Dear Readers,

We are delighted to share our 120th E-Newsletter “Weekly Taxation Newsletter” dated 16th August, 2023 from 08th Aug., 2023 to 15th Aug., 2023 with you. This E – Newsletter is a weekly reference / compilation of interesting and latest news related to tax including upcoming Timelines / Due Dates, Notifications / Press Information, Case Laws, International Taxation etc.                        

  • Stay updated, Stay connected
  • Due Dates under IT Act 1961
  Sl.  Compliance Particulars          Due Dates  
1​​Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194-IA for the month of July, 202330.08.2023
2.​​Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194M in the month of July, 202330.08.2023
4​​Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194-IB in the month of July, 202330.08.2023
4​Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194S in the month of July, 2023 Note: Applicable in case of specified person as mentioned under section 194S30.08.2023
  • Important Update:

Centre Announces 3-Month Extension For Implementing Revised TCS Rates:

Increased TCS rates to apply from 1st October, 2023: The increase in TCS rates; which were to come into effect from 1st July, 2023 shall now come into effect from October 1, 2023. Source: Click Here

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  • Under the GST, 2017

A. Filing of GSTR –3B / GSTR 3B QRMP

a) Taxpayers having aggregate turnover > Rs. 5 Cr. in preceding FY

Tax periodDue DateParticulars
July, 202320th August, 2023Due Date for filling GSTR – 3B return for the month of June, 2023 for the taxpayer with Aggregate turnover exceeding INR 5 crores during previous year.

b). Taxpayers having aggregate turnover upto Rs. 5 crores in preceding FY (Group A)

Tax periodDue Date Particulars
July, 202322nd August, 2023 Due Date for filling GSTR – 3B return for the month of July, 2023 for the taxpayer with Aggregate turnover upto INR 5 crores during previous year and who has opted for Quarterly filing of GSTR-3B
Group A States: Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana, Andhra Pradesh, Daman & Diu and Dadra & Nagar Haveli, Puducherry, Andaman and Nicobar Islands, Lakshadweep

c). Taxpayers having aggregate turnover upto Rs. 5 crores in preceding FY (Group B)

Tax periodDue Date Particulars
July, 202324th August, 2023 Annual Turnover Up to INR 5 Cr in Previous FY But Opted Quarterly Filing 
Group B States:  Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand, Odisha, Jammu and Kashmir, Ladakh, Chandigarh, Delhi

B. Non Resident Tax Payers, ISD, TDS & TCS Taxpayers

Form No.Compliance ParticularsTimeline Due Date
GSTR-5 & 5ANon-resident ODIAR services provider file Monthly GST Return20th of succeeding month20.08.2023

C. GST Refund:

Form No.Compliance ParticularsDue Date  
RFD -10Refund of Tax to Certain Persons18 Months after the end of quarter for which refund is to be claimed

F. Monthly Payment of GST – PMT-06:

Compliance ParticularDue Date
Due Date of payment of GST for a taxpayer with Aggregate turnover up to INR 5 crores during the previous year and who has opted for Quarterly filing of return under QRMP.  25.08.2023
  • Weekly Departmental Updates: Income Tax

1. Direct tax revenue surges by 16% to reach Rs. 6.53 trillion in current fiscal year

In a noteworthy development, direct tax collections in the ongoing fiscal year have surged by an impressive 15.73 percent, reaching an impressive total of Rs. 6.53 trillion by August 10, as confirmed by a recent statement from the Income Tax department. This substantial growth in gross direct tax collection, reflecting a 15.73 percent increase, has been met with enthusiasm and underscores a positive trend in fiscal revenue.

Notably, after factoring in refunds, the net direct tax collection stands even stronger at Rs. 5.84 trillion, showcasing a remarkable uptick of 17.33 percent when compared to the corresponding period in the preceding year. The consistent increase in net collections signals a favorable trajectory for the fiscal year’s tax revenue.

In conclusion, the significant growth in direct tax collections, both gross and net, signifies a promising trajectory for fiscal revenue in the ongoing fiscal year. The steadfast increase in collections, along with efficient refund processing, portrays a positive economic landscape and reinforces the nation’s fiscal stability.

2. Explained | What to do about income tax notices on under-reporting/misreporting of income

There is much celebration about the widening taxpayer base. Out of the 6.77 crore income tax returns (ITRs) filed for the current assessment year (AY), 53.67 lakh ITRs by first time filers. Much of this can be credited to the government’s increased scrutiny of large cash withdrawals, overseas remittances, purchase of luxury car, gains from future and options trading, net income from online games etc, alongside sustained social media compliances.

However, the close watch is equally trained on the ITRs filed, resulting in more Income Tax department notices being sent out seeking documentary evidence for allowing deductions/ exemptions claimed by the taxpayers under the old regime before granting tax refunds. In July, as per reports, the income tax department has sent one lakh notices under Section 133(6) of the Income Tax Act, 1961, to those suspected for under-reporting and/or misreporting their income by way of claiming deductions and exemptions unlawfully, largely related to leave travel allowance, house rent allowance, donations to charitable institutions, monetary contribution to political parties, medical expenses, housing loans, etc

Remarkably, not only did these notices seek documentary evidence on the claims made, but also the name, address, and contact number of the chartered accountant, advocate or income tax practitioner who has prepared and filed the relevant return on behalf of them, reflecting the seriousness of the issue. The author is also privy to some notices from the department even asking the assessee to furnish copies of earlier ITRs filed, along with documentary evidence of deductions claimed in them.

How to respond

On receipt of such a notice, the taxpayer is required to submit online his/her response with all the necessary documentary proofs sought within the prescribed time. For instance, if a taxpayer claimed to leave travel allowance, then copies of relevant travel tickets, invoices, and hotel-bookings. Those who claimed HRA, must provide a valid rental agreement with rent receipts, and the property owner’s PAN if the rent paid was more than a lakh. The Income tax law does not prohibit an employee from claiming HRA for the rent paid to the family members, however, the same may come under the department’s scrutiny. In the absence of any rental agreement, cash payment rather than bank transfers, it will be difficult to justify. For the payment of the housing loan’s principal and interest, a taxpayer can produce the concerned bank’s statements and certificates obtained for this purpose. For medical expenses claimed, concerned family doctors’ or hospitals’ prescription, bills, payment records will suffice.

Consequences of not responding

On failing to reply or if the reply is not found satisfactory, the department will insist the taxpayer file a revised return with or without claiming such deductions and exemptions as the case may be. As per Section 272A(2) of the Income Tax Act, 1961, failure to comply with a notice issued under Section 133, may invite penal provisions of penalty of Rs. 100/- per day. In addition, misreporting of income and claiming wrongful deductions may attract interest at 12 percent per annum, a penalty of 200 percent of taxes evaded and prosecution may entail imprisonment.

3. PAN cards and income tax returns filing in India

There are certain numbers and details available on the above 2 matters which are revealing a very disturbing picture:

(All values are approximate).

  1. Total India population — 143 Crores;
  2. Total PAN Cards issued — 61 Crores;
  3. % of PAN Cards issued to total population — 43%
  4. PAN Cards and Aadhaar Cards linked — 48 Crores;
  5. Income Tax Returns filed for Year ended Mar 31, ’23 — 6.80 Crores.
  6. Income Tax Returns filed to % of PAN Cards issued – 11%;
  7. % of Income Tax Returns filing to Total Population – 4.8%.

This raises an important and interesting matter — why are 43% of population having PAN Cards while only 11% of PAN Card holders are filing Income Tax Returns?

Note — it is suspected that there are individuals with multiple PAN Cards which is why the linkage to Aadhaar card is not possible and is being resisted.  Of course, the resistance is accompanied with flowery language of personal secrecy and Government overreach, etc.

What is relevant and important to understand is why only 25% of PAN Card Holders are filing Income Tax Returns (point 6 / point 3 above).  The Finance Ministry needs to get behind and find out why Indians feel the need to have a PAN Card but do not feel the need to file income tax returns.

Is it really fair that 5% of the population should carry the burden on income tax of the entire Indian populace.  Just 11% of PAN Cards holders file Income Tax Returns.  In India, it is raising the question of whether Income Tax in India is a fair tax.

It would be fair to assume that at least 65 – 75% of the Income Tax Returns are filed by Salaried employees, who have no escape hatch since the Tax deducted at source provisions are quite vigorous.  The question begs – is the Government machinery so helpless that it is unable to bring the non-salaried class into the income tax net?

If this is the state of Direct Tax Law in India and we pride ourselves on being a just and equitable democracy, can we say that Direct Tax Laws in India are equitable and all eligible tax payers are caught in the income tax net?

If the answer to the above question is NO and documented evidence shows that it is NO, should we not as a nation be looking at a significant recast of Direct Tax Law.  Just as we did a huge recast of indirect tax law (thru GST tax provisions) which have boosted our indirect tax revenues, should something similar not be tried out for direct tax?

Any tax measure should be equitable, facilitate incremental tax revenues and not provoke the eligible tax payers into attempting illegitimate means of hiding Income.  Indian Income Tax fails on all these tests.  Income Tax payers feel that they are being penalized and try every means in their control to escape the Income Tax Net by income non-disclosure.  This Cat and Mouse game between Revenue Bureaucracy and the income tax paying electorate is not good for Indian democracy.  Income Tax because of it’s convenient exclusions (of several income earners) is a detested ACT and the sooner it is tossed out and an alternative revenue collection mechanism introduced which is equitable and fair and does not make the tax payer feel hunted and hounded, the better it is. 

4. How to pay the penalty before filing a belated income tax return (ITR)

An individual can file a belated income tax return (ITR) for FY 2022-23 (AY 2023-24) if he/she has missed the deadline of July 31, 2023. The last date to file belated ITR for FY 2022-23 (AY 2023-24) is December 31, 2023.

While filing a belated ITR, an individual is required to pay a penalty under Section 234F of the Income Tax Act, 1961. Further, losses under various income heads cannot be carried forward in a belated ITR except for house property losses.


The penalty for filing a belated ITR is Rs 5,000 if net taxable income is more than Rs 5 lakh for FY 2022-23 (AY 2023-24). If net taxable income is below Rs 5 lakh, the penalty amount is Rs 1,000. If your net taxable income is below the basic exemption limit, you do not need to pay any penalty while filing a belated ITR.

How to pay the penalty for belated ITR

An individual can either pay the penalty under Section 234F before starting the process of filing belated ITR, or pay the penalty and any additional tax liability at the time of belated ITR filing on the e-filing portal.

The challan details of the penalty paid will have to be entered manually in the ‘tax paid’ schedule in the ITR form.

An individual cannot file a belated ITR before providing penalty paid details in the ‘tax paid’ schedule of the ITR form.

If you are paying penalty before filing belated ITR


An individual will be required to use the e-pay tax facility on the income tax e-filing portal to pay the penalty before filing a belated ITR. The e-pay tax facility can be used with or without logging into their account.

Here we have taken reference of how an individual can pay the penalty without logging into their account. On the e-filing portal (https://www.incometax.gov.in/iec/foportal/) under ‘Quick Links’ select the ‘e-pay tax’ option.

  • Important Circulars and Notifications:
Sl.Particulars of the Notification(s)File No. / Circular No. Notification Link(s)
1The Income-tax (Fifteenth Amendment) Rules, 2023Notification No. 58/2023   Click Here
2‘Chandigarh Building and Other Construction Workers Welfare Board, Chandigarh’(PAN AALC0595JNotification No. 59/2023   Click Here
3‘State Pollution Control Board Odisha’ (PAN AAALS2490J)Notification No. 60/2023   Click Here

Weekly Departmental updates:

  • GST Updates

1. Content creators’ income from ‘X’ will be subjected to GST? Experts say…

Elon musk had earlier in August announced that the subscribers of X Premium (Blue) will be eligible to receive their share in the ad revenue. The remuneration that individuals will receive from ‘X’, formerly known as Twitter, as part of its advertisement revenue are likely to be taxed 18% GST, experts have told news agency PTI.

Experts are of the opinion that ad revenue received by individuals from microblogging platform ‘X’, will be treated as supply under the GST law and will be subject to 18 per cent tax.

However, they have also mentioned to PTI that the tax will only be imposed if the total income from various services, including rental income, interest on bank fixed deposit, and other professional services, rendered by an individual exceeds ₹20 lakh in a year.

Musk had further said that the account needed to have at least 500 followers to receive ad revenue. On 8 August, Elon Musk had shared that Twitter had paid premium users thousands of dollars this week in advertising revenue.

This individuals primarily include content creators on X, who can set up Ad Revenue Sharing and Creator Subscriptions independently. Several users had also shared that X or Twitter had paid them ad revenue. “Twitter just paid me $120.65 for 21,400,000 impressions in the past 104 days. For what it’s worth, YouTube paid me $241.31 in that exact same amount of time for 928,593 views and 6,159,005 impressions,” said one user.

2. GST at par with personal income tax as share of GDP

Goods & services tax (GST) as a share of gross domestic products (GDP) has maintained parity with personal income tax, a report by Finance Ministry shows. Economists attribute this to consumption demand, compliance, and some impact of inflation.  However, another view is that this trend is not leading to an overall regressive taxation regime.

“GST has become the largest contributor to indirect taxes, ever since its implementation in FY 2017-18, “ a Finance Ministry report prepared to meet the obligations of the Government under the Fiscal Responsibility and Budget Management Act, 2003, said. It showed that the share of GST in GDP went up to 3.1 per cent in FY23 from 2.8 per cent in FY21, During the same period share of personal income tax rose from 2.5 to 3.1 per cent of GDP Apart from GST, indirect taxes also include Custom Duty and Central Excise Duty (levied mainly on petrol and diesel). At the same time, direct taxes comprise corporate income tax (CIT) and personal income tax (PIT).

While direct taxes are considered progressive as people’s tax incidence rises with a rise in income, indirect taxes are called regressive as these are levied according to the category of goods (merit vs demerit) or value of goods and not the basis of income of the consumer. According to a budget document, the Direct and Indirect Tax receipts are individually estimated to grow at 10.5 per cent and 10.4 per cent, respectively. The overall tax (GTR) buoyancy is estimated at 0.99. As the tax collection from GST stabilises, it is likely to give a boost to the Indirect tax collection with an estimated GST buoyancy of 1.14 in the ensuing year. In BE 2023-24, it is estimated that the direct and indirect taxes contribute 54.4 per cent and 45.6 per cent, respectively, to Gross Tax Revenue (GTR).

Meanwhile, the rise of GST’s share in GDP may not be called regressive. Devendra Kumar Pant, Chief Economist with India Ratings & Research, said that a broad look at direct and indirect tax collections suggests that direct tax collections are higher than indirect collections. It is not regressive. “GST on most of the food products is either zero or taxed at low rates, and people from the lower income strata are protected. However, if indirect tax collections overtake direct tax collections, it will be regressive,” he said.

3. GST: Here’s why auto dealers’ body wants government to cut GST on entry-level two wheelers

Union Minister of Road Transport and Highways, Nitin Gadkari, met with a team from the Federation of Automobile Dealers Associations (FADA) on August 9 to discuss matters related to Goods and Services Tax (GST) on two-wheelers and other vehicles. FADA urged Gadkari to reduce the GST on entry-level two-wheelers from 28 to 18 per cent.

The entry-level two wheeler segment comprises vehicles with engine capacity ranging between 100cc and 125 cc. It accounts for more than 70 per cent of overall sales in the two-wheeler segment.

“Reducing the GST from 28 per cent to 18 per cent for entry-level two-wheelers is more than just an economic strategy; it’s about empowering the common man and boosting rural mobility,” FADA President Manish Raj Singhania told news agency PTI. The body represents more than 26,500 automobile dealerships in the country.

The automobile body in a press release issued in May stated that the share of two-wheelers in the total automobile sales fell from 78 per cent in 2016 to 72 per cent in FY2023 due to rising costs. According to the federation, two-wheelers should not be grouped as luxury items for GST purposes as they are an essential commodity for millions.

How reduced GST will help auto dealers

FADA stated that the lowering the GST rate will increase the competitiveness of entry-level two wheelers with regards to other transportation modes. It will increase revenue for the industry and also address the transition from BS-4 to BS-6 emission norms.

4. Lok Sabha passes amendments to 2 GST bills for 28% tax on online gaming

The Lok Sabha has passed amendments to two Goods and Services Tax (GST) bills for levying 28 per cent tax on online gaming, casinos and horse race clubs during the monsoon session of Parliament.

Finance Minister Nirmala Sitharaman introduced the two bills to modify the Central and Integrated GST laws, proposing a 28 per cent tax on the complete nominal value of wagers in online gaming, casinos, and horse race clubs.

The Central Goods and Services Tax (Amendment) Bill, 2023, and The Integrated Goods and Services Tax (Amendment) Bill, 2023, were passed amid protests.

What are the proposed changes?

The proposed changes involve introducing clauses into the Schedule III of the CGST Act, 2017, aimed at offering explicit guidelines for the taxation of transactions within casinos, horse racing, and online gaming.

Similarly, within the IGST Act, an amendment seeks to establish GST obligations for offshore entities engaged in online money gaming, mandating their registration for GST within India.

Moreover, the revisions encompass provisions to halt access to offshore online gaming platforms in instances of non-compliance with registration and tax payment requirements.

These amendments to the Central GST (CGST) and Integrated GST (IGST) laws secured approval from the GST Council in the preceding week.

  • Important Notifications under

Excise / Custom/ GST:

  • GST Updates
Sl. No.  Particulars of the Notification(s)File No. / Circular No.Notification Link(s)
1Advisory on E-Invoice – Services Offered by the Four New IRPsGSTN 597Click Here
2Authorization of Booking Post Offices and their corresponding Foreign Post Offices in terms of the Postal Export (Electronic Declaration and Processing) Regulations, 2022 – Reg.  Circular No. 20/2023  Click Here
3Expansion of automatic LEO facility in ECCS- Reg.27/2023-Central TaxClick Here

Custom / Excise Updates

LinksNotification Particulars
Click HereFixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver- Reg
  Click HereAuthorization of Booking Post Offices and their corresponding Foreign Post Offices in terms of the Postal Export (Electronic Declaration and Processing) Regulations, 2022 – Reg.
Click HereSeeks to further amend No. 04/2022-Central Excise, dated the 30th June, 2022 , to increase the Special Additional Excise Duty on export of Diesel and ATF.
Click HereSeeks to amend No. 18/2022-Central Excise, dated the 19th July, 2022 to increase the Special Additional Excise Duty on production of Petroleum Crude.
  • Important Case-laws
  • Income Tax

1. Delhi HC stays income tax re-assessment proceedings against Oxfam India

In an “interim order”, the Delhi High Court recently stayed the Income Tax (IT) re-assessment proceedings initiated against the non-profit group Oxfam India.

In its August 4 order issuing notice to the authorities including the Deputy Commissioner of Income Tax Central Circle, New Delhi, a division bench of Justices Rajiv Shakdher and Girish Kathpalia said, “According to us, the matter requires further examination. Accordingly, issue notice…In the meanwhile, there shall be a stay on the continuation of the reassessment proceeding, till further directions of the court”. The matter is now listed on November 22.

A survey was conducted at Oxfam’s office on September 7, 2022 which led to initiation of the re-assessment proceedings. A notice was issued to Oxfam under Section 148A(b) of the Income Tax Act on March 29, 2023 triggering the re-assessment proceedings against it pertaining to certain aspects. Oxfam moved the high court against this.

Under Section 148A(b) of the Income Tax Act, an assessing officer can issue a notice directing the assessee to show cause as to why a notice of income escaping assessment should not be issued.

The authorities alleged that Oxfam was engaged in litigation activities which were violative of provisions of the Foreign Contribution (Regulation) Act, 2010. Secondly, Oxfam had allegedly received “suspicious contribution from foreign nationals”. Third, Oxfam had allegedly failed to recognise as revenue Rs 15.09 crore (Rs 15,09,85,211) received as advances against future projects. Fourth, the authorities said that Oxfam had not applied 85 per cent of its total receipts towards its objects in the relevant period, as required under the provisions of the Act.

Oxfam also said that the authorities did not share their survey report with it and the proceedings initiated against it were “barred by limitation”. It also submitted that an amendment brought in Section 149(1)(b) of the Act pursuant to the Finance Act, 2022 would not be applicable to the non-profit group as that amendment would be applicable only from Assessment Year 2022-23.

As per the amended Section 148(1)(b), a notice for escaped income assessment under Section 148 will not be a notice for the relevant assessment year if three years (but not more than ten years) have elapsed from the end of the relevant assessment year unless the assessing officer has in his “possession books of account or other documents or evidence” which reveal that the income chargeable to tax, represented in the form of an asset, expenditure in respect of a transaction or in relation to an event or occasion or an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to Rs 50 lakh or more.

The authorities said Oxfam’s Foreign Contribution Regulation Act (FCRA) licence has “run into rough weather” wherein Oxfam has filed a separate petition pending before a single judge bench of the high court, however “no interim relief” has been granted by that bench.

2. SC stays I-T dept bid to prosecute DMK MP Kathir Anand

In a reprieve to DMK MP Kathir Anand, the Supreme Court stayed the trial in prosecution initiated by the Income Tax department against him.

The prosecution was initiated for the alleged late filing of income tax return for the assessmenat year 2013-14.

A division bench of Justice Hrishikesh Roy and Justice Pankaj Mittal passed the interim order on Monday, on an appeal moved by Kathir Anand challenging an order passed by the Madras high court. A single judge of the high court refused to quash a criminal complaint filed by the income tax department for alleged late filing of returns for assessment year 2013-14.

When the appeal came up for hearing, senior advocates S Ganesh and P Wilson contended that the high court, while refusing relief, had not considered that the assessee had filed return within the extended time provided under Section 139(4) of the Income Tax Act.

“The assessee had already paid the tax with arrears, penalty and interest even before the department issued a notice. Assessee’s returns and tax have been accepted by the department without reopening,” they said.

Senior counsel added that the case on hand was a selective prosecution due to the individual involved.

They further pointed out that the high court has not considered other judgements which hold that voluntary filing of returns without a notice does not entail criminal prosecution.

  • Important Case-laws
  • GST Cases:

 

1. Charging your EV at public charging stations? Get ready to pay GST

The government is pushing electric vehicle (EV) adoption as a greener alternative to combustion engines, but a recent ruling by the Karnataka Authority for Advance Ruling (AAR) may dampen the enthusiasm. According to the AAR ruling, charging EV batteries at public stations will attract 18% GST.


The matter arose when Chamundeshwari Electricity Supply Corporation Ltd wanted to set up public charging stations (PCS) on its own for charging electric vehicles — both two-wheelers and four-wheelers.

Chamundeshwari Electricity said it was going to provide electric energy to these PCS. All electric vehicle users can access these public charging stations for battery charging. It wanted to issue tax invoices and collect an “electric vehicle charging fee”.


The applicant asked the AAR whether energy charges can be treated as exempt as per GST law — as it is a supply of electrical energy (“goods”), GST is levied only on service charges (as supply of services) — or whether it has to consider both energy charges and services charges together as “supply of service” for payment of GST on total charges.


According to the GST law, electrical energy is classified as goods and supply of electrical energy is exempted or kept outside the ambit of the GST law.


The AAR, while delivering the judgement, primarily relied on a clarification issued by the Ministry of Power (letter 23/08/2018-R&R dated 13.04.2018) for the requirement of obtaining a licence by charging stations under the Electricity Act, 2003. The clarification said the charging of a battery involved utilisation of electrical energy for its conversion to chemical energy, which gets stored in the battery. This activity does not involve any sale of electricity to any person as electricity is consumed within the premises owned by the charging station. So, there will be no requirement for the charging station to obtain a licence under the Electricity Act.

The ARR said the electrical energy was put to use as a consumable while charging the battery. In other words, the owner of the EV is being allowed to use the infrastructure and facilities provided by the charging station and so the said activity amounts to supply of service.

The AAR concluded that the “supply of electrical energy” and “service charges” together should be treated as “supply of service”. Thus, the activity of charging EV batteries, which is treated as supply of service, gets covered under SAC 998714 and attracts GST @18%. It added that the GST collected, which is treated as output tax, can be set-off against the input tax credit received by the applicant on its inputs and input services.

2. Construction of jetty at Fort Kochi to attract concessional 12% GST: AAR

The construction of a jetty for the Indian Coast Guard at Fort Kochi by the Cochin Port Trust (CoPT) is not eligible for exemption from the goods and services tax (GST), the Kerala-based authority for advance ruling (AAR) has said. It is, however, eligible for a concessional GST of 12 per cent, provided the jetty was completed within the specified time frame, AAR has ruled.

The authority held that the construction of the jetty constitutes works contract and hence, a concessional rate of 12 per cent GST, instead of 18 per cent, would be imposed on it.

Works contract is a service contract involving the supply of goods to execute it. That makes the works contract a combination of service and movement of goods.

The authority observed that nothing in the memorandum of understanding (MoU) or other documents reveals that CoPT has received any consideration for the services in the form of grants from the central government and as such it is not eligible for exemption.

This time of supply has to be within September 21, 2017 and July 17, 2022 to qualify for concessional rate since the provision for this was removed from July 18, 2022.

The AAR did not give a ruling on CoPT’s query about whether contractors engaged by it to execute the works contract would be eligible for 12 per cent GST.

  • International Taxation   Corner (ITC)

1. What are the factors affecting international taxation?

Albert Einstein said ‘the hardest thing in the world to understand is Income Tax’, though he was only 20 when the first Double Tax Avoidance Agreement (DTAA) was signed (1899 – between Austria and Prussia), nothing much actually happened until after his death, in 1956, when the OEEC (now OECD) started work on structured DTAAs.

Today we have about 4000 DTAAs globally with India herself signing over 100 DTAAs to decide “fair” distribution of taxes between Country of Residence of taxpayer (CoR) and Country of Source of income (CoS). One can only imagine what would have been Einstein’s reaction to the current International Tax scenario.

Amidst this backdrop, every person having cross border incomes is required file an annual statement a.k.a International Tax Returns (ITR) which is the starting link between a tax payer and the Revenue. The ITR is compulsorily needed to be filed in CoR while it may be optional in the CoS based on the nature and quantum of income. Various issues need to be considered while filing an ITR, where the core purpose is to disclose (facts), determine (tax liability) and avail (tax relief). Some of the prominent factors to be considered are:

A: Disclose Factors

Indian residents need to disclose these in Schedule FA and FSI, respectively. All foreign assets, including balances in foreign bank accounts for which the taxpayer is only a signatory, must be disclosed.

Foreign Tax Credit: Indian residents availing credit for tax paid on foreign-sourced income should include the relevant details in Schedule TR.

Assets and Liabilities: If an individual’s total income exceeds Rs. 50 lakhs, Schedule AL mandates disclosure of movable and immovable assets with related liabilities. Non-residents or “Not Ordinary” residents are only required to disclose assets located in India.

Non-Resident with Tax Deducted at Source: Non-residents are not required to file an Indian tax return if taxes have been deducted u/s 115A (dividends, interest, and fees for technical services).

Exempt Income: Even though certain incomes may be exempt from taxation in India (e.g.NRE interest), they must be disclosed in the tax return.

B: Determine Factors

Permanent Establishment (PE): For business income earned from a foreign country, it is essential to determine whether a PE (Article 5) exists in the source country. Taxation of business income happens only if a PE is present in the Source country.
Tax Residency: Tax residency rules vary between countries and can be influenced by factors such as the period of stay , calendar year, PE , and tie-breaker tests (Article 4 of DTAA). Dual residency situations require careful consideration to avoid double taxation.

Tax Payer Constitution: This is a tricky situation, some source countries provide for taxing fiscally transparent entities (e.g., partnerships/ trusts) while the same income could be taxed in the resident country in the hands of the beneficial owner (partner/ beneficiary). In such cases, availing credits is challenging unless presented appropriately.

Exchange Rates: Exchange rates to convert foreign currency income to Indian rupees, can impact tax liability. Rule 115 specifies the applicable rate, often the TTBR (Telegraphic Transfer Buying Rate), on the specified date.

Deemed Residency in India: An individual may be deemed (Sec 6(1)), as a resident of India subject to his quantum of total income, period of stay and tax rates in his foreign abode. Deemed residency is a recent provision and is critical while filing an international tax return.

Calendar Year vs. Financial Year: Differences in the tax year between the source country and India can exist creating challenges for apportionment / claiming relief. The situation needs to be handled with care to avoid double taxation/ cash flow challenges.

2. CANADA’S NEW TAX-FREE FIRST HOME SAVINGS ACCOUNT TO EASE HOME BUYING

The new tax-free First Home Savings Account is a registered savings account that helps Canadians become first-time home buyers by contributing up to $8,000 per year (up to a lifetime limit of $40,000) for their first down payment, within 15 years.

To help Canadians reach their savings goals, First Home Savings Account contributions are tax deductible on annual income tax returns, like a Registered Retirement Savings Plan (RRSP). And, like a Tax-Free Savings Account (TFSA), withdrawals to purchase a first home—including any investment income on contributions—are non-taxable. Tax-free in; tax-free out.

First Home Savings Accounts are available at seven financial institutions, and more are set to offer First Home Savings Accounts soon.

The new tax-free First Home Savings Account is a registered savings account that helps Canadians become first-time home buyers by contributing up to $8,000 per year until they reach the $40,000 contribution limit (within 15 years of opening their account) for their first down payment, and delivers tax relief when they file their taxes to help them meet their contribution goals.

Any Canadian re         sident at least 18 years of age, and not more than 71 years of age on December 31 of the year, can open a First Home Savings Account to save for their first home. Unused contribution room up to the $8,000 annual maximum and unclaimed contributions can be carried forward.

The First Home Savings Account can be combined with the Home Buyers’ Plan, which allows Canadians to withdraw up to $35,000 from their RRSPs to buy or build a qualifying home for themselves or for a relative with a disability. Amounts withdrawn under the Home Buyers’ Plan must be recontributed to an RRSP on a non-deductible basis over a period not exceeding 15 years.

  • Knowledge Bucket for NRI’s
  1. Under Section 6 of the Income Tax Act 1961, the residential status of NRIs always has to be determined to know their tax eligibility. To determine their residential status, the physical presence of an individual in India during a financial year and immediately preceding years is taken into account.
  • NRIs are required to pay tax on salary received in India, income from a house property or building situated in India in the form of rents, capital gains from sale of assets situated in India, interest on savings NRO bank accounts and fixed deposits, business income or income from other sources. Interest income from an NRE account and FCNR account is not taxed in India.
  • Income tax department has mapped the residential status of NRIs in case they have filed the ITR in any of the last 3 assessment years (AYs) or they have intimated their residential status to the Jurisdictional Assessing Officer (JAO). The PANs have been rendered inoperative, in case any one of the above-mentioned criteria is not met.
  • The NRIs whose PANs are inoperative are requested to intimate their residential status to their respective JAO. Details of JAO can be found at – Click Here
  • The OCIs/foreign citizens are requested to intimate their residential status to their respective JAO along with supporting documents with a request to update their residential status in the PAN database.
  • Do you know ??
  1. A tax rebate has been introduced in the New Tax Regime on income upto Rs 7 Lakhs. This implies that you do not have to pay tax if your taxable income is below 7 lakhs under new tax regime.
  2. The standard deduction of Rs 50,000 has been introduced under the new tax regime for salaried taxpayers.
  3. The highest surcharge under the new tax regime has been reduced to 25% from 37% for people earning more than Rs 5 crore. This move brings down their tax rate from 42.74% to 39%.
  4. TDS rate reduced to 20% from 30% on withdrawal of EPF.
  5. Income from transfer of digital assets such as crypto to be taxed at 30%.
  •    Disclaimer:

Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information. *(We consider various sources including ET, BS, HT, Taxmann etc.)

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