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.

Monday, April 22, 2019

Changes in ITR Forms AY 2019-20

1. If the taxpayer is a Director in a Company at any time during the tax year, the following details need to be furnished (ITR 2, 3):
(i) Name and Permanent Account Number (PAN) of the Company
(ii) Whether shares of the Company are listed or unlisted
(iii) Director Identification Number (DIN) of such person

2. If the taxpayer is a Partner in a Firm, then the name and PAN of the Firm need to be disclosed separately (ITR 5, 7).

3. Enhanced Reporting in case of Transfer of Immovable Property - such as name and PAN of the buyer, address of property and in case of more than one buyer, percentage share and amount paid by each buyer needs to be reported (ITR 2, 3, 5, 6).

4. Break-up of Interest Income earned needs to be bifurcated into interest earned from savings bank, deposits, income tax refund, interest in the nature of pass-through income or others. (ITR 2, 3, 5, 6, 7)

5. Break-up of certain Specified Incomes such as dividend income, winning from lotteries, puzzle, races etc. which are taxed under Income from Other Sources - The break-up period is aligned to the due dates of payment of advance tax (ITR 2, 3, 5, 6, 7).

6. Break-up of monetary Donations made in cash and other mode - Monetary donations made by taxpayer and eligible for deduction under section 80G of the Income Tax laws need to be bifurcated between donation made in cash or in any other mode (like cheque or electronic mode). (ITR 2, 3, 4, 5, 6)

7. Enhanced reporting in relation to Foreign Assets located outside India - instead of information about foreign bank accounts held, the new ITR forms require details of following assets held by resident taxpayers at any time during the tax year in Schedule FA dealing with foreign assets and income from any source outside India (ITR 2, 3, 5, 6, 7)
(i) Details of Foreign Depository accounts
(ii) Details of Foreign Custodial accounts
(iii) Details of Foreign Equity and Debt interest
(iv) Details of Foreign Cash Value Insurance Contract or Annuity Contract

Under each asset category, there is further reporting requirement such as details of country name and code, name and address of institution, account number, date of opening the account, peak balance during the tax year, closing balance, amount of interest/ amount paid/ credit. In case of insurance contract, cash/ surrender value of contract needs to be reported.

8. Enhanced reporting in Exempt Income schedule
(i) If net agricultural income exceeds Rs. 5,00,000; the following details need to be reported separately for each agricultural land (ITR 2, 3, 5, 6)
- Name of district along with pin code where agricultural land is situated
- Measurement in acres
- Whether the land is owned or leased and whether it is irrigated or rain fed
(ii) income is not chargeable as per Double Taxation Avoidance Agreement (DTAA)
(iii) it is pass-through exempt income (ITR 2, 3, 5)

9. Furnishing of PAN/ TAN of Tenant is mandatory if TDS credit on rent income is claimed by the taxpayer (ITR 2, 3, 5, 6, 7)

10. Insertion of Manufacturing Account and Trading Account - Statement of Profit and Loss has been bifurcated into Manufacturing Account, Trading Account and Profit and Loss Account. Certain additional details need to be furnished in the Manufacturing Account such as details of direct wages, direct expenses and factory overheads. (ITR 3, 5, 6).

11. In case regular books of accounts are not maintained - details of Gross Receipts as bifurcated between receipts through specified banking modes and any other mode to be reported.

12. Date of Commencement of Business to be disclosed by Companies

13. In case of Companies, Loans and Advances given and received - party wise details along with opening and closing balance, amount received and repaid during the year, rate and amount of interest

14. In case of Companies, land or building or both (whether residential or not), other assets such as motor vehicle, aircraft, yacht, jewelry, archaeological collections, drawings, painting, sculptures or any work of art or bullion - date and cost of acquisition, purpose of use needs to be disclosed.

Saturday, April 6, 2019

New Method of Utilization of ITC under GST (w.e.f. 23-Mar-19)

With effect from 29th March, 2019, the manner of utilization of Input Tax Credit (ITC) has been amended vide Notification No. 16/2019-CT, following which Rule 88A has been introduced. It states as under:

“Rule 88A: Order of utilization of input tax credit – Input tax credit on account of Integrated Tax shall first be utilised towards payment of Integrated Tax, and the amount remaining, if any, may be utilised towards the payment of Central Tax and State Tax or Union Territory Tax, as the case may be, in any order:

Provided that the input tax credit on account of Central Tax, State Tax or Union Territory Tax shall be utilised towards payment of Integrated tax, Central Tax, State Tax or Union Territory Tax, as the case may be, only after the input tax credit available on account of Integrated Tax has first been utilised fully.”

Here’s breaking down the change for you.

1. If you have IGST Input Credit, first exhaust that for payment of IGST Output

2. If there is any IGST ITC left thereafter, use it for payment of CGST and SGST Output, now in no particular order, i.e. you can use the remaining IGST ITC to pay both CGST and SGST equally. It will not follow the sequence of first setting it off against CGST Output and then the remaining against SGST Output.

3. Credit can be taken in any order.

4. ITC of CGST and SGST can be utilized towards payment of IGST, CGST, SGST only after exhausting the ITC of IGST.

5. It still remains that the ITC of CGST cannot be used to pay SGST, and ITC of SGST cannot be used to pay CGST.

To put it simply, the following tables show how the manner of utilizing GST ITC has changed in the past few months.


Up to 31-Jan-2019
Payment For
First Set off From
Then Set off From
IGST
IGST
CGST and SGST
CGST
CGST
IGST
SGST
SGST
IGST

From 01-Feb-2019 due to Section 49A of CGST (Amendment) Act, 2018
Payment For
First Set off From
Then Set off From
IGST
IGST
CGST and SGST
CGST
IGST ITC left after setting off IGST
CGST
SGST
IGST ITC left after setting off IGST and CGST
SGST

From 29-Mar-2019 due to Rule 88A – Order of utilizing IGST ITC against CGST and SGST is done away with
Payment For
First Set off From
Then Set off From
SGST
IGST ITC left after setting off IGST
SGST
CGST
IGST ITC left after setting off IGST
CGST
IGST
IGST
CGST and SGST

Illustration 1: ITC Utilization in Case of No IGST Liability
w.e.f. 29-Mar-19
IGST
CGST
SGST
ITC Available
1000
1000
1000
Output Tax Payable
NIL
2000
2000




IGST Utilized
NIL
500
500
CGST Utilized
NIL
1000
N.A.
SGST Utilized
NIL
N.A.
1000




ITC Balance
NIL
NIL
NIL
Payment in Cash
NIL
500
500

Illustration 2: ITC Utilization in Case of IGST Liability
w.e.f. 29-Mar-19
IGST
CGST
SGST
ITC Available
1000
1000
1000
Output Tax Payable
500
500
500




IGST Utilized
500
250
250
CGST Utilized
NIL
250
N.A.
SGST Utilized
NIL
N.A.
250




ITC Balance Carried Fwd
NIL
750
750
Payment in Cash
NIL
NIL
NIL

Monday, March 25, 2019

GST on Real Estate Sector w.e.f. 1st April, 2019

The following is a summary of decisions taken by the GST Council in its 34th Meeting held on 19th March, 2019 regarding GST on the real estate sector.

To reduce the burden of GST on home buyers, GST council has reduced the rate of tax to 5% without ITC for non-affordable houses and 1% without ITC for affordable house. Here, affordable house/flat is one of carpet area up to 90 sq.m. in non-metropolitan cities and 60 sq.m. in metropolitan cities, having value up to Rs.45 lakhs only, in both cases.

The proposed rates shall apply from 1st April, 2019.

Conditions for Availing the New Tax Rates

1. Input Tax Credit shall not be available on adoption of new rates. However, ITC shall be available to those who continue to pay tax under the old rate.

2. 80% of inputs and input services (other than capital goods, TDR/JDA, FSI, long term lease) shall be purchased from registered persons. On shortfall of purchase from 80%, tax shall be paid by builder @18% on RCM basis. However, tax on cement purchased from unregistered person shall be paid @28% under RCM basis.

Taxing Options for Ongoing Projects

1. Under construction projects shall be given a one-time option to continue to pay tax at old rates (effective rates of 8% or 12% with ITC) on ongoing projects (building where construction and actual booking have both started before 01.04.2019) which have not been completed by 31.03.2019.

2. The option shall be exercised once within the prescribed time, and where the option is not exercised, new rates shall apply.

Transition for Ongoing Projects

1. Ongoing projects not completed by 31.03.2019 shall transition the ITC in proportion to booking of the flat and invoicing done for the booked flat, subject to a few safeguards.

2. For a mixed project, transition shall also allow ITC on pro-rata basis in proportion to carpet area of the commercial portion in the ongoing projects (on which tax will be payable @12% with ITC even after 01.04.019) to the total carpet area of the project.

Transfer of Development Rights (TDR) & Floor Space Index (FSI)

The following treatment shall apply to TDR/FSI and long-term lease for projects commencing after 01.04.2019

1. Supply of TDR, FSI, long term lease (premium) of land by a land owner to a builder shall be exempted from GST if flats are sold before issuance of completion certificate and tax is paid on them. Exemption of TDR, FSI, long term lease (premium) shall be withdrawn in case of flats sold after issue of completion certificate, but such withdrawal shall be limited to 1% of value in case of affordable houses and 5% of value in case of other than affordable houses.

2. Builder has to pay GST on RCM basis. It means liability to pay tax on TDR, FSI, long term lease has been shifted from land owner to builder.

3. The builder has to pay tax under RCM basis, in respect of flats sold after completion certificate, on the date of issue of completion certificate.

Monday, March 11, 2019

Input Tax Credit (ITC) in case of Sales Promotion Activities

The GST Department has recently offered great relief to the FMCG industry by clarifying on a few matters with respect to supply of free articles under schemes such as "Buy One, Get One", where ITC was not being allowed in proportion to the free supplies made by such companies.

The details are as follows.

A. Free Sample and Gifts (No ITC): 

It is a common practice in trade and industry, such as, garment industries which often provide free sample or gifts to increase sales volume and to attract customers without any consideration.

According to section 7(1)(a) of said Act, supply made without any consideration shall be not treated as supply under GST (except in case of activities mentioned in Schedule I of the said Act).

It is clarified that input tax credit shall not be available to the supplier on the inputs, input services and capital goods to the extent they are used in relation to the gifts or free samples distributed without any consideration.

However, where the activity of distribution of gifts or free samples falls within the scope of ‘supply’ on account of the provisions contained in Schedule I of the said Act, the supplier would be eligible to avail of the ITC.

B. Buy One Get One Free Offer (ITC Available):

Offers like ‘buy one soap and get one free’, are actually not an individual supply of free goods but a case where a single price is charged for two or more individual supplies. Taxability of such supply will be dependent upon whether the supply is a composite supply or a mixed supply and the rate of tax shall be determined as per the provisions of section 8 of the said Act.

It is also clarified that ITC shall be available to the supplier for the inputs, input service and capital goods used in relation to supply of goods or service or both as part of such offers.

C. Discounts on the Face of Invoice or Pre-determined (Reduced from Taxable Value):

Sometimes, suppliers give discounts which increase with the increase in purchase volume. For example, 10% discount on purchase of more than Rs. 5000 and 15% discount on purchase of more than Rs. 10000. Such discounts are often given in the invoice itself.

Suppliers also give periodic discounts, generally at end of the season or at the year end. The discounted amount would be excluded to determine the value of supply. Such discounts are passed by the supplier by issuing credit notes.

It has been clarified in this regard that ITC shall be available to the supplier for the inputs, input service and capital goods used in relation to supply of goods or service or both as part of such offers.

D. Secondary Discount (Not Deducted from Taxable Value):

When discount is provided after sale it is termed as secondary discount. For example, M/s A supplies 10000 packets of biscuits to M/s B at Rs. 10/- per packet. Afterwards, M/s A re-values it at Rs. 9/- per packet. Subsequently, M/s A issues credit note to M/s B for Rs. 1/- per packet.

Discounts in cases such as these do not fulfill the conditions laid out in section 15(3)(b) of the Act. It has been clarified in this regard that financial / commercial credit notes can be issued by the supplier even if they don’t fulfill the conditions under the aforementioned section, i.e. credit notes can be issued as a commercial transaction between two contracting parties.

It is also clarified that such secondary discounts shall not be excluded while determining the value of supply since they are not known at the time of supply, and there is no impact on availability or otherwise of ITC in the hands of supplier in this case.



Compiled by:


Shivam Tiwari
Articled Assistant
GST Team
Sandeep Ahuja & Co.

Saturday, March 9, 2019

Completion of Audit Training Workshop

A few Articled Assistants of Sandeep Ahuja & Co. completed a training workshop on Internal Audits on 9th March, 2019 at the Gurgaon office of the firm.

Left to Right (Standing): Ritik Chandel, Saino Susan Varghese, Robin Singh Dhama, Kriti Makker, Amit Soam, Megha Bansal, Vijay Raghav, Pushkar Tayal, Shivam Tiwari, Mayur Sahni, Tanveer Alam, Sahil Sardana, Shivangi Jain, Piyush, Akash Arora, Kashika Ahuja, Aditya Harsh, Lovely Sharma, Harshit Singh

Partners (Sitting): Sarthak Ahuja, Surekha Ahuja, Sandeep Ahuja

Thursday, March 7, 2019

March 2019 - Due Date Calendar

7th March 2019: Income Tax TDS/TCS payment for the month of February 2019.

10th March 2019: Monthly GST-TDS/TCS payment in form GSTR-7 for the month of February 2019 under GST.

11th March 2019: GST Filing of returns by registered person with aggregate turnover more than 1.50 crores (GSTR-1) for February 2019.

15th March 2019: Due date for forth and last installment/ entire amount of advance tax for Assessee having presumptive basis income,

15th March 2019: Due date for PF and ESIC payment.

20th March 2019: GST monthly return for the month of February 2019 (GSTR-3B) 

25th March 2019: Due date for filing monthly return of PF

30th March 2019: Challan cum statement for TDS u/s 194 IA for immovable property and 194 IB for rent payment for February 2019.

31st March 2019: Due date for filing of GSTR 3B and 1 from July 2017 to September 2018 without late fees

31st March 2019: Due date for filing of ITC 4 under GST for claiming Input tax credit on goods sent for job works for the period July 2017 to December 2018.

31st March 2019: Last date for linking Aadhar with PAN.

Tuesday, February 26, 2019

INC-22A: Active Company Tagging Identities and Verification (ACTIVE)

About the Form

The Central Government, vide notification dated 21st February 2019, notified the Companies (Incorporation) Amendment Rules, 2019, in which Rule 25A has been inserted which states that every company incorporated on or before the 31st December, 2017 shall file the particulars of the company and its registered office, in e-Form ACTIVE, i.e. Form INC-22A

Applicability of Form INC-22A

Every company incorporated on or before the 31st December, 2017 shall file the particulars of the company and its registered office, in e-Form ACTIVE.

However, the Companies which have not filed its financial statements or annual returns (i.e., AOC-4 and MGT-7) shall be restricted from filing INC-22A.

And, the companies that have been struck off or amalgamated or dissolved or under process of striking off or under liquidation as recorded in the register are not required to fill e-Form ACTIVE.

Information required to be furnished in Form INC-22A
1. CIN of the Company
2. OTP sent on the email id of the company
3. List of Directors as on date of filing
4. Details of Statutory Auditors
5. Details of Cost Auditor, Company Secretary and CFO of the company, if applicable
6. Details of the Managing Director or CEO or Manager or Whole-time Director of the company
7. Details of form AOC-4/AOC-4(XBRL) and MGT-7 for FY 2017-18 (SRN)

The form shall be digitally signed by one director in case of OPC, and, in case companies other than OPC, form shall be signed by one director and one KMP or two directors.

The eForm shall also be digitally signed by a Chartered Accountant/ Cost Accountant or a Company Secretary in whole-time practice.

Due Date to file Form INC-22A

The companies, required to file in e-Form ACTIVE, shall file it on or before 25th April 2019.

Consequences of late filing or Non-filing

Late Filing: In case company does not file eForm INC-22A within the time limit, filing of eForm shall be allowed with a fee of Rs. 10,000.

Non-Filing: In case company does not file eForm INC-22A, the Company shall be marked as “ACTIVE-non-compliant” on or after 26th April, 2019. Also, request for recording the following event-based information or changes shall not be accepted by the Registrar from such companies, unless the form is filed:
a. SH-07 (Change in Authorized Capital);
b. PAS-03 (Change in Paid-up Capital);
c. DIR-12 (Changes in Director except cessation);
d. INC-22 (Change in Registered Office);
e. INC-28 (Amalgamation, de-merger)

Attachment required to file Form INC-22A

Photograph of Registered Office showing external building and inside office, also showing therein at least one director/KMP who has affixed his/her Digital Signature to this form.

Friday, February 15, 2019

Taxation in India of Digital Businesses by Non Residents

Update based on the PIB Press Release dated 12-Feb-2019.

To address the challenges posed by the Non Resident enterprises  conducting their business through digital means in the India remotely, the following measures have been taken under the existing law:

1. EQUALISATION LEVY -
a)  A new levy viz. 'Equalisation Levy' was introduced by the Finance Act, 2016 for taxation of the digital economy based on OECD Base Erosion and Profit Shifting (BEPS) suggested measures.
b)  Presently, the levy is charged @ 6% of the amount of consideration for specified services received or receivable by a non-resident not having permanent establishment ('PE') in India, from a resident in India who carries out business or profession, or from a non-resident having permanent establishment in India, where the aggregate amount of such consideration exceeds one lakh rupees (Rs.100000) in a previous year.
c)   The Equalization Levy tax collection exceeded Rs. 550 crore for FY 2017-18.

2. Significant Economic Presence” OF NON RESIDENTS IN INDIA-
a) Section 9(1)(i) of the Income-tax Act, 1961 as amended introduced the concept of "Significant Economic Presence" (SEP) for establishing "business connection" in the case of non-resident in India. Accordingly, significant economic presence shall mean–


  1. Based on Amount: Any transaction in respect of any goods, services or property carried out by a non-resident in India including provision of download of data or software in India if the aggregate of payments arising from such transaction or transactions during the previous year exceeds the amount as may be prescribed; or


  1. Based on number of Interactions: Systematic and continuous soliciting of its business activities or engaging in interaction with such number of users as may be prescribed, in India through digital means.
(Suggestions/comments of stakeholders and the general public are invited to prescribe the thresholds to establish SEP of a non-resident in India )

3. GAAR Applicability: If digital businesses operated by non-residents are structured to artificially avoid establishment of a "business connection" or "permanent establishment" in India, including by way of claiming the activities carried out in India to be preparatory or auxiliary in nature, the GAAR provisions under the Income-tax Act may become applicable to the income of such digital businesses in India.

4. TAX based on significant economic presence (SEP) on non residents’ income earned by digital businesses IN DTAA & NON DTAA JURISDICTION-

i.  If India does not have DTAA - Tax is expected to increase tax collection by establishing business connection .

ii. If India already has a  DTAA - However if Non resident operating out of jurisdictions with which India already has a DTAA, Tax based on SEP will only be effective after renegotiation of such DTAA which will be based on international consensus.

Monday, February 4, 2019

MSME Form 1 - Reporting of Payments Due Over 45 Days

The Central Government, vide notification number S.O. 368(E) dated 22nd January, 2019, directed that every specified company shall submit a half yearly return in MSME Form I furnishing details of outstanding payment to Micro and Small Enterprise suppliers.

Applicability

All companies shall file Form MSME-1, who:
(a) receive supplies of goods or services from micro and small enterprises; and
(b) the payment for such micro and small enterprises is due for a period exceeding 45 days from the date of acceptance of the goods or services

Definition of Micro Enterprise and Small Enterprise

As per the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006:

Micro Enterprise
1. Engaged in the manufacture of goods, where the investment in plant and machinery does not exceed Rs. 25 lakhs; or
2. Engaged in providing services, where the investment in equipment does not exceed Rs. 10 lakhs.

Small Enterprise
1. Engaged in the manufacture of goods, where the investment in plant and machinery is more than Rs. 25 lakhs but does not exceed Rs. 5 crore; or
2. Engaged in providing services, where the investment in equipment is more than Rs. 10 lakh but does not exceed Rs. 2 crore.

These entities could be any of:
- Company
- Partnership
- Association of Persons
- Hindu Undivided Family
- Co-operative Society
- Proprietorship, etc.

Information to be Reported

1. Details of Company filing the form: CIN, PAN, Address, Email ID
2. Amount due to micro and small enterprises suppliers during the filing period
3. Particulars of the suppliers:
    a) Name
    b) PAN
    c) Amount due
    d) Date since when the payment is due
4. Reasons for delay in payment

Due Date for Filing

April to September - 31st October
October to March - 30th April

First Return

Every specified company shall file in MSME Form I details of all outstanding dues to micro or
small enterprise suppliers existing on the date of notification, i.e., on 22nd January, 2019, within thirty days from the date of publication of this notification, i.e., by 21st February, 2019.

Action Points

1. For swift compliance, the company should take a declaration from all of its vendors about if they fall under the definition of Micro or Small Enterprise as per the MSMED Act.
2. After identifying micro and small enterprises, an ageing of the amount outstanding to them should be prepared.
3. In case of amounts payable to them beyond 45 days, either the same should be paid on priority, or reason for delay should be recorded which will have to be reported in such Form.

*****

Edit (12-Feb-2019)

Remarks for Filing of MSME Form:

1. The definition for MSME is investment in plant & machinery based only. The definition based on turnover is part of the MSME Amendment Bill 2018, but has not been tabled on the floor of the Lok Sabha for passing.

2. Since 2015, the Central Government has mandated obtaining of UAM (Udyog Aadhaar Memorandum). You may ask your suppliers to provide the UAM.

3. The ICAI has issued Guidance Note on reporting of outstanding payments to MSME in the Tax Audit Report. The same guidance may be applied while filing the Form MSME-1 with the ROC. There should not be any inconsistency between MSME reporting in Tax Audit Report and in Form MSME-1. The only difference would be on account of Medium Enterprises as amounts outstanding to them are not to be reported in the ROC Form yet.

4. If the vendor neither provides UAM/EM/SSI number, nor discloses whether or not it has applied for UAM within a reasonable time, then one may presume that they are not covered under the definition of MSME. However, such a disclaimer may be given in the form filed with ROC. Also, one should have documentary proof that the vendors have been asked to provide UAM, but they haven't responded or failed to provide it.

*****

Edit (15-Feb-2019)

Format of Letter to be obtained from Vendors to establish their MSME status.


The Accounts Department
<Name of Company>
<Address>                                                                                     Date:

                Sub:       Vendor Classification as per MSME Act, 2006

Dear Sir,

We certify the following details about our enterprise as requested by you.

Name

Address

PAN

GSTIN

Nature of Enterprise
(Tick correct option)

Also, specify nature of activity

1.       Manufacturer

2.       Trader

3.       Service Provider

Classification as per MSMED Act 2006*
(Tick appropriate box)

1.       Micro Enterprise

2.       Small Enterprise

3.       Medium Enterprise

4.       None of the Above

If classified as Micro or Small Enterprise as per above, please attach self-attested copy of either of the following:
a)      MSME Registration Certificate or
b)      Udyog Adhaar Memorandum (UAM) or
c)       Declaration confirming the same


Thanking you.
Yours sincerely,



Signature
Name:                                                               Place:
Designation:                                                       Date: