Dear Readers,
We are delighted to share our 157th E-Newsletter “Weekly Taxation Newsletter” dated 02nd September, 2024 from 26th Aug. 2024 to 01st Sep., 2024 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 deposit of Tax deducted/collected for the month of August, 2024. 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 Challan | 07.09.2024 |
| 2. | Due date for issue of TDS Certificate for tax deducted under section 194-IA in the month of July, 2024 | 14.09.2024 |
| 3 | Due date for issue of TDS Certificate for tax deducted under section 194-IB in the month of July, 2024 | 14.09.2024 |
| 4 | Due date for issue of TDS Certificate for tax deducted under section 194M in the month of July, 2024 | 14.09.2024 |
| 5 | Due date for issue of TDS Certificate for tax deducted under section 194S (by specified person) in the month of July, 2024 | 14.09.2024 |
- 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 | 13.09.2024 |
| GSTR -7 | Return for Tax Deducted at source to be filed by Tax Deductor | 10th of succeeding month | 10.09.2024 |
| GSTR -8 | E-Commerce operator registered under GST liable to TCS | 10th of succeeding month | 10.09.2024 |
B. Filing Form GSTR-1:
| Tax period | Due Date | Remarks |
| Monthly return (Aug., 2024) | 11.09.2024 | 1. 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. |
- Weekly Departmental Updates: Income Tax
1. CBDT forms committee to review Income Tax Act, will eliminate ‘sunset’ clauses
In a post-budget interaction, Revenue Secretary Sanjay Malhotra clarified that the review is not intended to create a new direct tax code but to conduct a comprehensive examination of the existing law.
An internal committee under the Central Board of Direct Taxes (CBDT) has been established to review the Income Tax Act of 1961. The committee will be led by VK Gupta, Chief Commissioner of Income Tax.
Union Finance Minister Nirmala Sitharaman had announced the formation of this committee during her July 2024 Budget speech, emphasising that the review process would be completed within six months. The primary goal is to simplify the Act, making it more concise, clear and easier to understand, which is expected to reduce disputes and litigation and provide greater tax certainty for taxpayers.
“The purpose is to make the act concise, lucid, and easy to read and understand. This will reduce disputes and litigation, thereby providing tax certainty to the taxpayers. It will also bring down the demand embroiled in litigation,” Sitharaman stated.
In a post-budget interaction, Revenue Secretary Sanjay Malhotra clarified that the review is not intended to create a new direct tax code but to conduct a comprehensive examination of the existing law.
- To read more Click Here
2. Why we need a new Income-Tax Act
The government is undertaking a comprehensive review of the Income-Tax Act, with the exercise expected to be completed before the next Budget. Sudhakar Sethuraman explains how overhauling the current law can help reduce compliance burdens and improve clarity for taxpayers.
In HER BUDGET speech in July 2024, finance minister Nirmala Sitharaman had said that the government would be undertaking a comprehensive review of the Income-Tax Act. The potential new direct tax code would be written in simple, easy-to-understand language with the following objectives: simplified taxes, improved taxpayer services, providing tax certainty and reducing litigation. Besides, the new tax code will be written keeping in mind the Prime Minister’s vision of a seamless, painless and faceless taxation system.
Keeping it relevant
THE INCOME-TAX ACT, 1961, (I-T Act) was introduced in the twelfth year of India becoming a republic. The economic status of the country, the purchasing power of the people, etc., at that point of time were very different from that today. Over the years, the I-T Act has been subject to many amendments to keep pace with the changing times and economic needs. With 23 chapters, 298 sections and over 1000 sub-sections / clauses, the I-T Act is quite complex. For instance, Explanation 1 to Section 2 (42A) has 18 sub-clauses. Section 47, which deals with transactions not regarded as transfer of capital assets, has over 40 clauses.
Impact of the Direct Tax Code, 2009
THE DIRECT TAX Code (DTC) was aimed at simplifying and streamlining the direct tax system in the country. It had provisions aligning with international practices on emerging issues. Many of these provisions have been incorporated in the I-T Act. To name a few, Place of Effective Management (POEM), general anti-avoidance rules as proposed in the DTC have been subsequently included in the I-T Act.
Fewer personal income tax slabs
THERE IS A need to review and reduce the number of tax brackets in personal taxation. Directionally, the government’s thrust towards the new tax regime is gaining significant impetus. The government can look at either increasing the exemption threshold or optimising the tax slab rates. The Direct Taxes Code Bill, 2010 did increase the slabs for individuals substantially for income up to `25 lakh.
- To read more Click Here
3. Aviva says India unit ‘engaging’ with authorities over tax investigation
British insurer Aviva said on Saturday (August 31, 2024) its India unit is “actively engaging” with local authorities in connection with alleged tax evasion practices.
Indian tax agency has found that Aviva India breached local regulations capping commissions to sales agents with a system of fake invoices and clandestine cash payments between 2017 and 2023.
Aviva’s India business paid about $26 million to entities who purportedly provided marketing and training services, but they did not perform any work and were actually a front for channeling funds to Aviva’s agents, the tax agency said on August 3.
In a statement on Saturday (August 31, 2024), a UK-based spokesperson for Aviva referred to the matter as “an industry wide issue”, adding its Indian joint venture was “actively engaging with the relevant authorities”.
The case is part of a broader investigation into over a dozen Indian insurers for alleged evasion of $610 million in unpaid taxes, interest and penalties.
- To read more Click Here
4. NDMC announces 5% rebate on property tax payments on or before September 30, 2024
The New Delhi Municipal Council (NDMC) has announced a five per cent rebate on the property tax payment on or before September 30, an official statement said on Friday. The rebate is also available on service charges of government properties, it said.
“The assessment list is available on the NDMC website, http://www.ndmc.gov.in, and concerned tax payers may login by using user ID and password to view details of the property owned,” the statement said.
The council, which oversees municipal work in several central Delhi areas, advised the taxpayers to avoid the last-minute rush and plan their tax deposit well in time to get the rebate.
- To read more Click Here
- Important Circulars and Notifications:
| Sl | Particulars of the Notification(s) | File No. / Circular No. | Notification Link(s) |
| NA | |||
Weekly Departmental updates:
- GST Updates
1. GST Council likely to exempt term life insurance from tax, no change in investment-linked plans
The GST Council is expected to exempt term life insurance policies from the goods and services tax (GST) while continuing to tax insurance policies with an investment component, a decision that could boost demand for pure protection policies.
The decision is likely to be formalised in the GST Council meeting on September 9, a senior government official said, requesting anonymity.
The revenue loss from the exemption of term life insurance from GST is estimated to be around Rs 200 crore annually, he added. This decision is anticipated to make term life insurance more affordable, potentially boosting its adoption among Indians.
Impact on Investment-Linked Plans
While the exemption on term life insurance is expected to encourage more individuals to opt for basic life coverage, the continued taxation on investment-linked life insurance plans may have a contrasting effect. These plans, which combine life coverage with an investment component, are likely to remain relatively costly due to the GST rate of 18 percent.
- Read more at: Click Here
2. State governments should be allowed to retain 80% of GST revenue, says Appavu
The State governments, which get only 21% of Goods and Service Tax revenue from the Union government, should be allowed to retain 80% of this revenue while giving the Centre remaining 20% for its Budget, Tamil Nadu Assembly Speaker M. Appavu has said.
During an informal chat with reporters at Palayamkottai on Friday after inaugurating a farm mechanisation and maintenance awareness event, Mr. Appavu said the Union government, which was giving the States only 21% of the GST revenue while keeping the 79% for its expenditure towards defence, railways, etc., was paying 19% from its share towards interest for the loans it had borrowed.
While paying this hefty a sum as interest, the Centre had unfairly waived ₹14 lakh crore loans given to corporate firms instead of waiving the education loans of students from poor families. Moreover, the Centre was refusing to allocate funds to the State governments for development works.
“Why should the State governments give the entire GST revenue to the Centre in the first place and wait agonisingly for the release of their due share? Why should the States, which generate the entire revenue, give 79% share to the Centre and have to content with just 21%? This system should be revised. The States, the revenue generators, should retain 80% of the GST revenue and give 20% to the Centre instead of getting it from the Union government,” Mr. Appavu said.
- (Read more at: Click Here)
3. GST payers with no valid bank account barred from filing GSTR-1 from Sept 1
GST taxpayers who do not furnish bank account details to GST authorities will be barred from filing outward supply return GSTR-1 from September 1, GST Network (GSTN) has said in an advisory.
As per GST Rule 10A, a taxpayer is required to furnish details of a valid bank account within a period of 30 days from the date of grant of registration, or before furnishing the details of outward supplies of goods or services or both in Form GSTR-1or using Invoice Furnishing Facility (IFF), whichever is earlier.
“From 1st September, 2024 this rule is being enforced. Therefore, for the tax period August-2024 onwards, the taxpayer will not be able furnish GSTR-01/IFF as the case may be, without furnishing the details of a valid bank account in their registration details on GST portal,” GSTN said in an advisory dated August 23. (Read more at: Click Here)
4. Plea to reduce GST for borewell service from 18% to 5% in Madurai
Their primary argument was that since their services were mainly used for agriculture and agro-based industries in addition to household borewell sinking, the imposition of such a huge burden in the form of tax would have to be borne by the farmers ultimately
Madurai District Borewell Rig Owners and Agents’ Welfare Association, following several failed attempts to represent their issue to the Union Finance Ministry, has once again appealed to the authorities to take up the issue of reduction of GST for borewell services in the upcoming 54th GST council meeting.
The members said, following the implementation of GST in 2017, there was no proper notification about the inclusion of borewell services in GST taxation. The borewell companies too, with a limited idea of GST and its procedures, ran their business as usual without getting into the new tax system, they said.
- (Read more at: Click Here)
- Important Notifications under
Excise / Custom/ GST:
- GST Updates
| Links | Notification Particulars |
| NA | |
Custom / Excise Updates
| Links | Notification Particulars |
| Click Here | Sea Cargo Manifest and Transhipment (Third Amendment) Regulations, 2024 |
| Click Here | Seeks to continue levy of anti-dumping duty on “Chlorinated Polyvinyl Chloride Resin (CPVC)-whether or not further processed into compound” imported from China PR and Korea RP, for 5 years pursuant to Sunset Review Final Findings issued by DGTR. |
| Click Here | Implementation of automation in the Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022 in respect of EOUs with effect from 01.09.2024 – reg. |
| Click Here | Implementation of the Sea Cargo Manifest and Transshipment Regulations (SCMTR). |
- Important Case-laws
- Income Tax
- Kiran Enterprises (HP High Court)
Can freight subsidy arising out of the scheme of Central Government be treated as a “profit derived from the business” for the purposes of section 80-IA?
On appeal, the High Court held that the transport subsidy received by the assessee was not a profit derived from business since it was not an operational profit. The source was not the business of the assessee but the scheme of Central Government. The words “derived from” are narrower in connotation as compared to the words “attributable to”. Therefore, the freight subsidy cannot be treated as profits derived from the business for the purposes of section 80-IA.
- Important Case-laws
- GST Cases:
1. AAR Ruling on GST on Supplementary Invoices for Price Escalation
The Authority for Advance Ruling (AAR) has ruled that supplementary invoices issued for price escalation in relation to works contracts executed before July 2022 are subject to 18% GST. This ruling is based on the amendment made to Notification No. 11/2017-Central Tax (Rate) through Notification No. 03/2022-Central Tax (Rate), which increased the GST rate for works contracts to 18% from 12% effective July 18, 2022.
Key points from the ruling:
- Time of supply: The time of supply for the supplementary invoices is considered to be the date of issuance, even if the original works contract was executed before the GST rate change.
- Applicable rate: The applicable GST rate is the one in force at the time of issuance of the supplementary invoice, which in this case is 18%.
Implications of the ruling:
- Increased costs: Businesses involved in works contracts will need to factor in the higher GST rate when preparing supplementary invoices for price escalation.
- Cash flow impact: The increased GST liability may affect cash flow, particularly for businesses with large-scale projects.
- Contractual provisions: Businesses should review their contracts to determine how GST costs are allocated between parties.
It’s important to consult with a tax professional to ensure compliance with the AAR ruling and to understand the specific implications for your business.
- International Taxation Corner (ITC)
1. Italy revises international tax credit, maintaining headline 40% rate and banning relief for AI spend
The 40% rate for international shoots applies to production spend in Italy of at least €250,000. However, the rate reduces to 30% for specific above-the-line costs relating to non-European entities.
Productions will be obliged to reveal if AI has been used on work carried out in Italy. There will also be an obligation to provide specific clauses in the contracts between Italian executive production or post-production companies and authors and performers allowing them not to consent to the exploitation of their work/image/performance by artificial intelligence systems.
Details of the revised international credit were announced at the Venice Film Festival today (August 30) by Lucia Borgonzoni, undersecretary of state to the ministry of culture, and Nicola Borelli, who heads the directorate general for Cinema and Audiovisual at the Italian Ministry of Culture.
Reforms in detail
In details sent to Screen, the international tax credit remains available up to a maximum annual limit of €20m for each company or group of companies. But there is no maximum limit per work. Italy’s local production tax credit, if claimed by a company also applying for the international tax credit, does not count for the purposes of reaching the annual limit of €20m per company.
Other details of the revised international tax credit include:
- The costs of professional and personnel figures governed by national collective labour agreements are eligible, for each employee, up to the amount provided for in the collective agreements entered into by the most representative employers’ and trade union associations, increased up to a maximum of 20%;
- The transferability of the tax credit is confirmed;
- The deadline of 180 days from the conclusion of the activities within which the final application must be submitted remains unchanged;
- The benefit is granted on condition that the eligible cost is at least €250,000;
- Read more at: Click Here
- Knowledge Bucket for NRI’s
- India operates two tax regimes. The primary income threshold for taxation is ₹2.5 lakh in the existing regime and ₹3 lakh in the new regime. NRIs and residents can choose between these regimes, with the new regime being the default.
- India has Double Taxation Avoidance Agreements (DTAA) with over 90 countries to prevent NRIs from being taxed twice. NRIs should check if their resident country has a DTAA with India to benefit from exemptions or lower tax rates.
- The surcharge is an extra tax imposed on the base income tax when the taxable income exceeds ₹50 lakh. The rates differ based on the income level and the nature of the income.
- In addition to the surcharge, there is a health and education cess levied at 4% on the total of the base income tax and the surcharge. This applies to both regimes and is consistent for all income levels.
- Do you know ??
- Under the Income-Tax Act, gifts exceeding Rs 50,000 are generally taxed as ‘income from other sources’ at the applicable slab rate, in the hands of the recipient.
- Gifts received from relatives, on the occasion of marriage, or through a will or inheritance are not taxed.
- Under the Section 56 (2)(x) of the I-T Act, gifts from a brother fall under the exempted category.
- 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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| 02.09.2024 – Vol. 157* |
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