Sandeep Ahuja & Co.

Established in the year 1986, we are a leading chartered accountancy firm based in Delhi & NCR rendering comprehensive professional services which include statutory audit, internal audit, direct tax, transfer pricing, GST, bank audit, propriety audit, cost accounting, internal financial controls and risk advisory.

Saturday, May 19, 2018

New ITR Forms - Changes and applicability as per Income sources or heads for Asst year 2018-19


ITR FORMS FOR AY 2018-19
Income Tax forms are forms in which the Taxpayer has to provide the details of his income and sources of such incomes and tax payable and paid on such income.
Seven types of Income Tax Forms are available for different classes of Taxpayer.
In ITR Forms, some schedules are modified and some new schedules introduced.
In  comparison to last year there are total 28 changes in ITR forms from which we have identified top 10changes.
Forms filled by different classes of Taxpayer
INDIVIDUAL AND HUF
PARTICULARS
ITR1
ITR2
ITR3
ITR4
Income from salary, pension & one  house property for Resident Individual
I  
I  
I  
I  
Income from salary, pension & one house property for Non Resident and not ordinary resident

I  
I  
I  
Income/ loss from more than one house property

I  
I  

Agriculture income for more than Rs. Five thousand

I  
I  

Taxable income more than Rs. 50Lacs

I  
I  
I  
Dividend Income more than Rs. Ten Lacs taxable u/s 115BBDA

I  
I  

If total income includes unexplained credit and investment and  taxable @ 60% u/s 68 69 69A

I  
I  

Income from other source excluding speculative income and lottery income
I  
I  
I  
I  
Income from other source including speculative/ lottery income

I  
I  
I  
Income includes Gain/ loss on sale of property / investment

I  
I  

Income includes Interest, salary, bonus, commission or profit share  from partnership firm as partner

I  


Income from business/profession


I  

Income from presumptive business



I  

ASSESSEE OTHER THAN INDIVIDUAL

ITR4
ITR5
ITR6
ITR7
Firm excluding LLP opting Presumptive Income
I  



Firm including LLP

I  


Association of person(AOP)

I  


Body of Individuals(BOI)

I  


Local Authority

I  


Artificial judicial person

I  


Company other than companies claiming exemption under section 11


I  


Changes in ITR form in respect of comparing last year forms
ITR FORMS MODIFIED
ITR FORMS LAST YEAR
New ITR form require detail calculation of income from salary and house property.
In last year it restricted to single figure only.
The new ITR 4 contains the details of 14 financial particulars of business like secured/unsecured loan, advance, fixed assets, capital accounts etc.
In old ITR 4, there are only 4 financial particulars of business i.e. Total creditor, total debtor, stock in trade and cash balance.
New ITR 4 require a taxpayer to provide the details of aggregate turnover reported by him in GST return. If any difference is found in turnover in GST return and ITR. Taxpayer can expect a notice from the department to explain mismatch in turnover.
Not applicable in old return
An individual or an HUF who is a partner in a firm, shall required to file his return in ITR 3.
Last year, the partner will required to file return in ITR 2.
New ITR forms introduced new column to report CGST, SGST, UTGST, IGST paid or refunded during the Financial Year.
Not applicable in Old return.
There are 7 number of ITR forms for AY 2018-19.
Last year, Number of ITR forms are 9.

§  New ITR 1 form has been withdrawn for a non-resident.
§  A Non-resident will file ITR in  ITR 2 or ITR 3 to file his return for AY 2018-19.
§  Existing forms ITR-2 ITR-2A and ITR-3 have been rationalized in to a single form.
§  ITR-4 and ITR-4S have been renumbered as ITR-3 and ITR-4 respectively.
Following person has an option to file his return paper form :
1.    An Individual of the age of 80 years or more at any time during the financial year.
2.    An individual and HUF whose income does not exceed 5 lakhs.
3.    An individual and HUF who has not claimed refund in the return of income.
NOTE: ITR-1, ITR-2 , ITR-3 and ITR-4 is now available on incometaxefiling site provided by CBDT on 18/05/18.

Compiled by Ms Megha Bansal CA Finalist at Sandeep Ahuja & Co

Friday, May 18, 2018

How to Make a Transfer Pricing Report?

Introduction

The expression 'Transfer Pricing' denotes the methods and the rules for valuing the transactions between one economic unit and another located in different countries, and units are under common ownership and control, also referred to as associated enterprises.

Generally, these transactions include provision of any service, supply of goods, granting of finance and use of intangible assets.

The topic of Transfer Pricing is important from the perspective of the Income Tax laws to determine whether the consideration paid among associated enterprises (related parties) is at Arm's Length Price (ALP), as would be between unrelated parties, and is not aimed to distort or to shift earnings from a high tax jurisdiction country to another country with lower tax compliances.

The contents of  Transfer Pricing report should include:

A. Executive Summary 

i) Purpose and scope of the report;
ii) Structure of  report;
iii) Manner of determination of Arm's Length Price (ALP)
iv) Conclusions reached

B. Information about the Group of Associated Enterprises & Relationships Therein

i) Legal, Organizational and operational structure of the group, its subsidiaries and other associated enterprises, which includes information about its shareholders and directors;
ii) A  general description of the business and its industry of operation;
iii) Elucidation of various transactions between the associated enterprises;
iv) Advance pricing arrangements between parties, global or domestic;
v) Entitlement of intangibles (Patents, trademarks, License, Know -how);
vi) Business strategy and Key Success Factors(KSF)

C. Information about the Domestic (India-based) Associated Enterprise 

i) A complete overview of organizational , legal, operational structure of the company, including  shareholders, history and financials.
ii) Presentation about the description of business and its operating environment;
iii) A detailed elucidations of related party transactions or transactions with the parent/associated company; 
iv) The complete flow of transactions;
v) Amount of various transactions

D. Industry Analysis

i) Nature and characteristics of industry ;
ii) Evolution of industry or any significant changes in its functioning;
iii) Global trends and developments and analyzing the macro environment;
iv) Consider micro environment factors like demand and supply;
v) SWOT (Strengths, Weaknesses, Opportunities & Threats) Analysis
vi) Technological changes and foreseeable industry disruption
vii) Porter's 5 Forces Analysis of competitive environment and advantages enjoyed by the assessee
viii) Other factors influencing the Industry

E. Functional Asset & Risk (FAR) analysis:

i) Number of entities involved in the transaction;
ii) Nature and scope of functions performed by the entities, such as
- Raw material procurement
- Manufacturing of the products
- Inventory management of raw materials and finished goods
- Sales and marketing
- Logistics and Operations
- After sales support
iii) Allocations of functions with the entity;
iv) Assets utilized by the aforementioned entities in performing the functions - in this context, some of the important factors are as follows
- Whether assets are owned or leased?
- Whether activity is capital or labor intensive?
- Presence or absence of intangibles?
- Are the assets unique in nature (like an intellectual property)?
iv) Corresponding risks undertaken by entity - some of the risks which are normally found in these transactions are Financial Risks, Market Risks, Credit Risks, Foreign Exchange Risks and Product Risks.
v) Justification of risks involved;
vi) Reasons for additional risk undertaken.

F. Determining Arm's Length Price (ALP)

i) Description of the various  transfer pricing methods;
(1) Comparative Uncontrolled Price (CUP) Method,
(2) Cost Plus Method (CPM),
(3) Resale Price Method (RPM),
(4) Profit Split Method (PSM),
(5) Transactional Net Margin Method (TNMM),
(6) Other Method which takes into account (i) the price which has been charged or (ii) would have been charged for similar uncontrolled transactions between non-associated enterprises.

ii) Selection of a most appropriate method to determine ALP.

iii) Substantiation of the selection criteria - following factors should be taken into account while selecting the most appropriate method;
(1) Nature and class of the international transaction;
(2) Class or classes of Associated enterprise entering into the transaction and function performed, assets employed and risk assumed by such entities. 
(3) Availability, coverage and reliability of data  necessary for application of the method.
(4) Degree of comparability existing between the international transaction and the uncontrolled transaction between the entities;
(5) The extent to which reliable and accurate adjustments can be made on account of differences
(6) Nature, extent and reliability of assumptions required to be made in application of a method.

iv) Application of most relevant method.

G. Performing Comparative Analysis

i) Internal and/or External Comparatives;
ii) Source of Data - Industry reports, annual reports of listed entities, databases such as Capital Line, ProLine, S&P Capital IQ, etc.;
iii) Basis for selection of comparatives;
iv) Comparatives selected for ALP

H. Conclusion

i) Whether companies have a transparent and adequately designed transfer pricing system.
ii) Reasons substantiating the pricing of the tested party for each international transaction between the related parties.

I. Documentation

Section 92D of Income tax act 1961 states that a person has to keep and maintain information and documents in relation to the international transaction undertaken in the financial year. This information broadly can be classified into three types which are mentioned below:
Enterprise-wise documents
Transaction-specific documents
Computation related documents

Section 92D read with Rule 10D applies not only to the international transaction but also to specific domestic transactions covered under Section 92BA and deemed international transactions covered under Section 92B(2) of the Income tax act, 1961.

According to Section 92E of Income Tax Act, 1961, it is compulsory for all the taxpayers to obtain a report from a Chartered Accountant in Form 3CEB  in respect of all international transactions between the associated enterprises (related parties) and specific domestic transactions. 



Contributed by:

Akash Arora
Articled Assistant
Gurgaon Team

Sandeep Ahuja & Co.
Chartered Accountants

Equalization Levy

This is a digital era and we are surrounded by umpteen digital advertisements popping up every single minute on our mobile phones. Online Service Providers are generating huge revenues from online advertising. However, they do not have permanent establishment in every country in which they are providing services and generating revenues.

Moreover, companies providing such services have permanent establishment in countries which are subject to lower rate of tax and hence, have created a new challenge for the revenue departments of the countries where they do not have any permanent establishment.

Introduction

The Equalisation Levy was introduced by Government of India through the Union Budget 2016 and is included in the Chapter VIII of the Finance Act, 2016 and came into force w.e.f. 1st June 2016. The Equalisation Levy of 6% is applicable to the consideration received or receivable for specified services provided on or after the commencement of the Chapter.

'Specified Service' means online advertisement and any provision for digital advertising space or any other facility or service for the purpose of online advertisement and any other service as may be notified by the Central Government. As of now, no other services have been notified.

For Example:
Facebook is one of the most popular platform to promote business online. Assuming Facebook does not have any permanent establishment in India, it does not have to pay taxes (Income Tax) in India from the revenue generated by it from the country. In order to end this practice, Government of India introduced the concept of 'Equalisation Levy' through Budget 2016.

Applicability

The Equalisation Levy is applicable only on the payments received by a non-resident service provider from an Indian Resident or an Indian Permanent Establishment of a non-resident. The levy would not be applicable to non-resident service providers having a Permanent Establishment  in India,  as they are already under the purview of tax as per the existing laws.

Conditions to be satisfied:

1. The Service Provider must be located outside India and does not have any permanent establishment in India.
2. If it is located in India, then Equalization Levy is not applicable as the Service Provider is registered in India and will be paying taxes on its income earned in India..
3. The transaction must be a Business-to-Business transaction.

Exemptions

1. If payment made during the year if less than Rs. 1 Lakh or
2. The organization making the payment is registered in Jammu and Kashmir.

Computation

(Section 166 of the Finance Act, 2016 read with Rule 3 and Rule 4)
The amount of consideration of specified services for the purpose of equalisation levy, interests and penalty shall be rounded off to the nearest multiple of ten rupees.

Rate

Equalisation Levy shall be deducted at a rate of 6% of the amount of consideration payable to the Service Provider for specified service.

For Example:
If  Flipkart pays Rs. 20,00,000 to Facebook (assuming facebook is not registered in India)  for advertisement, Flipkart is liable to deduct Equalisation Levy @ 6% from such consideration.

Date of Deposition

Equalisation Levy shall be deposited  within 7 days from the end of month in which the amount is deducted. In the same manner TDS is deducted and deposited.

Challan No. - ITNS 285

Interest on Delayed Payment of Equalisation Levy
Section 170

Every assessee,  who fails to credit equalisation levy as required under section 166 to the account of the Central Government within the period specified, shall pay simple interest at the rate of 1% for every month or part of the month by which such crediting of tax or any part thereof is delayed.

Return 

(Section 167 of the Finance Act, 2016 read with Rule 5 and Rule 6)
An Annual Return is to be filed with the government alike quarterly TDS returns. The date of filing return if 30th June of the next financial year. The return is to be submitted in Form no. 1. The return should be verified through either Digital Signatures or Electronic Verification Code by the Authorized Signatory.

Penalty

Penalty for failure to deduct equalisation levy
Section 171

Where an assessee who fails to deduct whole or any part of the equalisation levy as prescribed under the provisions, shall be liable to pay:

Levy in accordance with the provisions along with interest(if any) and penalty equal to the amount of equalisation levy the assessee failed to deduct.

Penalty for failure to pay equalisation levy to the Central Government

Where an assessee who having deducted equalisation levy, fails to pay such levy to the credit of Central Government in accordance with the provisions, shall be liable to pay:

Levy in accordance with the provisions along with interest(if any) and penalty of Rs. 1,000/-  for every day during which failure continues.

Penalty for failure to furnish statement
Section 172

Where an assessee fails to furnish the statement within time specified time period, shall be liable to pay a penalty of Rs. 100/- each day during which the failure continues.

Contributed by:

Harshit Singh
Articled Assistant
Sandeep Ahuja & Co.

Wednesday, May 9, 2018

MCA raises the filing fee for delay @Rs.100 per day


Increase in late filing fees for AOC-4/AOC-4 XBRL &  MGT-7 w.e.f. July 1, 2018.
LATE FILING FEES @ 100 PER DAY FOR DELAYED PERIOD :
          i.            The Companies (Registration Offices and Fees) Second Amendment Rules 2018 has been notified on 7th May 2018.

         ii.            In case of delay in filing Annual Returns (MGT-7) and Annual Financial Statements (AOC-4)  on or after July 1, 2018, then additional late fees @ Rs. 100 per day shall become payable.

       iii.            Belated Annual Returns or Annual Financial Statements under Companies Act , 1956 & Companies Act, 2013: In such cases,  additional fee as applicable for the period of delay up to 30th June 2018 plus Rs.100 per day w.e.f 1st July 2018 shall be payable.

       iv.            Stakeholders are advised to take note and plan accordingly.

Monday, April 30, 2018

E-WAY BILL UNDER GST REGIME



1.        The Government of India vide notification no. 74/2017 dated 29th Dec 2017 has appointment 1st day of February 2018 mandatorily for generation of e-way bill for inter-state movement of goods and 1st June 2018 for intra-state movement of goods.

2.         GST counsel in its 26th meeting held on 10.03.2018 at New Delhi decided to implement a e-way bill for inter-state movement on goods w.e.f. 01.04.2018 and for intra-state movement on goods on 01.06.2018.
3.         Karnataka had rolled out mandatory generation of e-way bill for intra-state movement of goods would be implemented from 01.04.2018 [Notification (8/2018) no. FD 47 CSL 2017, dated 23.03.2018]
4.         The Government of India state that E-way bill for intra state movement of goods for Andhra Pradesh, Gujarat, Kerala, Telangana, Uttar Pradesh would be implemented with effect from 15th  April 2018.
E-WAY BILL: E- way bill is a document in "Goods and Service Tax E-way bill system" generated in electric form for carry any consignment of goods of value exceeding 50000/- rupees with detail information of goods under movement. E-way Bill is a 12 digit number.E-way bill can be cancelled within 24 hours of generation but can not be deleted.


Benefits and Impact of E-way bill:

E-way Bill Rules:

Rules
Forms
Remarks
138(1) to 138(4)
Form GST EWB-01&02
Provisions relating to E-Way Bill, FORM GST EWB – 01 is for Single E –Way
Bill, and FORM GST EWB- 02 is for Consolidated E-Way Bill.
138(A)
……..
Documents and devices to be carried by a person-in-charge of a conveyance
138(B)
………
Verification of documents and conveyances.
138C
Form GST EWB -03
Verification Report (Inspection and verification of goods in transit)
138D
Form GST EWB -04
Report of Detention

Contravention of Rules: IF E-way bill required and not generated according to the rule of 138 of CGST, It will be termed as contavention of rules.
1.     Sec. 122 of CGST Act state that if any person who transports any taxable goods exceeding value 50000 without the cover of document including e-way bill shall be liable to penalty of Rs. 10000 or tax evaded whichever is higher.
2.     Sec. 129 of CGST Act state that if a person transports goods while they are in transit in contraventon of rules, all such goods and conveyance used shall be liable to detention.
Sub Rule 1 of Rule 138 who, why and when shall furnish information in part A.
WHO
WHY
WHEN
FORM NO.
INFORMATION REQUIRED
Registered person
For movement of taxable goods  across India 
Before commencement of movement of goods
GST-EWB 01
Bill no., Bill date, Generator, validity period,place of delivery, HSN code, value of goods

Registered Person: Person registered under GST is a registered person and should also be registered on the portal of E-way bill.


How to register on the common portal of E-way bill



Who will generate E-way bill? : Registered person either consignor or consignee shall generate e-way bill furnishing information in part B from EWB-01.


If E-Way Bill is not generated by ragistered person then:

 


Determination of consignment value exceeding 50000/-: Consignment value as shown in invoice, challan, bill of supply, as the case may be, including CGST, SGST, UTGST, IGST and Cess Charged but excluding the value of exempted goods.


                                                            Form GST EWB-01

E-way Bill No. :
E-Way Bill date:
Generator:
Valid from:
Valid until:               
                               
PART A

A.1
GSTIN of Supplier
*
A.2
Place of Dispatch
Including PIN Code of place of dispatch
A.3
GSTIN of Recipient
*
A.4
Place of Delivery
Including PIN Code of place of delivery
A.5
Document Number
Tax invoice, bill of supply, delivery challan, bill of entry number
A.6
Document Date

A.7
Value of goods

A.8
HSN code

A.9
Reason for transportation
Supply, Export or Import, Job Work, Sales return, Recipient not known.
*In case of unregistered person, Fill URP in the place mark as star (*).

EXCEPTIONS: E-WAY Bill will be generated if consignment value does not exceed Rs. 50000/- in following cases:
CASE-1 Inter state movement of goods for Job Work irrespective of the value of consignment
CASE-2 Inter state movement of handicraft goods by unregistered person.

Sub Rule 3 of Rule 138 Business place of consignor and consignee in same state or union territory, supplier, recipient and transportor may not furnish details of transportation in Part B of form GST EWB-01 if following condition does not satisfied.





Sub Rule 4 of Rule 138 Upon generation of E-way bill, a unique e-way bill no. [EBN] will generate for transporter, supplier and recipient.


Sub Rule 5 of Rule 138 Consigner, recipient, or transporter, as the case may be, who has provided information in form GST EWB-01 shall update the details of conveyence of goods in E-way bill for transfering the goods from one conveyence to another for further movement.
** Updation not required if distance between the place of transporter to consignee is less than 50000 KM. **

Sub Rule 6 of Rule 138 Transporter can only generate consolidte E-way bill prior to movement of goods.

Sub rule 7 of Rule 138 when consigner or consignee does not generate E-way bill, transporter, except in case of transportation by air, vessel, and railway, generate E-way billl on the basis of delivery challan, invoice, bill of supply and may also generate consolidate E-way bill.

Sub rule 8 of Rule 138
·         Information Furnished in part A by registered dealer made available to him on common portel for furnishing the detail in form GSTR-1
·         Information furnished by unregisterd dealer and unregistered participient shall be made available electronically to him, if mobile number & E-mail ID is available.

Sub Rule 9 of Rule 138: E-way bill can be cancelled within 24 hours of generation of e-way bill but can not be deleted. E-way bill can not be cancelled if varified in transit.

Sub Rule 10 of Rule 138: E-way bill shall be valid for the period mentioned given below:
Sr.No.
Distance
Validity period
1
Up to 100 KM

2
For every 100 KM and Part there of
One additional day
3
Up to 20KM
One day in case of over dimensional cargo
4
For every 20km and part there of
One additional day in case of over dimensional group
**Commissioner, by notification, can extend the validity period for certain category of goods.
**Each day shall be counted as 24 hours from the generation of E-way bill.

Sub Rule 11 of Rule 138:
S. N.
Information furnished in part A of Form GST EWB-1
Information shall be available to
Communicate acceptance or rejection of the consignment
1
The recipient or transporter
Supplier, if registered
By the supplier
2
The Supplier or transporter
Recipient, if registered
By the recipient
           
Sub Rule 12 of Rule 138: Acceptance and Rejection to be communicated within 72 hous of the details made available to supplier or the recipient.
**failing in acceptance and rejection shall be deemed to be an accepatance of details therein.

Sub Rule 13 of Rule 138: E-way bill generated under rule 138 of CGST 2017 shall be valid in every state and union territory.


Compiled by Megha Bansal CA Finalist at Sandeep Ahuja & Co