RBI Working Group on Digital Lending

Digital Lending

The Reserve Bank of India recently constituted a working group on
digital lending. The working group was constituted to study all aspects
of digital lending activities in the regulated and regulated financial
sector. The working group will ensure that an appropriate regulatory
approach is put in the digital lending platform.

Sebi reduces registration fee for investment advisors

Now, individuals and firms (partnership) will have to pay Rs 2,000 while
applying for an investment advisor certificate. Earlier, they had to
cough up a higher amount of Rs 5,000 as application fee, according to a
SEBI notification issued on Monday.
Markets regulator SEBI has cut down application and registration fees
for individuals and corporates seeking a registered investment advisor
The application fee for corporates including Limited Liability
Partnerships (LLPs) has been brought down to Rs 10,000 from Rs 25,000.
At the time of grant of a certificate, individuals and firms will have
to shell out a fee of Rs 3,000 and Rs 15,000 by bodies corporate.
Earlier, the registration fee was Rs 10,000 and Rs 5 lakh for individuals as
well as firms and body corporates respectively.
The cut down in fees is expected to help those seeking registration as
investment advisors.
The move comes after a series of tightening of norms by the Securities
and Exchange Board of India (SEBI) for registered investment advisors.
In September, SEBI came out with detailed guidelines for investment
advisers asking them to ensure segregation of advisory and distribution
activities at the client level.
Besides, SEBI had fixed a cap on the fee that investment advisers (IA) can
charge from clients. It had also put in place a procedural framework
pertaining to audit and record-keeping.

GST is applicable to canteen food or not?

There is also a rising debate about whether GST will be applicable to
corporate services like canteen food served to employees on a cost.
Mani said that in another recent decision, it was decided by GAAR that
the employer is liable to pay GST on canteen food served to its staff
for which the latter pays a charge.
The GST on canteen food is set at 5 percent. This would mean that this
tax payable by the employer to the GST authorities will be recovered
from the staff in the form of higher prices.
According to Section 46 of the Factories Act, 1948, any factory
employing more than 250 workers is required to provide a canteen
facility to its employees.

Is GST applicable for skipping notice period?

The Gujarat Authority for Advance Rulings (GAAR) has held that an
employee exiting a company without completing their notice period would
be liable to pay 18 percent goods and services tax (GST) on the recovery
of the pay.

This was in a case pertaining to an Ahmedabad-based export company
Amneal Pharmaceuticals that sought advance ruling on the issue of exit
from their job without serving the three-month notice period.

However, industry experts have said that while this shows that notice
pay is ‘not GST exempt’, the payment of this tax would differ based on
the employment terms and interpretations by the tax authorities.
MS Mani, Senior Director, Deloitte India told Moneycontrol explained
that on which transaction goods and services tax is applicable cannot be
certified in the GST law because there are far too many transactions all
over a country. GST law provides general guidance.
“Advance Ruling authorities interpret that law in a specific situation.
In this case, they have interpreted it to say that since serving the
notice period was a service, the notice pay of the employee should be
attracting GST,” Mani added.

What is to be noted is that this was a ruling in a specific case and may
not the same for all incidents where a corporate employee misses out on
serving the notice period.

So even while GST is applicable, depending on the employment contract
and terms set by individual companies, a decision will be taken.
Delhi-based HR consultant Nishant Tiwari who works with companies on
developing employment contracts said that it is ideal for employees and
employers to sit across and discuss all matters including GST.
“If GST is applicable, then the employee must be informed in advance of
the consequences of not serving the notice period. At the end, if the
employer is bearing the 18 percent GST, it will be recovered from the
employee,” he added.

For example, if the notice period pay is Rs 2 lakh, then the 18 percent
GST would mean an additional burden of Rs 36,000. This would be
recovered from the employee when they skip the notice period since it
amounts to a person promising ‘a service’ and not offering it.
So employees must be doubly-sure about the payment terms and sign the
offer letter only after careful verification. This will help avoid
penalty payments on account of GST.

A ruling ‘unites’ foodies with a single GST rate

A ruling ‘unites’ foodies with single GST rate

Be it a school kid in Ahmedabad whose favourite tea-time snack is a plate of Dhoklas or a senior citizen in Bengaluru who can’t do without his staple breakfast of piping hot Rava-Idlis, an advance ruling, issued by the Gujarat bench, has ‘united’ foodies across India with a single goods and services tax (GST) rate.

Despite various products of instant flour mixes falling in different sub-headings, fortunately the GST rate was the same at 5%.
On the flip side, the Authority for Advance Ruling did not agree with the submission of the applicant that a nil rate should apply as his instant flour products were nothing but grain and pulse flour mixed with spices, condiments and flavours.

In this case, a businessman who manufactured and sold varied types of instant mixed flour under the ‘Talod’ brand name sought an advance ruling to determine the GST rates on his products and also on chutney powder, which was provided free with a few products — such as the Bhajiya mix.
The instant mixed flour sold by him was used by customers to prepare a range of Indian dishes such as Khaman, Gota, Handwa, Dhokla, Rice Idlis, Rava Idlis, Dahiwada, Bhajiya, Upma and so on. The ingredients differed from product to product. To illustrate the Dhokla mix, flour consisted of Udad dal, Chana dal, Sugar, Salt, Sodium Bicarbonate, Citric acid and Asafoedtida. The ingredients of the Rava-Idli mix were Gram dal, Udad dal, Rava, Citric acid, Salt, Green Chilli, Curry leaves, and Mustard seeds.

The advance ruling bench has to delve deeply into the classification and sub-headings. While products such as the Dhokla mix, Dahi wada mix, Bhajiya mix and Idli mix fell under one sub-heading; Rava-Idli mix, Upma mix and Muthiya mix fell under another subheading. This despite the fact that all products were essentially flour and spices. The saving grace, there was no difference in the GST rate, which was the same at 5%. As regards Chutney powder, which was supplied free with a few flour mix categories, the AAR held it to be a ‘mixed supply of goods’ — this too had a GST rate of 5%.

5 things you must know about income tax return for FY2019-20 FAQs on ITR Filing

Keeping in view the challenges faced by individual taxpayers in meeting the statutory and regulatory compliances owing to the current pandemic, the government has recently extended income tax return (ITR) filing deadline for FY2019-20 by a month till December 31. The due date of furnishing ITRs for taxpayers whose accounts need to be audited has also been extended till January 31, 2021.

If you haven’t filed your ITR yet, then you can relax a bit as the government has given you some more time to file your return. However, if you are still wondering how to file your ITR or if you have some queries related to tax return, you can refer to these FAQs on ITR filing, which will help resolve some of your queries.

1. What are the modes for filing of return of income?

Return of income can be filed in paper mode or e-filing mode. If the return of income is filed through electronic mode, then the assessee has the following three options:

(a) E-filing using a Digital Signature (DSC);
(b) E-filing without a Digital Signature; or
(c) E-filing under Electronic Verification Code (EVC).

If the return of income is filed using a DSC or under EVC, then there is no requirement of sending the signed copy, ITR-V (i.e., acknowledgement of return filed electronically) to Bangalore CPC. However, if the return is filed without using DSC or without EVC, the assessee shall send the signed copy of ITR V on the following address within 120 days of uploading the return either by ordinary post or by speed post only:

Income Tax Department – CPC, Post Bag No.-1, Electronic City Post Office, Bangalore -560100, Karnataka

2. When is it mandatory to file the return of income for an individual or HUF?

Income exceeding the threshold limit

If the income of an individual or HUF (resident or non-resident), before claiming the following deductions or exemptions, exceeds the maximum exemption limit, then him/it must file the return of income:

(a) Exemption under Section 10(38)6;
(b) Deduction under Section 10A,10B,10BA;
(c) Exemption under section 54, 54B, 54D, 54EC, 54F, 54G, 54GA or 54GB7; and
(d) Deduction under Section 80C to 80U.

Assets outside India

An individual, being a resident and ordinary resident in India, shall file his return of Income, even if his income does not exceed the maximum exemption limit, if he:

(a) Holds, as a beneficial owner or otherwise, any asset (including any financial interest in any entity) located outside India;
(b) Has signing authority in any account located outside India; and
(c) Is a beneficiary of any asset (including any financial interest in any entity) located outside India.

Seventh Proviso to Section 139(1)

Filing of return of income is mandatory irrespective of the amount of gross total income if an assessee’s case is covered by the seventh proviso to Section 139(1). This provision requires every person, who is otherwise not required to file the return due to the reason that his income does not exceed the maximum exemption limit, to file the return of income if during the previous year he has:

(a) deposited more than Rs 1 crore in one or more current account maintained with a bank or a co-operative bank;
(b) incurred more than Rs 2 lakh for himself or any other person for travel to a foreign country; or
(c) incurred more than Rs 1 lakh towards payment of electricity bill.

3. Whether individuals are required to mention details of assets and liabilities in ITR-1 (Sahaj)?

Individuals/HUFs are required to furnish details of assets and liabilities at year-end only when their taxable income exceeds Rs 50 lakh. The Schedule AL, wherein the details of assets and liabilities are to be furnished, is available only in ITR-2 and ITR-3. Thus, the individual or a HUF who has to report the details of assets and liabilities has to opt for filing of return in ITR-2 or ITR-3.

4. My income is Rs 60 lakh. What details about assets and liabilities do I need to mention in income-tax return?

Schedule AL requires individuals/HUFs to declare the value of assets and liabilities if their total income exceeds Rs 50 lakh. If a taxpayer is required to provide information in this Schedule, he shall provide the details of cost of immovable property, jewellery, vehicles, shares, bank and cash balance, etc., at the year-end. Further, the taxpayer is also required to disclose the address of the immovable property and description of movable assets.

“If a taxpayer has acquired assets by way of gift, Will or any other mode specified under section 49(1) of the Income-tax Act, 1961, the asset shall be reported at the cost at which the previous owner has acquired it as increased by the cost of improvement incurred by such previous owner or by the taxpayer, as the case may be. If the cost of acquisition of the previous owner can’t be determined, the value may be estimated at the circle rate or market value of assets, as the case may be,” says CA Naveen Wadhwa, DGM, Taxmann.com.

5. Who are required to file return of income electronically?

For the Assessment Year 2020-21, every taxpayer has to file Income-tax return electronically except a super senior citizen (whose age is 80 years or above during the previous year 2019-20) who furnishes the return either in ITR-1 or ITR-4.

The various options for filing of a return have been enumerated below.

Source: Professional Updates

10 things to know about new provision of TCS on sale of goodsa

With effect from October 1, 2020, Section 206C(1H) of the Income-tax Act, 1961 has come into force which requires collection of tax by a seller, whose total sales, gross receipts or turnover in the preceding financial year exceeds Rs 10 crore. The tax shall be collected from the amount received as consideration for the sale of goods in excess of Rs 50 lakh in any previous year.

So if you are buying goods of more than Rs 50 lakh be ready to pay TCS on the same and claim the credit at the time of filing your income tax return.

In this article, we have touched upon 10 important key issues about this requirement.

1. Timing of collecting TCS
The tax should be collected at the time of receipt of amount from the buyer if the sale consideration received in a previous year exceeds Rs 50 lakh. There is no requirement to collect TCS on any sale consideration received before October 1, 2020.

This provision shall apply on all sale consideration (including advance received for sale) received on or after October 1, 2020 even if the sale was carried out before October 1, 2020.

2. How to compute the threshold limit of Rs 50 lakh?
The threshold of Rs 50 lakh shall apply to the entire financial year starting from April 1, 2020. If up to September 30, 2020 the seller has already received Rs 50 lakh or more from the buyer, tax under this provision shall be col ..

3. Whether TCS to be collected on sale of service?
TCS shall be collected on the consideration for “sale of any goods”. The term ‘goods’ is not defined in the Income-tax Act. The term ‘goods’ is of wide import. Anything which comes to the market can be treated as goods. Therefore, the sale of services are not subject to collection of TCS.

4. Whether TCS has to be collected on Sale of Immovable Property?
TCS is required to be collected on sale of goods. As per Section 2(7) of the Sales of Goods Act, 1930, ‘goods’ means every kind of movable property. Thus, the immovable property shall not be treated as ‘goods’. Consequently, the TCS shall not be collected from the sale of immovable property.

5. Whether TCS has to be collected on GST amount?
TCS is required to be collected on the sale consideration inclusive of GST. The CBDT has clarified that since the collection is made with reference to receipt of the amount of sale consideration, no adjustment on account of indirect taxes including GST is required to be made for the collection of tax under this provision.

6. Rate of collecting TCS
The tax shall be collected by the seller of goods at the rate of 0.1 per cent of the sale consideration exceeding Rs 50 lakh if the buyer has furnished his PAN or Aadhaar. If buyer does not submit PAN or Aadhaar, then, the tax shall be collected at the rate of 1 per cent.

The rate of TCS has been reduced to 0.075 per cent till March 31, 2021 due to the economic situation arising out of the COVID-19 pandemic. However, if the buyer does not submit the PAN or Aadhaar, the tax shall be collected at the rate of 1 per cent.

7. Requirement to collect TCS on advance received from the buyer
TCS is required to be collected under this provision from the advance received for sale. If the trigger event (i.e., receipt of sale consideration) has occurred before October 1, 2020, no liability to collect tax will arise.

On the contrary, where the sale has been made before October 1, 2020 but the sale consideration is received after the said date, the same shall be subject to TCS. Consequently, it would apply on all sale consideration, including advance, received on or after October 1, 2020 even if the sale was carried out before October 1, 2020.

8. No requirement to collect TCS on branch transfers
The TCS under this section is required to be collected by any person, being a seller receiving consideration for the sale of goods. Thus, the existence of two distinct parties as ‘seller’ and ‘buyer’ is a pre-requisite to construe a transaction as a sale. The condition of sale is not fulfilled in the context of branch transfer. Therefore, the provisions of this section shall not apply in the case of branch transfers.

9. Due date to deposit TCS
Tax collected during the month shall be deposited on or before the seventh day of the next month in which tax has been collected. For example, the TCS collected in the month of October shall be deposited by November 7, 2020.

10. Consequences for failure to collect or pay TCS
If a collector fails to collect or after collection fails to pay it to the credit of the Central Government, he shall be liable to pay interest at the rate of 1 per cent for every month or part thereof on the amount of tax he failed to collect or pay. The interest shall be calculated for the period starting from the date on which tax was required to be collected and ending on the date on which tax is deposited. The interest  .

Source: Professional Updates

Finance ministry clarifies on income tax returns filing deadline extention for corportates

The finance ministry has notified the extended due date for filing income tax returns (ITR) for the 2019-20 fiscal.

While the deadline for filing ITR by individual taxpayers has been extended by a month till December 31, the due date for those taxpayers whose accounts need to be audited has been extended to January 31, 2021.

Nangia Andersen LLP Partner Sandeep Jhunjhunwala said although the government had announced the extension of ITR and audit report filing due dates last week, but there was an ambiguity if such extension is available for corporates to whom tax audit and transfer pricing reporting was not applicable, for instance, foreign companies having no associated enterprise in India and yet earning income from Indian sources.

“Today’s notification has cleared the air by extending the due dates for such entities as well.

“Consequently, all Indian and foreign companies who are not liable to obtain a tax audit or do not maintain transfer pricing documents can now file ITR by January 31, 2021, whereas individuals not liable to tax audit will have to file their tax returns by December 31, 2020,” Jhunjhunwala said.

The government had earlier in May extended various due dates for filing ITRs for the 2019-20 fiscal from July 31 to November 30, to give compliance relief to taxpayers due to the COVID-19 pandemic.

Source: Professional Updates

How much income tax private sectors employees can save

The Income Tax Department has extended the income tax exemption available under the LTC cash voucher scheme to employees of state governments, state-owned enterprises and private sector. The government had on October 12 allowed payment of cash allowance equivalent to LTC fare to Central Government employees subject to fulfilment of certain conditions. The payment of cash allowance is subject to maximum of ₹36,000 per person as Deemed LTC round trip fare subject to fulfilment of prescribed conditions.

Here are 5 things to know about the income tax exemption on LTC cash voucher scheme:

1) This clarification provides the exemption for private sector employees who are eligible to claim the leave travel allowance, says Aarti Raote, Partner, Deloitte. Unfortunately, employees who have opted for the simplified tax regime will not be able to take the benefit of the exemption, she says, adding that “this is a welcome step by the government given the festive season is just round the corner.”

2) To avail this tax benefit, the employee is required to spend three times the eligible amount on the purchase of goods/services which carry a GST rate of not less than 12% from GST registered vendors/service providers through digital mode.

An employee who spends less than three times of the deemed LTC fare under the cash voucher scheme shall not be entitled to receive full amount of deemed LTC fare and the related income-tax exemption and the amount of both shall be reduced proportionately.

Explaining further the CBDT said if the deemed LTC Fare is ₹80,000 ( ₹20,000 x 4), then the amount to be spent under the scheme is ₹2,40,000. Thus, if an employee spends ₹2,40,000 or above on specified expenditure, he shall be entitled for full deemed LTC fare and the related income-tax exemption. However, if the employee spends ₹1,80,000 only, then he shall be entitled for 75 per cent (i.e. Rs. 60,000) of deemed LTC fare and the related income-tax exemption. In case the employee already received ₹80,000 from employer in advance, he has to refund ₹20,000 to the employer as he could spend only 75 per cent of the required amount

3) The maximum deemed LTC fare per person is Rs. 36,000, which would entail a maximum deduction of Rs. 144,000 for a person with a family of four, says Sraswathi Kasturirangan, Partner, Deloitte. This could translate to a tax benefit around Rs. 61,556 at the maximum marginal rate of 42.744%, she adds.

4) “The expenditure could be incurred during the period from the 12th of October, 2020 to 31st of March, 2021. Suitable vouchers indicating the GST number and the amount of GST paid is required to be submitted. Where a lower amount of expenditure is incurred, the exemption shall be available in a proportionate manner,” says Sraswathi Kasturirangan.

“Employees could consider the expenditure on purchase of white goods such as refrigerators, washing machines, mobiles, two wheelers/ four wheelers other than electric vehicles for this purpose since the GST rate for these would meet the above criteria. Further the GST rates for most services would fall under this category,” she adds.

5) The employees have to exercise an option for the deemed LTC fare in lieu of the applicable LTC in the Block year 2018-21.

Source: Professional Updates