CA SUDEEP KUMAR JAIN

CHAIRMAN - AGRA BRANCH

CA.SUDEEP K. JAIN

CA. ASHISH JAIN

CA. GAURAV BANSAL

CA. S.C. JAIN

CA. AYUSH GOYAL

CA. U.K. GARG

CA. NIKHIL GUPTA

CA.SANDEEP KAPOOR

CA.VINAY BANSAL

CA.PANKAJ MISHRA

Vol XXX Issue: 5 For Private Circulation Only JULY- 2019

“In every day, there are 1,440 minutes. That means we have 1,440 daily

opportunities to make a positive impact.” ---Les Brown

Respected Members,

First of all I would like to take the opportunity to wish you everyone for 71st CA

Foundation Day. Friends! Optimists seek the valuable lesson in every setback or

reversal. Rather than getting upset and blaming someone else for what has happened, they take control over their emotions by saying, “What can I learn from this experience?” Resolve today to learn how to develop positive thinking

and a positive attitude toward yourself, the people around you and your life.

Training your mind to think positive can be achieved by leveraging a simple

concept. Your mind has enough bandwidth to only focus on one thought at a

time. All you have to do is keep it focused on uplifting thoughts until you form

the same types of neural pathways that are created when you establish a new habit.

When a negative event occurs, remember that it’s your response that truly

determines the outcome. Always look for the positive response or optimistic

lesson when such events take place.

Resolve from now to see your glass of life as half full rather than half

empty. Happy people give thanks for the many blessings in life rather than worrying or complaining about the things they do not have.

Assume the best of intentions on the part of everyone around you. Most people

are pretty decent, honest and are trying to do the very best they know how to.

When you look for something good in their words and actions, you will almost

always find something. Finally, resolve to be cheerful, no matter what happens.

Looking on the bright side is most important when things go wrong.

Your Positive Attitude In Action

How Positive Thinking Can Help You

Developing a positive attitude can help you in more ways than you might

realize. When you think positive thoughts, you don’t allow your mind (conscious or subconscious) to entertain any negative thoughts or doubts.

After you learn how to think positive, you will notice amazing changes all

around you. Your brain will actually begin to operate in a state of free-flowing

feel-good hormones called endorphins, which will make you feel lighter and

happier. You’ll also notice a major boost in confidence and will feel more capable of taking on new assignments and challenges that might have

previously been outside your comfort zone.

By reducing your self-limiting beliefs, you will effectively release your brakes

and experience growth like you never imagined. Essentially, you can change

your entire life simply by harnessing the power of positive thinking.

Thank you for reading my blog about the power of positive thinking and developing a positive attitude. I hope it will inspire you to see the good in others

and help you to improve your life.

Discover your current level of self-confidence and how to take action toward

building greater confidence in yourself with this free self-confidence

assessment.

Thanks and Regards

CA Sudeep Kumar Jain

Chairman

Agra Branch of CIRC

Chief Editor

Editors

Members

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1. ANALYSIS OF DIRECT TAX PROPOSALS

2. FAQ ON GSTR 9

3. GLIMPSES OF JULY ACTIVITIES

4. AGRA BRANCH IN MEDIA

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PG…11

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ANALYSIS OF DIRECT TAX PROPOSALS

1. Rationalization of Tax Rates and Procedure

(a) Further Reduction of Corporate Tax Rates In line with budget proposals to reduce corporate tax rates over the last couple of years, the

Finance Bill has proposed to extend the beneficial corporate tax rate of 25% to all

companies whose turnover in FY 2017-18 did not exceed INR 4 billion. Earlier, the

exemption was available only to companies whose turnover in FY 2016-17 did not exceed

INR 2.5 billion. The lower corporate tax rate is in line with global trends and should apply

to 99.3% of Indian companies.

(b) Taxing the Super Rich In addition to the existing surcharge of: (i) 10% on income tax payable by individuals earning in excess of INR 5

million but less than INR 10 million and (ii) 15% on income tax payable by individuals earning in excess of INR

10 million, the Budget has retained the 15% rate of surcharge to individuals earning more than INR 10 million but

less than INR 20 million, and introduced a surcharge of: (a) 25% on income tax payable by individuals earning in

excess of INR 20 million but less than INR 50 million; and (b) 37% on income tax payable by individuals earning

in excess of INR 50 million. This would effectively increase the tax rates up to 42.7% for the highest slab of

assesses.

(c) Tax-Filing Rationalization Measures The Budget proposes to make an individual‟s permanent account number (“PAN”) and Aadhaar number

interchangeable, enabling individuals without a PAN to file their tax returns using their Aadhaar number. Further,

in a move to improve accuracy and reduce time taken to prepare annual tax returns, the Budget proposes to make

pre-filled tax returns containing details of various streams of income available to taxpayers. The information will

be sourced from banks, stock exchanges, mutual funds and the like.

2. Exemptions for Start-ups

As part of its „Make in India‟ initiative launched in 2014 and in its continuing strive to incentivize start-ups, the

Government of India has proposed the following changes in this year‟s Budget:

(a) Revisions to Angel Tax Provisions – will the ghost of Angel Tax be laid to rest? Section 56(2)(viib) of the ITA provides that where a company, not being a company in which the public are

substantially interested receives any consideration, from a resident for issuance of shares, that exceeds the face

value of such shares, the aggregate consideration received for such shares as exceeds the fair market value

(“FMV”) of the shares shall be charged to tax. However, this provision does not apply to consideration for

issuance of shares received: (i) by a venture capital undertaking from a venture capital company or a venture

capital fund; or (ii) by a company from a class or classes of persons as may be notified by the Government in this

behalf.

The definition of venture capital fund only includes Category I AIFs (“Cat I AIFs”). Accordingly, venture capital

undertakings are exempt from Section 56(2)(viib) only in respect of investments by Cat I AIFs. With a view to

facilitate venture capital undertakings to receive funds from Category II AIFs (“Cat II AIFs”) as well, the

Finance Bill proposes to amend Section 56(2)(viib) to exempt venture capital undertakings from its applicability

in respect of investments received by Cat II AIFs. This is a welcome move by the Government as it is likely to

boost investments by Cat II AIFs in venture capital undertakings. Further, most AIFs are set up as Cat II AIFs and

hence this amendment will effectively benefit most of them. Going forward, the Government should consider

extending this exemption in respect of all regulated entities since the intent behind Section 56(2)(viib) is to

prevent tax abuse which is unlikely in case of regulated entities.

The Budget also proposes that start-ups will not be subjected to scrutiny in respect of valuations of share premium

if necessary declarations and filings are made. In addition, the Budget proposes to ensure that no scrutiny will be

carried out by the Assessing Officer without obtaining the approval of her supervising officer. It is hoped that

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these changes will result in decreased scrutiny and harassment of entrepreneurs who are raising capital, leaving

them to focus on their business.

(b) Revisions to Carry Forward of Loss Provisions – Will Start-ups Benefit? Section 79 of the ITA provides certain restrictions on set off of carried forward losses in case of companies in

which the public are not substantially interested / closely held companies (“SpecifiedCompanies”).

The current provisions relating to carry forward of losses categorize companies into two different buckets:

1. In case of Specified Companies not being „eligible start-ups‟, the provision for allowing carry forward of

losses provides that on the last day of the previous year in which the carried forward loss has to be set off,

51% of the shares of the company carrying voting power shall be beneficially held by the same persons

who beneficially held 51% of the shares carrying voting power on the last day of the year in which the loss

was incurred.

2. In case of Specified Companies which are „eligible start-ups‟, the loss incurred in any year prior to the

previous year shall be carried forward and set off in the previous year only if: (a) all the shareholders

holding shares carrying voting power on the last day of the previous year in which the loss was incurred

continue to hold those shares on the last day of the such previous year; and (b) such loss has been incurred

during the period of 7 years since the year in which the company was incorporated.

In an attempt to facilitate ease of doing business for „eligible start-ups‟, the Finance Bill seeks to amend Section

79 to provide that for setting off carried forward losses by Specified Companies being eligible start-ups,

satisfaction of either of the above conditions shall suffice for the benefit to be claimed. This provides Specified

Companies being „eligible start-ups‟ the flexibility of satisfying either the continuation of 51% of the beneficial

ownership requirement or continuation of 100% of the legal ownership requirement (between the last day of the

year in which the loss was incurred and the last day of the year in which the carried forward loss is sought to be

set off) for setting off carried forward losses.

(c) Rollover Benefits on Capital Gains Section 54GB of the IT provides relief from capital gains tax to an „eligible assessee‟

2 in respect of sale proceeds

received from the transfer of a residential house, if such sale proceeds are reinvested in the equity of an „eligible

start-up‟ which then uses it to purchase new plant and machinery. Such relief is subject to certain specified

conditions.

In order to incentivize investments in eligible start-ups, the Finance Bill proposes to amend Section 54GB to bring

about the following changes: (i) extend the sun-set date of transfer of residential property to avail the benefit

under this provision from March 31, 2019 to March 31, 2021; (ii) relax the condition of minimum shareholding

by the „eligible assessee‟ in the „eligible start-ups‟ from 50% of share capital or voting rights to 25 %; and (iii)

relax the condition restricting transfer of new plant and machinery being computer or computer software by the

„eligible start-ups‟ from 5 years to 3 years.

3. Income Recognition Incentives for NBFCs

Under Section 43D of the ITA, interest income on prescribed categories of bad or doubtful debts received by

public financial institutions, scheduled banks, and certain other entities, is chargeable to tax in the year in which it

is credited to the profit and loss account of the concerned entity for that year, or in the year in which it is actually

received by that entity, whichever is earlier.

In light of the increasingly important role played by NBFCs in India‟s financial system, and given the enhanced

levels of regulation that certain NBFCs are subjected to by the RBI, the Budget proposes to provide greater parity

in the tax treatment of NBFCs vis-à-vis scheduled banks, by extending the benefit of Section 43D of the ITA to

deposit-taking NBFCs and systemically important non deposit-taking NBFCs. This is a welcome measure as tax

authorities have previously attempted to tax interest income on bad or doubtful debts held by NBFCs on an

accrual basis, despite no income potentially arising or having been actually received.

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The Budget also proposes to make a matching amendment in Section 43B of the ITA to provide that any sum

payable by an assessee as interest on any loan or advances from a deposit-taking NBFC or a systemically

important non deposit-taking NBFC shall be allowed as a deduction if it is actually paid on or before the due date

of furnishing the return of income of the relevant previous year, provided the assessee has not claimed the same

deduction in the year in which the liability to pay such some was incurred by the assessee.

The proposed amendments seek to put to rest longstanding litigation on the issue of taxability of interest on bad or

doubtful debts held by NBFCs. In 2011, the Delhi High Court,4 in a decision upheld on appeal by the Supreme

Court,5 had applied both the “real income” theory and the overriding effect of the prudential norms on income

recognition issued by the RBI, to hold that interest income on a non-performing asset held by an NBFC could

only be taxed on a receipt basis and not on an accrual basis. The proposed amendments are in line with the

decisions of the Delhi High Court and the Supreme Court and should therefore quell any lingering uncertainty on

the tax treatment of interest income on bad or doubtful debts held by adequately regulated NBFCs, although

perhaps, the amendments could have been introduced with retrospective effect in order to settle pending cases on

the issue as well.

4. Amendments to Anti-Abuse Provisions

(a) Amendment to Deemed Capital Gains on Transfer – Section 50CA of the ITA, introduced by Finance Act, 2017 provides that in case of transfer of unlisted shares of a

company at less than FMV, the FMV would be deemed to be the full value of consideration for computing capital

gains. While introduced as an anti-abuse provision, Section 50CA affected genuine transactions between

unrelated parties and resulted in economic double taxation in the hands of both the transferor and the transferee,

besides taxing notional income.

The Budget seeks to provide relief from the applicability of Section 50CA in cases where consideration for

transfer of shares is approved by certain authorities and the transferor has no control over such determination. For

the purposes of the same, the Finance Bill has proposed to amend the provisions of Section 50CA to empower the

CBDT to notify transactions undertaken by a certain class of persons and subject to certain prescribed conditions

to which the provisions of Section 50CA would not be applicable.

(b) Buyback Taxation – Section 115QA of the ITA was first introduced by the Finance Act, 2013 as an anti-abuse provision to curb the

practice of unlisted domestic companies resorting to buyback of shares instead of payment of dividends as the

capitals gains tax rate applicable at the time was lower than the rate applicable to dividend distribution.

Specifically, 115QA provides for the levy of a buy-back tax of 20% applicable on the amount of consideration

paid for buying back the shares in excess of the amount originally received by the company at the time of issuing

shares.

Noting that publicly listed companies are now also indulging in the practice of resorting to buyback of shares,

instead of payment of dividends, the Budget proposes to extend the purview of Section 115QA to listed

companies as well. Thus, any buyback of shares from a shareholder by a company listed on recognized stock

exchange, on or after July 5, 2019, shall also be subject to a 20% buyback tax.

5. Rationalization of Tax Neutrality for Demergers

In a move to facilitate M&A activity in India, the Budget proposes to rationalize the requirements for tax neutral

demergers under the ITA to align them with the Indian Accounting Standards (“IndAS”).

One of the existing conditions for tax-neutral demergers is that the resulting company should record the property

and the liabilities of the undertaking at the value appearing in the books of accounts of the demerged company.

However, resulting companies that follow IndAS are required to record the property and the liabilities of the

undertaking at a value different from the book value of the demerged company (i.e., their fair value), making it

impossible to meet the conditions for a tax neutral demerger.

In order to facilitate tax neutral demergers involving IndAS compliant companies, the Budget proposes to amend

Section 2(19AA) of the ITA to provide that the requirement of recording property and liabilities at book value by

the resulting company shall not be applicable in a case where the property and liabilities of the undertakings

received by the resulting company are recorded at a value different from the value appearing in the books of

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account of the demerged company immediately before the demerger (i.e., their fair value), due to the application

of IndAS.

6. Relaxation of Withholding Obligations

Section 201 of the ITA provides that where any person who is required to withhold tax, does not withhold tax, he

shall be deemed to be an „assessee-in-default‟ and subject to interest at the rate of 1% per month with the

possibility of a penalty of up to 100% of the amount that should have been deducted. Further, under Section 40 of

the ITA, the payer is barred from claiming such payments as deductions while filing his Indian tax returns.

However, in case of payments to a resident, a payer will not be deemed to be an assessee-in-default if, despite his

failure to deduct tax, the resident payee has filed his returns, disclosed the payment and paid his taxes. He can also

claim the payments as deductions, but will still be required to pay interest on the amount that should have been

withheld for the period commencing on the date on which the payment was made till the date on which the non-

resident furnishes his returns.

The Budget proposes extending this flexibility to similar situations involving payments to non-resident payees.

The Budget also proposes allowing a payer to file an electronic application for a nil withholding tax certificate

under Section 195 of the ITA. At present, such applications can only be filed manually.

7. Targeting Undervalued Transfers between Residents and Non-Residents

The Budget proposes to introduce a new clause under Section 9(1) of the ITA to tax undervalued transfers of

property or money by residents to non-residents.

Presently, under Section 56(2)(x) of the ITA, the recipient of any undervalued property shall be taxed on the

difference between the consideration actually paid for such property and its FMV, under the head “Income from

Other Sources” except in certain specified circumstances (e.g., receipt from a close relative).

Income that could potentially be taxed under Section 56(2)(x) must also, in the case of a non-resident recipient,

accrue or arise in India, or be deemed to accrue or arise in India, which is the basis of the nexus principle of

taxation. Section 9(1) of the ITA enumerates the circumstances where income can be deemed to accrue or arise in

India.

Noting that there have been instances where gifts made by residents to non-residents have been claimed to be

non-taxable in India on the basis that income does not accrue or arise in India, the Budget has proposed to

introduce a deeming fiction under Section 9(1) through a new clause (viii) to ensure that such gifts made by

residents to non-residents are subject to tax. The Finance Bill has proposed that any gifts of money or property

situated in India by a resident to a non-resident (subject to exceptions for close relatives) for inadequate or no

consideration would be taxable in India.

It may be noted that the scope of the provisions may even extend to cash situated outside India, which is

transferred by a resident to a non-resident.

Further, the term “assets situated in India” has also been accorded a wide meaning under Section 9 to extend to

shares or securities of a company incorporated outside India that derives substantial value from assets situated in

India. Hence, even transfer of shares of a foreign company may potentially come within the ambit of the new

clause (viii) in certain situations.

The exemptions to Section 56(2)(x), e.g., gifts to close relatives, should continue to be available even in the

context of gifts to non-residents.

The Budget clarifies that treaty relief with respect to income of the nature described in Section 56(2)(x) can be

availed of, which is likely to fall to be available under the treaty article on “Other Income.

8. Exemption limit raised for the payments made from NPS [Applicable from Assessment 2020-21]

As per section 10 of the Income-tax Act, any payment from the NPS Trust, on closure of account or on opting out

of the pension scheme, shall not be chargeable to tax to the extent it does not exceed 40% of the total amount

payable to him.

With a view to enable the pensioner to have more disposable funds, the Finance Bill proposed to amend Section

10(12A), so as to increase the exemption from 40% to 60% of total amount payable.

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9. Deduction for interest paid on housing loan taken for affordable housing [Applicable from Assessment Year 2020-21]

The Finance Bill, 2019 proposes a new deduction under Section 80EEA in order to incentivize the purchase of

affordable housing. The objective of this deduction is to provide an impetus to the „Housing for all‟ objective of

the Government and to enable the home buyer to have low-cost funds at his disposal.

As per the proposed section, a deduction of up to Rs. 1.50 lakhs shall be allowed to an individual for the interest

paid on loan taken for acquisition of a residential house property, subject to fulfilment of following conditions:

a) Stamp duty value of the house property should not exceed Rs. 45 lakhs

b) Loan should be sanctioned by the financial institution during the period April 01, 2019 to March 31, 2020

c) The assessee should not own any residential house property on the date of sanction of loan.

10. Deduction for interest paid on loan taken to buy electric vehicles [Applicable from Assessment Year 2020-21]

With a motive to make a pollution free India by reducing vehicular pollution, the Finance Bill proposed a new

deduction under Section 80EEB. As per the proposed section, a deduction of up to Rs. 1.50 lakhs shall be allowed

to an individual for the interest paid on loan taken for purchase of an electric vehicle, subject to the condition that

the loan should be sanctioned during the period April 1, 2019 to March 31, 2023

11. Deduction under section 80CCD raised for contribution made by Central Govt. [Applicable from Assessment 2020-21]

Deduction under section 80CCD is allowed to an individual person, whether self-employed or in employment,

who has deposited any amount in an account opened under National Pension Scheme. The deduction allowable

under section 80CCD is lower of the following amount:

a) Actual amount paid or deposited; or

b) 10% of salary or 20% of total income, as the case may be.

The Finance Bill proposes to increase the limit from 10% to 14% in case of contribution made by the Central

Government to the account of its employee, in order to ensure that the Central Government employees get full

deduction of the enhanced contribution.

12. New avenue of tax saving investment for Central Govt. Employees [Applicable from Assessment 2020-21]

To enable the Central Government employees to have more options for tax saving, the Finance Bill added one

more item in the list of eligible investment for Section 80C deductions. Clause (xxv) is proposed to be inserted in

Section 80C so as to provide deduction in respect of contribution made to Tier-II account of the pension scheme

by a Central Government employee.

As per current provisions of Section 194C and Section 194J, no tax is required to be deducted by an individual or

HUF from payment made to contractor or professional in the following cases:

1. Payment made for services received for personal use

2. Payment made for services received for business or profession if payer is not subjected to tax audit.

Due to this exemption, substantial amount by way of payments made by individuals or HUFs in respect of

contractual work or for professional service were escaping the levy of TDS.

Thus, a new Section 194M has been proposed to be inserted in the Act to provide for levy of TDS, at the rate of

5% on the sum paid or credited, to a resident, in a year on account of contractual work or professional fees, by an

individual or a HUF, if aggregate of such sums exceeds Rs. 50 lakhs in a year. However, in order to reduce the

compliance burden, it is proposed that such individuals or HUFs can deposit the tax deducted using their PAN

and shall not be required to obtain TAN.

If estimated tax liability of the deductee justifies no deduction of tax or deduction of tax at lower rate, he can

apply to the Assessing Officer under Section 197 to issue a nil or lower TDS certificate. The scope of Section 197

has been extended to this provision. Thus, payee can apply to the Assessing Officer to obtain such certificate in

respect of sum paid or payable which are subject to TDS under Section 194M.

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13. In case of purchase of immovable property, tax to be deducted on gross amount including incidental

charges [Applicable from September 1, 2019]

As per Section 194-IA, any person (buyer) who is responsible for making payment of sales consideration in

respect of purchasing an immovable property shall deduct tax therefrom. Tax is deductible under this provision if

amount of „consideration‟ paid or payable for transfer of immovable property is Rs. 50 lakhs or more.

The term „consideration‟ for immovable property is presently not defined for the purposes of this section. In a

transaction involving purchase of immovable property, there are other types of payments made besides the sales

consideration and the buyer is contractually bound to make such payments to the builder/seller, either under the

same agreement or under a different agreement. Accordingly, an Explanation has been proposed to be inserted in

Section 194-IA to provide that the term „consideration for immovable property‟ shall include all charges of the

nature of club membership fee, car parking fee, electricity and water facility fees, maintenance fee, advance fee or

any other charges of similar nature, which are incidental to transfer of the immovable property

14. Banks and Post Offices to deduct tax from cash withdrawals exceeding Rs. 1 crore [Applicable from September 1, 2019]

In order to discourage cash transactions and move towards less cash economy, a new Section 194N has been

proposed to be inserted in the Income-tax Act. As per this new provision, tax shall be deducted by a banking

company or co-op. bank or post office at the rate of 2% from the amount withdrawn in cash from any account

(saving or current account) if the aggregate of the amount of withdrawal exceeds Rs. 1 crore during the year.

However, no tax shall be deducted if amount is withdrawn from the bank or post office by following recipients:

1. Central or State Government

2. Banks

3. Co-op. Banks

4. Post Office

5. Banking correspondents

6. White label ATM operators

7. Other persons notified by the Govt. in consultation with the RBI.

15. TDS from Payment in respect of Life Insurance Policy [Applicable from September 1, 2019]

As per current provisions, any payment in respect of life insurance policy to a resident person shall be subject to

TDS at the rate of 1% under Section 194DA. The tax shall be deducted under this provision at the time of

payment, if sum payable exceeds Rs. 1 lakh. Tax is not required to be deducted if amount payable under an

insurance policy is exempt from tax under Section 10(10D) or the sum is received on the occasion of death of the

insured person. The Finance Bill has proposed an amendment to Section 194DA which requires the deductor to

deduct tax only on the income component comprised in the insurance pay-out. This amendment has been

proposed so that the income as per TDS return of the deductor can be matched automatically with the return of

income filed by the assessee. The tax shall be deducted at the rate of 5% computed on the income component (in

contrast to 1% on the gross amount)

16. E-filing of quarterly return by banks to report interest payments without TDS [Applicable from September 1, 2019]

Section 206A of the Act requires furnishing of statement in respect of payment of certain income by way of

interest to residents where no tax has been deducted at source. Thus, a banking company, co-operative society,

etc. is required to prepare and file quarterly returns to report the interest, other than on securities, paid or payable

to a resident person on which tax is not deductible. Such quarterly return has to be submitted in Form No. 26QAA

within one month from the end of first, second and third quarter and by June 30 in the case of last quarter. Such

returns should be delivered on floppy, diskette, magnetic cartridge tape, CD-ROM or any other computer readable

media to the prescribed Income-tax authority or to the person authorized by such authority.

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The Finance Bill, 2019 proposed that such statement can be filed in electronic mode as well. Further, the bill

proposed that such statement can also be filed for correction, rectification of any mistake or to add, delete or

update the information furnished.

17. Return filing has been made mandatory in certain circumstances [Applicable from Assessment Year 2020-21]

As per current provisions, if income of an individual or assessee exceeds the maximum exemption limit then it is

mandatory for him to file the return of income. Even if income of an Individual (a resident and ordinary resident

in India) does not exceed the maximum exemption limit, it is mandatory for him to file the return if he holds, as a

beneficial owner or otherwise, any asset or financial interest outside India.

In order to ensure that individuals, entering into certain high value transactions, furnish the Income-tax return, it is

proposed to amend section 139 so as to provide that a person shall be mandatorily required to file his return of

income, if during the previous year:

1. He has deposited an amount (or aggregate of amount) i n excess of Rs. 1 crore in one or more current account

maintained with a bank or a co-operative bank

2. He has incurred expenditure in excess of Rs. 2 lakh for himself or any other person for travel to a foreign

country

3. He has incurred expenditure in excess of Rs. 1 lakh towards payment of electricity bill.

4. He fulfils such other conditions as may be prescribed.

Further, filing of Income-tax return is proposed to be made mandatory, if total income of an assessee before

claiming capital gain exemption under Sections 54, 54B, 54EC, 54F, 54G, 54GA and 54GB, exceeds the

maximum amount not chargeable to tax.

Non-filing of Income-tax returns results in prosecution under Section 276CC if tax payable by a taxpayer is more

than Rs. 3,000. This threshold limit is proposed to be increased from existing Rs. 3,000 to Rs. 10,000.

18. Income-tax refund to be claimed by filing of Income-tax return only [Applicable from September 1, 2019]

Section 239 of the Income-tax provides that a claim of refund under Income-tax shall be made in the prescribed

form and verified in the prescribed manner. Though Income-tax Rules has prescribed Rule 41 and Form 30 to

claim the refund, but it has no practical relevance as refund can be claimed only by filing of Income-tax return. As

soon as the Income-tax return is processed by the CPC, the amount of tax refund claimed in the return is issued by

the Dept.

As this provision has lost its practical relevance, corrective amendment has been proposed in said section. Further,

all time-limits prescribed for claiming various refunds as prescribed in this section are now omitted. Accordingly,

the refund can be applied only through ITR forms within the time limit prescribed under Section 139.

19. PAN and AADHAR are interchangeable for Income-tax purpose [Applicable from September 1, 2019]

Section 139A lays down the conditions in which a person is required to obtain PAN. In current scenario, PAN has

to be mentioned in all communications with the Income-tax Dept. and in specified financial transactions which

exceed the threshold limit.

It has been noticed by the Govt., that sometimes persons entering into high-value transactions, such as purchase of

foreign currency or huge withdrawal from the banks, do not possess a PAN. Thus, the mandatory conditions for

obtaining PAN has been proposed to be relaxed as under:

1. A person may furnish his Aadhaar number in lieu of PAN, and such person shall be allotted a PAN in the

prescribed manner;

2. Every person who has been allotted a PAN, and who has linked his Aadhaar number with PAN as per section

139AA, may furnish his Aadhaar number in lieu of a PAN for all the transactions where quoting of PAN is

mandatory as per Income-tax Act.

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20. Pr. CIT to ensure compliance of other laws before granting Section 12AA registration [Applicable from September 1, 2019]

Section 12AA provides the procedure of registration of a trust. As per Section 12AA, if CIT is satisfied about the

objects of the trust and the genuineness of the activities of the trust, he shall pass an order granting registration of

the trust. This order shall be passed in writing and the copy of order shall be sent to the applicant.

The Finance Bill proposed to insert the following additional conditions in Section 12AA:

a) At the time of granting of registration to a trust or institution, the Pr. CIT or CIT shall satisfy himself about the

compliance to requirements of any other law which is material for the purpose of achieving its objects;

b) Pr. CIT or CIT may cancel the registration, if it is noticed that the trust or institution has violated requirements

of any other law which was material for the purpose of achieving its objects.

Happy Days Ahead!

CA PremGul

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FAQs ON GSTR 9

1. What is the relevance of auto populated figures in GSTR 9?

Ans: Auto-Populated figures are for the reference purpose only. In our opinion

the auto-populated figures shall be edited by the tax payer and correct figures

shall be mentioned.

2. If tax has been paid in FY 2018-19 for FY 2017-18, i.e., Sale is disclosed in GSTR 3B of FY 2018-19 and

not disclosed in GSTR 1 and GSTR 3B of FY 2017-18, then whether to disclose such additional sale and tax paid

in Table 10 and Table 14. Or we have to disclose it in Table 4 and pay tax again through DRC 03?

For eg: On Taxable value of INR 10,000, Tax of INR 500 has been paid and disclosed in GSTR 3B of FY 2018-

19 for FY 2017-18 but the same has not been disclosed in GSTR 1 and GSTR 3B of FY 2017-18 nor in GSTR 1

of FY 2018-19, then where to disclose such taxable value and tax in GSTR 9?

Ans: If tax has been paid and disclosed in GSTR 3B of FY 2018-19 for the FY 2017-18, then in our opinion the

same shall be disclosed in Point 10. Further, the corresponding tax payable and paid in FY 2018-19 shall be

disclosed in point 14. In the instant case, nothing is to be disclosed in Table 4.

3. Sale not disclosed in GSTR 1 and GSTR 3B for FY 2017-18 but shown in GSTR 1 in 2018-19. However,

tax not paid till date. Where to disclose in GSTR 9?

For eg: On Taxable value of INR 10,000, Tax of INR 500 has not been paid and disclosed in GSTR 1 and GSTR

3B of FY 2017-18 but the same has been disclosed in GSTR 1 of FY 2018-19 but not in GSTR 3B. However, tax

not paid till date, then where to disclose such taxable value and tax not paid till date in GSTR 9?

Ans: In the instant case, sale is to be reported in Table 4 and pay tax through DRC 03 – Annual Returns. The

tax payable in such case will be shown in Table 9. There will be difference between tax payable and tax paid in

Table 9 (since tax paid is auto-populated and freezed from GSTR 3B of FY 2017-18).

4. Instructions for Table 10 / 11 of GSTR 9 requires us to disclose amendments made in GSTR 1 of FY

2018-19 related to FY 2017-18. Hence, there is no column to disclose amendments / adjustments made in

GSTR 3B of FY 2018-19 for FY 2017-18. Also, Table 14 mentions “differential tax paid on account of

declaration in 10 & 11”. However, instructions for Table 10 and 11 mentions that GSTR 1 amendments has to be

disclosed. Further, no tax can be paid in GSTR 1. Thus, Table 10 and Table 14 are contradictory to each other.

For Eg: Sale of FY 2017-18 is not disclosed in GSTR 1 and GSTR 3B of FY 2017-18. But the same has been

disclosed in GSTR 3B of FY 2018-19 and tax has also been paid on the same. Then, whether such amendment will

be shown in Table 10? Since, Instructions to Table 10 only mentions the amendments done in GSTR1 is to be

disclosed.

Ans: It is reliably learnt not to give much weightage to the wordings in table titles and as regards instructions,

ensure two aspects, namely:

TO reported in 2018-19 must be captured in Part V so that the same may be excluded from next year‟s AR

(2018-19); and

Part II is a „catch all‟ portion in GSTR 9 that does not fit into Part V.

With this guidance, it seems that tax payments in 2017-18 will appear in table 9 and tax payments in 2018-19 will

appear in table 14. Any deficiency will be paid in cash (DRC 03 – Annual Returns).

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5. Why is export mentioned in Table 4 is auto populated from GSTR 3B? However, Table 6A of GSTR 1

captures export data more accurately then GSTR 3B

Ans: Instruction against 4C does require export (on payment of tax) to be reported from 6A. So, please edit auto

populated data.

6. Where to disclose tax paid on RCM basis in FY 2018-19 for FY 2017-18. If we disclose it in Table 10,

then Total supply will be affected since total supply is equal to 4N+5M-4G+10-11. Can only supplies / tax

individually be disclosed in Table 10 and 11?

Ans: Tax paid on RCM basis for FY 2017-18 in FY 2018-19 may be disclosed in Point 10. But only tax paid

shall be declared in Point 10 (i.e., taxable value shall not be disclosed in Point 10) since the same will affect the

total supply.

7. Where to disclose ITC on import of goods availed in FY 2018-19 for the FY 2017-18 in Table 8?

Ans: As per the press release dated 4th

June 2019 of GSTN, the credit which was availed in FY 2018-19 on

import of goods for the period July 2017- Mar 2018 shall be disclosed in Table 6(E).

8. How to rectify any error made in GST return of casual taxable person since there is no facility for

amendment / annual return / audit of CTP return

Ans: No provision to rectify returns. Since CTP registration is for limited duration (90 + 90 days), rectifications

to be flow through Final Return along with discharge of tax dues.

9. How to reconcile turnover in case a company is registered as normal tax payer in one state and casual

taxable person in different states.

Ans: GSTIN-wise trial balance is required to start GSTR 9C. Turnover of each State (GSTIN) needs to be

reconciled. CTP registration in other State ought not to affect reconciliation of each GSTIN.

10. In case ITC is reversed through DRC 03 for FY 2017-18 in FY 2018-19, then where should it be disclosed

in GSTR 9?

Ans: Reversal of ITC through DRC 03 whether it is by way of cash or credit is to be examined. If credit

reversal is by cash, then no reporting is required and suitable disclosure in GSTR 9C (table 12). But, if credit

reversal is utilizing credit, then the same may be reported in table 7 so that closing balance will match.

11. There is no mechanism for revision of GSTR 9. What recourse and repercussions in case GSTR 9 is filed

wrong inadvertently

Ans: There is no such thing called „defective Annual Return‟. If GSTR 9 is incorrect, suitable explanations will

be sought through notice under section 61.

12. What does “ITC to be lapsed” imply

Ans: ITC that which is to be accounted as „revenue of Government‟ but not so accounted. Now, where

Registered Person admits that credit „is to be lapsed‟, such as, 17(5) or 17(2), the same will be taken out of the

credit chain. But, this is a precursor to the days that lie in the future. That is, any credit appearing in 2A but not

claimed in 3B, it will be lapsed and be accounted as revenue of Government.

13. Under what circumstances difference in point 6J will not be equal to zero? Does it mean we have to give

breakup of values already disclosed in GSTR 3B of FY 2017-18 or we have to fill actual figures?

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Ans: 6B is break-up on credit already reported in 3B. But, if data is not available of credit claimed in 3B, then

to the extent break-up is not available, it will be inquired and then demanded back.

14. What will be the consequence in case HSN summary of purchases in GSTR 9 cannot be compiled

Ans: GSTR 9 calls for HSN data and there is no relation with GSTR 2/3. Data must be provided and to the

extent of relaxation (10% in table 18) allowed is the only relief available.

15. Whether interest to be paid on Net liability after adjustment of ITC or liability before adjustment of ITC

(Telangana HC or 31st GST Council Meeting)

Ans: Law provides for interest payment on „gross‟ liability. Depending on willingness to contest this issue, tax

may be paid on net liability and suitably disclosed in 9C.

16. In case credit is reversed through DRC 03, then under which head it is to be paid in challan (Tax, Interest,

Late Fee, Penalty or Others)

Ans: Experts are of the view that reversal of credit is not addition to output tax liability. And reporting as tax

could amount to admission of tax liability and hence interest. For now, there is no clarity on these fine nuances.

Reversal may be disclosed as „others‟.

17. Can Invoices pertaining to B2B of FY 2017-18 disclosed inadvertently as B2C in GSTR 1 of FY 2017-18

be now amended in GSTR 9?

Ans: As per clarification issued on 27th

June 2019, in terms of “Removal of Difficulty Order No. 02/2018”,

amendment of invoices pertaining to FY 2017-18 could have been done till the due date of filing GSTR 1 of

March 2019. That is the due date for amending invoices of FY 2017-18 has lapsed and the invoices disclosed as

B2C cannot be amended now to disclose it as B2B.

Have a great day!

CA. Nikhil Gupta

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GLIMPSES OF JULY ACTIVITIES

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AGRA BRANCH IN MEDIA AND OTHER SEMINARS

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