clerl.tax

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  • Fast Track Game Changing GST Refunds for Exporters

    The GST Council has unveiled a groundbreaking initiative to ease the financial burden on exporters who encounter upward price revisions after exporting their goods. This strategic move will allow for the processing of refund applications for the additional Integrated Goods and Services Tax (IGST) paid under such circumstances. The formalization of this process has been marked by the issuance of Notification No. 12/2024-Central Tax, dated July 10, 2024.

    Innovative Refund Application Development

    The GST Network (GSTN) is in the process of crafting a new refund application category specifically tailored for claims related to additional IGST paid due to post-export price adjustments. This advancement will be incorporated into FORM GST RFD-01, designed to streamline and expedite the filing process, ensuring efficient handling of these claims.

    Provisional Filing Procedure for Refund Claims

    In the interim, exporters who need to claim a refund for the additional IGST paid can proceed using the existing system. They are required to file their claims under FORM GST RFD-01, selecting the “Any other” category, and clearly stating in the remarks: “Refund of additional IGST paid on account of increase in price subsequent to export of goods.”

    Alongside the application, exporters must submit Statements 9A and 9B as specified in Notification No. 12/2024-Central Tax, along with all necessary documents outlined in Circular 226/20/2024-GST dated July 11, 2024.

    Rigorous Processing of Refund Applications

    Designated tax officers will meticulously process the refund applications filed under this interim category. These officers will scrutinize the claims based on the provided documentary evidence. Exporters are urged to ensure comprehensive documentation accompanies their applications, as detailed in Paragraph 6 of Circular 226/20/2024-GST.

    Resolving Filing Issues and Grievances

    Taxpayers encountering difficulties during the refund application process can report their issues via the Grievance Redressal Portal at https://selfservice.gstsystem.in. This portal serves as a dedicated platform to assist taxpayers in navigating and resolving any challenges faced during the application submission.

    Anticipated Impact of the New GST Refund System

    This forward-thinking initiative by the GST Council, supported by subsequent notifications, represents a significant step in aiding exporters who bear increased costs due to post-export price revisions. The creation of a specialized refund application category within the GST system is expected to further streamline the process, allowing exporters to efficiently secure refunds and sustain their financial health.

    By adopting these measures, the GST Council demonstrates a robust commitment to supporting exporters, fostering an environment where international trade can flourish despite the challenges of price fluctuations.

  • Litigation Management under 🇮🇳 GST—Part 02

    Adjudication proceedings in tax administration are crucial, providing taxpayers the essential opportunity to present their case before any action is taken against them. The issuance of a Show Cause Notice (SCN) is a fundamental step in this process, serving as a formal notification to the taxpayer about the proposed actions by the tax authorities. The adjudicating officer, responsible for reviewing the SCN, must carefully consider the taxpayer’s response and all relevant evidence before reaching a decision. To ensure the process is legally sound, an SCN must adhere to specific principles.

    At its core, adjudication involves the judicial determination of disputes by applying the law to the facts and issuing an authoritative resolution. Section 75 of the CGST Act, 2017, outlines the fundamental principles for adjudication within the GST framework, guiding officers under Sections 73 and 74 and other relevant provisions.

    Departmental officers, acting as quasi-judicial entities during adjudication, bear significant responsibility. They must execute their duties with the utmost impartiality and caution, free from any bias. It is crucial for them to thoroughly understand and accurately process the facts, applying the appropriate legal provisions and notifications pertinent to each case.

    According to Section 75(4) of the CGST Act, 2017, a personal hearing opportunity must be provided to the taxpayer in specific circumstances: when a written request is made by the taxpayer or when an adverse decision is anticipated against them.

    Navigating Show Cause Notices

    Upon receiving an SCN and submitting a response, preparing for the adjudication hearing becomes critical. Key actions include ensuring attendance at the scheduled hearing. If attendance is not possible, a written request for adjournment, citing valid reasons, must be submitted. Note that no more than three adjournments will be granted. Failure to attend the hearing or seek adjournment can result in ex-parte adjudication, eliminating any argument of violating natural justice principles.

    Drafting and preparing additional written submissions for presentation during the hearing is essential. These submissions, explicitly stated as supplementary to the initial SCN response, must be considered by the adjudicating authority. They may include new judicial precedents, additional defenses, circulars, clarifications, or binding precedents not previously provided. These documents may also need to be emailed upon request.

    Conducting SCN Hearings

    The adjudication of any SCN is a quasi-judicial process handled by the designated officer. Taxpayers or their representatives must attend personal hearings as scheduled, with the option to appoint a consultant or advocate via a power of attorney or vakalatnama. Arriving at the hearing with all relevant documents, explanations, and submissions is crucial, and these should be formally submitted, with an acknowledgment obtained or noted in the proceedings sheet.

    During the hearing, the officer will prepare a proceedings sheet summarizing the discussion, which must be signed by both the taxpayer/representative and the officer. It is essential to ensure all defense arguments are presented comprehensively. If additional time or documents are required, requesting another hearing date is common, as multiple hearings are often granted. Accurately recording all discussions in the proceedings sheet is vital, and it is essential to insist on proper documentation.

    The adjudicating authority often notes that the taxpayer “reiterated the reply to SCN and had nothing more to add.” It is crucial to agree or disagree with this statement as appropriate.

  • Unveiling GST Rules on Appeals Before the Appellate Authority

    In the intricate landscape of the Central Goods and Services Tax (CGST) Rules, 2017, understanding the appellate authority’s rules, procedures, and mechanisms is crucial for compliance and effective navigation of the legal framework. This guide offers a detailed examination of key rules, ensuring a profound comprehension and proficient application of the CGST provisions.

    Rule 26: Method of Authentication

    The CGST Rules, 2017, mandate that the grounds of appeal and the appeal form in GST APL-01 be authenticated and verified according to Rule 26. This rule outlines the process for authenticating appeal forms, ensuring the integrity and legality of submissions. Documents required under various provisions of CGST Rules, 2017 must be submitted electronically, adhering to one of the following methods:

    • Digital signature certificate (DSC)
    • E-signature in accordance with the Information Technology Act, 2000
    • Verification by any other mode of signature
    • Verification as notified by the Board

    The documents necessitating authentication per Rule 26 include all applications, replies to notices, returns, details of outward and inward supplies, appeals, and any other relevant document. For companies, verification must be conducted via DSC, with specific relaxations in place during certain periods for Electronic Verification Code (EVC).

    Rule 108: Appeal to the Appellate Authority

    Appealing to the Appellate Authority under sub-section (1) of section 107 requires filing FORM GST APL-01 electronically, accompanied by pertinent documents. A provisional acknowledgment is issued immediately upon filing. Appeals can also be submitted manually in cases where electronic filing is not possible, as notified by the Commissioner.

    The appeal must be signed and verified in the manner specified in Rule 26. A final acknowledgment, indicating the appeal number, is issued in FORM GST APL-02 once the decision or order appealed against is uploaded on the common portal. If the decision or order is not available on the portal, a self-certified copy must be submitted within seven days, after which the final acknowledgment is issued.

    Rule 109: Application to the Appellate Authority

    Under sub-section (2) of section 107, the Commissioner may also file an appeal to the appellate authority, following the procedure specified in Rule 109. This requires submitting FORM GST APL-03 electronically, along with the relevant documents. Manual submission is permitted if notified by the Commissioner or if electronic filing is not feasible.

    The procedure mandates the submission of a certified copy of the impugned order within seven days. The appellate authority, or an authorized officer, will issue a final acknowledgment, indicating the appeal number, upon receipt of the certified copy.

    Recent Amendments and Procedural Updates

    Rule 109 has undergone amendments, with the latest changes introduced by Notification No. 26/2022-Central Tax dated 26.12.2022 and further refined by Notification No. 38/2023-Central Tax dated 04.08.2023. The updated procedure now requires applications to be filed in FORM GST APL-08, along with supporting documents, electronically. Manual filing is allowed under specific conditions notified by the Commissioner.

    When the decision or order appealed against is uploaded on the common portal, a final acknowledgment in FORM GST APL-02 is issued, marking the date of the provisional acknowledgment as the filing date. If the decision or order is not uploaded, a self-certified copy must be submitted within seven days to finalize the acknowledgment. Failure to submit within this period shifts the filing date to the date of submission of the certified copy.

    Conclusion

    Mastering the appellate procedures under the CGST Rules, 2017, requires meticulous attention to detail and strict adherence to the prescribed methods of authentication, filing, and acknowledgment. By following the outlined rules and staying updated with recent amendments, appellants and legal practitioners can navigate the appellate landscape with confidence and precision.

  • Common ITR Issues and FAQs for Filing Returns for AY 2024-25

    Filing income tax returns can be a complex and often challenging task for taxpayers, especially with frequent updates to tax laws and regulations. The Assessment Year (AY) 2024-25 introduces several changes and clarifications that taxpayers need to be aware of to ensure a smooth and accurate filing process. This document provides a comprehensive list of common issues encountered while filing ITR for AY 2024-25 and offers detailed answers to frequently asked questions (FAQs). By addressing these common queries, taxpayers can avoid potential pitfalls and ensure compliance with the latest tax requirements.

    Q.1: Taxpayer is unable to choose ITR 1/ 4 from drop down for AY 2024-25 as the option is greyed off while filing return?

    Ans: In case the taxpayer has special rate of income and TDS is deducted for such income (e.g., 115BB), then ITR 1 and ITR 4 are not applicable. The respective dropdowns are greyed off. The taxpayer is required to file ITR Form 2 or 3 as applicable.

    Q.2: Schedule VIA for claiming deductions is not enabled while filing the ITR for AY 2024-25?

    Ans: From AY 2024-25, the new tax regime has become the default tax regime and VIA deductions cannot be claimed, except deduction u/s 80CCD(2)/80CCH/80JJAA as per Section 115BAC of the Income Tax Act, 1961. To claim any deductions (as applicable), the taxpayer needs to choose the old tax regime by selecting “Yes” in ITR 1 / ITR 2 or “Yes, within due date” in ITR 3 / ITR 4 / ITR 5 under the “opting out option” in the Schedule ‘Personal Information’ or ‘Part-A General’.

    Q.3: While filing the ITR, the taxpayer is getting a bank account validation error. How to resolve the issue?


    Ans: The taxpayer should check if valid bank account details are added under the ‘My Bank Account’ tab in the ‘My Profile’ section on the income tax portal before filing the ITR. Update the profile correctly before starting the new filing. In case of issues while validating the bank account, use the offline utility to file ITR. A pre-validated bank account is required for issuing refunds.

    Q.4: If the taxpayer has earned special income like winning from a lottery or horse races, can they file ITR 1 and ITR 4?


    Ans: If TDS has been deducted on special income like winning from a lottery or horse races, filing ITR-1 and 4 is not allowed. It is recommended to check Form 26AS and AIS before filing the ITR.

    Q.5: If Form 10IEA is filed for AY 2024-25, is it compulsory for the taxpayer to opt for the old tax regime?


    Ans: Yes, once Form 10IEA is filed for AY 2024-25, it cannot be reverted in the same AY, and the taxpayer must opt for the old tax regime for AY 2024-25. The taxpayer can change the option in the next assessment year based on the income details and ITR applicability.

    Q.6: In which case is filing Form 10IEA for AY 2024-25 compulsory to opt for the old tax regime?


    Ans: Filing Form 10IEA is mandatory for taxpayers who want to file ITR under the old tax regime for AY 2024-25 with Business and profession income, i.e., either in ITR-3 or ITR-4.

    Q.7: The taxpayer is unable to claim Interest on borrowed capital of a self-occupied property as it is greyed off. Why?


    Ans: From AY 2024-25, the ‘New Tax Regime’ has become the default tax regime, and claiming “Interest on borrowed capital for self-occupied property” is not allowed as per Section 115BAC of the Act, 1961. To claim this, the taxpayer must choose the ‘Old Tax Regime’ by selecting “Yes” in ITR 1 / ITR 2 or “Yes, within due date” in ITR 3 / ITR 4 / ITR 5 in the field provided for the “opting out option” in the ITR Form.

    Q.8: While filing ITR for AY 2024-25, the taxpayer is unable to claim all other deductions other than 80CCD (2). Why?


    Ans: From AY 2024-25, the new tax regime has become the default tax regime where claiming Chapter VIA deductions are not allowed except Section 80CCD (2) as per Section 115BAC of the Income Tax Act. To claim other VIA deductions, the taxpayer must choose the ‘Old Tax Regime’ by selecting “Yes” in ITR 1 / ITR 2 or “Yes, within due date” in ITR 3 / ITR 4 in the field provided for the “opting out option” in the ITR Form.

    Q.9: The taxpayer is getting an error as “Name of taxpayer in ITR does not match with the Name as per the PAN database”. How to resolve this?


    Ans: The First Name, Middle Name, and Last Name in ITR should match the name registered under the My Profile section after logging in on the portal. Update the profile and then download the latest prefilled JSON for filing the return offline or start a new filing online.

    Q.10: For AY 24-25, the taxpayer filed Form 10IEA by mistake and now wishes to revoke/withdraw the same. Can this be done?


    Ans: Once Form 10IEA is filed for AY 2024-25, it cannot be revoked/withdrawn in the same AY. The taxpayer must mandatorily opt for the old tax regime for AY 2024-25. The option to ‘Withdraw’ will be available in the subsequent year and can be changed only once in a lifetime for Business and profession cases (ITR-3 or ITR-4).

    Q.11: The taxpayer is unable to claim 10(13A) house rent allowance while filing the return for AY 2024-25. Why?


    Ans: From AY 2024-25, the new tax regime has become the default tax regime where claiming HRA u/s 10(13A) is not allowed as per Section 115BAC of the Income Tax Act. To claim HRA, the taxpayer must choose the ‘Old Tax Regime’ by selecting “Yes” in ITR 1 / ITR 2 or “Yes, within due date” in ITR 3 / ITR 4 in the field provided for the “opting out option” in the ITR Form.

    Q.12. Is any form required to file for claiming the deduction u/s 80DD and 80U?


    Ans: When claiming deductions u/s 80DD and 80U, it is recommended for the taxpayer to obtain a certificate from the relevant medical authority for such disabilities. File Form 10IA as per Rule 11A and provide the form details (acknowledgement no. and date) in Sch 80DD/80U of the return.

    Q.13. Is it mandatory to verify the return?


    Ans: Yes, verification of ITR after submission is mandatory. The return should be verified within 30 days post-submission either through EVC mode or DSC. Alternatively, download the ITR-V receipt copy under View Filed Return and send it to CPC via speed post within 30 days. It is recommended to complete verification online to avoid postal issues.

    Q.14: The taxpayer is unable to choose “Yes/No” for “Whether you were director in a company at any time during the previous year” while filing return in ITR 2 / ITR 3. Why?


    Ans: This question is applicable only for “Individual”. Check the Status of the Assessee. If the Status is ‘Individual’, the option “Whether you are a ‘Director’ of a company at any time during the previous year” will be enabled. Enter the details and proceed to file the return.

    Q.15: The taxpayer is getting an error as “Gross receipts/ Turnover is provided in schedule BP but financial particulars such as sundry creditors/Inventories, sundry debtors, cash in hand is not filled” in ITR 4. How to resolve this?


    Ans: It is mandatory to fill fields such as ‘Sundry Creditors, Inventories, Sundry Debtors, Cash in Hand’ under “Financial particulars” in schedule BP in ITR 4. If not filled, it will throw an error.

    Q.16: The taxpayer filed Form 10-IEA and is submitting ITR with correct Form 10-IEA details, but an error still appears. What to do?


    Ans: Check and validate Form 10IEA details under “view filed Forms” after submission. Retry filing ITR after entering the correct form details. Ensure not to submit Form 10-IEA multiple times on the portal.

    Q.17: The taxpayer corrected validation errors during ITR submission, but errors still show. What to do?


    Ans: Try resubmitting ITR in a fresh session to avoid issues after correcting errors.

    Q.18: The taxpayer entered the deduction amount u/s 80CCD (2) under Schedule VIA in the return, but the eligible amount is computing as 0. Why?


    Ans: Check if Salary income is provided after selecting the ‘Basic Salary’ dropdown under Schedule Salary for computing the eligible deduction u/s 80CCD (2).

    Q.19: Is it mandatory to verify the return through DSC option only for 44AB audit return cases?


    Ans: An amendment in Rule 12 of Income Tax Rules, 1962, effective from 1st April 2024, allows verification of the return in 44AB audit cases through the EVC option. It is no longer mandatory to verify through DSC only.

    Q.20: The taxpayer is receiving an error for tax computation even after paying advance tax. What could be the issue?


    Ans: The taxpayer should ensure that the details of the advance tax paid are correctly filled in the Schedule IT section of the ITR form. If the details are incorrect or missing, it will result in an error. Cross-check with Form 26AS to confirm the advance tax payments are recorded correctly.

    Q.21: The taxpayer is unable to e-verify the return using Aadhaar OTP. How to resolve this?


    Ans: Ensure that the mobile number linked to Aadhaar is active and has the ability to receive OTPs. Check if the Aadhaar number is correctly linked and verified in the income tax portal profile section. If issues persist, use other e-verification methods like net banking or bank account pre-validation.

    Q.22: The taxpayer has multiple bank accounts, but not all are visible for refund purposes. What should be done?


    Ans: The taxpayer should ensure that all bank accounts are pre-validated and EVC-enabled in the ‘My Bank Account’ section of the income tax portal profile. Only pre-validated and EVC-enabled bank accounts will be available for selection for refund purposes.

  • The 🇮🇳 tycoon who took on big pharm by launching $1 AIDS Drugs that shook the world

    Dr. Yusuf Hamied, the visionary leader of Cipla, navigated a turbulent sea of medical and ethical challenges to revolutionize AIDS treatment. His journey, underscored by relentless dedication and profound empathy, would change the course of pharmaceutical history, providing life-saving drugs at unprecedentedly low prices.

    The Genesis of a Movement

    In 1986, Dr. Hamied stumbled upon a pivotal revelation when a colleague mentioned AZT as the only drug for AIDS, a disease he was unfamiliar with at the time. This moment marked the beginning of his relentless quest to make AIDS medication accessible to all, especially in India where the disease was quietly escalating.

    Pioneering Affordable Solutions

    By 1991, Hamied had taken a bold step to manufacture AZT, offered by Rama Rao from an Indian government lab. While the international price soared at $8,000 per patient annually, Cipla introduced it at a fraction of the cost. Despite this effort, affordability remained an issue for most Indians, leading to zero sales and eventual disposal of 200,000 capsules.

    Discovering HAART and the Challenge Ahead

    Dr. Hamied’s tenacity did not wane. He learned about HAART (Highly Active Anti-Retroviral Therapy) from medical journals, a cocktail comprising stavudine, lamivudine, and nevirapine, which together cost $12,000 per patient annually. Determined to make these accessible, Hamied embarked on a mission to produce this cocktail at Cipla.

    Confronting Global Giants

    The struggle took a significant turn in 1997 when South Africa, led by Nelson Mandela, enacted laws to bypass pharmaceutical patents, enabling the import of low-cost medicines. This move incited fierce backlash from multinational drug companies and the US government, leading to a high-stakes legal battle against South Africa’s new health law.

    A Call to Action and a Formidable Alliance

    On August 8, 2000, William Haddad, an activist and former investigative journalist, contacted Hamied. Along with a group of dedicated activists, Haddad sought a partnership to disrupt the stranglehold of pharmaceutical patents on AIDS medications. This alliance, forged in the crucible of shared determination, would challenge and ultimately change the global pharmaceutical landscape.

    The Landmark Proposal in Brussels

    A month later, at the European Commission’s conference, Hamied made a groundbreaking offer: selling the AIDS cocktail for $800 a year, $600 for bulk purchases, and providing the technology free to any African government. Despite his compelling pitch, which underscored the urgent need to prioritize human lives over profits, no immediate action was taken.

    Persistence Amidst Skepticism

    Facing widespread skepticism about the quality of Indian generics, Hamied remained undeterred. His credibility and the reputation of Indian pharmaceuticals were under constant scrutiny, yet he persisted in his mission to deliver affordable treatment to those in dire need.

    Breaking Through with a Revolutionary Price

    The defining moment came when Haddad posed a direct question to Hamied: Could Cipla offer the AIDS cocktail for $1 a day? After swift calculations, Hamied agreed, setting a price that would become a game-changer. This bold decision was announced to the world through a New York Times article, igniting a global outcry against Big Pharma’s price-gouging practices.

    Victory for Humanity

    The relentless efforts of Hamied and his allies culminated in a significant victory. Multinational drug companies, under immense pressure, dropped their lawsuit in South Africa and waived patents to allow the sale of affordable generic AIDS medications. The $1-a-day figure shattered the previous financial barriers, compelling the West to reconsider its stance on aiding the global fight against AIDS.

    Conclusion

    Dr. Yusuf Hamied’s legacy is a testament to the power of resilience and compassion in the face of formidable opposition. His unwavering commitment to making life-saving drugs accessible to all, irrespective of economic status, not only transformed the pharmaceutical industry but also saved millions of lives. This narrative of courage and innovation continues to inspire and challenge the global community to prioritize humanity over profits.

  • Recent Development in 🇮🇳 GST—Part 01

    India’s economic landscape is in the midst of a remarkable transformation, as evidenced by the latest data released by the National Statistical Office (NSO) on May 31, 2024. The nation’s fiscal year 2024 growth rate stands at an impressive 8.2%, marking the ninth instance since 1961 where the GDP growth rate has surpassed the 8% threshold. This robust growth underscores the vigorous momentum within the economy, poised to accelerate further under a stable central government.

    The quarterly growth rates for FY 2023-24, consistently stable at 8.2%, 8.1%, 8.6%, and 7.8%, highlight the resilience of domestic economic activities, buoyant investment, and consumption demand, alongside strong corporate performance. As the new fiscal year 2024-25 unfolds, expectations remain optimistic with a promising monsoon season and positive ratings from global agencies bolstering this outlook.

    In contrast to the global scenario where only three of the major five economies—China (5.3%) and the UK (0.2%)—have shown significant growth, India remains the fastest-growing major economy. Projections from the OECD suggest a potential slowdown for the US and China in 2025, positioning India at the forefront of global economic expansion.

    GST: The Backbone of India’s Economic Framework

    As India approaches the seventh anniversary of the Goods and Services Tax (GST) regime, several critical developments warrant attention. Since its inception on July 1, 2017, the GST has undergone continuous evolution, facing demands for the establishment of Appellate Tribunals and the inclusion of petroleum products and natural gas under its purview. The current phase signifies a shift from procedural adjustments to adjudication and appeals, indicating a potential rise in litigation and disputes.

    The Central Board of Indirect Taxes and Customs (CBIC) has issued an advisory on special procedures for manufacturers of tobacco and pan masala, and provided new guidelines for personal hearings in GST DRC-01. Additionally, the introduction of the new E-way Bill-2 portal by the National Informatics Centre (NIC) aims to enhance efficiency, operating alongside the main portal since June 1, 2024.

    Fiscal Fortitude: May 2024 GST Revenue Insights

    May 2024 witnessed gross GST revenues reaching Rs. 1.73 lakh crore, a 10% year-on-year increase. This surge is attributed to a significant rise in domestic transactions (up 15.3%) and a deceleration in imports (down 4.3%). Post-refunds, the net GST revenue for May 2024 stands at Rs. 1.44 lakh crore, reflecting a 6.9% growth compared to the same period last year.

    Strategic Reassignments: Territorial Jurisdiction Adjustments

    A notable amendment in the territorial jurisdiction of Central Tax Officers has been executed by the CBIC, effective from August 5, 2023. The revised jurisdiction covers districts in Rajasthan, including Alwar, Jaipur, Jodhpur, and Udaipur, as stipulated in the amended Notification No. 02/2017-CT dated June 19, 2017. This realignment aims to streamline tax administration and enhance operational efficiency.

    Proactive Measures: CBIC Guidelines for Early Recovery

    In a move to safeguard revenue, the CBIC has established guidelines for initiating recovery proceedings before the conventional three-month period post-demand order service. Under Section 79(1) of the CGST Act, 2017, recovery can commence before the three-month deadline if deemed necessary for revenue interests. This proactive measure requires proper justification and approval, emphasizing the balance between revenue protection and business facilitation.

    Special Procedures for Tobacco and Pan Masala Manufacturers

    With the issuance of Notification No. 04/2024-CT dated January 5, 2024, specific taxpayers dealing with tobacco and pan masala are required to follow a newly established special procedure. This includes the submission of detailed information via forms GST SRM-I and GST SRM-II, with the GSTN portal facilitating machine registration and data filing.

    E-way Bill 2 Portal: Enhancing Logistics and Compliance

    The launch of the E-way Bill 2 portal signifies a major step towards improving the efficiency of logistics and compliance in the GST regime. This portal, operational from June 1, 2024, allows taxpayers and logistic operators to generate and update E-way bills independently, ensuring high availability and seamless operations even during technical issues on the main portal.

    Enhanced Compliance: Personal Hearing in GST DRC-01

    In response to a directive from the Madras High Court, the GSTN has enabled an option for taxpayers to request a personal hearing in GST DRC-01 responses. This functionality, now active on the GST portal, allows taxpayers to choose between ‘Yes’ or ‘No’ for personal hearings, enhancing the procedural fairness and transparency of the adjudication process.

    Sustained Growth: Breakdown of May 2024 GST Collections

    The GST revenue collection for May 2024 stands at Rs. 1.73 lakh crore, with cumulative revenue for FY 2024-25 reaching Rs. 3.83 lakh crore, reflecting an 11.3% year-on-year growth. The breakdown of collections includes Rs. 32,409 crore for CGST, Rs. 40,265 crore for SGST, Rs. 87,781 crore for IGST (including Rs. 39,879 crore from imported goods), and Rs. 12,284 crore from Cess (including Rs. 1,076 crore from imported goods). Leading states in GST collection growth include Delhi, Punjab, Uttarakhand, and Haryana, while states like Himachal Pradesh, Mizoram, Assam, West Bengal, Madhya Pradesh, and Tamil Nadu lag behind.

    India’s economic journey continues to be a testament to strategic governance and resilient growth, setting a benchmark for global economies to follow.

  • Key Circulars in 53rd GST Council Meeting—Part 1

    Following the 53rd GST Council meeting on June 22, 2024, the Central Board of Indirect Taxes and Customs (CBIC) issued a series of clarifying circulars, numbered 207 to 222, on June 26, 2024. These circulars address key issues including taxability, place of supply, and time of supply, ensuring compliance and clarity for taxpayers. Here is a comprehensive analysis of the most significant circulars issued.

    CBIC’s New Circulars: An Overview

    CBIC has introduced 16 circulars (Nos. 207 to 222-GST), formulated from the recommendations of the GST Council meeting on June 22, 2024. These circulars cover a spectrum of critical issues:

    Circular No. 207 focuses on reducing government litigation by setting monetary thresholds for departmental appeals before the GST Appellate Tribunal (GSTAT), High Courts, and the Supreme Court. Circular No. 208 provides special procedures for manufacturers of specified commodities. Circular No. 209 clarifies the provisions related to the place of supply under Section 10(1) of the Integrated Goods and Services Tax Act, 2017.

    Overview of Key Circulars

    Circular No.Issue
    207Reduction of Government Litigation – fixing monetary limits for filing appeals or applications by the Department before GSTAT, High Courts, and Supreme Court
    208Clarifications on various issues pertaining to special procedure for the manufacturers of specified commodities
    209Clarification on the provisions of clause (ca) of Section 10(1) of the Integrated Goods and Service Tax Act, 2017 relating to place of supply
    210Clarification on the valuation of supply of import of services by a related person where the recipient is eligible for full input tax credit
    211Clarification on the time limit under Section 16(4) of the CGST Act, 2017 in respect of RCM supplies received from unregistered persons
    212Clarification on the mechanism for providing evidence of compliance with conditions of Section 15(3)(b)(ii) of the CGST Act, 2017 by the suppliers
    213Seeking clarity on the taxability of reimbursement of securities/shares as SOP/ESPP/RSU provided by a company to its employees
    214Clarification on the requirement of reversal of input tax credit in respect of the portion of the premium for life insurance policies which is not included in the taxable value
    215Clarification on the taxability of wreck and salvage values in motor insurance claims
    216Clarification in respect of GST liability and input tax credit (ITC) availability in cases involving Warranty/ Extended Warranty, in furtherance to Circular No. 195/07/2023-GST dated 17.07.2023
    217Entitlement of ITC by the insurance companies on the expenses incurred for repair of motor vehicles in case of reimbursement mode of insurance claim settlement
    218Clarification regarding the taxability of the transaction of providing a loan by an overseas affiliate to its Indian affiliate or by a person to a related person
    219Clarification on the availability of input tax credit on ducts and manholes used in the network of optical fiber cables (OFCs) in terms of section 17(5) of the CGST Act, 2017
    220Clarification on the place of supply applicable for custodial services provided by banks to Foreign Portfolio Investors
    221Time of supply on Annuity Payments under HAM Projects
    222Time of supply in respect of the supply of the allotment of Spectrum to Telecom companies in cases where an option is given to the Telecom Companies for payment of licence fee and Spectrum usage charges in instalments in addition to an option of upfront payment

    Reduction of Government Litigation in GST (Circular No. 207/1/2024-GST)

    The CBIC, under Section 120 of the CGST Act, has established monetary thresholds below which appeals or applications will not be filed by Central Tax officers. This measure aims to minimize unnecessary litigation and optimize judicial resources. The thresholds are:

    Appellate ForumMonetary Limit (₹)
    GSTAT20,00,000
    High Court1,00,00,000
    Supreme Court2,00,00,000

    Only the aggregate amount of tax in dispute is considered, excluding interest and penalties. These limits apply to CGST, SGST, UGST, IGST, and Compensation Cess disputes. In cases of interest, penalty, late fee, or erroneous refunds, the respective amounts are considered for the monetary limit.

    The thresholds are non-applicable in certain circumstances, including cases involving constitutional validity, valuation of goods or services, classification disputes, refunds, place of supply issues, and recurring interpretational matters. Additionally, cases with adverse comments or costs imposed on the government or its officers are excluded.

    Special Procedure for Manufacturers of Specified Commodities (Circular No. 208/2/2024-GST)

    Based on the GST Council’s recommendations, the CBIC has clarified various issues pertaining to the special procedure for manufacturers of specified commodities such as pan masala, tobacco, and hookah. Key points include:
    The make and model number of machinery are optional in Table 6 of FORM GST SRM-I.
    The special procedure is not applicable to manufacturing units in Special Economic Zones (SEZs).
    Chartered Engineers with certification from the Institute of Engineers India (IEI) are qualified to issue certificates.
    The special procedure applies to all individuals involved in manufacturing, including job workers and contract manufacturers. If unregistered, the principal manufacturer bears the compliance responsibility.

    Place of Supply of Goods to Unregistered Persons (Circular No. 209/3/2024-GST)

    The CBIC has provided clarity on the place of supply for goods delivered to unregistered persons, especially when supplied through e-commerce platforms. According to clause (ca) of Section 10(1) of the IGST Act, effective from October 1, 2023:
    When goods are supplied to an unregistered person, and the delivery address differs from the billing address, the place of supply is the delivery address recorded on the invoice.
    Suppliers may record the delivery address as the recipient’s address on the invoice for determining the place of supply.

    These insights from Circulars No. 207, 208, and 209 underscore the CBIC’s commitment to simplifying GST compliance, reducing litigation, and providing clarity on critical tax issues. By setting clear guidelines and thresholds, the CBIC aims to streamline the tax administration process and ensure a more efficient dispute resolution system.

    Key Takeaways from the Latest CBIC Circulars

    The CBIC’s recent circulars provide a roadmap for taxpayers and tax officials alike, clarifying procedures and reducing ambiguities in GST implementation. With these updates, the GST regime continues to evolve, aiming for greater transparency and efficiency in tax administration.

  • Key Circulars in 53rd GST Council Meeting—Part 2

    In the aftermath of the pivotal 53rd GST Council meeting on June 22, 2024, the Central Board of Indirect Taxes and Customs (CBIC) has released a series of 16 circulars, numbered 207 to 222, all dated June 26, 2024. These circulars provide critical clarifications on various aspects such as taxability, place of supply, and time of supply. This article delves into Circulars No. 210, 211, and 212, highlighting their significant provisions and implications.

    Circular No. 210/4/2024-GST: Valuation of Supply of Import of Services by Related Persons

    Following the recommendations of the 53rd GST Council, the CBIC has clarified the valuation of services imported by related persons where the recipient is eligible for full input tax credit (ITC). According to the second proviso to Rule 28(1) of the CGST Rules, the invoice value is deemed the open market value for such transactions.

    The circular reiterates the guidelines issued on July 17, 2023 (Circular No. 199/11/2023-GST), concerning services between distinct persons eligible for full ITC. It extends these provisions to cover imported services between related entities. If the Head Office (HO) does not issue an invoice for services provided to a Branch Office (BO), the service value is considered Nil and deemed as open market value.

    Moreover, for foreign affiliates providing services to related domestic entities eligible for full ITC, the invoice value is considered the open market value. If the domestic entity does not invoice these services, they are also deemed Nil and considered the open market value.

    Circular No. 211/5/2024-GST: Time Limit for Availment of ITC under RCM Supplies from Unregistered Persons

    This circular, based on the GST Council’s recommendations, clarifies the time limit for availing ITC under Section 16(4) of the CGST Act, 2017, for supplies received from unregistered persons under the reverse charge mechanism (RCM).

    For supplies where the recipient must issue an invoice per Section 31(3)(f) of the CGST Act, the financial year relevant for calculating the ITC availment time limit is when the recipient issues the invoice, provided the tax is paid, and all conditions of Sections 16 and 17 are met. Should the recipient delay issuing the invoice and tax payment, interest on the delayed tax payment and possible penalties under Section 122 of the CGST Act will apply.

    Circular No. 212/6/2024-GST: ITC Mechanism for Providing Compliance Evidence by Supplier

    To ensure uniformity and compliance with Section 15(3)(b)(ii) of the CGST Act, 2017, regarding the reversal of ITC when a supplier issues a tax credit note, the CBIC has introduced a clarificatory mechanism. Currently, the GST portal lacks functionality for verifying ITC reversal compliance. Therefore, suppliers must provide substantial proof to avoid demands from GST authorities.

    Until a portal-based verification system is available, suppliers must submit a certificate or self-undertaking from the recipient to prove ITC reversal. For tax amounts exceeding Rs 5,00,000 in a financial year, the recipient must provide a certificate from a Chartered Accountant (CA) or Cost Management Accountant (CMA). For amounts below this threshold, an undertaking or certificate from the recipient suffices. These documents must detail the credit notes, relevant invoice numbers, ITC reversal amounts, and reference documents like FORM GST DRC-03.

    These certificates or undertakings will serve as admissible evidence under Section 15(3)(b)(ii) during scrutiny, audits, or investigations. They can also be retrospectively procured to provide necessary compliance evidence for past periods.

    Summary of Circulars

    Circular No. / DateIn Relation To
    Circular No. 210/4/2024-GSTValuation of supply of import of services by related persons
    dated 26.06.2024
    Circular No. 211/5/2024-GSTTime limit for availment of ITC under RCM supplies from unregistered persons
    dated 26.06.2024
    Circular No. 212/6/2024-GSTITC related mechanism for providing evidence of compliance by supplier
    dated 26.06.2024

    In conclusion, these circulars from the CBIC, grounded in the GST Council’s recommendations, aim to streamline tax processes and ensure clarity on critical GST provisions. They emphasize the importance of meticulous documentation and compliance to avoid legal complications and facilitate smooth tax administration.

  • Advantages of Filing a Nil ITR

    In the realm of personal finance, the act of filing a Nil Income Tax Return (ITR) often goes undervalued. While it may seem unnecessary for those earning below the taxable limit, the benefits extend far beyond compliance. Filing a Nil ITR can unlock significant advantages, from easing travel visa approvals and securing scholarships to simplifying loan processes and managing future tax liabilities.

    This article sets the stage for exploring six key benefits of filing a Nil ITR. With expert insights and practical examples, we aim to demonstrate how this simple act can enhance financial credibility, offer proof of income, and provide strategic tax planning opportunities. Discover how a Nil ITR can be a powerful tool in your financial toolkit, paving the way for greater financial stability and opportunities.

    Unlocking Travel Visa Approvals with Ease

    Filing an ITR can be a game-changer for securing travel visas. Many embassies demand the last three years of ITRs to assess an applicant’s financial stability and history. This not only demonstrates ongoing financial commitments but also enhances your credibility as a law-abiding citizen, significantly boosting your chances of visa approval. Swapnil Bhaskar, Chief of Strategy at Niyo, emphasizes, “A consistent ITR filing record strongly indicates ongoing financial responsibilities and ties to India, suggesting a lower risk of the applicant overstaying their visa.

    Boosting Scholarship Applications

    Filing an ITR can be crucial for scholarship applications, especially when proving a family’s income below a certain threshold. For instance, the Kanyashree Prakalpa in West Bengal mandates that the family income must be less than Rs 1.2 lakh per annum for eligibility. Alay Razvi, Partner at Accord Juris, notes, “ITRs serve as proof of your income, which can help you apply for scholarships.”

    Carrying Forward Losses for Future Gains

    One of the significant advantages of filing an ITR, even a nil one, is the ability to carry forward losses to offset future income. Chartered accountant Ankit Jain explains, “Capital losses can be carried forward for up to eight years to be set off against future capital gains, which can be a valuable tax planning tool.” This strategy can effectively reduce future tax liabilities.

    Validating Gifts and Assets Received

    An ITR serves as official proof of income or assets received during the year. Advocate Razvi highlights, “Some income, like gifts from relatives, is exempt from income tax but needs to be declared in the ITR to avoid future disputes.” This declaration ensures transparency and avoids complications related to bank or property transfers.

    Securing Loans with Confidence

    Regularly filed ITRs play a critical role in loan assessments, especially for significant loans like home loans. Bhaskar states, “Regularly filed ITRs indicate stable income and financial discipline, crucial for lending decisions.” For self-employed individuals, ITRs provide a reliable, government-verified source of income assessment.

    Claiming TDS Refunds Efficiently

    TDS deductions occur in various transactions, such as interest from bank FDs or high-value monthly house rents. To reclaim these deductions, filing an ITR is essential. Without this step, eligible refunds remain unclaimed, leaving your money with the tax authorities.

    The Bottom Line: Why Filing a Nil ITR is a Smart Move

    Filing a Nil ITR, even when not legally required, opens doors to numerous benefits. From simplifying visa applications to securing loans, scholarships, and even managing future tax liabilities, the advantages are substantial and multifaceted. In the complex landscape of personal finance, a proactive approach to ITR filing can offer peace of mind and tangible benefits.

  • ITR Filing Deadline Must Be Permanently Extended beyond 31 July

    Here’s Why 45 Days Isn’t Enough for Salaried Individuals

    The current deadline to file income tax returns (ITR) for FY 2023-24 (AY 2024-25) is set for July 31, 2024. This timeframe, while applicable to taxpayers whose accounts do not require auditing – including salaried individuals and certain self-employed professionals – remains insufficient. Here, we delve into why this deadline is unreasonable and advocate for a permanent extension.

    1. Inadequate Time Post TDS Certificate Issuance

    Despite the income tax department releasing ITR forms at the financial year’s start, many salaried individuals are hindered by the delayed availability of critical TDS certificates such as Form 16 and Form 16A. These documents, essential for accurate tax filing, are typically issued by June 15. This effectively compresses the filing window to a mere 45 days, from June 15 to July 31, a duration glaringly inadequate for thorough tax preparation.

    2. Timing of AIS and Form 26AS Updates

    The Annual Information Statement (AIS) and Form 26AS are pivotal for taxpayers, reflecting income and tax deductions respectively. These are fully updated by May 31, as entities responsible for filing the Statement of Financial Transactions (SFT) and TDS returns must do so by this date. Consequently, taxpayers require sufficient time beyond June 15 to reconcile these documents with their financial records, underscoring the necessity for a deadline extension.

    3. Complexities of Collecting Supporting Documents

    The process of collating additional documents such as capital gains statements from mutual funds, interest certificates from banks and the RBI, and income details from post office schemes, is intricate and time-consuming. Given that some interest income may not appear in the AIS, taxpayers must diligently verify and report all income sources to avoid discrepancies and potential tax notices.

    4. Switching Tax Regimes

    Taxpayers may opt to switch between the new and old tax regimes during the ITR filing process. This switch entails meticulous recalculations of taxable income, accounting for deductions and exemptions applicable under each regime. Such detailed financial planning cannot be satisfactorily completed within the constrained timeframe currently provided.

    Expert Opinions on Extending the ITR Filing Deadline

    Sujit Bangar, a former IRS officer and founder of TaxBuddy.com, emphasizes the impracticality of the current deadline. He suggests a three-month period from the issuance of TDS certificates, proposing September 15 as an ideal deadline for non-audit cases. Similarly, Suresh Surana, founder of RSM India, advocates for a permanent extension, highlighting the disproportionate pressure on taxpayers to compile financial data and file returns within just 45 days.

    In conclusion, extending the ITR filing deadline beyond July 31 to a more reasonable date, such as September 15 or even August 31, is imperative. This adjustment will ensure that taxpayers have adequate time to accurately prepare and file their returns, ultimately fostering compliance and reducing undue stress. The call for a permanent extension is not just a matter of convenience but a necessary reform for fair and efficient tax administration.