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Tuesday, 12 September 2017

12 September 2017 Updates

Forwarded as received

GST (GOODS AND SERVICES TAX)

*GST on Charitable and Religious Trusts*

The provisions relating to taxation of activities of charitable 
institutions and religious trusts have been borrowed and carried over from the erstwhile service tax provisions. All services provided 
by such entities are not exempt. In fact, there are many services that are provided by such entities which would be within the ambit of GST. 

Notification No.12/2017-Central Tax (Rate) dated 28th June 2017 exempts services provided by entity registered under Section 12AA of the Income-tax Act, 1961 by way of charitable activities from whole of GST vide entry No. 1 of the notification, which specifies that  “services by an entity registered under Section 12AA of Income-tax Act, 1961 by way of charitable activities” are exempt from whole of the GST. Thus as per this notification,exemption is given to the charitable trusts, only if the following conditions are satisfied.

(a) Entities must be registered under Section 12AA of the Income-tax Act, and

(b) Such services or activities by the entity are by way of charitable activities.

Thus, it is essential that the activities must conform to the term “charitable activities’ which has been defined in the notification as 
under “charitable activities” means activities relating to:

(i) public health by way of:

(A) care or counseling of 

(I) terminally ill persons or persons with severe physical or mental disability; 

(II) persons afflicted with HIV or AIDS; 

(III) persons addicted to a dependence -forming substance 
such as narcotics drugs or alcohol; or 

(B) public awareness of preventive health, family planning or 
prevention of HIV infection; 

(ii) advancement of religion, spirituality or yoga;

(iii) advancement of educational programmes or skill development 
relating to:

(A) abandoned, orphaned or homeless children; 

(B) physically or mentally abused and traumatized persons; 

(C) prisoners; or 

(D) persons over the age of 65 years residing in a rural area; 

(iv) preservation of environment including watershed, forests and wildlife.

This notification makes the exemption to charitable trusts available for charitable activities more specific. While the income from only those activities listed above is exempt from GST, income from the activities other than those mentioned above is taxable. Thus, there could be many services provided by charitable and religious trust which are not considered as charitable activities and hence, such services come under the GST net. The indicative list of such services could be renting of premises by such entities, grant of sponsorship and advertising rights during conduct of events/functions etc.

This is also borne out from the fact that in so far as renting out 
of religious precincts is concerned, there is a limited exemption 
available to such entities. Activities not covered by the specific exemption would be taxable. Entry No.13 of notification no.12/2017-

Central Tax (Rate) dated 28th June, 2017, provides the following exemption to entities registered under Section 12AA of the Income Tax Act: 

Services by a person by way of:

(a) conduct of any religious ceremony; 

(b) renting of precincts of a religious place meant for general public, owned or managed by an entity registered as a charitable or 
religious trust under section 12AA of the Income-tax Act, 1961 
(hereinafter referred to as the Income-tax Act) or a trust or an institution registered under sub clause (v) of clause (23C) of section 10 of the Income-tax Act or a body or an authority 
covered under clause (23BBA) of section 10 of the said Income-
tax Act: 

Provided that nothing contained in entry (b) of this exemption 
shall apply to:

(i) renting of rooms where charges are one thousand rupees or more per day; 

(ii) renting of premises, community halls,kalyanmandapam or open area, and the like where charges are ten thousand rupees or more per day; 

(iii) renting of shops or other spaces for business or commerce where charges are ten thousand rupees or more per month.

Thus, the law gives a limited exemption to renting of only religious precincts or a religious place meant for general public by the entity registered under Section 12AA of the Income Tax Act. As per clause (zc) of the said notification, the term “general public” means “the body of people at large sufficiently defined by some common quality of public or impersonal nature”.

The term “religious place” as per the clause (zy) of the said notification means “a place which is primarily meant for conduct of prayers or worship pertaining to a religion, meditation, orspirituality”.Dictionary meaning of “precincts” is an area within the walls or perceived boundaries of a particular building or place, an enclosed or clearly defined area of ground around a cathedral, 
church, temple, college, etc.

 This implies that if immovable properties owned by charitable trusts like marriage hall, convention hall, rest house for pilgrims, shops 
situated within the premises of a religious place are rented out, income from letting out of such property is wholly exempt from GST.

But if such properties are not situated in the precincts of a religious place meaning thereby not within walls or boundary walls of the religious place, income from such letting out will lose this exemption and income from it will be liable to GST.

Income from a religious ceremony organised by a charitable trust is 
exempt as per the above notification . So the income from Navratrifunctions, other religious functions, and religious poojas conducted on special occasions like religious festivals by persons so authorised for this purpose by the charitable or religious trust are exempt from GST. But a careful perusal of this exemption shows that all income from such a religious ceremony is not exempt (services other than by way of conduct of religious ceremony are not exempt). Therefore, the nature of income is an essential factor for ascertaining whether it will be taxable or exempt. If income loses its religious nature, itis definitely chargeable to GST. For example, if with regard to Ganeshutsav or other religious functions, charitable trusts rent out their space to agencies for advertisement hoardings, income from such advertisement is chargeable to GST, as this will be considered as income from the advertisement services. Further, if donation for religious ceremony is received with specific instructions to advertise the name of a donor, such donation income will be subject to GST. But if donation for religious ceremony is received without such instructions, it may not be subject to GST. 

Similarly, entry No.80 of notification no.12/2017-Central Tax (Rate), provides the following exemption to an entity registered under  Section 12AA.

Services by way of training or coaching in recreational activities 
relating to:

(a) arts or culture, or 

(b) sports by charitable entities registered under section 12AA of 
the Income-tax Act. 

Thus, services provided by way of training or coaching in recreational activities relating to arts or culture or sports by a charitable entity will be exempt from GST.

*GST on management of educational institutions by charitable trusts*

If trusts are running schools, colleges or any other educational 
institutions specifically for abandoned, orphans, homeless children, physically or mentally abused persons, prisoners or persons over age of 65 years or above residing in a rural area, such activities will be considered as charitable activities and income from such supplies will be wholly exempt from GST.

Meaning of the word rural area defined in said notification is rural area means the area comprised in a village as defined in land revenue records excluding the area under any municipal committee, municipal corporation, town area committee, cantonment board 
or notified area committee or any area that may be notified as an 
urban area by the Central Government or a State Government. 

*Import of Services*

Also as per the entry no. 10 of Notification no.9/2017-Integrated 
Tax (Rate) dated 28.06.2017, if charitable trusts registered under 

Section 12AA of Income-tax Act receives any services from provider of services located in non-taxable territory, for charitable purposes, such services received are not chargeable to GST under the reverse charge mechanism.

*Services by and to Education Institutions (including institutions run by Charitable trusts)*
If the trust is running school for the purpose which is not covered above (i.e. not coming within the scope of charitable activities 
as defined in the notification), income from such activity will not be exempt under notification no. 9/2017-Integrated Tax (Rate) or 12/2017-Central Tax (Rate), but will be exempt under entry 66 of notification no.12/2017-Central Tax (Rate). Entry 66 provides for exemption w.r.t supply by and to educational institutions andonly 
the following services received by eligible educational institution are exempt:

(1) Transportation of students, faculty and staff of the eligible 
educational institution.

(2) Catering service including any mid-day meals scheme sponsored by the Government.

(3) Security or cleaning or house-keeping services in such educational institution.

(4) Services relating to admission to such institution or conduct of examination.

If such school or other educational institution gives property owned 
by such institution on rent to others, no exemption will be available for such services. Therefore, all services received by educational institutions managed by charitable trusts (for other than charitable activities, as defined) except those services mentioned above are taxable.GST on arranging yoga and meditation camp by charitable trusts Charitable trusts organise yoga camps or other fitness camps and they generally are not free for participants, as trusts charge some amount from the participants in the name of accommodation or 
participation. If trusts are arranging residential or non-residential yoga camps by receiving donation or other charges from the participants, these will not be considered charitable activities (as it is different from advancement of religion , spirituality or yoga).

Since donation is received for participation, it will be considered 
commercial activity and it will definitely be covered under the 
GST. Similarly, if charitable trusts organise fitness camps in reiki, 
aerobics, etc., and receive donation from participants, such income that comes under health and fitness services and will also be taxable.

*GST on running of public libraries by charitable trusts*

No GST will be applicable if charitable trusts are running public 
libraries and lend books, other publications or knowledge-enhancing content/material from their libraries. This activity is specifically excluded by way of entry No. 50 of Notification No. 

12/2017- Central Tax Rate (and isapplicable for everyone, including charitable trusts); which means services by private libraries are not exempt. Thus, if donors of public library remain open to all and if it caters to educational, informational and recreational needs of its users and finance for such libraries can be provided from donation, subscription, from special fund created for this purpose or from combination of all such sources, it will be called public library and no GST will be applicable on such services.

*GST on hospital managed by charitable trusts*

Entry no. 74 of Notification No. 12/2017-Central Tax Rate (applicable to all persons including charitable trusts) exempts healthcare services at clinical establishment, an authorised medical professional or 
paramedics. As per clause (zg), health care services means any service by way of diagnosis ortreatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India and includes services by way of transportation of the patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma. Therefore, all treatment or diagnosis or care for illness, injury, deformity,abnormality or pregnancy by a clinical establishment is covered. Such services provided by doctors and paramedics either provided as an employee (clinical establishment) or in their individual capacity is exempt. Transportation of patients to and from a clinical establishment is also exempt. The clinical establishment, as per clause (s), means a hospital, nursing home, clinic, sanatorium or any other institution by, whatever name called, that offers services or facilities requiring diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India, or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases.
So, if charitable trusts run a hospital and appoint specialist doctors, nurses and provide medical services to patients at a concessional rate, such services are not liable to GST. If hospitals hire visiting doctors/specialists and these deduct some money from consultation/visit fees payable to doctors and the agreement between hospital and consultant doctors is such that some money is charged for providing services to doctors, there may be GST on such amount deducted from fees paid to doctors. 

*GST on services provided to charitable trusts*

Services provided to charitable trusts are not out of ambit of GST.All services other than those specifically exempted provided to 
charitable trusts will be subject to GST.

*GST on supply of goods by Charitable Trusts*

There is no exemption for supply of goods by charitable trusts. Thus any goods supplied by such charitable trusts for consideration shall be liable to GST. For instance, sale of goods shall be chargeable to GST. 

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: Due Date for Filing GSTR for July by Input Service Distributor Extended to Oct 13 [Read Notification]

Read more at: http://www.taxscan.in/due-date-filing-gstr-july-input-service-distributor-extended-oct-13/11014/

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TDS not attracted to Payment towards Chit Loss: ITAT Bangalore [Read Order]

Read more at: http://www.taxscan.in/tds-not-attracted-payment-towards-chit-loss-itat-bangalore/11024/

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Amount Paid under Annual Maintenance Contract is not in the Nature of Fee for Professional & Technical Services: ITAT Mumbai

Read more at: http://www.taxscan.in/amount-paid-annual-maintenance-contract-not-nature-fee-professional-technical-services-itat-mumbai/11021/

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: Govt Explains applicability of GST on Charitable & Religious Trusts [Read Concept Note]

Read more at: http://www.taxscan.in/govt-explains-applicability-gst-charitable-religious-trusts/11034/

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MCA

 

MCA has revised the versions of eForms - Form DIR-12 (Particulars of appointment of Directors and the key managerial personnel and the changes among them), Form DIR-6 (Intimation of change in particulars of Director to be given to the Central Government), Form INC-24 (Application for approval of Central Government for change of name) and SPICe Form (New Version - Simplified Proforma for Incorporating Company Electronically (SPICe) - with mandatory PAN & TAN application included) are revised on MCA portal recently and are available on the MCA portal. Stakeholders are requested to download the new version of the forms and to check the latest version of the form before filing.

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Finance Minister Arun Jaitley constitutes a Group of Ministers and a Committee on Exports

Read more at: http://www.taxscan.in/finance-minister-arun-jaitley-constitutes-group-ministers-committee-exports/11030/

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Definition of ‘Speculative Transaction’ does not include Currency: ITAT allows Deduction on Cancellation of Forward Contracts

Read more at: http://www.taxscan.in/definition-speculative-transaction-not-include-currency-itat-allows-deduction-cancellation-forward-contracts/11018/

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# *GST*: Government notifies increase in CESS ranging from 2-7% on motor vehicles w.e.f. 11th SEP 2017 – Noti.No.5/2017-Compensation (Rate), dt.11.09.17.

# *GST*: The Govt. has tasked taxmen with bringing half the 6 crore private businesses in India in the GST net, up from less than a crore at present, and also make the IT system glitch free.

# *IT*: After indirect taxes, the govt. has now set its sights on overhauling the 56-year-old direct taxes law covering income and corporation tax as it seeks to make the Indian regime more contemporary and tailor it to current requirements.

# *IT*: Direct tax revenue grows 17.5% to Rs.2.24 Lac crore in April-August mainly on account of income tax mop-up from individuals. The government estimates to collect Rs.9.80 Lac crore from direct taxes in the current fiscal.

# *PMLA*: CBI has registered a case against 19 companies which have sent over Rs.424 crore in foreign remittances through 700 transactions, suspecting it to be a case of money laundering through shell companies.

# *ICSI* has brought out Exposure Drafts on 4 Auditing Standards: CSAS-1: Auditing Standard on the Audit Engagement; CSAS-2 : Auditing Standard on Audit Process and Documentation; CSAS-3 : Auditing Standard on Forming of Opinion; and CSAS-4: Auditing Standard on Secretarial Audit..

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Supreme Court of India recently ruled that the CBDT has no power to amend the provisions of the law through issuing circulars. In the instant case, the petitioners, S V Gopala Rao and Sons.

20/09/2017 is the due date of filing of GSTR-3B & for Payment of Tax for the month of  AUG 2017.

New GST Tax Rates on Luxury Cars:
Small cars (Petrol): 28.00% base + 1.00% cess = 29.00%
Small cars (Diesel): 28.00% base + 3.00% cess = 31.00%
Mid-size cars: 28.00% base + 17.00% (+2%) cess = 45.00%
Luxury cars: 28.00% base + 20.00% (+5%) cess = 48.00%
SUVs: 28.00% base + 22.00% (+7%) cess = 50.00%
Hybrids: 28.00% base + 15.00% cess = 43.00%
Electric: 12%

Global auditing firms may come under greater scrutiny for any wrong doing as regulators mull ways to make them more accountable, with the role of such auditors , especially the Big Four coming under the lens in various corporate misdoings.

SEBI has issued a press release stating that ascertaining acquisition of ‘control’ under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“Takeover Regulations”) requires consideration of facts and circumstances of each case.

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: GST Gyan - Advisory-Use separate series of Invoice & Payment voucher for RCM cases, Receipt & Refund Voucher for advances as series to be given in  GSTR-1.

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Direct Tax Collections grows 17.5% in April-August, says Finance Ministry

Read more at: http://www.taxscan.in/direct-tax-collections-grows-17-5-april-august-says-finance-ministry/11003/

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Power of Attorney Holder cannot be assessed for Capital Gain received on Sale of Land: ITAT Jaipur [Read Order]

Read more at: http://www.taxscan.in/power-attorney-holder-cannot-assessed-capital-gain-received-sale-land-itat-jaipur/11007/

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*Rules related to E-Way Bill-As Per Notification No-27/2017 Dated 30-08-2017*-
1. *Consignment Value Exceeds Rs 50000*- Eway Bill to be generated in Form GST EWB-01
2. *Procedure*- Supplier will Will Part-A of Form GST EWB-01 and than Transporter will fill Part-B of Form GST EWB-01 before movement of Goods.
3. *Distance < 10 Km*- where the goods are transported for a distance of less than ten kilometres within the State or Union territory from the place of business of the transporter finally to the place of business of the consignee, the details of conveyance may not be updated in Part-B of the e-way bill.
4. *Unique e-way bill number (EBN)*- Upon generation of the e-way bill on the common portal, a unique e-way bill number (EBN) shall be made available to the *supplier*, the *recipient* and the *transporter* on the common portal.
5. *Transporter transferring goods from one conveyance to another* - in the course of transit shall, before such transfer and further movement of goods, update details of conveyance in the e-way bill on the common portal in FORM GST EWB-01.
6. *Multiple consignments in one conveyance*- A consolidated e-way bill in FORM GST EWB-02 has to be generated by the Transporter which contains the serial No of all the individual Consignments. 7. *Cancellation of E-way Bill*- If Goods are not transported after generation of E-way Bill than it need to be cancelled with 24hrs of its generation
8. *Validity of E-way Bill*- Upto 100km one day and additional 1 Day for each additional 100 Km
9. *No E-way Bill is Required in the following cases*- Goods Specified in Annexure to E-Way Rules, Goods Transported by Non-motorised Conveyance,

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📺 *Updates*

➡1. Ind AS: FAQs on Disclosures in Ind AS Financial Statements

➡2. Maintenance charges collected from allottee's of plots were to be included in income of builder: Delhi HC
Principal Commissioner of Income-tax-3 v. Delhi State industrial Infrastructure Development Corp. Ltd.*

➡3. No section 14A disallowance when no exempt income earned during the year: Delhi HC
Pr. CIT v. IL & FS Energy Development Co. Ltd.

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Quick reference to "Political Contribution" :-

Legal Provision:-

Section 182 of Companies Act, 2013.

Points:-

1. The Company can give Political Contribution in an aggregate in such Financial Year upto 7.5% of average net profit during 3 immediately preceding Financial Years.

2.Contribution should be given to Any Political Party.

3. The Government Companies and The Company which is incorporated within less than 3 Financial Years are not allowed to Contribute an amount to any political party whether Directly or Indirectly.

4. Board Resolution is mandatory for Contribution to any political party.

5. Disclosure should be made in the P& L account of the Company.

6. If there is any Contravention under this Section then Company is liable for fine upto 5 times of Contribution of Amount. And the officer in default is liable for imprisonment upto 6 months and with fine also which may extend to 5 times of the contribution of amount.

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#Economy:Direct tax collections, net of refunds, stood at Rs 2.24 lakh crore during the April-August period of FY18.The receipts had grown 19.1% in the first four months of FY18. After adjusting for refunds the growth in corporation collections was at 18.1% during the period, while personal income tax collections rose 16.5%. A total of Rs 74,089 crore refunds were given by the Govt in this period.

#Finance:Revenue Secretary made it amply clear that all businesses in the country needed to file GST returns, even if there was no taxable income and warned that a penalty would be charged in case of non-compliance. "The facility of 'Nil' returns is available in GSTR 1 form. So, even if there is no transaction, business is liable to file returns. GST compliance for the month of July stood at 74%. Admitting that there were initial hiccups and glitches, he said that the implementaion has been smooth so far. No achievement in the world is possible without the costs attached to it. There will be problems in the first six months. But the important thing is that the Govt is ready for a course correction.

#The upper age limit for joining the National Pension System will be increased to 65 years from the current 60. NPS is currently open for people between 18 and 60.

#After slipping into the negative in July, thanks to a temporary slowdown in drug sales caused by the transition to the GST, the Indian pharmaceutical market was back on track in August, registering 2.4% year-on-year growth during the month.

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Interest Expenses incurred on Account of Late Deposit of Service Tax & TDS are Eligible for IT Deduction: ITAT Kolkata [Read Order]

Read more at: http://www.taxscan.in/interest-expenses-incurred-account-late-deposit-service-tax-tds-eligible-deduction-itat-kolkata/10998/

Kindly note that ITAT judgment can't be referred in any court.