We are delighted to share our 82nd E-Newsletter “Weekly Taxation Newsletter” dated 12th July, 2022 from 05th July, 2022 to 12th July, 2022 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.
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Upcoming Due Dates
Weekly Departmental updates Important Notifications & Circulars Important Case-laws
International Taxation Corner (ITC) Knowledge bucket for NRI
Brain Bites- Do you Know?
Due Dates under IT Act 1961
|Sl.||Compliance Particulars||Due Dates|
|1||Due date for issue of TDS Certificate for tax deducted under section 194- IA, 194-IB, and 194M in the month of April 2022.||15.07.2022|
|2.||Quarterly statement in respect of foreign remittances (to be furnished by authorized dealers) in Form No. 15CC for quarter ending June, 2022.||15.07.2022|
|3||Quarterly statement of TCS deposited for the quarter ending 30 June, 2022.||15.07.2022|
|4||Due date for furnishing statement in Form no. 3BB by a stock exchange in respect of transactions in which client codes been modified after registering in the system for the month of June, 2022||15.07.2022|
Under the GST, 2017
A. Non Resident Tax Payers, ISD, TDS & TCS Taxpayers
|Form No.||Compliance Particulars||Timeline||Due Date|
|GSTR -6||Every Input Service Distributor (ISD)||13th of succeeding month||13.07.2022|
|GSTR-5 & 5A||Non-resident ODIAR services provider file Monthly GST Return||20th of succeeding month||20.07.2022|
B. GST Refund
|Form No.||Compliance Particulars||Due Date|
|RFD -10||Refund of Tax to Certain Persons||18 Months after the end of quarter for which refund is to be claimed|
C. A. GSTR – 1 QRMP monthly / Quarterly return
|Form No.||Compliance Particulars||Timeline||Due Date|
|Details of outward supply-IFF & Summary of outward supplies by taxpayers who have opted for the QRMP scheme.||GST QRMP monthly return due date for the month of April, 2022 (IFF). Applicable for taxpayers with Annual aggregate turnover up to Rs. 1.50 Crore. Summary of outward supplies by taxpayers who have opted for the QRMP scheme.||13th of succeeding month – Monthly Quarterly Return||13.07.2022|
Attention: Attention: Taxpayers with AATO in excess of Rs 20 Crore are also required to generate e-invoice for their outward supplies w.e.f. 1st April, 2022.
Weekly Departmental Updates: Income Tax
1. Want a loan or credit card? File your income tax return first
The Central Boardof Direct Taxes (CBDT) keeps amending or adding conditions on when it becomes mandatory to file income tax return (ITR). Recently on April 21, 2022, the CBDT issued a circular, which added four new conditions related to business turnover, professional receipts, bank deposits and spending, which makes it mandatory to file ITR.
These conditions notified by the CBDT are applicable for Assessment Year (AY) 2022-23 onwards. Besides these few new conditions, there are various other existing conditions which make it mandatory to file ITR. However, even if you are not compulsorily required to file the ITR, still there are merits and benefits of filing the ITR.
For those below 60 years of age, the basic exemption limit is taxable income of up to Rs 2.50 lakh, and for those over 60 but below 80 years of age, the basic exemption limit is Rs 3 lakh. For very senior citizens (above 80 years of age), the basic exemption limit is Rs 5 lakh.
Further, the law also provides for mandatory filing of tax returns in specific circumstances such as expenditure in excess of Rs 2 lakh on foreign travel, consumption of electricity costing above Rs 1 lakh in a financial year, and foreign income or assets, among others, even if the gross total income is less than the basic exemption limit. Deposit of more than Rs 1 crore in one or more current accounts maintained with either bank or cooperative bank in India during the year, makes it compulsory to file ITR. To read more Click Here
2. Income Tax Return Filling (ITR): 10 Things To Know Before Filing ITR For FY 2021-22
With just a few days left for the ITR filing deadline to end, the taxpayers must have started filing their ITR. If you are an earning individual, then 31 July is the last date for filing an income tax return (ITR) for the financial year 2021-22 and assessment year 2022-23. The taxpayers are advised to file their ITR before the deadline to avoid last-minute hassles.
For filing of the ITR, the Income-Tax (I-T) Department provides pre-filled forms to make the filing of tax returns hassle-free. However, the taxpayers should keep all the documents handy while filing the return and cross-check every field in the pre-filled form.
It is always advisable to select the applicable ITR form depending upon the taxpayer’s residential status and income earned from various sources for an accurate filing. If you use the wrong tax return form, then the return will not be processed and you may receive a defective return notice from the tax department.
The taxpayers also need to report the exempt income under ‘Schedule EI’ such as agriculture income, exempt income of minor child, income not chargeable to tax as per Double Taxation Avoidance Agreement, etc.
If a taxpayer could not furnish the ITR by due date due to multiple reasons such as non- availability of relevant documents/ information, lack of time, personal exigencies, etc, there may be varied consequences under the Income Tax Act such as levy of late filing fee, payment of interest on balance tax liability, ineligibility to carry forward certain losses, etc. Make sure to file your return by the deadline. To read more Click Here
3. I-T dept detects tax evasion worth hundreds of crores after raids on Chhattisgarh group, bureaucrat
The Income Tax department has seized “undisclosed” cash and jewellery worth Rs 14 crore and detected tax evasion of a “few hundreds of crores” after it recently raided a Chhattisgarh- based group engaged in coal transportation and linked businesses, and a senior state government officer, the CBDT said Monday.
The searches were launched on June 30 and more than 30 locations in Raipur, Bhilai, Raigarh, Korba, Bilaspur and Surajpur were covered, apart from the premises of the officer.
The CBDT said in a statement, without identifying the group, that the business entity indulged in “unfair regular collection on coal transportation throughout the state of Chhattisgarh leading to generation of huge unaccounted income”.
“Evidence of such collection of more than Rs 200 crore during a short time period has been found. The same has been corroborated by the key trusted associates of the group,” it said. The statement added that sleuths have found “instances of certain cash payments made to government officials”.
- To read more Click Here
4. TDS on crypto, VDAs: CBDT issues new circular on peer to peer transactions
The Central Board of Direct Taxes (CBDT) given clarification regarding how the tax will be deducted (TDS) on peer-to-peer transactions related to buying/selling of Virtual Digital Assets (VDAs) and crypto under section 194S of the Income-tax Act, 1961. Peer-to-peer transactions are those transactions where buying and selling have taken place without the involvement of a third party (E.g., an exchange).
As per the latest circular issued on June 28, 2022, “According to section 194S of the Act, any person who is responsible for paying to any resident any sum by way of consideration for transfer of VDA is required to deduct tax. Thus, in a peer-to-peer (i.e., buyer to seller without going through an Exchange) transaction, the buyer (i.e., person paying the consideration) is required to deduct tax under section 194S of the Act.”
The latest circular issued clarifies that there could be a situation where the consideration is in kind or in exchange for another VDA or partly in kind and cash is not sufficient to meet the TDS liability. In this situation, the person responsible for paying such consideration is required to ensure that tax required to be deducted has been paid in respect of such consideration, before releasing the consideration.
The circular further states, “The tax so deducted is required to be deposited with Government in accordance with the time and procedure prescribed in the Act read with the relevant provisions of the Income-tax Rules, 1962. After deduction, the deductor is required to furnish a quarterly statement (in Form No. 26Q) for all such transactions of the quarter on or before the due date prescribed in the Income-tax Rules, 1962. For specified person Form 26QE has been introduced. It may be clarified that the TDS shall be on consideration for transfer of VDA less GST.”
- Source: Read full at Click Here
Important Circulars and Notifications:
|Sl.||Particulars of the Notification(s)||File No. / Circular No.||Notification Link(s)|
|1||Central Government hereby notifies for the purposes of the said clause, ‘Uttar Pradesh Electricity Regulatory Commission’ (PAN AAALU0227H),||Notification No. 79/2022||Click Here|
|2||The Government of India, Ministry of Finance, Department of Revenue (Central Board of Direct Taxes) number 73/2022 dated 30th June, 2022||Notification No. 77/2022||Click Here|
|3||The Central Government hereby specifies a token which qualifies to be a virtual digital asset||Notification No. 75/2022||Click Here|
Weekly Departmental updates:
1. (a) Availing ITC as per law and GSTR2B. Please refer News and Update section.
(b) Maintenance activity is planned for the NIC IRP portal on Sunday 12th June 2022 between 7pm and 9pm, due to which e- Invoice services for all the taxpayers will not be available. Inconvenience is regretted.
2. GST: Mandatory e-invoicing for companies with Rs 5-crore sales from January
The GST e-invoicing will likely be mandatory for firms with a turnover of over Rs 5 crore from January 1, 2023, down from the current threshold of Rs 20 crore to further plug leakages, ensure better compliance and policy formulation, Central Board of Indirect Taxes chairman Vivek Johri told FE.
“I think expanding the coverage to over Rs 5 crore will give us very good data for policy making. We can analyse the data at the level of four-digit HS (Harmonised System) and get some sense of which are the sectors which are contributing more to the GST, which have higher potential but are not contributing enough,” Johri told FE.
The tax authorities will also be able to better analyse the trends and availment of input tax credit across sectors and weed out fake ITC claims, which had emerged as a major issue for the government. Fake ITC worth over Rs 50,000 crore was detected in the past one-and-half years alone.
E-invoicing for business-to-business (B2B) transactions started with a very high threshold from October 1, 2020, when firms with a turnover of over Rs 500 crore came under its ambit. In the second phase, businesses with a turnover exceeding Rs 100 crore were mandated to issue e- invoices from January 1, 2021. In the third phase, firms with a turnover of over Rs 50 crore had to generate e-invoices from April 1, 2021. It has been extended to firms with a turnover between Rs 20 crore to Rs 50 crore from April 1, 2022. (Read more at: Click Here)
3. GST 2.0 may be free of jurisdiction: Vivek Johri, chairman, CBIC
India could consider a significant shift in the Goods and Services Tax (GST) including a jurisdiction-free regime as part of the next set of reforms for the five-year-old indirect tax system. New Delhi, which raised the import duty on gold recently, is not looking at any further administrative measures immediately to clamp down imports.
“The second aspect of administrative structure, which we need to sort of discuss is whether we still need a territorial jurisdiction, at least within CBIC…I think technology makes it possible for us to not be tied to a particular geographic location,” Vivek Johri, chairman of the Central Board of Indirect Taxes and Customs (CBIC), told ET.
“If rates have to go up or come down to achieve the revenue rate of 15%, then the timing is also very critical. Do we do it now when there are inflationary expectations in the economy or later…. I think those are the kind of decisions the (GST) Council will have to take,” Johri said.
He said the recent decision on rate rationalisation along with tighter scrutiny and better
compliance will keep the monthly average GST collections high, between ₹1.35 lakh crore and
₹1.40 lakh crore. To read more Click Here
4. Rented homes lack GST clarity
The Goods and Services Tax (GST) Council’s decision last week to tax residential units being rented out to business entities at 18% may become another source of litigation and divergent rulings under the GST regime as there is no clarity over whether companies would be allowed to claim an input tax credit for the 18% GST.
Tax experts pointed out that input tax credit should be available for companies taking residential units on rent as it is not for personal use. However, the government has not provided any clarification on this and, thus, the issue may be open to the interpretation of tax officers and advance ruling benches.
The decision was part of the larger rate rationalization exercise to boost GST revenue collections with a compensation scheme for states coming to an end. The council did away with a raft of exemptions and increased GST rates on others, besides correcting inverted duties.
Abhishek A. Rastogi, a partner at Khaitan and Co, said that any accommodation for residential purposes, whether given to an individual or to a business unit, must have the same rate of tax as the inherent nature of the service remains the same. To read more Click Here
5. Trade raises concern over GST on unbranded packaged rice
A move by the Centre to impose 5 per cent Goods and Services Tax (GST) on unbranded packaged rice is being viewed with concern by a section of the trade. Until now, only branded rice attracted GST.
The move to impose GST on unbranded rice and wheat flour has drawn opposition from the Confederation of All India Traders (CAIT), which claims small businesses will be affected. “The problem with taxing unbranded but pre-packaged rice will be its monitoring. There are
55,000-60,000 rice mills. It is anyone’s guess if the effort will be worth it when the returns are going to be paltry,” said a rice trader from Andhra Pradesh without wishing to identify.
The GST will also lead to a hike in the price of rice, which is consumed in many parts of the country, he said. Some among the trade fear that it would needlessly arm tax officials and probably, lead to red-tapism, which had come to an end after the launch of GST. “There could be people wanting to evade the GST and some officials could connive with them,” the trader said.
At the recent GST council meeting, the Centre decided to levy 5 per cent GST on pre-packed and labelled food items such as meat, fish, curd, paneer, honey, dried leguminous vegetables, dried makhana, wheat and other cereals, wheat or meslin flour, jaggery, puffed rice (muri), besides rice and wheat flour. (Read more at Click Here
Important Notifications under Excise / Custom/ GST:
|Sl. No.||Particulars of the Notification(s)||File No. / Circular No.||Notification Link(s)|
|1||Removal of negative balance in cash ledgers of some composition taxpayers||GSTN Circular 546||Click Here|
|2||Withdrawal of Circular No. 106/25/2019-GST dated 29.06.2019.||176/08/2022-GST||Click Here|
|3||Manner of filing refund of unutilized ITC on account of export of electricity.||175/07/2022-GST||Click Here|
|4||Prescribing manner of re-credit in electronic credit ledger using FORM GST PMT-03A.||174/06/2022-GST||Click Here|
|5||Clarification on issue of claiming refund under inverted duty structure where the supplier is supplying goods under some concessional notification.||173/05/2022-GST||Click Here|
|6||Clarification on various issues relating to applicability of demand and penalty provisions under the Central Goods and Services Tax Act, 2017 in respect of transactions involving fake invoices.||171/03/2022-GST||Click Here|
|7||Mandatory furnishing of correct and proper information of inter-State supplies and amount of ineligible/blocked Input Tax Credit and reversal thereof in return in FORM GSTR-3B and statement in FORM GSTR-1||170/02/2022-GST||Click Here|
CUSTOM / EXCISE UPDATES
|Click Here||Exchange rate Notification No.58/2022-Cus (NT) dated 07.07.2022-reg.|
|Click Here||seeks to amend the name of Country of Export from Singapore to Any country including Indonesia for the producer PT. ENERGI SEJAHTERA MAS and Exporter Sinarmas CEPSA Pte. Ltd. in Customs notification No. 28/2018-Customs (ADD) dated 25th May, 2018 which imposed Anti-dumping duty on imports of Saturated Fatty Alcohols from Indonesia, Malaysia, Thailand and Saudi Arabia.|
|Click Here||Standard Operating Procedure (SOP) (Version 1.1) for “Implementation of Central Government notification prohibiting import of mobile phones with duplicate, fake and non-genuine International Mobile Equipment Identity”– reg|
|Click Here||Warehousing of solar power generating units or items like solar panel, solar cell etc. for power plants with resulting goods ‘electricity’ – In-applicability of Manufacture and Other Operations in Warehouse (no.2) Regulations, 2019 under section 65 of the Customs Act, 1962 regarding.|
- Case Details: Noida Cyber Park (P.) Ltd. v. ITO
Citation:  123 taxmann.com 213 (Delhi – Trib.)
Section 50C is not applicable on the transfer of leasehold rights in land and building
The Delhi ITAT held that the expression ‘land or building’ in its coverage is quite distinct from the expression ‘any right in land or building’. The legislature, in its wisdom, has used the expression ‘land or building or both’ in Section 50C, and not the expression ‘any right in land or building’. Therefore, the express use of one expression would exclude the other.
The Hon’ble Supreme Court has supported these legal premises in the case of GVK Industries Ltd. v. ITO  197 Taxman 337 (SC). Thus, transfer of leasehold rights does not warrant invoking Section 50C as the said property is not of the nature covered by Section 50C.
2. Case Details: State Bank of India v. ACIT
Citation:  123 taxmann.com 447 (Mumbai – Trib.)
No denial of LTC exemption even if travel is not undertaken through shortest route: Mumbai ITAT
The Mumbai ITAT held that a plain reading of Section 10(5) read with Rule 2B does not indicate any requirement of taking the shortest route for travelling to any place in India. It does
not restrict the route to be adopted for going to such a destination. However, the statutory provisions do envisage the possibility of someone taking a route other than the shortest route. It is implicit in the restriction that only an amount not exceeding the air economy fare of the national carrier by the shortest route to the place of destination is eligible for exemption under section 10(5).
There is no specific bar in the law on the travel, eligible for exemption under Section 10(5), involving a sector of overseas travel. In the absence of such a bar, the assessee couldn’t be faulted for not inferring such a bar. The reimbursement was restricted to airfare, on the national carrier, by the shortest route, as was the mandate of Rule 2B. As part of that composite itinerary involving a foreign sector as well, the employee had travelled to the destination in India.The guidance available to the assessee indicates that, in such a situation, the exemption under section 10(5) was available to the employee. Such exemption shall be available only to the extent of farthest Indian destination by the shortest route, and that was what assessee had allowed. In the light of this analysis of the legal position and the factual backdrop, whatever may be the position with respect to taxability of such a leave travel concession in the hands of the employee, the assessee could not be faulted for not deducting tax at source from LTC allowed by it to employees.
Ø GST Law:
- Perks not liable to GST, CBIC clarifies
The Central Board of Indirect Taxes and Customs has clarified that perks provided by employers to employees are not subject to the Goods and Services Tax (GST), and emphasised that penalties can only be levied in cases involving fake invoices as no goods are supplied.
Tax experts expect the clarification to bring about a reduction in tax demands and arrests in fake invoicing cases, reining in official overreach that has been contested through several petitions in courts. The board detailed the clarifications in a series of circulars issued on Wednesday, following up on decisions taken by the GST Council at its meeting last month.
The confusion on the applicability of GST on employee perquisites has persisted for a while as transactions between related parties are subject to the tax even where no consideration is involved. Noting that various representations had been received from field formations of officials seeking clarifications on various issues, including perquisites provided by an employer to employees as per contractual agreements, the board concluded that neither services rendered by employees to employers nor perks provided to them by their firms would be subject to GST.
In a separate circular, the board responded to pleas from businesses as well as tax officials for clarity on demand and penalty provisions under the Central GST law for transactions involving fake invoices. Reference: Click Here
2. TN AAR says GST to be levied on employees’ share of canteen charges
‘The supply of food by the applicant is ‘Supply of Service’ by the applicant to their employees as the same is not a part of the employment contract’
Tamil Nadu’s Authority for Advance Ruling (TNAAR) has ruled that employee’s share for canteen services will be subjected to Goods & Services Tax (GST). This is contrary to earlier rulings by Gujarat AAR (GAAR) in the matter of two pharmaceutical companies.
“The applicant has established canteen facilities as mandated under Section 46 of of the Factories Act, 1948 and supplies food at a nominal cost either directly or through third-party vendor. The supply of food by the applicant is ‘Supply of Service’ by the applicant to their employees as the same is not a part of the employment contract and the canteen facility is provided under the Factories Act. The nominal cost, which is recovered from the salary as deferred payment is ‘consideration’ for the supply and GST is liable to be paid,” TNAAR said while disposing the application filed by Chennai based Kothari Sugars and Chemaicals Limited.
After going through all the facts and arguments, TNAAR said the recovery of cost from the delayed payments do not alter the fact of the service provided and the person providing the said supply. The third part has entered into agreement with the applicant for running of the canteen in one of units and is paid service charges which is a supply made by the third party vendor to the applicant. “The supply of the food by the employer, i.e., the applicant to their employees is composite supply of food held as ‘Supply of Service’ as per Schedule-II of the GST Act,” AAR said and ruled GST to be paid.
AAR rulings are applicable only on the applicant and related tax jurisdiction, though can be referred in similar matter. Interestingly, the applicant mentioned the GAAR’s decision in the case of Emcure along with others, but TNAAR made it clear that the advance ruling granted to one application could not be applied universally . In the matter of Emcure, GAAR had held that company not required to pay Goods and Services Tax on employees’ share for canteen services and free transportation services. In the similar matter of Cadila, GAAR held the same.
- To read more: Click Here
International Taxation Corner (ITC)
1. U.S. Treasury to end 1979 treaty with global minimum tax holdout Hungary
The U.S. Treasury on Friday said it was moving to terminate a 1979 tax treaty with Hungary in the wake of Budapest’s decision to block the European Union’s implementation of a new, 15% global minimum tax. A Treasury spokesperson said that since Hungary lowered its corporate tax rate to 9% – less than half the 21% U.S. rate – the tax treaty unilaterally benefits Hungary.
“The benefits are no longer reciprocal – with a significant loss of potential revenues to the United States and little in return for U.S. business and investment in Hungary.”
The timing of the termination following years of U.S. concerns about the treaty suggests that Treasury is using it to try to pressure Hungarian Prime Minister Viktor Orban to agree to implement the 15% global minimum tax agreed by nearly 140 countries.
Termination of the treaty is expected to be completed in six months after the U.S. Treasury sends formal notification to Hungarian authorities. Read more at: Click Here
- 2. Australia Tax Agency Clarifies Changes in Fuel Tax Credits
The Australian Taxation Office July 4 clarified changes in fuel tax credits. The clarification includes that: 1) taxpayers claiming the credits on their business activity statement must apply the lower credit rates for fuel acquired from March 30; 2) using the fuel tax credit calculator helps ensure application of the correct rate; 3) the credit amount is reduced due to the six-month reduction in fuel excise duty from March 30 to Sept. 28; and 4) businesses using fuel during the rate reduction period in heavy vehicles on public roads can’t claim the credit. [Australia, Australian Taxation Office, 07/04/22]
- To read more Click Here
Knowledge Bucket for NRI’s
- After July 1, if you want to buy a cryptocurrency or any other VDA such as a non- fungible token (NFT), you will have to pay 1 per cent of the value of your purchase to the seller, who could be an individual or exchange.
- The law is applicable to resident Indians. It is also applicable to non-resident Indians (NRIs) if the NRI buys VDAs from an Indian but there will be no TDS if an NRI buys through another NRI.
- NRIs can convert their existing resident savings account into an NRO account when their status changes from resident to non-resident. Any repatriation done through this account should be reported to RBI.
- NRE accounts are tax exempted. Therefore, income taxes, wealth taxes, and gift taxes do not apply in India. Interest earned from these accounts is also exempt from taxes. But as per Indian Income tax laws, NRO accounts are taxable; income taxes, wealth taxes, and gift taxes do apply. Interest earned on an NRO account as also subject to taxation. However, the reduced tax benefit is availed under the Double Taxation Avoidance Agreement (DTAA).
DO YOU KNOW ??
- A fee of Rs 1,000 would be applicable if the PAN-Aadhaar link is completed on or after July 1, 2022. Earlier, till June 30, the charge was Rs. 500.
- Doctors and social media influencers will be subject to 10 percent tax Deducted at Source (TDS) beginning July 1, 2022, on benefits received from companies for sales promotion. The provider of the benefit or perquisite may directly deduct the tax under Section 194R according to a notification from the Central Board of Direct Taxes (CBDT), although the taxpayer must verify the recipient’s possession of any taxable amounts.
- If the total value of benefits or perks received throughout the financial year is less than Rs.20,000, there would be no TDS.
- The discussion on the crucial issues of extension of compensation to states beyond June this year and the imposition of 28% GST on casinos, online gaming and horse racing, will take place soon.
- Individual taxpayers, who don’t possess any income from businesses, need to file their Income Tax Returns (ITRs) by July 31, 2022.
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.)