Wednesday, 25 October 2017

25 October 2017 Updates

Quick Reference to "Revised Secretarial Standard -2 i.e. for General Meetings " :-
( Few Aspects only).
Points:-
1. The SS-2 is not not applicable for OPC & Section 8 Companies.
2. It is already effective & notified / Applicable from 1st October, 2017.
3. Secretarial Auditor means not only PCS but also PCS Firm.
4. Notice of GM shall be posted on website of the Company till the end /Conclusion of the meeting. ( If Company having a Website ).
5. Notice of AGM shall also have a Serial number of Meeting.
6. In Case of Nidhi Company Individual Notice should be provided if Member is holding more than 1 k of Face value of Shares or 1% of total paid up share capital of Company whichever is less. & For remaining or Other member notice shall be given through Public Notice in newspaper.
7. The Complete Particulars / Information about Route map or Venue of the meeting is not applicable in case of Wholly owned Subsidiary and The Company in which only it's directors & relatives are members.
8. The Proxy form should be as per MGT-11 only and not as per AOA of the Company.
9. Nidhi Company is not required to Provide e-voting facility to the Members of the Company.
10. It's not Mandatory that atleast 1 Scrutinizer is the Member of Company.
11. The Scrutinizer is required to Submit his report within 7 days from the last date of the Poll.
12. Notice of Adjourned Meeting os not required to be given if its Adjourned on same day or within 3 days.
13. Minutes book is required to Kept only at the Registered Office of the Company.
14. If Minutes are maintained in the Loose-leaf form then it should be bound at least once in every 3 years.
15. If the Member has made request to the Company about Delivery of Notice through Particular Mode other than followed by the Company then that member is required to Pay fees as decided by the Company.
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Rental Income from Real Estate Business cannot be treated as ‘Income from House Property’: ITAT [Read Order]
Read more at: http://www.taxscan.in/rental-income-real-estate-business-cannot-treated-income-house-property-itat/12494/
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CBEC clarifies Taxability of Printing Contracts under GST [Read Circular]
Read more at: http://www.taxscan.in/cbec-clarifies-taxability-of-printing-contracts/12510/
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GST Revenue Collection Figures stand at Rs.92,150 crore as on 23rd Oct, 2017
Read more at: http://www.taxscan.in/gst-revenue-collection-figures-stand-rs-92150-crore-23rd-oct-2017/12524/
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# *GST*: Retailers won't have to issue long invoices detailing prices and taxes for each item under the GST regime, retailers are also not to issue separate invoices for exempted items taxed at the 0% rate and can club all purchases in one bill.
# *GST*: More relief for SMEs as GST Council set to cut late filing penalties in its next meeting in Guwahati on 10th November to ease procedural irritants for small firms.
# *CBDT* has launched online chat service for income tax payers to enable them to seek answers to their queries relating to direct tax issues. The "Live Chat" window can be access from Mon to Fri b/w 10AM to 5PM at http://www.incometaxindia.gov.in/Pages/default.aspx.
# *INet*: The government has kick-started the process of giving a boost to the minimum mandated internet speed from existing 512 kbps to at least 2 mbps and more.
# *GST*: HC vacated the order of goods detained by the State as the Central Govt. did not notify the documents that have to be carried by a transporter under IGST – Ascics Trading Co. Vs ASTO (2017 (10) TMI 831 - Kerala High Court).
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Rental Income from Real Estate Business cannot be treated as ‘Income from House Property’: ITAT [Read Order]
Read more at: http://www.taxscan.in/rental-income-real-estate-business-cannot-treated-income-house-property-itat/12494/
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CBDT has launched an online chat service for income taxpayers to enable them to seek answers to their queries relating to direct tax issues. "Live Chat" window from Monday to Friday between 10 a.m and 5 p.m.

CBDT releases draft amendments to rules relating to the registration of religious and charitable trusts as per changes in the I-T Act brought through the Finance Act of 2017 They will need to seek fresh registration under a new format announced.

Unions of the Income Tax Dept have warned of a nationwide stir against implementation of the new advance software package — IT Biz Application (ITBA) developed by TCS — from October 1, and asked the department to delay the same by at least three months.

Exporters can soon start claiming refunds for GST paid in August and September as GSTN will this week launch an online application for processing of refund, its CEO said on Monday.

GST issued Notification no 40 CGST act & 41 IGST act dated 23-10-2017 - regarding concessional tax rate by registered supplier to registered exporter for Inter state @ 0.1 %  (IGST) & Intra state supply of goods @0.05% (CGST).

Govt and Supreme Court are in favour of setting up an independent body to regulate ethics in the legal profession, the absence of which has prevented the country from improving its global position in the enforcement of business contracts.
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Govt Notifies 1% GST on Intra-State Supply of Goods between Registered Persons for Exports [Read Notification]
Read more at: http://www.taxscan.in/govt-notifies-1-gst-intra-state-supply-goods-registered-persons-exports/12486/
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✳Direct Tax: 
▶ITAT Mumbai held that the embezzlement loss due to siphoning of funds of assessee company by the employees is a business loss allowable u/s. 28 of the Act.  {ACIT Vs M/s. Haldyan Glass Ltd. (ITAT Mumbai)}
ITAT Mumbai held that 100% addition on bogus purchase cannot be done without doubting sales. {Pravin Thanmal Shah HUF Vs. Asst. CIT(A) (ITAT Mumbai)}
✳Indirect Tax: 
▶CBEC gives clarification on issues wherein the goods are moved within the state or from the state of registration to another state for supply on approval basis. {Circular No. 10/10/2017-GST Dated- 18 Oct. 2017}
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https://goo.gl/WcH7u6
*CBEC has notified that inter-state/ domestic supply of taxable goods by a registered supplier to a registered recipient/ merchant exporter, for exports, shall attract a nominal GST rate of 0.1%, under CGST/ IGST/ UTGST, in line with recommendations of the 22nd GST Council Meeting held on 6 Oct. 2017, subject to fulfillment of certain conditions*
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 *Updates*
➡1. FMV of property under construction or used by assessee for business purpose couldn’t be determined u/s 23(1)p
Ashok Kumar Gupta v. Income-tax Officer, Ward- 15 (3), New Delhi*.
➡2. Form 10A modified for fresh registration by already regd. Trust in case of change in object of the trust
➡3. Delivery challan sufficient for supply of goods on approval basis within or outside State
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RBI clarifies that linking Aadhaar to bank accounts is mandatory vide Press Release dated 21/10/2017.
NCLT Order levy of compounding fee of Rs. 3.39 Lakh for Non Appointment of CS - Re. Atyati Technologies Private Limited (National Company Law Tribunal Bangalore) 
GST: e-way bill system will be introduced with effect from 1st January, 2018 and will be applicable nationwide with effect from 1stApril, 2018.
*Due Dates for October Month*
*31.10.17* - TDS Return
*31.10.17* - Income Tax Return any type Audit Cases
*31.10.17* - GSTR-2 for the month of July
*31.10.17* - TRAN-1
*Annual Compliance Filing for Companies*
Balance Sheet and Profit & Loss A/c - Form AOC-4 to be filed by all companies - 30 days from date of AGM
Annual Return - Form MGT-7 to be filed companies having share capital - 60 days from date of AGM
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Goods Sent on Approval Basis-GST Rules Relaxed-Big Relief for Jewellery Industry*
Government relaxed GST rules for movement of goods, including jewellery, within a state or outside along with an e-way bill, for sale on an approval basis. *Such movements take place even for business exhibitions* and such events where actual sale may or may not happen.
In a *GST circular issued on Wednesday*, the government clarified that the goods taken for supply on an approval basis could be moved from the place of business of the registered person to another place within the same state or outside the state under the cover of a delivery challan.
No Invoice to be raised only the delivery challan is sufficient.
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Aadhaar linkage with bank accounts mandatory - RBI.*
(The RBI clarification followed media reports quoting a reply to a Right to Information (RTI) application that suggested the apex bank has not issued any order for mandatory Aadhaar linkage with bank accounts.)
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https://goo.gl/oM35J6
*GSTN launches excel-based offline tool to file initial GSTR-3B returns.*
(Goods and Services Tax Network (GSTN) has launched an excel-based offline tool for businesses to file initial GSTR- 3B returns. After uploading of the return to the GST Portal, the taxpayer has to preview the form, complete formalities like submit, offset the liability and file their GSTR-3B Return using digital signature or electronic verification code.)
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https://goo.gl/fvoKco
*Half the assessees fail to file GST returns for September.*
(Even three months after the roll-out of the goods and services tax (GST), the level of compliance continues to be low in filing returns. In fact, less than half of assessees filed summary returns under the GST for September.)
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https://goo.gl/mzHV45
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Hello,
Please refer to below Export Procedure for Goods and Services:
Under GST regime, exports of goods as well as services are zero-rated. It may be noted that in the earlier regime process for export of services was simple. Service providers were not required to execute any Bond/LUT. In the GST regime however even service providers intending to do export of services will have to follow any of the three options discussed below. This is as per the law as on date. Hence kindly pay attention to subsequent developments as we have already represented that service providers must not be asked to execute Bond/LUT.
As per Sec. 2(5) of IGST Act export of goods means taking goods out of India to a place outside India. As per Sec. 2(6) export of services means the supply of any service when,–
·                the supplier of service is located in India;
·                the recipient of service is located outside India;
·                the place of supply of service is outside India;
·                the payment for such service has been received by the supplier of service in convertible foreign exchange; and
·               the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in Section 8 of IGST Act
As per Sec. 16 of IGST Act, such supplier shall be entitled to credit of input tax of goods or services or both used for making such export supplies. For doing exports of goods as well as services, one has following three options:
Option A: Supply with payment of IGST
Option B: Supply under a Bond with/without Bank Guarantee
Option C: Supply under a Letter of Undertaking
Let us analyze each option in detail:
A) Payment of IGST and claim refund of such tax paid on export supply
1. The exporter prepares tax invoice showing the amount of IGST payable on the value of exports.This option shall be selected if the supplier is not able to utilize credits against domestic supplies and wants faster refund of such accumulated credits.

2. Exchange rate for determination of value of goods/services shall be applicable reference rate for that currency as determined by RBI on the date of time of supply (Rule 34). Hence RBI reference rate is to be used on the date of invoice for calculating the IGST amount.

3. The tax invoice shall state “SUPPLY MEANT FOR EXPORT ON PAYMENT OF INTEGRATED TAX”.
4. The IGST liability shown on the invoice is only for presentation purpose and should not be collected from the customer.
5. The exporter uses the balance availed in his ITC ledgers to discharge the IGST liability shown on the export invoice. There is no cash outflow as the IGST liability is discharged by utilization of available ITC. As per law there is no need to debit the IGST amount on the date of invoice. Same needs to be paid in due course (i.e. by 20th of succeeding month). It may be noted that carry forward credit as per June return shall not be available till the supplier files TRAN – 1 form. Hence under this option there will be blockage of working capital if TRAN -1 form is not filed on or before 31.07.2017 as one will not be able to utilize carry forward credit.
6. The IGST liability, thus discharged, is then claimed as refund. Please ensure that tax invoice number is mentioned on the shipping bill and not the commercial invoice number made in foreign currency in case of exports. This is because there is no requirement to make a separate application for refund. Return filed shall itself be the application and once the export is confirmed through export manifest, refund shall be automatically processed. Hence it is important that tax invoice number on shipping bill tallies with invoice number stated in GST return. If there is mis-match refund may get delayed.
7. In case of export of services made with payment of IGST, refund shall be granted post receipt of payment for such services in convertible foreign exchange.
8. ARE-1 is not required to be prepared.
B) Supply under a Bond with/without Bank Guarantee
1. This option must be exercised when supplier can utilize credits against liability on domestic supplies and thus will have no balance of accumulated credits. Under this option exporter can supply goods or services by executing a bond with or without bank guarantee (please see condition no. 6 for Bank Guarantee requirement). Hence an exporter is not required to pay IGST and claim subsequent refund. A Bond (in nature of Indemnity bond) in Form GST RFD-11 is executed on non-judicial stamp paper between the exporter and the Government through President of India. As a transition provision, exports may be allowed under existing Bonds till July 31, 2017, by which date, the above mentioned Form GST RFD-11 has to be furnished for future exports. Format of the same is attached for ready reference.
2. Bond amount should cover the IGST liability on the export of goods or services and not the basic value of goods/services exported. Bond needs to be given prior to export. The Bond need not be given separately for each export as this would make the compliance burdensome. The Bond would be like a running Bond (with debit / credit facility). Amount of IGST (calculated on the invoice value by referring the RBI reference rate on the date of invoice) will be debited in the bond on the date of invoice. Said amount shall be credited on furnishing proof of export which in case of export of goods shall be furnished latest within a period of fifteen days after the expiry of three months from the date of issue of the invoice for export. In case of export of services amount shall be credited on furnishing proof of payment in convertible foreign currency. Such proof must be submitted within fifteen days after the expiry of one year, or such further period as may be allowed by the Commissioner, from the date of issue of the invoice for export. If proofs are not submitted the department shall enforce the Bond and the amount of tax liability with interest needs to be paid immediately.

3. The Bond should sufficiently cover the amount of tax involved in the export based on estimated tax liability as assessed by the exporter himself. The exporter shall ensure that the outstanding tax liability on exports is within the bond amount. In case the bond amount is insufficient to cover the tax liability in yet to be completed exports, the exporter shall furnish a fresh bond to cover such additional liability.
4. As an ease of compliance, the Bond shall be accepted by the jurisdictional Deputy/Assistant Commissioner having jurisdiction over the principal place of business of the exporter (though Rule 96A(1) requires to be filed with the Jurisdictional Commissioner)
5. In the Bond, the exporter undertakes that he shall export the goods / services and observe all the provisions of the Act / Rules in respect of export of goods / services.
6. A Bank Guarantee will have to be furnished to the Commissioner as a security under the Bond. The Jurisdictional Commissioner may decide about the amount of Bank Guarantee depending upon the track record of the exporter.  If Commissioner is satisfied with the track record of an exporter then furnishing of bond without bank guarantee would suffice. In any case the bank guarantee should normally not exceed 15% of the bond amount. Hence 15% of not the upper limit. Commissioner should not normally demand bank guarantee of amount exceeding 15% of bond amount.
7. The Bonds also will state that in the event of breach or failure in performance, the Government shall invoke the bank guarantee to make good all the loss / damages.
8. The Bond has to be furnished prior to the export. Once the Bond is furnished, the exporter can carry out the export of goods / services.
9. No tax will be paid on the export supply and the invoice shall carry a declaration as ‘SUPPLY MEANT FOR EXPORT UNDER BOND WITHOUT PAYMENT OF INTEGRATED TAX’.
10. The format of Form GST RFD-11 along with format of the Bond to be executed. Format is attached.
11. Presently, the module for furnishing of GST FORM RFD-11 is not available on the GST common portal. Hence, the Form GST RFD-11 has to be downloaded from cbec.gov.in and furnished manually to the jurisdictional Deputy/Assistant Commissioner.
12. Form ARE-1, which all along was an important statutory document to avail export benefits, both under Excise and Customs Laws, is now dispensed off with the onset of GST, except that it will now apply only to commodities to which provisions of Central Excise Act continue to be applicable.
C) Supply under a Letter of Undertaking (LUT)
1. Option B i.e. furnishing of Bond supported by a Bank Guarantee results in blocking of working capital since Bank would ask the exporter for a margin money deposit against the Guarantee.
2. For this reason, every exporter would want to do export (without furnishing any Bank Guarantee) through Letter of Undertaking.
3. However, the Government is selective in giving this option and at present, the following registered person shall alone be eligible for submission of LUT in place of a Bond (Refer CBEC Notification No 16/2017 – Central Tax dated July 7, 2017)
·                a status holder as specified in paragraph 5 of the Foreign Trade Policy 2015-2020; or
·                who has received the due foreign inward remittances amounting to a minimum of 10% of the export turnover, which should not be less than Rs 1 Crore, in the preceding financial year, and he has not been prosecuted for any offence under the CGST Act, 2017 or under any of the existing laws in case where the amount of tax evaded exceeds Rs 2.5 crores.

4. A Letter of Undertaking in Form GST RFD-11, addressed to the President of India has to be executed by the Registered Person. As a transition provision, exports may be allowed under existing LUT’s till July 31, 2017, by which date, the above mentioned Form GST RFD-11 has to be furnished for future exports.
5. As an ease of compliance, the LUT shall be accepted by the jurisdictional Deputy/Assistant Commissioner having jurisdiction over the principal place of business of the exporter (though Rule 96A(1) requires to be filed with the Jurisdictional Commissioner)
6. In the LUT, the exporter would undertake the following:
(a) To export goods within 3 months from invoice date
(b) To receive consideration for export of services in foreign currency within 1 year from invoice date
(c) To observe all the provisions of the Act / Rules in respect of export
(d) In event of failure to do the export he shall pay IGST along with interest @ 18% on the IGST from the invoice date till date of payment
7. The LUT has to be furnished prior to the export. Once the LUT is furnished, the exporter can carry out the export of goods / services
8. No tax will be paid on the export supply and the invoice shall carry a declaration as ‘SUPPLY MEANT FOR EXPORT UNDER LETTER OF UNDERTAKING WITHOUT PAYMENT OF INTEGRATED TAX’.
9. The LUT will be valid for 12 months and should be furnished for each financial year in duplicate.
10. No Bank Guarantee is required to be furnished to the Commissioner. However, if the exporter fails to comply with the conditions of the LUT, he may be asked to furnish a Bond with Bank Guarantee.
11. The format of Form GST RFD-11 along with format of the LUT to be executed is available in Circular No 26/2017 – Customs dated July 1, 2017
12. Presently, the module for furnishing of GST FORM RFD-11 is not available on the GST common portal. Hence, the Form GST RFD-11 has to be downloaded from cbec.gov.in and furnished manually to the jurisdictional Deputy/Assistant Commissioner.
13. Form ARE-1, which all along was an important statutory document to avail export benefits, both under Excise and Customs Laws, is now dispensed off with the onset of GST, except that it will now apply only to commodities to which provisions of Central Excise Act continue to be applicable.
SUPPLIES TO SEZ DEVELOPER/UNITS

As per Sec. 16 of IGST Act, any supply of goods or services or both to SEZ Developer or SEZ units is also zero-rated. In case of such supplies, a supplier has following options:

Option A: Supply to SEZ Developer/units with payment of IGST
Option B: Supply to SEZ Developer/units without payment of IGST

Let us discuss both the options in detail:
A) Payment of IGST and claim refund of such tax paid on supply to SEZ Developer/units
1. A supplier can supply goods or services to SEZ developer/units with payment of IGST. As the invoice shall be in local currency, IGST amount shall be calculated on said amount. This option shall be selected if the supplier is not able to utilize credit against domestic supplies and wants faster refund of such accumulated credits.

2. An invoice should carry a declaration stating ‘SUPPLY MEANT FOR SEZ DEVELOPER/UNIT WITH PAYMENT OF INTEGRATED TAX’.

3. IGST is not required to be paid on the date of invoice. Same shall be paid in due course by utilizing credits.

4. Application for refund must be filed electronically in FORM GST RFD-01.

5. The application for refund shall be filed by the –

(a) supplier of goods after such goods have been admitted in full in the Special Economic Zone for authorised operations, as endorsed by the specified officer of the Zone;

(b) supplier of services along with such evidence regarding receipt of services for authorized operations as endorsed by the specified officer of the Zone. It must be noted that as per law in case of supply of service to SEZ, there is no requirement that the consideration must be obtained in convertible foreign exchange.

6. Refund application shall also contain a statement to the effect that the Special Economic Zone unit or the Special Economic Zone developer has not availed the input tax credit of the tax paid by the supplier of goods or services or both.

B)Supply to SEZ Developer/units without payment of IGST

1. Under this option, a supplier can supply goods/services to SEZ Developer/Units without payment of IGST.

2. As per Sec. 16(2) of IGST Act, supplier can make such supplies under bond or letter of undertaking. The Notifications issued on the subject of bond/letter of undertaking till date only covers direct exports. It does not cover supplies to SEZ Developer/Units. Hence one will have to wait for further clarity on the subject. Even as per law there is no requirement to obtain the consideration for such supply in convertible foreign currency.
​Thank You.
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