We are delighted to share our 119th E-Newsletter “Weekly Taxation Newsletter” dated 07th August, 2023 from 30th July, 2023 to 06th 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.                        

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  • Due Dates under IT Act 1961
  Sl.  Compliance Particulars          Due Dates  
1​Due date for deposit of Tax deducted/collected for the month of July, 2023. However, all sum deducted/collected by an office of the government shall be paid to the credit of the Central Government on the same day where tax is paid without production of an Income-tax Challan07.08.2023
2.​​​Due date for issue of TDS Certificate for tax deducted under section 194-IA in the month of June, 202314.08.2023
4​​Due date for issue of TDS Certificate for tax deducted under section 194-IB in the month of June, 202314.08.2023
4​​Due date for issue of TDS Certificate for tax deducted under section 194M in the month of June, 202314.08.2023
5​Due date for issue of TDS Certificate for tax deducted under section 194S in the month of June, 2023 Note: Applicable in case of specified person as mentioned under section 194S14.08.2023
6​Due date for furnishing of Form 24G by an office of the Government where TDS/TCS for the month of July, 2023 has been paid without the production of a challan15.08.2023
7​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 July, 202315.08.2023
  8​Quarterly TDS certificate (in respect of tax deducted for payments other than salary) for the quarter ending June 30, 2023 Note: Due to extension of due date of TDS statement vide Circular no. 9/2023, dated 28-06-2023, the revised due date for furnishing TDS certificate shall be October 15, 2023  15.08.2023
  • 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 Form GSTR-1:

Tax periodDue DateRemarks
Monthly return (July, 2023)11.08.20231. GST Filing of returns by registered person with aggregate turnover exceeding INR 5 Crores during preceding year.   2. Registered person, with aggregate turnover of less then INR 5 Crores during preceeding year, opted for monthly filing of return under QRMP.

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

Form No.Compliance ParticularsTimelineDue Date
  GSTR -6Every Input Service Distributor (ISD)  13th of succeeding month  13.08.2023
  GSTR -7Return for Tax Deducted at source to be filed by Tax Deductor  10th of succeeding month  10.08.2023
  GSTR -8E-Commerce operator registered under GST liable to TCS10th of succeeding month10.08.2023

D. GSTR – 1 QRMP monthly / Quarterly return

Form No.Compliance ParticularsTimeline 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    13.08.2023

E. 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
  • Weekly Departmental Updates: Income Tax

1. Most still choose old tax regime, new one making inroads

An overwhelming majority of personal income tax filers have opted for the old tax regime that allows a host of tax exemptions, but the new regime with more flexible tax rates and fewer exemptions is beginning to attract more takers, according to professionals who assist taxpayers in filing their returns.

In the just-concluded season for personal income tax return (ITR) filing, 85% of individuals have opted for the old regime, and the rest for the new regime, showed an analysis by leading fintech software as a service (SaaS) company Clear (formerly ClearTax), based on data of tax returns filed using its tax return filing service.

Clear has more than 5 million taxpayers as customers, in addition to many professionals and small and large businesses. While this is only a part of the overall tax returns filed, it points to the broader trends in ITR filing.

In the current assessment year, the Central Board of Direct Taxes (CBDT) reported 67.7 million ITRs by the end of July, the due date for personal ITR filers, showing an improvement of over 16% from the year-ago period. In the current assessment year, the Central Board of Direct Taxes (CBDT) reported 67.7 million ITRs by the end of July, the due date for personal ITR filers, showing an improvement of over 16% from the year-ago period.

2. I-T department introduces Young Professional Scheme; to hire 50 for litigation management>

With the rising number of tax disputes, the Income Tax Department, for the first time, will hire 50 young professionals to strengthen litigation management before Income Tax Appellate Tribunal (ITAT).

These professionals will be hired for a period up to two years. They will be given ₹40,000 a month. Advertisements for inviting professionals is set to be completed by August 25, while screening and selection committee will be formed by August 31. Based on the recommendation of the committee, process of selection will be completed by October 31 and in next one-month topics for these professionals will be finalised.

According to a communication from Central Board of Direct Taxes (CBDT) to field jurisdictions, Mumbai region will get maximum (12) of these professionals, followed by Delhi (9), Gujarat (5), Tamil Nadu and Puducherry (4) and West Bengal and Sikkim (4). A law graduate/post graduate or Chartered Accountants up to the age of 35 years will be eligible under the scheme. Selected candidate will get 8 years of leave in a year.

The communication has clarified that no other facilities such as DA, accommodation, residential phone/conveyance/transport, foreign travel, personal staff, medical reimbursement, CGHS etc. would be admissible. The engagement will neither constitute a regular job or appointment of any nature in Income Tax Department, nor it will be a relationship of employer and employee between the Income Tax Department and the Young Professional.  Also, in case of death during engagement, no compensation will be paid.

3. Has the ITR filing deadline been extended beyond July 31?

The deadline to file income tax return (ITR) for FY 2022-23 (AY 2023-24) was originally July 31, 2023. If you are wondering whether the income tax department has extended this deadline or not, then the answer is no. The income tax department has not extended the deadline to file ITR.

Despite there being several pleas from the taxpayers on social media for extending the ITR filing deadline, the income tax department did not extended the ITR filing deadline.

Here are some reasons why taxpayers were asking for an extension of the tax filing deadline. First, there have been widespread floods across the country. Many states – Uttarakhand, Himachal Pradesh, Telangana, Maharashtra — are facing flood situations. Previously, the Central Board of Direct Taxes (CBDT) extended the deadline in 2018 due to flood situation in Kerala.

Second, even after two years of the new income tax portal being launched, it is marred with glitches. On the last day of filing ITR, many taxpayers complained on Twitter about the website being slow, glitches while validating the ITR form and more. Those taxpayers wanted the government to extend the due date and waive late filing penalty.

Third, essential TDS certificates, i.e., Form 16 (issued by employer) and Form 16A (issued by the banks, companies, mutual funds) are mandatorily required to be issued by June 15. Due to this, a salaried individual usually gets only 45 days to file his/her income tax return. However, many times banks, employers and other deductors delay in issuing the TDS certificates. This further delays the process of filing ITR for individuals.

What should you do now?

If you have missed the ITR filing deadline, then you must worry not. You can still your ITR, albeit by paying a late filing fee of a maximum of Rs 5,000. ITR filed after the expiry of the deadline is called belated ITR. This ITR is filed under section 139(4) of the Income Tax Act, 1961.

4. Govt sent 1 lakh notices for not filing income tax returns, misrepresentation of income: FM Nirmala Sitharaman

Union Finance Minister Nirmala Sitharaman informed on Monday that the government has sent one lakh notices for non-filing of returns and misrepresentation of income. The minister added that the notices were sent where the income was found to be close to ₹50 lakh and they are expected to be cleared by the end of this fiscal.

While addressing the 164th Income Tax Day the chairperson of the Central Board of Direct Taxes (CBDT) Nitin Gupta said that for the fiscal year 2022-23 more than 4 crore income tax returns (ITR) have been filed so far and the government has processed more than half of such ITRs, resulting in ₹80 lakh refunds.

  • Important Circulars and Notifications:
Sl.Particulars of the Notification(s)File No. / Circular No.Notification Link(s)
1Standard Operating Procedure (SOP) for making application for recomputation of total income of a co-operative society engaged in the business of manufacture of sugar, as provided for in the sub-section (19) of section 155 of the Income-tax Act, 1961 – reg.  Circular No. 14 of 2023  Click Here
2Condonation of delay under clause (b) of sub-section (2) of section 119 of the Income-tax Act, 1961 for returns of income claiming deduction u/s 80P of the Act for various assessment years from AY 2018-19 to AY 2022-23  Circular No. 13 of 2023    Click Here
3The Income-tax (Fourteenth Amendment) Rules, 2023.Notification No. 54/2023  Click Here

Weekly Departmental updates:

  • GST Updates

1. Awaiting GST tribunals, taxpayers’ pending appeals surge

Ahead of the much-awaited formation of the Goods and Services Tax (GST) Appellate Tribunals, the number of pending appeals from taxpayers over central GST levies has spiked sharply to over 14,000 by the end of the first quarter of 2023-24, 20% higher than such pending cases as on March 31 this year.

The GST Council had cleared the way for the setting up of GST Appellate Tribunals across the country at its meeting on July 11, and the government had indicated it will aim to make the first set of tribunals operational sometime between November 2023 and January 2024.

Responding to a query from Lok Sabha MP A Ganeshamurthi from the DMK, Minister of State for Finance Pankaj Chaudhary said the plan is to establish the State benches in a phased manner based on the request of States. Mr. Chaudhary also shared details of the number of GST appeals related to central GST authorities that are pending at various levels.

As per the data, these pending appeals stood at 5,499 cases as of March 31, 2021, which rose to 9,759 by the end of the next fiscal. As of June 30 this year, the total number of appeals from tax payers pending with central GST authorities stood at 14,227.

2. Corporate guarantees given to subsidiaries land many Indian holding companies in a GST pickle

More and more holding companies in India have found themselves embroiled in litigation over extending corporate guarantees to their arms, a ToI report said on August 7. According to the report, the number of such cases is on the rise.

The cases relate to demands raised under the Goods and Services Tax (GST) Act. As per estimates by officials, the aggregate demand in the past three months amounts to a few hundred crores.

The office of the directorate general of goods and services tax intelligence (DGGI) as well as state audit officials are currently probing such cases across sectors.  

GST authorities hold the corporate guarantee given by a holding company to its subsidiary to be a free supply between related parties, thus falling within the ambit of a taxable ‘schedule-1’ transaction.

Officials have now raised GST demand on the holding company in cases where it is in the country. In cases where the holding company is located overseas, the demand is being raised on the Indian subsidiary under a reverse charge mechanism.

The Central Board of Indirect Taxes and Customs (CBIC) had clarified on July 17 that in those instances “where the head-office has not issued a tax invoice to the branch office for services provided to it, and the branch is eligible for ‘full’ input tax credit, the value of such services may be deemed as ‘nil’.

3. Solve GST burden on us: Community Radios to Odisha govt

Members of the Community Radio Association of Odisha conducted a meeting here on Sunday by taking representatives from 22 community radio stations in the state. They discussed several issues including goods and services tax (GST) burden on community radios.

The meeting chaired by association president SA Safique emphasised to promote rural capacity building through community radio initiatives. NA Shah Ansari, chairperson of Radio Namaskar, said the burden of the GST on community radio stations has led to the cessation of government advertisements for these stations. This financial setback has posed difficulties for the sustainability of community radio initiatives in the state, he added.

In the meeting the representatives highlighted a disparity in the Gopabandhu Journalist Health Insurance Scheme. It excludes workers, reporters, and representatives of community radio stations. Subrat Kumar Pati, the head of Radio Outreach, expressed his concern over this exclusion and the meeting resolved to bring this issue to the attention of the state government.

Pati was elected as the executive secretary of the association. The association members felicitated Nihar Ranjan Panda, director of Radio Gunjan, Bargarh, for securing the first prize at the recent National Community Radio Conference organised by the ministry of information and broadcasting.

4. Uncertainty on bills to amend 28% GST on online gaming, casinos, horse racing

Uncertainty prevails over introduction of bills during the monsoon session of Parliament to implement Goods & Services Tax (GST) at uniform rate of 28 per cent on full face value for online gaming, casino and horse racing. The government aims to implement the decision from October 1.

The Monsoon Session of Parliament ends on August 11. On August 4, while business for week starting August 7 was announced, the bill to amend CGST Law was not listed. On the same day, the Cabinet meeting took place and sources confirmed that it did not consider any bill to amend CGST Act 2017 and IGST Act 2017. However, sources said this may not be the end of the matter. The option of promulgating ordinance is available to the government.

According to sources, the government can move a supplementary list of business for a specific legislation, even not discussed in Business Advisory Committee (BAC) of the House. Also, post-facto approval can be given to a bill. However, the issue is with the time. BAC has allocated three days (August 8,9 and 10) for debate on no-confidence motion.

What is the Bill

A Finance Ministry statement said GST Council, in its meeting on August 2, nearly unanimously recommended amendments in Schedule III of the CGST Act, 2017, to provide clarity on the taxation of supplies in casinos, horse racing, and online gaming. This amendment will make all three taxable actionable claims.

On July 11, the Council recommended all three namely Casino, Horse Racing and Online gaming to be taxed at the uniform rate of 28 per cent. Tax will be applicable on the face value of the chips purchased in the case of casinos, on the full value of the bets placed with bookmaker/totalisator in the case of Horse Racing and on the full value of the bets placed in case of the Online Gaming.

Once the Centre amends CGST and IGST Acts and States/Union Territories (with legislatures) make changes in SGST Acts, then detailed rules will can be prescribed for the implementation.

  • Important Notifications under

Excise / Custom/ GST:

  • GST Updates
Sl. No.  Particulars of the Notification(s)File No. / Circular No.Notification Link(s)
1Advisory: e-Invoice Exemption Declaration Functionality Now AvailableGSTN 596Click Here
2Advisory on E-Invoice – Services Offered by the Four New IRPsGSTN 597Click Here
3Seeks to notify the provisions of section 123 of the Finance Act, 2021 (13 of 2021).27/2023-Central TaxClick Here
4Seeks to notify the provisions of sections 137 to 162 of the Finance Act, 2023 (8 of 2023).28/2023-Central TaxClick Here
5Seeks to notify special procedure to be followed by a registered person pursuant to the directions of the Hon’ble Supreme Court in the case of Union of India v/s Filco Trade Centre Pvt. Ltd., SLP(C) No.32709-32710/2018.29/2023-Central Tax  Click Here
6Seeks to notify special procedure to be followed by a registered person engaged in manufacturing of certain goods.30/2023-Central Tax  Click Here
7Seeks to amend Notification No. 27/2022 dated 26.12.2022.31/2023-Central TaxClick Here
8Seeks to exempt the registered person whose aggregate turnover in the financial year 2022-23 is up to two crore rupees, from filing annual return for the said financial year.32/2023-Central Tax  Click Here
  9Seeks to notify “Account Aggregator” as the systems with which information may be shared by the common portal under section 158A of the CGST Act, 2017.33/2023-Central Tax  Click Here
  10Seeks to waive the requirement of mandatory registration under section 24(ix) of CGST Act for person supplying goods through ECOs, subject to certain conditions.  34/2023-Central Tax  Click Here
11Seeks to appoint common adjudicating authority in respect of show cause notices in favour of against M/s BSH Household Appliances Manufacturing Pvt Ltd.35/2023-Central Tax  Click Here
12Seeks to notify special procedure to be followed by the electronic commerce operators in respect of supplies of goods through them by composition taxpayers.36/2023-Central Tax  Click Here
13Seeks to notify special procedure to be followed by the electronic commerce operators in respect of supplies of goods through them by unregistered persons.37/2023-Central TaxClick Here
14Seeks to make amendments (Second Amendment, 2023) to the CGST Rules, 2017.38/2023-Central TaxClick Here
15clarification regarding GST rates and classification of certain goods based on the recommendations of the GST Council in its 50th meeting held on 11th July, 2023200/12/2023-GSTClick Here
16Clarifications regarding applicability of GST on certain services201/13/2023-GST  Click Here

Custom / Excise Updates

LinksNotification Particulars
Click HereSeeks to amend certain notifications in order to implement recommendation of GST COUNCIL in its 50th meeting.
  Click HereAppointment of Common Adjudicating Authority for the purpose of adjudication of finalization of Provisional Assessment in SVB case w.r.t. M/s Mageba Bridge Products Pvt. Ltd, Kolkata.
Click HereDeferred Payment of Import Duty (Amendment) Rules, 2023.
Click HereFixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver- Reg.
Click HereSeeks to impose ADD on Dispersion Unshifted Single Mode Optical Fiber (SMOF) originating in or exported from China PR, Indonesia and Korea RP.
  • Important Case-laws
  • Income Tax

1. Bharat Gears Ltd (Delhi High court)

What would be the nature of the repair and reconditioning expenditure incurred on a machine which broke down years ago – Revenue or Capital?

The machinery which was repaired had outlived its utility and huge expenditure was incurred in replacing many vital parts in order to make the same functional. The expenditure was of such nature that it brought into existence a new machinery altogether and consequently, there was a benefit of enduring nature to the assessee even though technically no new asset came into existence. Therefore, the Delhi High Court observed that it is in the nature of capital expenditure on which depreciation can be claimed.

2. Dr. Aswath N. Rao (Karnataka High Court)

Can the expenditure incurred for purchase of second hand medical equipment for use as spare parts for existing equipment be claimed as revenue expenditure?

Since the second hand machinery purchased by the assessee is for use as spare parts for the existing old machinery, the same had to be allowed as revenue expenditure. Since the entire sale consideration was paid on 31st March of the relevant previous year and the machinery was also dispatched by the vendor from USA, the sale transaction was complete on that date. The title to the goods had passed on to him on that date and he became the owner of the machinery even though the goods reached India only in August next year. Therefore, the assessee was eligible to claim deduction of expenditure in the relevant previous year ended 31st March.

  • Important Case-laws
  • GST Cases:

 

1. Hostel accommodation to attract 12 per cent GST: AAR

Students will have to shell out more for hostel accommodation as a 12 per cent GST would be applicable on the rent paid, the Authority of Advance Ruling said in two separate cases. The Bengaluru bench of the Authority of Advance Ruling (AAR) said hostels are not akin to residential dwelling units and hence are not exempt from Goods and Services Tax (GST).

In an advance Ruling sought by Srisai Luxurious Stay LLP, the AAR said GST exemption was applicable on the accommodation services, of charges up to Rs 1,000/- per day, provided by hotels, clubs, campsites etc. till July 17, 2022.

“PG/Hostel Rent paid by inhabitants do not qualify for GST exemption… as the services provided by applicant are not akin to renting of residential dwelling for use as residence,” the Bengaluru bench said.

“In the instant case, the applicant in his own admission claims to be providing PG/hostel services which inter alia refer to ‘paying guest accommodation / hostel’ services and are akin to guest house and lodging services and therefore can’t be termed as residential dwelling’,” the Bengaluru bench said.

In a similar reference by Noida-based V S Institute & Hostel Pvt Ltd, the Lucknow bench of the AAR said that GST would apply on hostel accommodation costing less than Rs 1,000 per day.

“Hence, from July 18, 2022, onward services provided by an applicant will be (covered under GST for taxation)…,” the Lucknow bench AAR said.

2. AAR: OPD care for substance abuse not GST exempt

  • Applicant Name          Sanjeevani Psychiatric Clinic
  • Advance Ruling No.   RAJ/AAR/2023-24/01
  • Date    25.04.2023

The GST-Authority for Advance Rulings (AAR), Rajasthan, has held that treatment of outpatients suffering from substance abuse disorders does not fall within the ambit of ‘healthcare services’ that are exempt from GST.

Sanjeevani Psychiatric Clinic, an allopathy facility, provides counselling, medical examination and prescription of medicines by psychiatrists. It submitted to the AAR that in the treatment of substance abuse disorders, examination of a patient by a doctor is pivotal. Other elements like counselling and dispensing of medicine are an integral part of the treatment, it said. The supply of medicines constitutes ‘controlled drugs’ and is given by the clinic itself in exact dosage as per the psychiatrist’s prescription, said the clinic. It said a patient does not have the choice to buy it from a medical store and, therefore, the medicines cannot be treated as an independent supply.

The AAR bench observed that the clinic is engaged in the supply of services (medical examination and counselling) as well as supply of goods (medicines). It noted that healthcare services are exempt from GST, and that the supply of medicines to inpatients by hospitals may be a part of the composite supply of healthcare and may not be separately taxable. However, in this case, medicines are provided by the clinic to outpatients and are not a tax-exempt composite supply, the bench said.

It also distinguished between substance abuse disorder treatment and mental health services, and held that the former is not covered by the GST exemption notification.

  • International Taxation   Corner (ITC)

1. UAE Corporation Tax: A round up of relief measures for SMEs

The UAE is a popular destination for entrepreneurs with numerous initiatives designed to ease the process of doing business. When the Federal Tax Authority introduced its new rules on corporation tax in late 2022 some wondered whether the move might slow down start-up growth in the Emirates; however, the government has introduced a range of relief measures in line with its commitment to support SMEs.

Rayhan Aleem, Founder and Managing Partner of the customer focused accounting firm Alpha Pro Partners commented: “like all companies, SMEs need to be aware of the corporate tax rules, understand their implications, and factor them into accounting processes. It can be overwhelming as there is a lot of information circulating from different sources, not all of it accurate. But SMEs should know that there is plenty of help available so they can continue to thrive.”

There have been 24 pieces of legislation released since the announcement of Corporation tax in the UAE. Here are the key takeaways that affect entrepreneurs.

  • Annual income subject to Corporation tax (as per cabinet decision No. 116 of 2022)

Smaller companies may not have corporation tax to pay based on their profit threshold.

  1. Taxable profits not exceeding AED 375k – 0% corporate tax.
  2. Taxable profits exceeding AED 375k – 9% corporate tax.
  • Small business relief (Article 21 of Law No. 47)

Small business tax relief allows for the taxable person to be considered as not having any derived taxable income in a fixed tax period to reduce their tax costs and compliance requirements.

  1. It is available for companies with revenues less than AED 3m.
  2. Free zones and multinationals do not qualify.
  3. Applies mainly to mainland businesses.
  • Business restructuring relief (Article 27 of Law No. 47)
  1. Business restructuring such as a mergers or demerger can result in a taxable gain or loss (even if the ultimate ownership of the business does not change).
  2. This article allows certain types of restructuring transactions to take place in a tax neutral manner.
  • Interest expenditure (Article 29 of Law No. 47)
  1. This article stipulates the circumstances when interest on business loans can be deductible against profit subject to corporation tax.
  2. Interest from conventional and shariah compliant loans is included.
  • Entertainment expenditure (Article 32 of Law No. 47)
  1. Only 50% of the entertainment expenditure can be deducted against taxable profits.
  2. Employee entertainment is 100% deductible.
  • Payments to connected persons (Article 36 of Law No. 47)
  1. Payments to connected persons (e.g. directors or owners) must be at market value and wholly and exclusively for business purposes (i.e. business owners cannot pay themselves inflated salaries).
  • Tax loss relief (Article 37 of Law No. 47)
  1. Tax losses can be offset against the taxable income of subsequent tax periods subject to conditions.
  • Withholding tax (Article 45 of Law No. 47)
  1. Withholding tax is currently at 0% in the UAE in most circumstances (other GCC states impose WHT).
  • Foreign tax credit (Article 47 of Law No. 47)
  1. Foreign tax incurred can be used to reduce the taxable income.
  • Accounting standards and methods (Ministerial decision No. 114 of 2023)
  1. Small businesses with less than AED 3m of revenue can apply cash-basis accounting, benefitting those who have a high level of accounts receivables.
  • Free zones (Article 3 of law No. 47)
  1. 0% of Corporation tax is available for qualifying free zone entities on qualified income.

Qualifying income is:

  1. Income derived from transactions with other free zone persons except for excluded activities.
  2. Income derived from transactions with a non-free zone person but only in respect of qualifying activities.

Qualifying activities include:

  1. Manufacturing of goods or materials.
  2. Processing of goods or materials.
  3. Holding of shares and other securities.
  4. Ownership, management and operation of ships.
  5. Reinsurance.
  6. Fund management services.
  7. Wealth and investment management services.
  8. Headquarter services to related parties.
  9. Treasury and financing services to related parties.
  10. Financing and leasing of aircraft, including engines and rotable components.
  11. Distribution of goods or materials in or from a designated zone to a customer that resells such goods or materials, or parts thereof or processes, or alters such goods or materials or parts thereof for the purposes of sale or resale.
  12. Logistics services.

It is imperative to get professional advice before acting in accordance with any of the above. A trusted tax consultant can advise on how to prepare and proceed in more detail. The Federal Tax Authority (FTA) website is also an excellent resource for educating yourself on corporation tax.

2. Canada publishes draft Global Minimum Tax Act, DST bill

Canada’s government is seeking public input on draft tax legislation to implement a global minimum corporate tax rate, commonly known as GloBE, approved by the OECD’s Inclusive Framework.

The draft Global Minimum Tax Act, published on August 4, is in line with the OECD’s Pillar Two proposals as adopted by the Inclusive Framework. The government noted that it would update the draft tax law as necessary to reflect elements of the administrative guidance (including on the treatment of transferable and other tax credits) released this summer by the OECD.

Alongside the draft tax law, the government has published a “Table of Concordance,” which cross-references certain provisions of the proposed Global Minimum Tax Act with the source documents on which they are based, being the provisions of the GloBE model rules, the GloBE commentary, the administrative guidance in respect of the GloBE model rules, the GloBE Information Return and the GloBE Safe Harbours and Penalty Relief document, all as approved by the Inclusive Framework and published by the OECD.

The government has also published draft tax law to implement the Digital Services Tax Act. The Act would impose a tax of three percent on revenues derived by residents and non-residents of Canada from certain digital services they provide.

The targeted revenues are generally those that arise in connection with the digital service providers’ engagement with online users in Canada. These revenues include certain revenue relating to online marketplaces, online targeted advertising, social media platforms and the sale or licensing of user data.

The tax is aimed at large businesses with annual revenues of EUR 750,000,000 or more and Canadian digital services revenue (as defined in the legislation) of more than CAD 20,000,000.

The Digital Services Tax Act will come into force on a day to be fixed by order of the Governor in Council, but not earlier than January 1, 2024. The tax will apply on a calendar year basis, beginning with the year that includes the day that the DSTA comes into force. For the first year that the tax applies, tax liability will be calculated by reference to certain Canadian digital services revenue earned from January 1, 2022, up to and including that first year.

Last month, 138 tax jurisdictions agreed to a further one-year standstill on the imposition of any new domestic digital services tax measures, despite there being no deadline stipulating when Pillar One will come into force. However, Canada’s Finance Minister Chrystia Freeland confirmed that the government will implement its domestic digital services tax measures from January 2024 in the absence of any multilateral agreement on Pillar One.

  • Knowledge Bucket for NRI’s
  1. The PAN numbers of NRIs who hadn’t updated their residential status with the I-T department, those who had not  linked it with the Aadhaar (although it is not mandatory for NRIs) and those who had not filed ITR in the past three years, turned inoperative after June 30, 2023.
  • NRI’s aren’t taxed in India for their foreign income, they need to file tax returns if they receive interest from bank fixed deposits or savings accounts (non-resident ordinary only), income such as rent from assets in India or by selling assets, shares, redeeming mutual fund units, dividends beyond a limit, business income or consultation fees from India. 
  • Interest from non-residential external (NRE) and foreign currency non-resident accounts is fully exempt from tax.
  • The capital gains tax provisions for NRIs are similar to those for resident individuals, except for the applicability of TDS provisions.
  • NRIs are not taxed on their foreign income, which is not received in India or deemed to accrue or arise in India. However, they may be subject to tax in the country where the income is earned.
  • Do you know ??
  1. The introduction of an annual information statement (AIS) is one such change, which along with the e-verification scheme launched in March 2023 could mean you would receive notices asking you for clarifications on some points that the artificial intelligence tools of the income tax department have been gathering.
  • At times, there is wrong reporting in AIS. Even after the returns are filed, you need to match the AIS again. If some TDS (tax deducted at source) mismatch gets reported due to a revision request in the other party’s AIS, then rectifications need to be made in your return too
  • The government is issuing a warning to taxpayers, advising them not to disclose passwords, bank details, or OTPs in response to any fake refund messages.

The fraudulent message requests you to provide your bank details, passwords, or OTPs, alleging to be from the Income Tax Department. The message tricks you into believing that the income tax refund has been processed and credited to your bank account, but the account number provided might be incorrect. Subsequently, you will be asked to update the correct bank details through a link provided. However, this link is designed to steal your identity.

  • After a gap of almost two months, the govt has brought back the windfall tax on crude petroleum. In its notification dated May 16, the special additional excise duty on petroleum crude had been slashed to nil from ₹4,100/tonne.
  •    Disclaimer:

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