🇮🇳 CBDT issues clarification on Section 194Q.
🍎 1. TDS under section 194Q on net of GST if charged separately. However for section 206C(1H) GST is to be included.
🥝 2. Transactions on recognised exchanges exempted from 194Q.
🍑 3. Hierarchy of section 194-O, 194Q and Section 206C(1H) clarified. If section 194-O is applicable to a transaction then 194Q and 206C(1H) will not apply. If 194Q is applicable then section 206C(1H) shall not be applicable. If section 194-O and 194Q are not applicable section 206C(1H) will be applicable.
🥭 4. Turnover/ Gross receipts of INR 10 crore of buyer for applicability of this section 194Q will mean Turnover/ Gross receipts in business only. Hence receipts by way of rent, interest , capital gain etc if not considered as business income are not to be included.
🌽 5. Further provision of section 194Q not to apply in first year of an entity as no turnover / gross receipts in preceding year since entity was not in existence.
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CBDT issues clarification on Section 194Q on Dated 30th June 2021 vide Circular No. 13 of 2021
Guidelines under section 194Q of the Income-tax Act, 1961
👉Finance Act, 2021 inserted a new section 194Q in the Income-tax Act 1961 which takes effect from I st day of July, 202 I. It applies to any buyer who is responsible for paying any sum to any resident seller for purchase of any goods of the value or aggregate of value exceeding fifty lakh rupees in any previous year. The buyer, at the time of credit of such sum to the account of the seller or at the time of payment, whichever is earlier, is required to deduct an amount equal to 0.1 % of such sum exceeding fifty lakh rupees as income tax.
👉Buyer is defined to be person whose total sales or gross receipts or turnover from the business carried on by him exceed ten crore rupees during the financial year immediately preceding the financial year in which the purchase of good is carried out
👉 Calculation of threshold for the financial year 2021-22
👉i) the provision of this sub-section shall not apply on any sum credited or paid before I st July 2021. If either of the two events had happened before 1 st July 2021 , that transaction would not be subjected to the provisions of section 194Q of the Act.
👉ii)if a person being buyer has already credited or paid fifty lakh rupees or more up to 30th June 2021 to a seller, the TDS under section 194Q shall apply on all credit or payment during the previous year, on or after I st July 2021 , to such seller.
Adjustment for GST
👉with respect to TDS under section 194Q of the Act, it is clarified that when tax is deducted at the time of credit of amount in the account of seller and in terms of the agreement or contract between the buyer and the seller, the component of GST comprised in the amount payable to the seller is indicated separately, tax shall be deducted under section 194Q of the Act on the amount credited without including such GST. However, if the tax is deducted on payment basis because the payment is earlier than the credit, the tax would be deducted on the whole amount as it is not possible to identity that payment with GST component of the amount to be invoiced in future.
Whether non-resident can be buyer under section 194Q of the Act?
👉it is clarified that the provisions of section 194Q of the Act shall not apply to a non-resident whose purchase of goods from seller resident in India is not effectively connected with the permanent establishment of such nonresident in India
Whether tax is to be deducted when the seller is a person whose income is exempt
👉it is clarified that the provisions of section 194Q of the Act shall not apply on purchase of goods from a person, being a seller, who as a person is exempt from income tax under the Act
Whether tax is to be deducted on advance payment
👉It is clarified that since the provisions apply on payment or credit whichever is earlier, the provisions of section 194Q of the Act shall apply to advance payment made by the buyer to the seller.
Whether provisions of section 194Q of the Act shall apply to buyer in the year of incorporation?
👉It is clarified that under section 194Q of the Act a buyer is required to have total sales or gross receipts or turnover from the business carried on by him exceeding ten crore rupees during the financial year immediately preceding the financial year in which the purchase of good is carried out. Since this condition would not be satisfied in the year of incorporation, the provisions of section 194Q of the Act shall not apply in the year of incorporation.
Whether provisions of section 194Q of the Act shall apply to buyer if the turnover from business is 10 crore or less?
👉It is clarified that for the purposes of section I94Q of the Act, a buyer is required to have total sales or gross receipts or turnover from the business carried on by him exceeding ten crore rupees during the financial year immediately preceding the financial year in which the purchase of good is carried out. Hence, the sales or gross receipts or turnover from business carried on by him must exceed Rs 10 crore. His turnover or receipts from non-business activity is not to be counted for this purpose.
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No reversal of ITC in case of loss by consumption of input which is inherent to manufacturing loss: Madras High Court
ARS Steels & Alloy International (P.) Ltd. v. State Tax Officer 2021
The petitioners were engaged in the manufacture of MS Billets and Ingots. MS scrap was an input in the manufacture of MS Billets and the latter, in turn, would constitute an input for manufacture of TMT/CTD Bars. There was a loss of a small portion of the inputs, inherent to the manufacturing process. The department issued orders seeking to reverse a portion of the ITC claimed by the petitioners, proportionate to the loss of the input, referring to the provisions of Section 17(5)(h) of the GST Act. The petitioner filed writ petition against the same.
High Court observed that assessment orders rejected a portion of ITC claimed, invoking the provisions of Section 17(5)(h) which relates to goods lost, stolen, destroyed, written off or disposed by way of gift or free samples. The situations as set out in clause (h) indicate loss of inputs that are quantifiable, and involve external factors or compulsions. A loss that is occasioned by consumption in the process of manufacture is one which is inherent to the process of manufacture itself. Therefore, the reversal of ITC involving Section 17(5)(h) by the revenue, in cases of loss by consumption of input which is inherent to manufacturing loss is misconceived and not correct, as such loss is not contemplated or covered by the situations adumbrated under section 17(5)(h). Thus, the orders requiring reversal would be liable to be set aside.
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The CBDT has extended the last date for updating UDINs for all the IT forms at the e-filing portal to 31st August, 2021.
Source: https://www.icai.org/post/last-date-of-updation-of-udins-at-e-filing-portal
Note:The extension is in relation to updating UDIN on the Income Tax portal. You are not allowed to generate any UDIN for a date older than 15 days as usual.
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⚫Govt launched a special drive to enrol more cultivators under the Pradhan Mantri Fasal Bima Yojana.
⚫130 countries have agreed on a global minimum tax backed by US President as part of a worldwide effort to keep multinational firms from dodging taxes by shifting their profits to countries with low rates.
⚫New projects drop 13% sequentially in June quarter due to Covid.
⚫The second wave had a negative impact on the consumer credit demand as inquiries for such loans fell sharply across product categories.
⚫UPI, the flagship payments platform of the National Payments Corporation of India, touched a record high both in terms of volume and value of transactions in June after a slump in April and May.
⚫Delhi Airport sees 3x rise in footfall since mid May as Covid cases dip.
⚫IMD forecasts normal monsoon rainfall 'over the country as a whole' in July.
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👉🏻SEBI tightens norms on independent Directors
(SEBI said that two-thirds of the members of the nomination & remuneration committee (NRC) and the audit committee (AC) of the board of a listed company should be independent directors)
👇🏻 👇🏻 👇🏻
https://bit.ly/3qEFpDt
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Income from conversion of sugarcane into jaggery is not a Agricultural Income. E. Palaniappan Vs ITO (Madras High Court) It is not the case of the appellant/assessee that the sugarcane in its original form could not be marketed by him. The conversion of sugarcane into jaggery is also not an essential process to make sugarcane marketable.
Income Tax AO having reopened the assessment merely relying on the information passed on to him by the Investigation Wing regarding Accommodation entry taken by the assessee. Without applying his own mind to it and verifying the same. The belief of escapement of income clearly not that the AO . And therefore the jurisdiction assumed by the AO to reopen the case u/s 147 was bad in law. Century Fiscal Services Ltd. Vs. ITO, ITAT-Chandigarh.
GST Appellate Authority should adopt more liberal approach in matters of condonation of delay. M/s. Shree Udyog Vs Commissioner of State Tax Odisha (Orissa High Court) The difficulties generally faced by lawyers and litigants in applying for and obtaining certified copies of orders is generally known.
Securities Appellate Tribunal(SAT) gave an interim relief to Franklin Templeton(FT) by staying the Securities and Exchange Board of India(Sebi) order barring it from launching any new debt schemes for two years. The tribunal has asked FT to deposit Rs 250 crore within two weeks into an interest bearing escrow account, details of such account to be submitted to Sebi.
India may see a flurry of corporate acquisitions ending in delisting if a regulatory proposal to smoothen the process goes through, industry experts said. A Securities and Exchange Board of India (Sebi) discussion paper released proposed a seamless process to attempt delisting when one acquires a significant stake under the takeover code.
Finance Minister in a Press Conference has announced the economic relief packages: a. ₹1.1 Lakh Crore Loan Guarantee Scheme for COVID Affected Sectors b. Additional ₹1.5 Lakh Crore for Emergency Credit Line Guarantee Scheme (ECLGS) c. Credit Guarantee Scheme to Facilitate Loans to 25 Lakh Persons.
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✅ Forms which are required to be filed between 1st April to 31st July, 21, can be filed till 31st August, 21 without any late fees.
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🌎 MCA Date extension
🌱 1. It has been decided to grant additional time upto 31st August, 2021 for filling of forms of Companies & LLPs due for filling during 1st April, 2021 to 31st July, 2021 other than charge forms without any additional fees.
🌴 Accordingly, the due dates of DPT-3 & Form CFSS is extended to 31st August, 2021.
🎋 2. In case of CHG – 1 & CHG – 9 the period from 01.04.2021 till 31.07.2021 shall not be reckoned for the purpose of counting the number of days under section 77 & 78 of the Act.
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CBDT issues clarification on Section 194Q on Dated 30th June 2021 vide Circular No. 13 of 2021
Guidelines under section 194Q of the Income-tax Act, 1961
👉Finance Act, 2021 inserted a new section 194Q in the Income-tax Act 1961 which takes effect from I st day of July, 202 I. It applies to any buyer who is responsible for paying any sum to any resident seller for purchase of any goods of the value or aggregate of value exceeding fifty lakh rupees in any previous year. The buyer, at the time of credit of such sum to the account of the seller or at the time of payment, whichever is earlier, is required to deduct an amount equal to 0.1 % of such sum exceeding fifty lakh rupees as income tax.
👉Buyer is defined to be person whose total sales or gross receipts or turnover from the business carried on by him exceed ten crore rupees during the financial year immediately preceding the financial year in which the purchase of good is carried out
👉 Calculation of threshold for the financial year 2021-22
👉i) the provision of this sub-section shall not apply on any sum credited or paid before I st July 2021. If either of the two events had happened before 1 st July 2021 , that transaction would not be subjected to the provisions of section 194Q of the Act.
👉ii)if a person being buyer has already credited or paid fifty lakh rupees or more up to 30th June 2021 to a seller, the TDS under section 194Q shall apply on all credit or payment during the previous year, on or after I st July 2021 , to such seller.
Adjustment for GST
👉with respect to TDS under section 194Q of the Act, it is clarified that when tax is deducted at the time of credit of amount in the account of seller and in terms of the agreement or contract between the buyer and the seller, the component of GST comprised in the amount payable to the seller is indicated separately, tax shall be deducted under section 194Q of the Act on the amount credited without including such GST. However, if the tax is deducted on payment basis because the payment is earlier than the credit, the tax would be deducted on the whole amount as it is not possible to identity that payment with GST component of the amount to be invoiced in future.
Whether non-resident can be buyer under section 194Q of the Act?
👉it is clarified that the provisions of section 194Q of the Act shall not apply to a non-resident whose purchase of goods from seller resident in India is not effectively connected with the permanent establishment of such nonresident in India
Whether tax is to be deducted when the seller is a person whose income is exempt
👉it is clarified that the provisions of section 194Q of the Act shall not apply on purchase of goods from a person, being a seller, who as a person is exempt from income tax under the Act
Whether tax is to be deducted on advance payment
👉It is clarified that since the provisions apply on payment or credit whichever is earl ier, the provisions of section 194Q of the Act shall apply to advance payment made by the buyer to the seller.
Whether provisions of section 194Q of the Act shall apply to buyer in the year of incorporation?
👉It is clarified that under section 194Q of the Act a buyer is required to have total sales or gross receipts or turnover from the business carried on by him exceeding ten crore rupees during the financial year immediately preceding the financial year in which the purchase of good is carried out. Since this condition would not be satisfied in the year of incorporation, the provisions of section 194Q of the Act shall not apply in the year of incorporation.
Whether provisions of section 194Q of the Act shall apply to buyer if the turnover from business is 10 crore or less?
👉It is clarified that for the purposes of section I94Q of the Act, a buyer is required to have total sales or gross receipts or turnover from the business carried on by him exceeding ten crore rupees during the financial year immediately preceding the financial year in which the purchase of good is carried out. Hence, the sales or gross receipts or turnover from business carried on by him must exceed Rs 10 crore. His turnover or receipts from non-business activity is not to be counted for this purpose.
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.
No reversal of ITC in case of loss by consumption of input which is inherent to manufacturing loss: Madras High Court
ARS Steels & Alloy International (P.) Ltd. v. State Tax Officer 2021
The petitioners were engaged in the manufacture of MS Billets and Ingots. MS scrap was an input in the manufacture of MS Billets and the latter, in turn, would constitute an input for manufacture of TMT/CTD Bars. There was a loss of a small portion of the inputs, inherent to the manufacturing process. The department issued orders seeking to reverse a portion of the ITC claimed by the petitioners, proportionate to the loss of the input, referring to the provisions of Section 17(5)(h) of the GST Act. The petitioner filed writ petition against the same.
High Court observed that assessment orders rejected a portion of ITC claimed, invoking the provisions of Section 17(5)(h) which relates to goods lost, stolen, destroyed, written off or disposed by way of gift or free samples. The situations as set out in clause (h) indicate loss of inputs that are quantifiable, and involve external factors or compulsions. A loss that is occasioned by consumption in the process of manufacture is one which is inherent to the process of manufacture itself. Therefore, the reversal of ITC involving Section 17(5)(h) by the revenue, in cases of loss by consumption of input which is inherent to manufacturing loss is misconceived and not correct, as such loss is not contemplated or covered by the situations adumbrated under section 17(5)(h). Thus, the orders requiring reversal would be liable to be set aside.
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