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GSTPAM News Bulletin March 2023

THE GOODS & SERVICES TAX PRACTITIONERS’ ASSOCIATION OF MAHARASHTRA INTENSIVE STUDY COURSE CIRCULAR FOR THE YEAR 2022-23

Respected Members,

It is 6th year of the GST act is implemented. After implementation of GST, whole fraternity of Indirect Tax Practitioners and Trade are facing various challenges with regard to implementation, transition, interpretation, practical aspects, prescribed schedule rates, AAR, Department Audit, various notices related to ITC mismatch and so on.

We all are aware about the practical diDculties we are facing while applying the rules and procedures of the GST law and the frequent amendments to the law especially due to frequent lockdown. With the view to update our fellow members on the latest development in law and to discuss the practical issues arising there from, our association has been regularly conducting Intensive Study Course. This year the Intensive Study Course is designed to enable the members to study and discuss various issues on Indirect Tax Laws mainly on GST Law, as well as on profession tax, etc.

With the same enthusiasm to discuss mainly on various aspects of GST Law, We are starting our hybrid mode Intensive Study Course for the year 2022-23 from Friday, 16-09-2022 onwards, upto June, 2023.

The Intensive Study Course is such an academic activity of our association which is designed to facilitate the members to study and discuss various issues in group. At the intensive study Course, one of the members acts as a group leader and leads the discussion on issues of the relevant subject/ topic and one of the seniors in the profession monitors the discussion. The meetings are generally arranged ON Hybrid mode on 1st 3rd and 5th Friday of the month during 3.30 p.m. to 6.00 p.m.. There are around 15-16 meetings will be arranged for the Intensive Study Circle.

1st The inaugural meeting of the Intensive Study Course is scheduled to be held on Friday, 16-09-2022 onwards, upto June, 2023. between 3.00 p.m. – 6.00 p.m. on hybride mode on the subject “Issues in Assessment and Recovery proceedings under GST” The topic will be lead by Group Leader CA Dharmen Shah and the Monitor of CA Ashit Shah.

The group strength is restricted to a limited number of members to facilitate better interaction within the group. The Intensive Study Course Fee is fixed at Rs. 1,650 – including GST for Members and Rs. 1,850 – including GST for Non members. You are requested to enroll at the earliest to avoid disappointment.

Member interested to act as group leader should inform by filling up the option in the Form of “I wish to be a group leader for the subject” and are requested to contact the Convener on the mobile numbers mentioned- on Cell No. 9552451930 / 98211 21433 / 9324541329

Note:

  1. GST lectures will be in form of group discussion, which will be helpful to study the GST law.
  2. If the materials are received 3 days earlier to the date of meeting, the same will be circulated through mails to the participants.
  3. Participants are requested to discuss only the points related to the particular topic of the meeting and to come prepared for the subject, which will be helpful for the discussion.
Pravin Shinde

Chairman

Dilip Nathani

Convenor

9821121433

Pravin Jadhav

Convenor

9324541329

Manakchand Baheti

Convenor

9552451930

CIRCULAR FOR RENEWAL OF MEMBERSHIP/SUBSCRIPTION CHARGES FOR THE F.Y. 2022-23

Dear Members,

RENEWAL OF MEMBERSHIP FOR F.Y. 2022-23

The Membership Fees for the year 2022-23 are due for renewal on 01.04.2022. We appreciate your Continuing support and participation in the activities of our Association.

The timely Renewal of Membership will enable the members to continuously receive the updates on various activities of GSTPAM along with the GST Review, News Bulletin, Circulars, Messages, Webinars and online access to the website www.gstpam.org . The Life Members only need to renew the subscription charges for the GST Review. The members can also avail the benefit of discount by paying advance for subsequent two years membership fees /subscription charges.

The Membership Renewal Fees received after 30th April, 2022 will be subject to approval of the Managing Committee. If the Renewal fees for a particular year are not paid, then the member is liable to pay Admission Fees again for Renewal in the subsequent year.

Delayed Renewal Members will be provided Pre Renewal GST Review subject to availability upon payment of such additional courier charges.

The details of Membership/Subscription Fees are given below for your ready reference:

Type of Membership Membership Fees incl.

GST

Admission Fees Incl.

GST

Subscription Charges for GST Review Total
New Membership Application
Donor Member 24,780.00 600.00 25,380.00
Patron Member 17,700.00 600.00 18,300.00
Life Member 11,800.00 944.00 600.00 13,344.00
Life Member (Conversion from Ordinary) 11,800.00 590.00 600.00 12,990.00
Ordinary Local Member 1,770.00 590.00 2,360.00
Ordinary Outstation Member 1,475.00 590.00 2,065.00
New Membership Application (Firm/LLP)
Ordinary Local Member 1,770.00 944.00 0 2,714.00
Ordinary Outstation Member 1,475.00 944.00 0 2,419.00
Patron Member 17,700.00 0 600.00 18,300.00
Donor Member 24,780.00 0 600.00 25,380.00
Advance Membership/ Subscription charges for subsequent two years 2023-24& 2024-25 (Non-Refundable)
Ordinary Local Member 3,186.00 3,186.00
Ordinary Outstation Member 2,655.00 2,655.00
Life Member (Individual/Firm/LLP) 0 1,200.00 1,200.00
Patron Member 0 1,200.00 1,200.00
Donor Member 0 1,200.00 1,200.00
Subscription for GST Review for F.Y. 2022-23 by Non-Members
Subscription fees for GSTR 1,000.00 1,000.00
Advance Membership / Subscription charges for subsequent two years 2023-24& 2024-25 (Non-Refundable)
Subscription Fees -GSTR 0 2,000.00 2,000.00

Modes of Payment:-

Cheque A/c Payee Cheque drawn in favor of “The Goods & Services Tax Practitioners’ Association of Maharashtra” payable at Mumbai.
NEFT Details The Goods & Services Tax Practitioners’ Association of Maharashtra

Bank of India, Mazgaon Branch

Current Account No. 007020100001816, IFSC Code – BKID0000070.

Online generated transaction Acknowledgment should be sent by email on [email protected] along with membership and payment details Members are requested to send their physical form to the association for Approval, Issuance and Office record.

Cash Renewal form along with requisite amount will be accepted between 10.30

a.m. and 5.30 p.m. on all working days except Saturday at our Office at Mazgaon Library – Mazgoan: 1st Floor, 104, GST Bhavan, Mazgaon, Mumbai – 400 010 Or

Bandra Library – GST Bhavan, Ground Floor, A Wing, Bandra Kurla Complex, Bandra (East), Mumbai – 400 051. Or

Mazgaon Tower-8 & 9, Mazgaon Tower, 21, Mhatar Pakhadi Road, Mazgaon, Mumbai – 400 010.

Identity

(New Members)

New Members should provide the following as Identity Proof : PAN, Aadhar Card, Constitution Document.

Address Proof(any one) : Electricity Bill / Passport/ Aadhar Card / Driving License/ Voter id/ Ration Card along with Membership Form

Identity Card

(For Renewals)

Ordinary Local/Outstation Members should provide Two Photographs along with the Renewal Form for issue of I-cards.
Online Payment Link Members can make online payment on our website www.gstpam.org. Members are requested to download Members Renewal form from website. Update the latest details in the form, scan it and mail at [email protected] org

Payment Link : https://www.gstpam.org/online/renew-membership.php

If you are login first time? Click here for create your password

We value your continuation of the membership and look forward to your renewal to this effect.

Dated:-31.01.2022 Mahesh Madkholkar

Parth Badheka

Hon. Jt. Secretary

 

GST, MVAT & ALLIED LAW UPDATES

Compiled by
Adv. Pravin Shinde

 

Notification under Central Tax (Rate)
 Notification No. Date of Issue Subject
01/2023- Central Tax (Rate) 28.02.2023 Seeks to amend notification No. 12/2017- Central Tax (Rate) so as to notify change in GST with regards to services as recommended by GST Council in its 49th meeting held on 18.02.2023.
02/2023-Central Tax (Rate) 28.02.2023 Seeks to amend notification No. 13/2017- Central Tax (Rate) so as to notify change in GST with regards to services as recommended by GST Council in its 49th meeting held on 18.02.2023.
03/2023-Central Tax (Rate) 28.02.2023 Seeks to amend notification no. 1/2017-Central Tax (Rate), dated 28.06.2017.
03/2023-Central Tax (Rate) 28.02.2023 Seeks to amend notification no. 2/2017-Central Tax (Rate), dated 28.06.2017.

 

Notification under Integrated Tax (Rate)
 Notification No. Date of Issue  Subject
01/2023- Integrated Tax (Rate) 28.02.2023 Seeks to amend notification No. 9/2017- Integrated Tax (Rate) so as to notify change in GST with regards to services as recommended by GST Council in its 49th meeting held on 18.02.2023.
02/2023- Integrated Tax (Rate) 28.02.2023 Seeks to amend notification No. 10/2017- Integrated Tax (Rate) so as to notify change in GST with regards to services as recommended by GST Council in its 49th meeting held on 18.02.2023.
03/2023- Integrated Tax (Rate) 28.02.2023 Seeks to amend notification no. 1/2017-Integrated Tax (Rate), dated 28.06.2017.
04/2023- Integrated Tax (Rate) 28.02.2023 Seeks to amend notification no. 2/2017-Integrated Tax (Rate), dated 28.06.2017.
Notification under Union Territory Tax (Rate)
 Notification No. Date of Issue Subject
01/2023 -Union Territory Tax (Rate) 28.02.2023 Seeks to amend notification No. 12/2017- Union Territory Tax (Rate) so as to notify change in GST with regards to services as recommended by GST Council in its 49th meeting held on 18.02.2023.
02/2023 -Union Territory Tax (Rate) 28.02.2023 Seeks to amend notification No. 13/2017- Union Territory Tax (Rate) so as to notify change in GST with regards to services as recommended by GST Council in its 49th meeting held on 18.02.2023.
03/2023 -Union Territory Tax (Rate) 28.02.2023 Seeks to amend notification no. 1/2017-Union Territory Tax (Rate), dated 28.06.2017.
04/2023 -Union Territory Tax (Rate) 28.02.2023 Seeks to amend notification no. 2/2017-Union Territory Tax (Rate), dated 28.06.2017.

 

Notification under Compensation (Rate)
Circular No.  Date of Issue  Subject
01/2023-Compensation Cess (Rate) 28.02.2023 Seeks to amend notification no. 1/2017- Compensation Cess (Rate), dated 28.06.2017

 

Circular under CGST Act
Circular No.  Date of Issue  Subject
188/20/2022-GST 27.12.2022 Prescribing manner of filing an application for refund by unregistered persons
189/01/2023-GST 13.01.2023 clarification regarding GST rates and classification of certain goods.
190/01/2023-GST 13.01.2023 clarification regarding GST rates and classification of certain services.

 

Notification / Trade Circular under Maharashtra Goods and Services Tax Act, 2017 (MGST)
Notification / Circular No.  Date of Issue  Subject
12/2022-State Tax (Rate) 13.01.2023 Seeks to amend notification no. 1/2017-State Tax (Rate), dated 29.06.2017.
13/2022-State Tax (Rate) 13.01.2023 Seeks to amend notification no. 2/2017-State Tax (Rate), dated 29.06.2017.
14/2022-State Tax (Rate) 13.01.2023 Seeks to amend notification no. 4/2017-State Tax (Rate), dated 29.06.2017.
15/2022-State Tax (Rate) 13.01.2023 Seeks to amend notification no. 12/2017-State Tax (Rate), dated 29.06.2017.
Notification No. 26/2022—State Tax Dt.13.01.2023 13.01.2023 Seeks to amendments (Fifth Amendment, 2022) to the MGST Rules, 2017
07 T of 2023, CBIC circular no. 189/01/2023-GST 19.01.2023 Clarification regarding GST Rates and classification of certain goods based on the recomandations of the GST Council in its 48th meeting held on 17th December 2022.
08 T of 2023, CBIC circular no. 189/01/2023-GST 19.01.2023 Clarification regarding applicaty of GST on certain services.
Order No. PWR-GST/2017

/01/ADM-8/(I), No. PWR- GST/2017/01/ADM-8/(II), No. D&.C. (AR)-2/GST/

PWR/Sections/2017-18/ ADM-8/(III), No. D.C. (A&R)-2/GST/PWR/

Sections/2017-18/ADM

-8/(IV).Dated 01.02.2023 (EO NO. 7)

01.02.2023 Order of power delegation & area jurisdiction in case of DCST-INV & ACST-INV.

 

SUMMARY OF RECENT CASES UNDER GST

By CA. Aditya Surte

  1. 1 Vouchers – Taxability

    Whether vouchers are chargeable to tax at time of supply or when goods and services are redeemed?

    Vouchers themselves could not be treated as ‘goods or services’ for purpose of levy of GST. When vouchers do not have any intrinsic value and they represent value of future goods or services to be redeemed, levy of tax on such vouchers is without authority of law and amounts to multiple levy of taxes. Vouchers are mere instruments accepted as consideration for supply of goods or services and do not have any inherent value of their own. As vouchers qualify as instruments, they are covered under definition of ‘money’ u/s 2(75) of CGST Act. Transaction is restricted to procurement of printed form and delivering the same to clients. Printed forms are like currency where form can be transacted only at time of redemption of voucher and not at time of delivery of vouchers to clients. Issuance of vouchers is similar to pre-deposit and not in nature of supply of goods or services. Tax could not be levied on vouchers as they neither qualify as goods nor as services.

    (Karnataka High Court order in W.P. No. 5569 of 2022 dated 16/01/2023 in the case of Premier Sales Promotion Pvt. Ltd. v. Union of India)

  2. CBIC Circular – Applicability

    Circular No.183/15/2022-GST directing the field officer to dispose of various cases of mismatch between GSTR-1 and GSTR-3B or as the case may be GSTR-2A and GSTR-3B, in a manner laid down in the said Circular is also applicable for 2019-20, although the Circular refers only to years 2017-18 and 2018-19. (Karnataka High Court order in Writ Petition No. 16175 of 2022 dated 06/01/2023 in the case of Wipro Ltd. India v. The Assistant Commissioner of Central Taxes and Ors.)

  3. Appeals to Appellate Authority – Condonation of delay

    Assessee was not aware of ex-parte assessment order dated 15/07/2021 as notice was sent to its Chartered Accountant during COVID pandemic period. Upon becoming aware of the order on 06/09/2022 after attachment of its bank account, assessee filed appeal on 17/09/2022. Appellate authority passed an order rejecting the appeal on the ground that it was preferred beyond the period of limitation. Appellate Authority should have taken into consideration entire period of pandemic and decision of Supreme Court in Misc. Application No. 665 of 2021 in SMW(C) No. 3 of 2020 dated 23/09/2021, to condone delay. Therefore, time to be reckoned for filing appeal was to be from the date of knowledge, i.e. 06/09/2022, and appeal was to be restored to file for decision on merits.

    (Gujarat High Court order in R/Special Civil Application No. 20904 of 2022 dated 01/12/2022 in the case of Times Projects v. State Tax Inspector)

  4. Detention of goods – Expiry of e-way bill

    Whether goods and vehicle can be detained u/s 129 on the ground that e-way bill had expired 48 hours before the detention?

    Goods and vehicle were detained on ground that e-way bill had expired. Petitioner-assessee had deposited tax and penalty demanded in notice issued u/s 129(3) of CGST Act. Assessee was situated in West Bengal and place of delivery was in Gujarat which resulted in expiry of e-way bill during transit. Assessee did not have intention to use the expired e-way bill. Judgement of the Gujarat High Court in the case of Shree Govind Alloys Pvt. Ltd. V/s State of Gujarat (Special Civil Application No. 23835 of 2022) was squarely applicable to the present case wherein the expiry of e-way bill was bonafide and without any fraudulent intent. Held that the impugned order of detention was to be quashed and department was directed to refund tax and penalty deposited by assessee.

    (Gujarat High Court order in R/Special Civil Application No. 18982 of 2018 dated 18/01/2023 in the case of Orson Holdings Company Ltd. v. Union of India)

  5. Violation of principles of natural justice

Petitioner-assessee challenged the order passed u/s 73(9) of CGST Act since he was denied the opportunity to file reply in respect of intimation in FORM GST DRC-01A, in as much as, intimation in FORM GST DRC-01A was uploaded simultaneously with show cause notice u/s 73(1) of CGST Act. Held that from the scheme of rules 142(1A) and 142(2A), it is apparent that before issuing notice u/s 73, person chargeable with tax is entitled to an intimation in FORM GST DRC-01A in order to respond to intimation by filing its reply in Part-B of the said Form. Since petitioner was denied a valuable right of filing its submission in response to aforementioned intimation, impugned order was to be quashed and matter was remitted back to Competent Authority.

(Uttarakhand High Court order in Writ Petition (M/S) No. 141 of 2023 dated 23/02/2023 in the case of Ravi Enterprises v. Commissioner of State Tax)

 

INCOME TAX UPDATES

By CA. Ajay Talreja

ACIT Vs Atlas Cycles (ITAT Delhi)

ITAT Delhi held that a reasonable amount of expenditure towards distribution of gifts amongst the dealers is allowable expenditure. Facts- AO disallowed a sum of 2,00,000/- out of Sales Promotions / Business Promotion A/c. It was submitted that the assessee company has over 4000 dealers nationwide along with various other worldwide buyers and company executives need to visit, entertain these dealers from time to time to keep them happy since companies products can only be sold through network of these dealers. It is essential need for the growth of the company and its survival through competition to be in constant touch with them so as to motivate them to achieve the desired sales.

Conclusion- Held tse gifthat thes are distributed among dealers who are selling the product of the company and are its lifeline. A reasonable amount spent on distribution of some gifts to them certainly promotes goodwill and enhances business interests. The above payments are made as gifts to dealers and shagun on the marriage of dealers and staff which is an effective tool for Business promotion as well as staff welfare.

Ananya Ajay Mittal Vs DCIT (ITAT Mumbai)

ITAT Mumbai held that income of non-resident not taxable in India merely because the status of the assessee was wrongly mentioned as resident in the original return of income.

Facts- A search and seizure actions was carried out in the case of the assessee’s father, Shri Ajay Mittal and during the course of search action, certain documents were found which contained details of foreign bank account of the assessee, USA. It was also seen that the foreign bank account was not declared in the Income Tax Return filed by the assessee for the said assessment year. AO has taxed the entire credit noticing that in the foreign bank account u/s 68 by holding that the so called explanation given that it was gift from a family friend resident of USA did not fall within section of 56(2)(v). In the order of Ld. CIT(A), this issue was specifically raised that assessee was not a resident in India in terms of section 6 of the Act, has not rebutted this fact and dismissed the appeal of the assessee.

Conclusion-The assessee is resident or non-resident has to been from the records whether he was outside India for more than 182 days or not and this fact has not been controverted and is also borne out from the records. Thus, merely mentioning the status as resident in the original return of income does not make the assessee as resident in India. Here in this case, assessment has been made u/s 153A and the assessee has declared the status as non-resident in return of income filed in response to the notice u/s 153A and the assessment has been completed in the status of non-resident. Therefore, this cannot be the ground for treating the assessee as resident. Once the assessee is non-resident, then income or deposit in the foreign bank account of the assessee who is not resident in India cannot be taxed in India. Therefore, on this ground the entire additions cannot be sustained.

District Marketing Officer Vs ITO (ITAT Raipur)

ITAT Raipur held that charging of late fees of delay in filing of TDS statement under section 234E of the Income Tax Act is effective only from 01.06.2015. Charging the same for period prior to 01.06.2015 is untenable in law.

Facts- The assessee has made payment of vehicle hire charges in respect of vehicles used by the personnel of the assessee for various purposes however, at the time of making the payments or subsequently, the assessee has not deducted tax at source as required under the provisions of section 194-I or 194-C of the I.T. Act but after, the conduct of TDS Verification deposited tax at source under the provisions of section 194-I of the I.T. Act. This is an appeal filed by the assessee against the order of ld. Commissioner of Income Tax(Appeals)-I, Raipur, dated 01.03. 2016 for Assessment Year 2013-14 emanating from the order of ITO (TDS) u/s 201(1) and 201(1A) of the Income- tax Act, 1961 The ITO (TDS) has also levied late fee u/s 234E of the Act as calculated in the order. The issue involved is levy of late fee u/s.234E of the Act, for delay in submitting TDS statement.

Conclusion-

Held that in this case, there is no dispute that at the time of payment TDS was not deducted. The TDS liability as mentioned arises at the time of payment or credit to the account of the payee, whichever is earlier. Section 201 of the Act defines the ‘assessee in default’ who has not deducted tax at source. Therefore, in this case since the tax was not deducted at source, we uphold the order of ITO(TDS) passed u/s 201(1) for F.Y. 2012-13. Tribunal in the case of Maharashtra Cricket Association vs. Dy. CIT has held that the amendment to section 200A(1) of the Act is procedural in nature and in view thereof, the Assessing Officer while processing the TDS statements / returns in the present set of appeals for the period prior to 01.06.2015, was not empowered to charge fees under section 234E of the Act. Hence, the intimation issued by the Assessing Officer under section 200A of the Act in all these appeals does not stand and the demand raised by way of charging the fees under section 234E of the Act is not valid and the same is deleted.

All about Udyam Registration for MSMEs

INTRODUCTION: The purpose of simplifying the Udayam registration procedure by the MSME Ministry was to make it easier for MSME owners to register their enterprises under Udayam. Its primary goal is to stimulate and facilitate the growth of MSMEs in India and to provide all necessary support to MSMEs as a whole. Any person who intends to establish a micro, small or medium enterprise can apply for Udyam Registration. Several new entrepreneurs have this question in their minds – “What is Udyam Registration?” Let’s get some things clear! Udyam Registration is a government registration for MSME that provides them a unique Identity Number and a recognition certificate to certify them as micro/small/medium enterprises. The following enterprises are eligible for Udyam Registration: Proprietor

HUF

Partnership, Co-Operative Private Limited Company ,Public Limited Company, Self Help Group Limited Liability Partnership Society Trust or others type of organization Any enterprise is eligible for udyam registration either engaged in manufacturing, manufacturing process, maintenance of goods, trading or rendering services.

CRITERIA FOR CLASSIFYING THE ENTERPRISES AS MICRO, SMALL AND MEDIUM ENTERPRISES:

An enterprise shall be classified as a micro, small or medium enterprise on the basis of the following criteria, namely: —

Micro enterprise:- where the investment in plant and machinery or equipment does not exceed 1 crore rupees and turnover does not exceed 5 crore rupees

Small enterprise:- where the investment in plant and machinery or equipment does not exceed 10 crore rupees and turnover does not exceed 50 crore rupees

Medium enterprise:- where the investment in plant and machinery or equipment does not exceed 50 crore rupees and turnover does not exceed 250 crore rupees

DETAILS REQUIRED:

  1. Aadhaar number is mandatory for obtaining udyam registration. Following aadhaar number is required based on the type of organization Proprietorship firm —– Proprietor Partnership firm —– Managing partner Hindu Undivided Family —– Karta Company or a Co-operative Society or a Trust or a Limited Liability Partnership —– Authorised Signatory
  2. PAN number of Proprietor required in case of proprietorship/ PAN number of organization in any other cases
  3. Bank details of Business —– Copy of passbook
  4. GST Number if any
  5. Date of the Business commencement
  6. No of Employees (With Bifurcation of Male and Female)
  7. Self-declared value of investment in plant and machinery or equipment and turnover must be required if no income tax return has been filed till date. Or The latest audited financial statements
  8. Location/Address of Plant(s)/Unit(s)
  9. Nature of Business
  10. Authority Letter/ Board Resolution
  11. Company Incorporation documents

NOTE:

Udyam registration is a self-declaration process so there is no requirement to upload any documents, papers, certificates or proof. However, the aforementioned details are required to complete the Udyam application. A permanent registration number will be given after registration i.e. Udyam Registration Number. There will be no need for renewal of Registration. Only you need to update regardless of what changes you have made from time to time. Such as change of address or contact etc. No enterprise shall file more than one Udyam Registration. However, any number of activities including manufacturing or service or both may be specified or added in one Registration.

BENEFITS: 1. It provides protection from delayed payments and early resolution of disputes.

  1. Upon registration of udyam, your enterprise becomes eligible for priority sector lending from Banks.
  2. Enjoy Collateral Free Loans under some specific schemes
  3. Get the bank loans at the cheaper rate of Interest
  4. Get subsidies from National Small Industries Corporation and other Government entities
  5. It will also be useful as a proof for opening a current bank account in most of the banks. 7. Enjoy special 50 percent discount on Government fees for Trademark and Patent

8. Get easy access to government licenses, regulatory approvals and legal registrations 9. Get special preference in Procuring Government Tender

10. Get various tax rebates available for Udyam

Purchase or Sale of Immovable Property by NRIs

Non Resident Indians (NRIs) always scout for options to invest their foreign exchange earnings in the Indian market. Investment in real estate has always been the preferred choice for the NRIs, especially after the rupee depreciation. Ease in Indian regulations and taxation has resulted in a spurt in investment, especially in the last decade. This article decodes the regulations for the investment in real estate by NRIs and its impact on taxation. FEMA empowers the Central Government to prescribe, in consultation with the RBI, rules pertaining to capital account transactions. Reserve Bank frames regulations to prohibit restrict or regulate the acquisition or transfer of immovable property in India by certain person residents outside India. Acquisition of Immovable Property Foreign Exchange Management (Non Debt Instruments) Rules 2019 permits an NRI or an OCI to acquire immovable property in India other than:

  1. Agricultural land or .
  2. Farm house or
  3. Plantation property.

Consideration for the acquisition of the immovable property should be made out of the:

  1. Funds received in India through banking channels.
  2. Funds paid through NRO/NRE or FCNR(B) Account

Acquisition by way of Gift: An NRI or an OCI can acquire any immovable property in India (except agricultural land/farmhouse/plantation property) by way of gift from a person resident in India or from an NRI or an OCI but they have to be a relative as defined under the Companies Act. Transfer of Immovable Property An NRI or an OCI may transfer any immovable property in India by way of sale to any person resident in India, an NRI or an OCI. However, in the case of transfer of agricultural land or plantation property or farmhouse, it can be transferred only to a person resident in India.

Provisions for Repatriation of Sale Proceeds

As per FEMA, in the event of the sale of immovable property other than agricultural land/farmhouse/plantation property in India by NRI / PIO, the Bank will allow repatriation of sale proceeds outside India provided;

  1. The immovable property was acquired by the seller in accordance with the provisions of the law in force;
  2. The amount for acquisition of the immovable property was paid in foreign exchange received through banking channels or out of funds held in a Foreign Currency Non-Resident Account or out of funds held in Non-Resident External account;
  3. In the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.

Kindly Note: In the case where an NRI or an OCI has acquired the immovable property when he was a resident in India or he has inherited from a person resident in India, the sale proceeds can only be credited to his NRO account. Repatriation from NRO account is limited upto $ 1 Million in a Financial year.

Provisions for Specific Countries On acquisition or transfer of immovable property in India by citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Hong Kong or Macau or the Democratic People’s Republic of Korea (DPRK), prior permission of the Reserve Bank is required. In case of a lease not exceeding five years, there is no requirement of prior permission.

Tax Implications on sale of Immovable Property

Since the immovable property qualifies as a “Capital Asset”, any profits or gains arising from the transfer of a capital asset shall be charged under “Income under the head Capital Gains”. In the case of immovable property, the determination of income tax shall be determined depending on the period of holding.

Exemptions: NRI or an OCI can avail exemption from the long term capital gains by investing the sale proceeds on the purchase of one residential house in India within 1 year before or 2 years after the date of sale, or constructing a house within 3 years after that date of sale.

Union Budget 2023 has proposed that the maximum cap of the exemption is limited to Rs. 10 Crores.

NRI can also avail exemption from long term capital gains upto Rs. 50 Lakhs under Section 54EC of the Act, if he invests in specified Government Bonds.

Tax Deducted at Source Provisions: In addition, whenever any property is sold by NRI in India, the buyer is liable to deduct TDS under Section 195 of the Income Tax Act, 1961, irrespective of the amount or nature of the payment. at the rate of 20% in the Long term capital gain and 30% in the case of Short Term Capital Gain. Additional, surcharge and cess would also be levied on these amounts. However, if the tax liability of the NRI is lower, NRI can file an application in Form 13 with the Income Tax Department for Nil/ Lower deduction of TDS. The department computes the Capital Gains of the seller and issues a certificate, according to which the buyer is required to deduct the TDS. Also, to repatriate money outside India received on the sale of property in India, the NRI would be required to submit Form 15CA & Form 15CB as per Income Tax Act to the Bank. Many Countries levy tax on the sale of property by their Residents irrespective of the location of the property. However, to avoid the levy of double taxes, India has entered into Double Taxation Avoidance Agreements (DTAA) with several countries. These agreements state that if a person has paid Tax on the sale of property in India, then he can get a tax credit of the taxes paid in India which will reduce his tax liability in the other country by making proper disclosures. All the above points are required to be considered while purchasing or sale of an immovable property situated in India by an NRI or an OCI.

 

INCOME TAX CIRCULARS & NOTIFICATIONS

Compiled By CA. Aloke R. Singh

No circular has been issued in the month of February 2023

Income Tax Notifications

Notifications No Date of Issue Subject
03/2023 07/02/2023 In exercise of the powers conferred by section 168(2) of the Finance Act, 2016, the CBDT makes the scheme for processing of statement furnished under section 167 of the Act, as per this notification.
04/2023 10/02/2023 Income Tax (1st Amendment) Rules, 2003 notified, to amend the Income Tax Rules, 1962 regarding the ITRs and other rules.
05/2023 14/02/2023 Income Tax (2nd Amendment) Rules, 2003 notified, to amend the Income Tax Rules, 1962 regarding substitution of ITR-7, in Appendix-II.
06/2023 16/02/2023 IU/s 138(1)(a)(ii) of the Income-tax Act, 1961, the Central Government specifies ‘Secretary (Information Technology & Digital Service Department), Directorate of e-Governance, Government of Tamil Nadu’ for the purposes of the said clause in connection with sharing of information regarding income-tax assesses for identifying genuine beneficiaries and proper implementation of all the Centrally sponsored schemes and welfare schemes of the state of Tamil Nadu.
07/2023 21/02/2023 Income Tax (3rd Amendment) Rules, 2003 notified. Rules 16CC and 17B substituted with new rules, substituting Form 10B audit report.
08/2023 28/02/2023 Corrigendum to Notification no. 04/2023 dated 10.02.2023.
09/2023 01/02/2023 For the purpose of section 10(46) of the Income-tax Act, 1961, the Central Government notifies the ‘Insolvency and Bankruptcy Board of India’, New Delhi (PAN AAAGI0193K), a Board established by the Central Government, in respect of the specified income arising to that Board, as per this notification.
10/2023 01/03/2023 U/s 120(1), 120(2) and 120(5) of the Income Tax Act, 1961, the CBDT makes

amendments in Notification no. 61/2022 dated 10.06.2022

11/2023 03/03/2023 Corrigendum to Notification no. 05/2023 dated 14.02.2023.
12/2023 03/03/2023 For the purpose of section 10(46) of the Income-tax Act, 1961, the Central Government hereby notifies the Karnataka State Building and Other Construction Workers Welfare Board (PAN AAALK0820C), a Board constituted by the State Government of Karnataka, in respect of the specified income arising to that Board, as per this notification

 

DGFT & CUSTOMS UPDATE

By CA. Ashit Shah

1. Notifications issued under Customs Tariff:

Notifications No Remark Date
02/2023

Customs

Basic Custom Duty (BCD) on certain goods are either exempted / revised the conditions of exemptions by amending N. No. 50/2017-Customs, dated the 30th June, 2017. 01-02-2023
03/2023

Customs

Agriculture and Infrastructure Development Cess (AIDC) on certain goods are either exempted / revised the conditions of exemptions by amending N. No. 11/2021-Customs dated 1st February, 2021. 01-02-2023
04/2023

Customs

 

 

Social Welfare Surcharge (SWS) on certain goods are either exempted /revised the conditions of exemptions by amending N. No. 11/ 2018- Customs dated 21st February, 2018.

01-02-2023
06/2023

 

Customs

 

 

N. Nos. 25/1999 – Customs, 25/2002 – Customs and 57/2017-Customs related to certain electronic items were amended.

 

 

01-02-2023
06/2023

Customs

Project Imports Scheme is a concept, unique to Indian Customs, wherein all the goods imported for the purpose of setting up of Industrial Project or substantial expansion of existing industrial projects is subjected to single classification under heading 98.01 of Custom Tariff Act, 1975 and subjected to single rate of duty instead of merit assessment of imported goods. Project Imports Regulation, 2023 has been amended so as to exclude projects other than solar power plant or solar power projects. 01-02-2023
09/2023

Customs

Amend N. No. 57/2000 – Customs which exempts gold, silver and platinum imported under specified schemes. 01-02-2023
10/2023

Customs

Amend N. No. 146/94 – Customs, dated the 13th July, 1994 to extend the exemption benefit to Warm blood horse for equestrian sports and extend the validity of said notification up to the 31st 2028 23-02-2023
13/2023

Customs

Exempts Basic Custom Duty on ships/ vessels for breaking up. 23-02-2023

2. Notifications under DGFT:

Notifications No Remark Date
58/2015-2020 The exports of Agri Residue Based Biomass and Briquettes / Pellets under ITC – HS Heading 1213 is placed under “Free Category” with immediate effect. However, exports of Fodder, including wheat, rice straw will continue to be in “Restricted Category”. 14-02-2023
59/2015-2020 The Minimum Import Price (MIP) imposed on tariff lines under 080280 is revised from INR 251/- per Kilogram to INR 351/- per Kilogram. The Import Policy of Supari under ITC (HS) 21069030 is revised from ‘Free’ to ‘Prohibited’ and Import shall be Free if CIF value is Rs. 351/- or above per Kilogram. The given conditions shall not be applicable for imports by 100% Export Oriented Units (EOUs) and units in the SEZs subject to the condition that no DTA sale is allowed. 14-02-2023
52/2015-2020 Import regulations for raw Cashew Kernel (broken / whole) has been modified / amended so that processing facilities operating within Special Economic Zones (SEZ) and export-oriented are exempt from the Minimum Import Price (MIP) requirement subject to condition that they should not be sold in the Domestic Tariff Area (DTA). 21-02-2023

 

CHARITABLE TRUSTS UPDATES

By Adv. Hemant Gandhi & CA Premal Gandhi

   

Our Views on the recent Supreme Court Judgement of New Noble Education Society Vs CCIT.

Subject matter of the appeal:

In the case of New Noble Educational Society v. CCIT and Another, 2022 SCC OnLine SC 1458, a three-judge bench of the Hon’ble Supreme Court of India (SC) inter alia (a) Has laid down important interpretational principles in relation to the scope of exemption provided to charitable educational institutions under Section 10(23C) (vi) of the Income-tax Act, 1961 (IT Act), and (b) made certain important observations as to what can be regarded as an ‘incidental’ activity in relation to education.

Facts of the Case:

Under the IT Act, educational institutions are eligible for tax exemption (subject to satisfaction of specified conditions) under two separate sets of provisions i.e. (a) Section 10(23C) (Section 10 exemption) and (b) Section 11 (Section 11 exemption). While the scope of Section 11 exemption is wider in nature and available to an institution undertaking any ‘charitable purpose’ (ie relief to poor, education, medical relief, advancement of any other object of general public utility, the Section 10 exemption covers certain specified categories of educational institutions only – one such category is “any university or educational institution existing ‘solely’ for educational purposes and not for purposes of profit” (Special Exemption).

With respect to the Special Exemption, there has been some jurisprudence as to how to interpret the word ‘solely’ ie whether it should mean that the educational institution should be exclusively engaged for the purpose of education, or whether only the predominant purpose of the institution should be education (Dominant Intension Test). Basis an earlier SC judgement (though not in the context of Section 10 exemption), the prevailing view was that for the purpose of Special Exemption, the Dominant Intension Test would suffice

In the instant case, the taxpayer was an educational institution and its application for registration under Section 10(23C)(vi) was rejected by the income-tax authority on the ground that inter alia (a) not all its objects mentioned in the charter documents were exclusively for educational purposes, and (b) it was not registered under the applicable state-specific laws regulating charitable institutions . The taxpayer challenged this before the Hon’ble Andhra Pradesh High Court (HC), but the same was rejected by the HC. The HC decision was challenged by the taxpayer before the SC.

Judgment:

SC, taking cognizance of several judgements on this subject, on a literal interpretation, held that the Dominant Intension Test will not apply for Section 10 exemption as the language of the law is unambiguous and that the word ‘solely’ will have to categorically be interpreted to mean exclusively and not primarily. Hence, if the objects of an educational institution enable it to undertake non-educational activities, such institution will not be eligible for being registered for the purpose of Section 10 exemption. In other words, all objects of such institution must relate to imparting or facilitation of education or be in relation to educational activities.

The SC also stated that though there is no bar to the generation of surplus by such educational institutions, the key aspect is that such surplus shall be generated while providing educational and related activities only (such as sale of textbooks, providing school bus facilities, hostel facilities etc.).

With respect to the aspect of registration under state laws, though the taxpayer argued that obtaining the registration under state or local laws is not a pre-condition for seeking approval under the IT Act, the SC held that if an educational institution is required under such laws to obtain registration, then such registration should be obtained for the purposes of seeking approval under the IT Act as this would enable the income-tax authorities to not only ascertain the genuineness of the activities of educational institution, but also call for audited financial statements or other such documents for recording satisfaction about this aspect while processing the application.

The SC also stated that in the larger interest, this Judgment will apply prospectively (a) since it has departed from the prevailing view regarding the meaning of the term ‘solely’ and (b) to give time to potentially affected educational institutions to make suitable changes in their activities, charter documents etc.

Our Comments:

Income-tax exemption for charitable institutions (particularly, educational institutions) has been a subject matter of debate in the past. The SC has taken a view that an educational institution is eligible to the Special Exemption, only if its sole object is education or education related activities. There is also a clear emphasis on the importance of aims, mission statement, objects etc. as spelt out in the charter documents of such institutions which are closely scrutinised before granting registration to such institutions. Hence, charitable institutions should take utmost care not only in the activities they undertake but also in the preparation of their charter documents to ensure that they are in line with such interpretational principles.

Further, given that ‘education’ as a charitable activity is covered in Section 10 as well as Section 11, SC’s observations in relation to the scope of activities incidental to the main object of education (such as providing textbooks, transport facilities, special learning courses, hostel facilities etc.) are relevant even in the context of Section 11 exemption. This judgement will definitely change the overall structure of many educational institution as matter of fact, has it put to rest all possible litigations or opened a new plethora of them, that only time will be able to say.

 

PROTECT YOUR HEALTH AGAINST CANCER

By Mr. Tushar P. Joshi

In the present budget our FM Mrs. Nirmala Sitharaman has proposed to levy tax on Insurance premium paid above Rs. 5 Lakh w.e.f 1st April. 2023

I feel, it is not correct from Govt’s point of view, from Insurance, Industry & Advisor’s and also from Investor’s angle.

After above announcement in the budget all concerned have Shorted to have a second thought proposal of fresh investment with LIC including those who are paying more than 5 lakh premium and also those who are paying 50k. or 1 Lakh premium also. First of all we will consider whether it is Tax on, Maturity or on Earning?

W.e.f. 1st April 2023 either, it is to one Insurance Co. or aggregate number of different insurance Companies. If premium paid is above 5 lakh during the year, the maturity income will be taxable when it is received after 10,15 or 20 yrs.

FM has used the word ‘INCOME’, but what is Income? Ideally it should be the addition or surplus whatever is received e.g. Rs. 10 lakh per year when invested for 10 years i.e. 1 cr. & you get 1.5 cr, on maturity, then the addition would be of 50 lakh only. So according to me technically INCOME is 50K which is normally called Bonus in Insurance parlance.

But Govt. has proposed to levy tax on entire 1.5 cr which is not correct. On full maturity proceeds, tax is applicable, is not digestable. If I invest in Bank FD & I get interest @ 7% or 7.5% then on interest only tax is applicable but suppose if I opt, for cumulative option & suppose on 1 lakh after 5 years I get 1.5 lakh still on full 1.5 lakh tax is not payable.

But whether on Bonus amount received from LIC Policy is taxable or not? Many people think that there is tax on interest, Dividend, but not on Bonus. So why such a favourable treatment to insurance industry? You pay premium for “X” number of years & on maturity you get X + Y amount that additional amount i.e. Y which is Bonus amount why it should not be taxable? In general, people may think that every money invested in insurance as per Insurance Act. As per law, whatever amount is collected, out of Investable Fund minimum amount of 50% should necessarily be invested in Govt. securities only. Govt. don’t give more then 6% to 7%. Out of total collection 50% goes in low yielding securities then how can you generate higher returns.

There are other investments avenues like Bank FD, MF, Real estate etc. There is no such compulsion for them to invest 50% in Govt. Secutities.

How will you get comparative return when 50% is in Govt-Securities. Govt. Needs money for Infrastructure developments & in future, where from they will borrow? Of course from Govt. securities only. So Govt. also needs money with low rate of Interest. Hence the provision was made under Sec. 10(10 D) that maturity should be tax free so as, to encourage the people to invest in insurance.

But now Govt. must be thinking why not introduce a tax on it & as money collected by way of tax goes to consolidated fund, they don’t have to borrow from anywhere and will use such fund only.

Yet another plan is to remove EEE provision i.e. when you invest you get Tax Relief, During the period of investment whatever you earn is also free and on maturity also whatever you get is Exempt / Tax free. This is called EEE Provision.

Originally (EPF) Employee’s Provident Fund was under EEE. Which is not so now. Same way, in insurance those who invest in LIC will also be taxable. Is it correct? What will be its long term effects? If Govt. may be thinking that they do not desire to borrow then they should inform insurance Co’s that now there is no restriction of 50% investment. You can invest anywhere. Our’s is a developing Economy, In budget they make provision that “X” Crors of amount will be borrowed, as on date. In future Govt. may not get funds for Infrastructure with lower rate of interest funds. How they will balance it? They need for Capital Expenditure like Roads, Dams etc. The money which was invested in Insurance will now be diverted to M.F. or Real Estate, Property, Gold non-financial instruments. According to me it is not advisable at all. On the contrary they should encourage investing in the financial instruments savings more.

For future they must have made some calculations, they feel people avoid tax by investing in insurance.

If any person invests in insurance & get tax free maturity under sec 10 (10 D) it is not a evasion but it is a tax planning in four corners of law.

Now let us see how many % of investors are there, who are investing over 5 lakh in insurance during a year? It may be small number around 1%. But the volume may be around 15 % to 20% of total first year premium.

Now according to me the penetrations through insurance will reduce. You may be thinking what is penetration? Penetration is ratio of premium to G.D.P.

 

OUR PUBLICATIONS AVAILABLE FOR SALE

 S. No Name Price (Rs.)
1 FMCG & Pharmaceutical Industry – GST Issues & Challenges 150/-
2 Transitional Provision 50/-
3 46th RRC Book 175/-
4 Referencer 2022-23 750/-
5 Mega Full Day Seminar Booklet 2.7.2022 130/-
6 Half Day Seminar Booklet 17.11.2022 100/-
7 Maharashtra Goods & Service Tax Act along with Rules (MGST Bare Act) 850/-
8 Short Publication GST practical guides (5 Book Series) 555/-

GSTPAM News Bulletin Committee for Year 2022-23

   
Ashit C. Shah
Chairman
   
Sunil D. Joshi
Jt. Convenor

Aloke R. Singh
Jt. Convenor
The opinions and views expressed in this Bulletin are those of the contributors.
The Association does not necessarily concur with the opinions/views expressed in this Bulletin.