Taxation & Audit

THE INCOME TAX UPDATES

07-Jan-2023
e-Pay Tax service is now enabled for IndusInd Bank with Over the Counter and Net Banking options.

List of banks for tax payments 👇

THE INCOME TAX UPDATES

Bank of Baroda has been migrated from OLTAS e-Payment of Taxes at NSDL to e-Pay Tax facility at the e-Filing portal for payment of taxes henceforth.

List of banks for tax payments 👇

Section 12 Amendment of the IGST Act 2017
In order to clarify the availability of input tax credits and other matters, Clause 144 of the Finance Bill 2023 seeks to eliminate the proviso from section 12(8) of the IGST Act, 2017.

In section 12 of the Integrated Goods and Services Tax Act, in sub-section (8), the proviso shall be omitted.

IGST Act 2017 Changes in the Finance Bill 2023
The IGST Act, 2017, is also subject to the following proposed modifications in the Finance Bill 2023:

Changes in Section 2 of the IGST Act
For restricting the definition of “non-taxable online recipient” to any unregistered person obtaining online information and database access or retrieval services located in the taxable territory, clause 143 of the Finance Bill 2023 proposes to amend clause (16) of section 2 of the IGST Act, 2017, by ignoring certain words.

Additionally, it seeks to make it clear that individuals who have been registered exclusively in accordance with clause (vi) of section 24 of the CGST Act, 2017 shall be regarded as unregistered for the purposes of the aforementioned provision.

Additionally, it suggests deleting several phrases from clause (17) of the aforementioned section in order to eliminate the definitions of “basically automated” and “having minimum human participation.”

143. In the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as the Integrated Goods and Services Tax Act), in section 2,-
(a) for clause (16), the following clause shall be substituted, namely:-

(16) “non-taxable online recipient” means any unregistered person receiving online information and database access or retrieval services located in taxable territory.

Explanation.- For the purposes of this clause, the expression “unregistered person” includes a person registered solely in terms of clause (vi) of section 24 of the Central Goods and Services Tax Act, 2017’;

(b) in clause (17), the words “essentially automated and involving minimal human intervention and” shall be omitted.

New Changes in Schedule II Under the CGST Act

According to clause 142 of the Finance Bill 2023, Schedule III of the CGST Act 2017 would be changed such that, as of July 1, 2017, paragraphs 7 and 8 and Explanation 2 will apply retroactively.

142. Retrospective exemption to certain activities and transactions in Schedule III to the Central Goods and Services Tax Act.
(1) In Schedule III to the Central Goods and Services Tax Act, paragraphs 7 and 8 and the Explanation 2 thereof (as inserted vide section 32 of Act 31 of 2018) shall be deemed to have been inserted therein with effect from the 1st day of July, 2017.

(2) No refund shall be made of all the tax which has been collected, but which would not have been so collected, had subsection (1) been in force at all material times.

New GST Section 158A Added in Finance Bill 2023
The Finance Bill 2023’s clause 141 suggests adding a new section 158A to the CGST Act, 2017, to specify how and under what circumstances a registered person may share the information provided in his registration application, return filed, or statement of outward supplies, or the details uploaded by him for the generation of an electronic invoice or E-way bill, or any other information as may be provided by CGST Rules, on the common portal, with such other parties.

141. The following provision of the Central Goods and Services Tax Act shall be placed after section 158, namely:-
158A. Consent based sharing of information furnished by taxable person:

(1) Notwithstanding anything contained in sections 133, 152 and 158, the following details furnished by a registered person may, subject to the provisions of subsection (2), and on the recommendations of the Council, be shared by the common portal with such other systems as may be notified by the Government, in such manner and subject to such conditions as may be prescribed, namely:-

(a) particulars furnished in the application for registration under section 25 or in the return filed under section 39 or under section 44;

(b) the particulars uploaded on the common portal for preparation of invoice, the details of outward supplies furnished under section 37 and the particulars uploaded on the common portal for generation of documents under section 68;

(c) such other details as may be prescribed.

(2) For the purposes of sharing details under sub-section (1), the consent shall be obtained, of-

(a) the supplier, in respect of details furnished under clauses (a), (b) and (c) of sub-section (1); and

(b) the recipient, in respect of details furnished under clause (b) of sub-section (1), and under clause (c) of sub-section (1) only where such details include identity information of the recipient,

in such form and manner as may be prescribed.

(3) Notwithstanding anything contained in any law for the time being in force, no action shall lie against the Government or the common portal with respect to any liability arising consequent to information shared under this section and there shall be no impact on the liability to pay tax on the relevant supply or as per the relevant return.

GST Section 138 Modification
The first proviso to section 138(1) of the CGST Act, 2017, is proposed to be changed in clause 140 of the Finance Bill 2023 to exclude people who commit crimes involving the issuance of invoices without the supply of goods or services, or both, from the option of compounding the offences under the aforementioned Act.

140. In section 138 of the Central Goods and Services Tax Act,-
(a) in sub-section (1), in the first proviso,-

(i) for clause (a), the following clause shall be substituted, namely:-

(a) a person who has been allowed to compound once in respect of any of the offences specified in clauses (a) to (f), (h), (i) and (l) of sub-section (1) of section 132;

(ii) clause (b) shall be omitted;

(iii) for clause (c), the following clause shall be substituted, namely:-

(c) a person who has been accused of committing an offence under clause (b) of sub-section (1) of section 132;

(iv) clause (e) shall be omitted;

(b) in sub-section (2), for the words “ten thousand rupees or fifty per cent. of the tax involved, whichever is higher, and the maximum amount not being less than thirty thousand rupees or one hundred and fifty per cent. of the tax, whichever is higher”, the words “twenty-five per cent. of the tax involved and the maximum amount not being more than one hundred per cent. of the tax involved” shall be substituted.

Changes in Section 132 Related to GST Offenses
In order to decriminalize the offences listed in clauses (g), (j), and (k) of the CGST Act, 2017, section 132(1) of that Act would need to be changed, Clause 139 of the Finance Bill 2023 proposes. Additionally, the financial threshold for filing a charge under that Act would be raised from Rs. 100 lac to Rs. 200 lac, with the exception of offences involving the issuance of invoices without the provision of goods or services or both.

139. In section 132 of the Central Goods and Services Tax Act, in sub-section (1),–
(a) clauses (g), (j) and (k) shall be omitted;

(b) in clause (l), for the words, brackets and letters “clauses (a) to (k)”, the words, brackets and letters “clauses (a) to (f) and clauses (h) and (i)” shall be substituted;

(c) in clause (iii), for the words “any other offence”, the words, brackets and letter “an offence specified in clause (b),” shall be substituted;

(d) in clause (iv), the words, brackets and letters “or clause (g) or clause (j)” shall be omitted.

Finance Bill 2023 Adds a New Section 122 Under Clause 138
Clause 138 of the Finance Bill 2023 seeks to insert the new sub-section (1B) in section 122 of the CGST act 2017 for furnishing the penal provisions relevant to the electronic commerce operators for the case of the breach of provisions concerned with the goods or services incurred through them via unregistered persons or composition taxpayers.

138. In section 122 of the Central Goods and Services Tax Act, after sub-section (1A), the following sub-section shall be inserted, namely:–
(1B) Any electronic commerce operator who–

(i) allows a supply of goods or services or both through it by an unregistered person other than a person exempted from registration by a notification issued under this Act to make such supply;

(ii) allows an inter-State supply of goods or services or both through it by a person who is not eligible to make such inter-State supply; or

(iii) fails to furnish the correct details in the statement to be furnished under sub-section (4) of section 52 of any outward supply of goods effected through it by a person exempted from obtaining registration under this Act,

shall be liable to pay a penalty of ten thousand rupees, or an amount equivalent to the amount of tax involved had such supply been made by a registered person other than a person paying tax under section 10, whichever is higher.

Changes to Section 56 as per Clause 137 Under GST
In order to establish the method of determining the duration of delay for the computation of interest on delayed refunds through the CGST Rules, clause 137 of the Finance Bill 2023 seeks to alter section 56 of the CGST Act, 2017.

In section 56 of the Central Goods and Services Tax Act, for the words “from the date immediately after the expiry of sixty days from the date of receipt of application under the said subsection till the date of refund of such tax”, the words “for the period of delay beyond sixty days from the date of receipt of such application till the date of refund of such tax, to be computed in such manner and subject to such conditions and restrictions as may be prescribed” shall be substituted.

Section 54 of the CGST Act in Finance Bill 2023
In order to bring section 54(6) of the CGST Act, 2017 into line with the present system of claiming self-assessed input tax credits under section 41(1), clause 136 of the Finance Bill 2023 recommends amending that section by deleting the reference to the provisionally accepted input tax credit.

In section 54 of the Central Goods and Services Tax Act, in sub-section (6), the words “excluding the amount of input tax credit provisionally accepted,” shall be omitted.

CGST Section 52 Amendment for Electronic Commerce Operators
Section 52 of the CGST Act, 2017 is proposed to have a new sub-section (15) added as part of Clause 135 of the Finance Bill 2023, setting a three-year deadline for an electronic commerce operator to make a statement under Section 52(4) for a month. Additionally, it aims to provide the government with the authority to, upon the GST Council’s advice and subject to a number of criteria and limitations, extend the time limit for a particular operator or class of operators by notification.

135. In section 52 of the Central Goods and Services Tax Act, after sub-section (14), the following sub-section shall be inserted, namely:–
(15) The operator shall not be allowed to furnish a statement under sub-section (4) after the expiry of a period of three years from the due date of furnishing the said statement:

Provided that the Government may, on the recommendations of the Council, by notification, subject to such conditions and restrictions as may be specified therein, allow an operator or a class of operators to furnish a statement under sub-section (4), even after the expiry of the said period of three years from the due date of furnishing the said statement.

Annual Return Related Amendment U/S 44 of CGST Act
In order to give registered persons three years to submit the annual return required by section 44(1) for a fiscal year, clause 134 of the Finance Bill 2023 seeks to incorporate a new sub-section (2) into section 44 of the CGST Act, 2017. Additionally, it aims to grant the government the power to extend the time limit for a registered person or class of registered people by notice, subject to a number of requirements and limitations, on the GST Council’s proposal.

134. Section 44 of the Central Goods and Services Tax Act shall be re-numbered as sub-section (1) thereof, and after subsection (1) as so re-numbered, the following sub-section shall be inserted, namely:–
(2) A registered person shall not be allowed to furnish an annual return under sub-section (1) for a financial year after the expiry of a period of three years from the due date of furnishing the said annual return:

Provided that the Government may, on the recommendations of the Council, by notification, and subject to such conditions and restrictions as may be specified therein, allow a registered person or a class of registered persons to furnish an annual return for a financial year under sub-section (1), even after the expiry of the said period of three years from the due date of furnishing the said annual return.

GST Section 39 Amendment
Section 39 of the CGST Act, 2017 proposed to have a new sub-section (11) added as part of Clause 133 of the Finance Bill 2023, which would set a three-year deadline for a registered person to submit a return for a given tax period. Additionally, it aims to grant the government the power to extend the time limit for a registered person or class of registered people by notice, subject to a number of requirements and limitations, on the GST Council’s proposal.

133. In section 39 of the Central Goods and Services Tax Act, after sub-section (10), the following sub-section shall be inserted, namely:–
(11) A registered person shall not be allowed to furnish a return for a tax period after the expiry of a period of three years from the due date of furnishing the said return:

Provided that the Government may, on the recommendations of the Council, by notification, subject to such conditions and restrictions as may be specified therein, allow a registered person or a class of registered persons to furnish the return for a tax period, even after the expiry of the said period of three years from the due date of furnishing the said return.

Section 37 Offers a New Sub-section Under CGST Act

Section 37 of the CGST Act, 2017 is proposed to have a new sub-section (5) added as part of Clause 132 of the Finance Bill 2023, which would set a three-year deadline for a registered person to report information on outward supplies under Section 37(1) for a tax period. Additionally, it aims to grant the government the power to extend the time limit for a registered person or class of registered people by notice, subject to a number of requirements and limitations, on the GST Council’s proposal.

132. In section 37 of the Central Goods and Services Tax Act, after sub-section (4), the following sub-section shall be inserted, namely:–
(5) A registered person shall not be allowed to furnish the details of outward supplies under sub-section (1) for a tax period after the expiry of a period of three years from the due date of furnishing the said details:

Provided that the Government may, on the recommendations of the Council, by notification, subject to such conditions and restrictions as may be specified therein, allow a registered person or a class of registered persons to furnish the details of outward supplies for a tax period under sub-section (1), even after the expiry of the said period of three years from the due date of furnishing the said details.

THE INCOME TAX UPDATES

Explanatory Memorandum It is certified that no person is being adversely affected by giving retrospective effect to this notification of Printing at Government of India Press, Ring.

Changes in Section 23 of CGST Act in Finance Bill 2023

Clause 131 of the Finance Bill 2023 seeks to retroactively replace Section 23 of the CGST Act 2017 related to people not required to register, giving the said section precedence over Sections 22(1) and 24 of the said Act, with effect from July 1, 2017.

131. For section 23 of the Central Goods and Services Tax Act, the following section shall be substituted and shall be deemed to have been substituted with effect from the 1st day of July, 2017, namely:–

132. Persons not liable for registration: Notwithstanding anything to the contrary contained in sub-section (1) of section 22 or section 24,–
(a) the following persons shall not be liable to registration, namely:–

(i) any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act, 2017;

(ii) an agriculturist, to the extent of supply of produce out of cultivation of land;

(b) the Government may, on the recommendations of the Council, by notification, subject to such conditions and restrictions as may be specified therein, specify the category of persons who may be exempted from obtaining registration under this Act.

ITAT can’t remand the matter to AO if the case was remanded to it by HC with specific directions: HC

INCOME TAX: Where the High Court remanded the matter to the Tribunal with a direction to verify the distance of the land in question from municipal limits, Tribunal was expected to follow the same in pith and substance; Tribunal manifestly erred in remanding the matter to Assessing Authority instead of recording the finding with the regard to distance of land itself

GST Section 17(3) Modification

In order to limit or restrict the use of input tax credits for certain transactions listed in clause (a) of paragraph 8 of Schedule III of the aforementioned Act, as may be provided by rules, Clause 130 of the Finance Bill 2023 proposes amending Explanation to Section 17(3) of the CGST Act 2017 by including the value of such transactions in the value of exempt supply.

Additionally, it proposes to change Section 17(5) to state that a taxable person’s receipt of goods or services, or both, that are used or intended to be used for activities related to his corporate social responsibility obligations as described in Section 135 of the 2013 Companies Act, shall not be eligible for an input tax credit.

130. In section 17 of the Central Goods and Services Tax Act,-
(a) in sub-section (3), in the Explanation, for the words and figure “except those specified in paragraph 5 of the said Schedule”, the following shall be substituted, namely:–

“except,–

(i) the value of activities or transactions specified in paragraph 5 of the said Schedule; and

(ii) the value of such activities or transactions as may be prescribed in respect of clause (a) of paragraph 8 of the said Schedule”;

(b) in sub-section (5), after clause (f), the following clause shall be inserted, namely:–

“(fa) goods or services or both received by a taxable person, which is used or intended to be used for activities relating to his obligations under corporate social responsibility referred to in section 135 of the Companies Act, 2013;”

Cash deposits from various places can’t be treated as suspicious transactions; HC quashes reassessment: HC

INCOME TAX: Where a reopening notice was issued upon the assessee company, engaged in the business of electronic appliances, on the ground that information was received on the insights portal that high-risk transactions had taken place in the case of the assessee which was required to be verified since there was no any mention about "cash credits and subsequent debits" in reasons recorded and there was no live link or nexus between said information received and income escaping assessment, impugned reopening notice.

PAN - Aadhaar linking: Income tax dept spells out consequences of not meeting March 31 deadline

The deadline to link your Permanent Account Number (PAN) and Aadhaar is March 31, 2023. Do note that now there is a penalty applicable for linking PAN with Aadhaar. If you link your PAN with your Aadhaar now, then you are liable to pay a late fee of Rs 1,000 as the last date for linking without penalty was June 30, 2022 which is already past.

Also read: PAN–Aadhaar linking penalty: How to pay fine to link PAN with Aadhaar

If you do not link your PAN and Aadhaar before the March 31, 2023 deadline, then your PAN will become inoperative. According to a recent Income Tax Department tweet: “As per Income-tax Act, 1961, it is mandatory for all PAN holders, who do not come under the exempt category, to link their PAN with Aadhaar before 31.3.2023. From 1.04.2023, the unlinked PAN shall become inoperative. Please don’t delay, link it
today!”

According to a Central Board of Direct Taxes (CBDT) circular dated March 30, 2022, “Rule 114AAA of the Income-tax Rules provides that if PAN of a person has become inoperative, he will not be able to furnish, intimate or quote his PAN and shall be liable to all the consequences under the Act for such failure.”

As per an advisory issued by the income tax department in the Times of India edition of March 6, 2023, following are 6 consequences of not linking your PAN with Aadhaar.

1. Your PAN will become inoperative.
2. Filing ITR will not be possible.
3. Pending returns will not be processed
4. Pending refunds cannot be issued.
5. Pending proceedings, as in the case of defective returns cannot be completed.
6. Tax will be deducted at a higher rate.

If you have not linked your PAN with Aadhaar, here is how you can do it as per the Income Tax Department website.

Finance Bill 2023 Amends Section 16
The second and third provisos to Section 16(2) of the CGST Act, 2017 are proposed to be changed in accordance with the return filing mechanism made available by the aforementioned Act in Clause 129 of the Finance Bill 2023.

129. In section 16 of the Central Goods and Services Tax Act, in sub-section (2),-
(i) in the second proviso, for the words “added to his output tax liability, along with interest thereon”, the words and figures “paid by him along with interest payable under section 50” shall be substituted;

(ii) in the third proviso, after the words “made by him”, the words “to the supplier” shall be inserted.

Modification in GST Section 10
A change to Sections 10(2)(d) and 10(2A)(c) of the CGST Act, 2017, is proposed in Clause 128 of the Finance Bill 2023 to eliminate the prohibition on registered individuals who supply goods through electronic commerce operators (ECOs) from choosing to pay tax under the composition levy.

128. In the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the Central Goods and Services Tax Act), in section 10,-
(a) in sub-section (2), in clause (d), the words “goods or” shall be omitted;
(b) in sub-section (2A), in clause (c), the words “goods or” shall be omitted.

Attention Taxpayers!
The last date for payment of the last instalment of Advance Tax is almost here!

Do remember to pay your fourth & final instalment of Advance Tax by 15th March, 2023.

THE INCOME TAX UPDATES

01-Jan-2023
e-Pay Tax service is now enabled for City Union Bank with Over the Counter and Net Banking options.
IDBI, Jammu & Kashmir Bank, UCO Bank and Union Bank has been migrated from OLTAS e-Payment of Taxes at Protean (previously NSDL) to e-Pay Tax facility at the e-Filing portal for payment of taxes henceforth.

List of banks for tax payments 👇

CGST Act 2017 Related Amendments in the Finance Bill 2023

The Finance Bill 2023 proposes a number of changes to the CGST Act, such as lowering the compounding amount from 50-150 per cent of the tax amount to 25-100 per cent, raising the GST prosecution threshold from one crore to two crores, except for the offence of issuing invoices without providing goods or services, decriminalizing CGST offences like obstructing an officer, tampering with evidence, or failing to provide information, and allowing filing returns and statement in three years from the due date.

Full Description of Latest GST Changes in Finance Bill 2023

Extracts from the GST-related amendments that were included in the Finance Bill for 2023 (Budget 2023-24), which Union Minister of Finance Mrs Nirmala Sitharaman submitted to the Loksabha on February 01, 2023.

Except for those in clause 142, modifications proposed in the Finance Bill, 2023 will go into effect on the date they are announced, ideally concurrently with revisions to comparable Acts approved by the States and Union territories with the legislature. Changes to the Finance Bill of 2023 pursuant to clause 142 will be retroactively effective as of July 1, 2017.

Government Schemes For Senior Citizens (SCSS)
An undertaking of the Indian government, a senior citizen scheme that enables savings – SCSS, is widely regarded as one of the best investment options in India for a variety of reasons.

First, the scheme offers significant financial security for senior citizens. Secondly, the interest rate for this scheme is decided by the government every quarter. You can open an SCSS account at post offices and any nationalised banks.

Post Office Monthly Income Schemes
Generally regarded as one of the best plans for investment, the post office monthly income scheme is most suitable for risk-averse individuals who are looking for low-risk investment plans with decent returns. Here, you must understand that while the income from post office monthly income schemes is fully taxable, the monthly income plans do not attract Tax Deduction at Source (TDS.)

Low-Risk Investment

As the name suggests, low-risk investment plans are those in which the element of risk is approximately zero. In other words, low-risk investment plans tend to provide stable and reliable, growth of value, but minimal losses. Given below is the list of top investment options that can be taken into consideration.

1. Sukanya Samriddhi Yojana
Sukanya Samriddhi Account is gaining popularity as one of the best investment plans in India for the girl child. If you have a girl child, this Yojana aims to facilitate corpus creation for the girl child. You can open a Sukanya Samriddhi Yojana account at both commercial banks and post offices. Furthermore, you can avail of significant tax savings4 under Section 80C of the Income Tax Act 1961.