposes to amend the Insurance Act, 1938 to increase the permissible FDI limits from 49% to 74% in insurance companies. This significant move will come with some “safeguards”. For instance, it is proposed that the majority of directors on the board, and key management personnel, of such insurance companies, would have to be resident Indians, with at least 50% of the directors being Independent Directors. A specified percentage of profits may also be required to be retained as general reserve.

MISCELLANEOUS

RELIEF TO SMALL CHARITABLE TRUSTS RUNNING EDUCATIONAL INSTITUTIONS AND HOSPITALS

As of now, there is a blanket exemption to such charitable trusts from making compliances, whose annual receipt does not exceed INR 10,000,000. The exemption is now proposed to be extended to all such small charitable trusts running educational institutions and hospitals, whose annual receipt does not exceed INR 50,000,000.

IMPLEMENTATION OF LABOUR CODES

The FM in her speech mentioned that the Code on Wages, 2019, the Occupational Safety, Health and Working Conditions Code, 2020, the Industrial Relations Code, 2020 and the Social

The FM also proposed to make further amendments to the Apprenticeship Act, 1961 for enhancing apprenticeship opportunities for youth.

FINANCIAL MARKETS

DEBT FINANCING OF INVITS AND REITS BY FPIS

It is proposed that debt financing of InVITs and REITs by FPIs will be enabled.

UNIVERSAL SECURITIES MARKET CODE

It is proposed to consolidate the provisions of the SEBI Act, 1992, Depositories Act, 1996, Securities Contracts (Regulation) Act, 1956 and Government Securities Act, 2007 into a rationalized single Securities Markets Code.

FIN-TECH HUB AT GIFT-IFSC

The Government is proposing to support the development of a world class Fin-Tech hub at the GIFT-IFSC.

“POOLED INVESTMENT VEHICLE” INTRODUCED TO BORROW AND ISSUE DEBT SECURITIES

An amendment to the SCRA is proposed to introduce a “pooled investment vehicle” defined under Section 2(da) of the SCRA which will raise or collect monies from investors and invest in funds as specified by SEBI. Such pooled investment vehicles will be able to borrow and issue debt securities in the manner as specified by SEBI.

GOLD EXCHANGES - SEBI TO BE NOTIFIED AS REGULATOR

The Government has proposed to make SEBI as the regulator for gold exchanges.

INVESTOR CHARTER

The Government proposes to introduce an investor charter as a right of all financial investors across all financial products.

DISINVESTMENT POLICY IN NON-STRATEGIC AND STRATEGIC SECTORS

Government has proposed to keep four areas that are strategic where bare minimum Central Public Sector Enterprises (“CPSEs”) will be maintained and rest privatized. In the remaining sectors, the Government has indicated that all CPSEs will be privatized.

  • Atomic energy, Space and Defence;
  • Transport and Telecommunications;
  • Power, Petroleum, Coal and other minerals; and
  • Banking, Insurance and financial services
  • In strategic sectors, there will be bare minimum presence of the public sector enterprises. The remaining CPSEs in the strategic sector will be privatized or merged or subsidiarized with other CPSEs or closed.
  • In non-strategic sectors, CPSEs will be privatized.

Has also proposed incentive package of Central Funds for States in respect of disinvestment of their Public Sector Companies.

DISINVESTMENT AND STRATEGIC SALE OF LIC & OTHER GOVERNMENT CORPORATIONS

Government has now proposed to complete its sale of holding in BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank

  • Privatization of two public sector banks and one general insurance company; and
  • Sale of its part holding in the LIC by way of an IPO to provide access to financial markets, unlock value and to give opportunity to retail investors to participate in the wealth creation.

AMENDMENTS TO THE LIC ACT

Some of the key amendments proposed in the LIC Act are related to superintendence and direction of the affairs and business of LIC, increase in the authorized share capital, transferability of shares, etc.

BANKING & FINANCE

DEVELOPMENT FINANCIAL INSTITUTION (DFI)

FM in her speech has proposed to introduce a Bill to set up a DFI with a capital of INR 200,000 million for promoting infrastructure funding since infrastructure needs long term debt financing. To that effect, a professionally managed DFI is necessary to act as a provider, enabler and catalyst for infrastructure financing. FM further stated that the DFI will aim at developing a lending portfolio of at least INR 5,000,000 million in 3 years’ time

DEPOSIT INSURANCE

In the budget for FY20-21, FM had announced increase in the Deposit Insurance Coverage for a depositor from INR 100,000 to INR 500,000 by the Deposit Insurance and Credit Guarantee Corporation.

CORPORATE BOND MARKET

FM has proposed a permanent institutional framework for purchase of investment-grade bonds. The proposed institution would purchase investment grade debt securities, both in stressed and normal times and will help in enhancement of secondary market liquidity of corporate bonds.

ISSUE OF ZERO COUPON BONDS BY NOTIFIED INFRASTRUCTURE DEBT FUNDS (IDFS)

FM in her speech has proposed that in a bid to attract investments into the country’s infrastructure sector, the government will notify IDFs eligible to raise funds by issuing tax efficient zero coupon bonds.

PUBLIC SECTOR DISINVESTMENT

Government would initiate privatization of two Public Sector Banks and one General Insurance company in FY 21-22. FM also proposed requisite amendments under Life Insurance Corporation Act, 1956 for liquidating/selling of stakes of the Government in Life Insurance Corporation of India through an IPO.

DIGITAL MODES OF PAYMENT

FM earmarked INR 15,000 million towards a proposed scheme that will provide financial incentive to promote digital modes of payment.

STRESSED ASSET RESOLUTION

RESOLUTION OF STRESSED ASSETS BY SETTING UP OF BAD BANK

FM announced the establishment of a “bad bank” which shall be based on an ARC, AMC and AIF model to acquire, manage and efficiently dispose off the bad loans of such PSBs.

SARFAESI-REDUCTION IN THRESHOLDS

For NBFCs with a minimum asset size of INR 1000 million, the minimum loan size eligible for debt recovery under the SARFAESI is proposed to be reduced from the existing level of INR 5 million to INR 2 million.

STRENGTHENING THE DISPUTE RESOLUTION FRAMEWORK

FM stated that in order to ensure a faster resolution of the companies undergoing restructuring as per the provisions of the IBC, the framework in relation to the NCLT shall be strengthened. Further, the FM also announced implementation of an e-courts system for speedy resolution of disputes under IBC.

MEASURES FOR MSME SECTOR

The Government announced various remedial measures including granting a loan moratorium, redefining MSMEs, as well as suspending initiation of fresh insolvencies under the IBC. However, with the suspension of IBC coming to an end on March 31, 2021, a looming uncertainty in the MSME sector is palpable. In this backdrop, the FM has now announced a special mechanism for resolution of MSMEs.

INFRASTRUCTURE

INTRODUCTION

The FM has provided for sharp increase in capital expenditure by over INR 5,500,000 million 10 which is 35.4% more than the budget estimate of 2020-21. Out of the above, the FM has kept a sum of more than INR 440,000 million11 in the Budget head of the Department of Economic Affairs, which will be provided for projects/programs/departments that show good progress on Capital Expenditure and are in need of further funds.

INVESTMENTS IN INFRASTRUCTURE SECTOR

InvITs and REITS. Debt Financing of InVITs and REITs by FPIs will be enabled by making suitable amendments in the relevant legislations.

Tax on dividend. The dividend paid to REITS or InvITs has been exempted from TDS. It is also proposed to clarify that deduction of tax on incomes including dividend income of FPIs may be made at treaty rate. It is also proposed to exempt dividend payment from levy of MAT for foreign company if the applicable tax rate is less than the rate of MAT.

Investment by funds. For ease in availing the 100% tax exemption granted to funds such as pension funds and sovereign wealth funds, the Government proposes to relax certain pre-conditions to availing the exemption.

Zero coupon bonds. Notified infrastructure debt funds will be made eligible to raise funds by issuing tax efficient zero- coupon bonds

Stressed Asset. An asset reconstruction company limited, and asset management company is proposed to be set up by the Government. The company will consolidate and take over existing stressed debt and then manage and dispose the assets to AIFs and other potential investors for value realization.

Strategic Divestment. The FM announced approval for the policy of strategic disinvestment of public sector enterprises by the Government.

POWER, OIL AND GAS

Power - The FM mentioned that a reforms-based result-linked power distribution sector scheme will be launched. The scheme will aid DISCOMS for infrastructure creation including pre-paid smart metering and feeder separation, upgradation of systems, etc., tied to financial improvements. The FM has allocated a sum of INR 3,059,840 million14 for the coming 5 years to the proposed new scheme.

Further boost to the non-conventional energy sector has been provided for through additional capital infusion of INR 10,000 million to the SECI and INR 15,000 Million to IREDA. Custom duty on solar investors and solar lanterns has been increased with a view to encourage domestic production.

We are raising duty on solar invertors from 5% to 20%, and on solar lanterns from 5% to 15%.

Transmission assets of value of INR 70,000 Million will be transferred to PGCIL’s InvITs under the proposed asset monetization objectives.

Oil and Gas. For easy access to natural gas on a non-discriminatory open access basis, the FM proposed setting up of an independent Gas Transport System Operator to facilitate and coordinate booking of common carrier capacity in all- natural gas pipelines.

Ujjawala scheme, which provides LPG connections with financial assistance from the Central Government and currently benefits 80 Million households, will be further extended to 10 Million more household.

ROADS

The FM while discussing the Bharatmala Pariyojana project announced that by March 2022, 8,500 kms length of roads would be awarded and an additional 11,000 kms of national highway corridors would be completed.

The FM also announced that a few more economic corridors including 3,500 km national highway work in Tamil Nadu, 1,100 km national highway work in Kerala, 675 km of highway works in West Bengal and more than 1,300 km of national highways in Assam were also being planned.

RAILWAYS

A National Rail Plan for India – 2030 has been prepared by the Indian Railways to create a ‘future ready’ Railway system by 2030. The FM also announced that railways would monetize Dedicated Freight Corridor assets for operations and maintenance, after commissioning.

The FM mentioned that 100% electrification of Broad-Gauge routes would be completed by December 2023.

A record sum of INR 11,00,550 million has been announced for Railways out of which INR 10,71,000 million is for capital expenditure.

AIRPORTS

Tax holiday for capital gains for aircraft leasing companies, tax exemption for aircraft lease rentals paid to foreign lessors have also been proposed.

PORTS WATERWAYS

FM announced 7 projects for more than INR 20,000 million by the Major Ports on PPP mode in FY 2021-22.

FM proposed to launch a scheme which provides for subsidy support to Indian shipping companies in global tenders floated by ministries and central public sector enterprises.

LOGISTICS AND URBAN INFRASTRUCTURE

A new scheme will be launched at a cost of INR 1,80,000 million to support augmentation of public bus transport services.

The FM announced that two new technologies i.e., ‘MetroLite’ and ‘MetroNeo’ will be deployed to provide metro rail systems at much lesser cost with the same experience, convenience and safety in Tier-II cities and peripheral areas of Tier-1 cities.

WATER INFRASTRUCTURE

The FM announced that, the Jal Jeevan Mission (Urban), is to be launched.

REAL ESTATE

DEBT FINANCING OF INVITS AND REITS BY FOREIGN PORTFOLIO INVESTORS

The FM announced that debt financing of InvITs and REITs by Foreign Portfolio Investors will be enabled by making suitable amendments in the relevant legislations.

INCREASE IN SAFE HARBOR LIMIT FOR PRIMARY SALE OF RESIDENTIAL UNITS

With a view to incentivize home buyers and real estate developers, FM proposed to increase safe harbor limit from 10% to 20% for the specified primary sale of residential units.

TEXTILE PARKS

FM announced a scheme for launching Mega Investment textiles parks in addition to the PLI scheme. It has been proposed by the FM that 7 textile parks will be established over 3 years..

AFFORDABLE HOUSING/RENTAL HOUSING

FM proposed an extension in the tax holiday for an additional year for Affordable housing projects till March 31, 2022 and provided a tax exemption for notified affordable rental housing projects.

GROWTH OF INFRASTRUCTURE

FM in her speech on the Union Budget 2021-22, laid emphasis on boosting infrastructure in the country including airports, highways, etc.

CENTRE FORMING AN SPV TO MONETIZE LAND OWNED BY PSUS

FM has announced monetization of non-core assets largely consisting of surplus lands with government Ministries/Departments and Public Sector Enterprises by way of sale or concession or similar ways.

SWACHCH BHARAT, SWASTH BHARAT

The Urban Swachh Bharat Mission 2.0 will be implemented with a total financial allocation of 14,16,780 million over a period of 5 years from 2021-2026.

RECORD OF RIGHTS BEING GIVEN TO PROPERTY OWNERS IN VILLAGES

Up till now, about 0.180 million property owners in 1,241 villages have been provided cards. The FM in her speech on the Union Budget 2021-22 has further proposed to extend this to cover all States/Union Territories.

SCRAPPING POLICY

The FM announced the voluntary vehicle scrap policy which may come into force from April, 2022.

DEFENCE & AEROSPACE

OVERVIEW

The Union Budget of 2021-22 has allocated INR 4,781 billion towards the Ministry of Defence for revenue and capital expenditure, defence pensions and other miscellaneous expenditures. Out of this allocation, the Defence Expenditure (Revenue and Capital) budget for 2021-22 amounts to INR 3,470 billion. The Defence Expenditure equals roughly 9.9% of the central government’s total expenditure for 2021-22 and 2.58% of India’s estimated GDP.

INDIA’S DEFENCE BUDGET ANALYSIS

India’s defence budget for 2021-22 has grown by 7.4% over last year’s budget estimates.

SHARE OF CAPITAL & REVENUE EXPENDITURE

In 2021-22, capital expenditure is budgeted at INR 1,350 billion

Revenue expenditure for 2021-22 stands at INR 2,120 billion and amounts to 61% of the defence budget. Share of revenue expenditure is typically high because the Indian defence forces are personnel-intensive, with a sanctioned strength of 1.4 million active personnel along with 2.8 million reserve personnel.

The amount of funds sanctioned in this budget for defence pensions amounts to INR 1,158 billion, which has decreased when compared to last years’ figures of INR 1,250 billion.

DIRECT TAXES

RELIEF TO SENIOR CITIZENS: EXEMPTION FROM FILING ITRNO CHANGES IN THE TAX RATES ACROSS ALL ASSESSEE’S

  • Having age 75 years and above
  • Having only pension and interest income and TDS on the same has been deducted

REDUCTION IN TIME LIMITS FOR ASSESSMENTS

  • Time limit for sending the intimation from 1 year to 9 months (Section 143(1))
  • Time limit for issue of notice from 6 months to 3 months (Section 143(2))
  • Time limit for reopening of assessment from 6 years to 3 years except serious fraud cases. (Section 149)

ASSESSMENTS

  • Faceless ITAT
  • Setting up of Dispute Resolution Committee for Small Tax Payers

EXEMPTIONS AND RELAXATIONS

  • Exemption Limit u/s 10(23C) increased to 5 Cr for hospitals & educational institutions
  • Additional Interest deduction (80EEA) extended till 31.03.2022
  • Tax Holiday for Affordable Housing Projects (80IBA) extended till 31.03.2022
  • Permitted Variance between Guideline Value and Agreed Sale Consideration extended to 20%
  • Tax Audit Limit Increased from 5 Crores to 10 Crores for assesses having 95% or more digital Transactions.
  • Advance tax liability on dividend only after declaration of dividend
  • Income tax return will have pre filled data of Dividend, Capital Gains, Interest Income, Salary, etc.

PROVISIONS ENHANCING TAX LIABILITY IN CERTAIN CASES

  • Deprecation will not be allowed in case of Goodwill whether self-generated or acquired.
  • Interest on Provident Fund would be taxable if contribution is more than Rs.2.50 Lakhs in a year
  • In case of Non-Filers of ITR, assesse should deduct TDS at twice the notified rate or 5%, whichever is higher
  • Exemption u/s 10(10D) shall not apply to ULIP issued after 01.02.2021 if premium exceeds Rs. 2.50 Lakhs per year
  • Late deposit of PF Employee Contribution will not be allowed as deduction..

GOODS AND SERVICE TAX

  • Mandatory requirement of getting accounts audited and reconciled by CA/CMA to be removed.
  • Input Tax credit would be available only when the supplier would provide the details in its GSTR-1.
  • Retrospective amendment to charge interest on Net Cash Liability.
  • Amendment proposed to Zero Rate Supply of Goods or Services to a Special Economic Zone Developer or a Special Economic Zone Unit only when the said supply is for authorized operations, Restrict the zero rated supply on payment of integrated tax only to a notified class of taxpayers or notified supplies of goods or services and Link the foreign exchange remittance in case of export of goods with refund.

CORPORATE LAWS

REVISION IN THE DEFINITION OF SMALL COMPANIES

Private Companies having paid up capital and turnover as below:

Criteria

Existing

Revised

Paid-up Capital

<=50 Lacs

<=2 Crores

Turnover

<= 2 crore

<=10 Crores

This will give relief to more than 200,000 companies

BENEFITS TO ONE PERSON COMPANIES (OPC’S)

  • Restrictions on Turnover and Share Capital for OPC’s has been removed.
  • NRIs can now set up OPCs.
  • 120 days of presence in India in a year is enough to start an OPC.

DECRIMINALIZATION OF LLP ACT, 2008

OTHER ANNOUNCEMENTS

  • Launching MCA Version 3 0 E Scrutiny, E Adjudication and Compliance management to be simplified
  • Tribunals to be rationalized

VARIOUS DUE DATES EXTENDED

PARTICULAR

EXTENDED DUE DATES

The due date for filing Income Tax Returns where Audit is not applicable has been extended to

10 January 2021.

The due date for filing Tax Audit Report is

15 January 2021.

Vivaad se Vishwas scheme has been further extended to

31 January 2021.

The due date for filing Income Tax Returns where Audit is applicable has been extended to

15 February 2021.

Due dates for filing Annual Return (GSTR-9) and Reconciliation Statement (GSTR-9C) for 2019-20 has been extended to

28 February 2021.

 

 

OBJECT OF THE FACILITY

In the view of the unprecedented and extreme COVID-19 situation, the Central Government has approved ‘Scheme of grant of ex-gratia payment of difference between compound interest and simple interest by way of relief for the period from 1st March 2020 to 31st August 2020 to borrowers in specified loan accounts. (01.03.2020 to 31.08.2020)

Eligibility Criteria

1. Borrowers, who have loan accounts having sanctioned limits and outstanding amount not exceeding Rs.2 Crore (Aggregate of all facilities with lending institutions) as on 29.02.2020 shall be eligible under the scheme

·   MSME Loans

·   Education loans

·   Housing Loans

·   Consumer durable Loans

·   Automobile Loan

·   Personal Loans to Professionals

·   Consumption Loans

2. Any Borrower whose aggregate of all facilities with lending institutions should be less than Rs.2 Crores (sanctioned Limits or outstanding amount) and Account should be standard as on 29th February 2020, will be eligible for ex-gratia payment under this scheme.

Period To Be Reckoned

 

Period to be reckoned for creating of difference between compound interest and simple interest would be

·  For Operative Accounts : From 01.03.2020 to 31.08.2020 (Six Months/184 Days )

·  For Closed Accounts: From 01.03.2020 to the date of closure of such account.

Benefit Under The Scheme

The lending institutions shall credit the difference between compound interest and simple interest with regard to eligible borrowers in respective accounts irrespective of whether such borrowers have fully availed or partially availed or not availed of the moratorium period.

Interest Rate

The rate of interest would be prevailing on 29.02.2020 i.e.in case the rate of interest has changed thereafter it shall not be reckoned for the purposes of computation.

Mode of Calculation of Simple and Compound    Interest

 

 

Education loans, Housing loans, Consumer Durable Loans   ,Credit Card Dues, Auto Loans ,Personal Loans ,Consumption Loans and MSME (Term Loans ) :,simple Interest and Compound Interest on the outstanding amount at the end of 29.02.2020 will be calculated after ignoring all repayments in the loan account during the period to be reckoned.

MSME( Cash Credit Account /Overdraft facilities )

(i)   Simple interest for the period will be calculated on daily product basis at the rate of interest as on 29.02.2020.

(ii) Compound interest will be calculated for the period at the rate of interest as on 29.02.2020 and compounding will be done on monthly rests.

Due Date For Crediting Ex-gratia

The Lending Institution should complete the exercise of crediting the ex-gratia amount on or before 05.11.2020.

Grievance Redressal Mechanism

Every Lending Institutions shall put in place a grievance redressal mechanism for the eligible borrowers for redressal of their grievances arising out of the present Scheme within one week from the date of issuance of these Scheme guidelines.

VARIOUS DUE DATES EXTENDED

PARTICULAR

EXTENDED DUE DATES

Due dates for filing Annual Return (GSTR-9) and Reconciliation Statement (GSTR-9C) for 2018-19

31 December 2020

The due date of furnishing Income Tax Returns for taxpayers whose accounts are required to be audited for F.Y.2019-20 extended to

31 January 2021

Due date for furnishing of Income tax return for taxpayers whose accounts are not required to be audited for F.Y.2019-20 extended to

31 December 2020

VARIOUS DUE DATES EXTENDED

PARTICULAR

EXTENDED DUE DATES

GSTR9 and 9c (Goods and Service Tax Annual Return and Audit)

31 OCT 2020

Income Tax Return Filling FY 2018-19

30 NOV 2020

Companies Fresh Start Scheme (CFSS) 2020

31 DEC 2020

LLP Settlement Scheme & Charge related fillings under the Companies Act, 2013

31 DEC 2020

Deadline for filing GSTR-4 annual return for businesses registered under the composition scheme for FY 2019-20 has been extended from Aug 31 to October 31, 2020

EXTENSION for AGM – 2020

MAJOR RELIEF GRANTED BY Ministry Of Corporate Affairs:

  • Extension of 3 months for holding Annual General Meeting for the F.Y. ending 31 March 2020.
  • Revised due date for holding AGM 2020 will be 31 Dec 2020.
  • No need of filing form GNL- 1 to apply for Extension.

The due date for income tax return FY 2018-19 AY 2019-20 has been extended to SEPTEMBER 30, 2020

NATURE OF COMPLIANCE

ORIGINAL DUE DATE

NEW DUE

DATES

FILING OF TDS/TCS STATEMENT

Form 24Q, 26Q, 27Q and 27EQ of Q4 of FY 2019-20

31-05-2020

31-07-2020

Form 24Q, 24Q, 26Q, 27Q and 27EQ of Q1 and Q2 of FY 2020-21

As per Rule 31A/31AA

31-03-2021

Form 26QB, 26QC and 26QD of February, 2020

30-03-2020

31-07-2020

Form 26QB, 26QC and 26QD of March, 2020

30-04-2020

31-07-2020

Form 26QB, 26QC and 26QD of April to November, 2020

30 days from end of month in which tax is deducted

31-03-2021

ISSUE OF TDS/TCS CERTIFICATE

Form 16 for TDS on salary during FY 2019-20

15-06-2020

15-08-2020

Form 16A for TDS on income other than salary for Q4 of FY 2019-20

15-06-2020

15-08-2020

TCS certificate for Q4 of FY 2019- 20

30-05-2020

15-08-2020

DIR-3 KYC FOR FY 2019-20

Due Date – 30th September, 2020

Late Fees – Rs.5 ,000/-

Who is required to file DIR-3 KYC?

Any Individual, who is Director/Partner in any Company/LLP is compulsorily required to File DIR-3 KYC.

Consequences on Non Filing of DIR-3 KYC :-

1)Late Fees – Rs.5000/-

2)Director will be disqualified and status will be changed from

“Approved” to “Deactivated  due to non-filling of DIR-3 KYC“

1)DIN will be disabled and Deactivated and No return or form containing that DIN can be filed.

2)Until the KYC is completed, Individual cannot be appointed or resign in any company/LLP 

DIR-3 KYC is to be signed using DSC

Feel free to contact, in case of any query.

 

Udyam Registration

Ministry of Micro, Small and Medium Enterprises vide notification dated 26th June, 2020 has issued new guidelines for existing MSMEs and the upcoming MSMEs.

Some highlights are as follows:-

  1. All existing enterprises registered under Udyog Aadhar Memorandum shall register again on or after 01.07.2020.
  2. Registration will be called Udyam Registration;

3.Classification of Enterprises;      

  1. Turnover Calculation;
  2. Investment calculation;
  3. Registration Process for new enterprises;
  4. Registration for existing enterprises;
  5. Facilitation and Grievances redressal of Enterprises.
  6. Information of Turnover will be linked to IT Act or CGST Act and GSTIN;
  7. Effective date will be 01.07.2020
  8. The existing enterprises registered prior to 30th June, 2020, shall continue to be valid only for a period up to the 31stday of March, 2021.

  • The due date for linking pan number with Aadhar number has been further extended to March 31, 2021
  • The due date for Income Tax Return FY 2019-20 AY 2020-21 has been extended to November 30, 2020.
  • The due date for Income Tax Return FY 2018-19 AY 2019-20 has been extended to July 31, 2020
  • The due date for claiming investment deduction FY 2019-20 has been extended to July 31, 2020
  • The due date for claiming deduction under capital gains FY 2019-20 has been extended to September 30, 2020
  • The due date for furnishing TDS/TCS & Insurance of certificate for FY 201-20 has been extended to August 15, 2020

  1. Eligible Borrowers: MSME borrowers whose outstanding loans as on 29/02/2020 is less then Rs.25 crores and whose turnover is less than Rs.100 crores would be eligible to avail fresh loans under this scheme.
  2. Maximum Amount Of Loan Offered: Upto 20% of the loan outstanding as on 29/02/2020 would be offered.
  3. Loan Type: Term Loan, Collateral Security Free and Guaranteed by the Central Government.
  4. Loan Tenure: 4 years which includes 1 year Moratorium period.
  5. Application to be made upto: 31/10/2020.
  6. Rate of Interest: For Banks – Maximum upto 9.25% and For NBFCs Maximum upto 14%.
  7. Processing Fees: Nil
  8. Guarantee Fees: Nil

The above are the brief details of the scheme. You can get in touch with your Banks / NBFC’s to avail benefit of the above scheme.

We shall be glad to assist you in availing the benefit of the above scheme in every possible way.

  1. REPO rate has been reduced by 40 basis points.

– This will reduce the interest rates on all existing and new borrowings. Get in touch with your Banks and try and extract the Rate of Interest presently being charged by them. If the Rate of Interest is on a higher side you can negotiate with them or think of switching it over to other Bank.

  1. Reverse REPO rate has been reduced by 40 basis points.

– This will help to ensure that Banks do not park their money with RBI and instead increase the lending in the near future.

  1. Increase in Moratorium by further 3 months.

– In this current situation we propose that everyone should go ahead and opt for the Moratorium offered by RBI for further three months. Moreover in case of working Capital limits, RBI has also proposed of converting the interest charged during Moratorium period into Term Loan. Benefit of the same can also be availed.

We would be happy to Assist you in all your funding requirements.

  1. On 13th May, 2020, Government of India has revised the definition of Micro Small and Medium Enterprises (MSME) to include turnover criteria along with long standing investment criteria as mentioned below:

    Micro: Investment < Rs. 1 crore and Turnover < Rs. 5 crore;

    Small: Investment < Rs. 10 crore and Turnover < Rs. 50 crore;

    Medium: Investment < Rs. 20 crore and Turnover < Rs. 100 crore;

    Should you fall in any of the above mentioned categories, get your firm registered at the earliest to avail the Govt. benefits worth Rs. 3 lakh crore as collateral free loans.

    We facilitate the above Registration.

  1. All TDS n TCS rates reduced by 25% for Non-Salaried Resident payments
  2. All refunds to be issued immediately
  3. Income tax returns due date extended to 30-11-2020
  4. Tax Audit due date extended to 31-10-2020
  5. All Assessments getting barred on 30-9-2020 extended to 31-12-2020
  6. All Assessments getting barred on 31-3-2021 extended to 30-9-2021
  7. Vivad Se Vishwas Scheme extended to 31-12-2020 without any additional payments

Brief highlights of the scheme are as follows

1.Scheme applicable for LLP who have defaulted in filling annual filling forms (Form 8 and Form 11) and LLP form 3 and form 4 (for change in LLP particulars in agreement).

2.Scheme Applicable from 16.03.2020 to 13.06.2020.

3.Late fee would be  Rs 10 per day per form with maximum cap of Rs 5,000/-.Otherwise the penalty would be rs 100 per day per form with no maximum limit.

4.Scheme is already been effective.

5.Scheme not applicable to those LLP which has made an application for strike off.

Here are the highlights –

  1. All domestic companies to be allowed to pay corporation tax at the rate of 22% (effective rate 25.17% including cess and surcharge). This would be subject to the condition that these companies do not avail of any tax incentives or exemptions. Moreover, no Minimum Alternative Tax (MAT) would be imposed on these companies.
  2. Any new domestic manufacturing company, incorporated on or after October 1, 2019, will be allowed to pay corporation tax at the rate of 15% (effective rate 17.01%). No MAT will be imposed on these companies either. This will be subject to the condition that the company does not avail of any tax incentives or exemptions and commences production by 31 March, 2023. Companies that are availaing tax holidays at present can join the new regime once their tax holiday period ends, announced the minister.
  3. To provide relief to companies that continue to avail of exemptions and incentives, the rate of MAT has been reduced from 18.5% to 15%.
  4. Enhanced surcharge introduced by the Finance Act 2019 shall not apply to capital gains arising on sale of equity share in a company/unit of equity-oriented fund or unit of business trust liable for securities transaction tax, the FM announced.
  5. Enhanced surcharge shall not apply to capital gains on sale of any securities, including derivatives, in the hands of Foreign Portfolio Investors (FPIs)
  6. Relief to listed companies which have already made a public announcement of buyback before 5th July 2019. No tax on buyback of shares in case of such companies.
  7. The finance minister also announced an expansion in the scope of CSR activities. The companies can now spend 2% of the money on state or union govt incubators, PSUs, state universities, IITs, public-funded entities.

Address -

Head Office:
Parmar Trade Centre, 3rd Floor, 12 Connaught Road, Sadhu Vaswani Chowk, Pune – 411 001.
Tel: 020-48648899 / 48638899

Mumbai Branch:
The Capital, Level 7, Plot No. C-70, G Block, Bandra Kurla Complex, Bandra (East), Mumbai – 400051

London Office:
BSMART London LTD.
71-75, Shelton Street, London, Greater London,
WC2H 9JQ, UNITED KINGDOM.

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