©orporate Updates on 13.8.2019
Ø Reliance, BP joint venture to invest in KG basin
Ø Etihad says not feasible to reinvest in Jet Airways
Ø Fullerton India Credit aims to raise $250-300 million via offshore loan
Ø Sun Pharma's Q1 nos: One-off boost likely from US supplies
Ø IBM, Tata join US tech platform's governing council
Ø New U.S. rule could disqualify half of visa applicants
Ø Syndicate Bank expects Rs. 4,000 cr from NPA recovery
Ø Saudi Aramco interest in Reliance Industries upstages PSU mega refinery
Ø Anil Agarwal pulls out of race for acquiring grounded Jet Airways
Ø Reliance Jio ties up with Microsoft for digital transformation
Ø India's steel output edges past world in H1 of CY2019, lags China
Ø Govt. set to dilute 3.5-year-old air pollution norms for thermal plants
Ø CARE Rating revises outlook on 11 solar firms to negative
Ø Coastal shippers demand more facilities at ports
Ø HIL posts lower Q1 profit of Rs. 40 cr
Ø Visaka Industries profit slips to Rs 23 crore in Q1
Ø Cox & Kings unable to declare Q1 results
Ø Eros International Q1 net falls 55% to ₹27.05-cr
Ø CCI slaps Rs. 14 crore fine on Jaiprakash Associates
Ø Tech Mahindra to pay 490 crore for 65% stake in MadPow
Ø CBS, Viacom in final stages of all-stock merger
Ø Natco gets six USFDA observations for its Mekaguda plant
Ø Jaguar Land Rover sales increase 5% in July at 37,945 units.
Ø Economic slowdown: Govt plans urgent steps to boost exports
Ø SME-focused Ugro Capital eyes over Rs 1,000 crore loan book
Ø China promises to address India’s concern over ballooning trade deficit
Ø GSP roll-back: Exports of goods to US grew 32% in June
Ø Gold imports up 35.5 per cent during Apr-Jun
Ø Syndicate Bank expects Rs 4,000 cr from NPA recovery in FY20
Ø Reliance to be zero-net debt company in 18 months: Ambani
Ø Reliance Retail may get global partner
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GST: There is a fundamental problem of demand today. At the core of it is incomes that aren’t rising enough:
READ MORE- https://www.gststation.in/gst-there-is-a-fundamental-problem-of-demand-today-at-the-core-of-it-is-incomes-that-arent-rising-enough/
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CBDT had exempted registered startups from the purview of the angel tax provision except for those that have already received tax demand notices with the intent of granting them relief at the appeals stage.
Gift received by assessee from ‘HUF’, being its member, was a capital receipt in his hands and was not exigible to income tax as in case of individual, the HUF has not been included in the definition of relative in explanation to section 56(2) (vii). Pankil Garg Vs PCIT (ITAT Chandigarh)
GST Less than a fifth of the businesses registered as regular taxpayers have so far filed their first annual returns (for FY18) under the new system, even as the deadline for the same is this month-end. This has raised concerns over the compliance readiness of the industry, and is threatening to undermine the ability of the tax administration to plug revenue leakages which are perceived to be large.
Sebi has come up with a new set of proposals with the aim to improve transparency and the quality of portfolio management service (PMS) in India, besides improving distribution practices. PMS products currently have a minimum investment limit of Rs 25 lakh and are typically sold to high net-worth individuals.
Sebi is planning to ease its norms for 'Muni Bonds' to help smart cities and other registered entities working in areas of city planning and urban development work, like municipalities, raise funds through issuance and listing of their debt securities.
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GST is no longer a dampener for the housing sector:
READ MORE- https://www.gststation.in/gst-is-no-longer-a-dampener-for-the-housing-sector/
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No GST relief likely for auto sector: Report:
READ MORE- https://www.gststation.in/no-gst-relief-likely-for-auto-sector-report/
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End under-voicing and tax evasion, demand city bizmen:
READ MORE- https://www.gststation.in/end-under-voicing-and-tax-evasion-demand-city-bizmen/
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Poorer states leave industrialised peers behind in GST collection rates: Report:
READ MORE- https://www.gststation.in/poorer-states-leave-industrialised-peers-behind-in-gst-collection-rates-report/
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Govt detects GST evasion of Rs 45,000 crore in FY19:
READ MORE- https://www.gststation.in/govt-detects-gst-evasion-of-rs-45000-crore-in-fy19/
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Auto sector seeks GST relief as vehicle sales dip 31% in July:
READ MORE- https://www.gststation.in/auto-sector-seeks-gst-relief-as-vehicle-sales-dip-31-in-july/
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Calculation and Reporting of LTCG
Calculation of LTCG
LTCG on transactions in listed equity and equity mutual fund units in FY 2018-19 is to be calculated as per a new tax regime introduced in Budget 2018.
To report long term capital gains on listed equity or equity mutual funds for FY2018-19 in ITR-2, taxpayers can either provide transaction wise details or enter the aggregate capital gains/loss.
Earlier on July 11, ITR-2 was modified to include the requirement of transaction wise details. However, it has now been clarified that this is optional and instead a taxpayer can provide aggregate amounts relating to such long-term capital gains. Reporting LTCG in tax returns for FY 2018-19 assumes importance as this is the first year for which the gains/losses would have to be reported based on the new tax regime introduced in Budget 2018 for gains from listed equity and equity mutual fund units.
On July 11, 2019, the income tax department inserted a schedule 'Section 112A' in ITR-2 to capture transaction-wise details of all sale transactions of listed equity shares or equity oriented mutual funds where the gains are long term in nature.
The schedule requires the taxpayers to provide the following information:-
1. ISIN Code
2. Name of the Share/Unit (Auto populated if ISIN is provided)
3. No. of Shares/Units
4. Sale-price per Share/Unit
5. Cost of acquisition per Share/Unit
6. Fair Market Value per share/unit as on 31st January,2018
7. Cost of improvement without indexation
8. Expenditure wholly and exclusively in connection with transfer
These are extensive details, and many taxpayers may not have the ISINs of the shares/units they hold. Further, it could be cumbersome to provide transaction-wise details in the tax return.
However, it has now been clarified that this schedule is not mandatory. It is important to note that this schedule was not part of the notified form, and probably due to this the newly inserted schedule (through schema changes) has not been made mandatory for this year.
It appears that the income tax department really wanted to help taxpayers by providing a tool for transaction-wise calculation of LTCG. The amounts calculated in this schedule go directly into the main Capital Gains schedule. However, taxpayers are also allowed to enter the final LTCG calculations directly into the Capital Gains schedule.
Therefore, to report LTCG in ITR-2, the taxpayers have two options:-
a) Insert details in 'Section 112A schedule' with details such as ISIN No, name of share and so on as mentioned above, or;
b) Calculate the capital gains for each transaction and enter the aggregate amount directly in 'CG' schedule (Part B- 4) of the ITR-2 form.
It is, however, possible that this very schedule is made mandatory next year. It may also happen that in the coming years the income tax department pre-populates this schedule based on data obtained from stock exchanges. This should actually help the taxpayers in making correct calculations.
The long term capital gain tax (LTCG) on transactions in listed equity and equity mutual fund units in FY 2018-19 is to be calculated as per a new tax regime introduced in Budget 2018.
As per this new regime, LTCG in excess of Rs 1 lakh on sale of listed equity shares and equity oriented mutual fund was made taxable effective April 1, 2018 at the rate of 10 per cent without indexation benefit.
On February 1, 2018, the Finance Minister announced removal of the earlier tax exemption for LTCG from sale of listed equity shares or equity oriented mutual funds (if STT is paid at the time of sale).
However, to protect small investors, such capital gains of an amount up to Rs 1 lakh in a financial year have been made exempt from tax. Remember even if your long-term capital gains does not exceed Rs 1 lakh in a financial year, then also you are required to report such gains while filing your ITR.
Grandfathering clause
Further, a grandfathering clause was inserted to ensure that the tax is only prospective in nature, and effectively only the gains from the date of announcement were made taxable. Therefore, cost of acquisition is required to be calculated as per a specified formula to ensure investments made before February 1, 2018 remain tax-exempt.
The cost of acquisition of such investment is to be calculated as follows:
A)The actual cost of acquisition of asset and
1)Take the Lower of - (i) Fair market value (FMV) of asset as on January 31, 2018 or (ii) Sale proceeds received.
2)Then take the higher of the above at 1 or the actual cost of acquisition.
The result of (2) above will be the cost of acquisition
This can be further explained with an example.
Let's say A made a lump-sum investment of Rs. 10 lakh in shares of a listed company in July 2006. Its market value on January 31, 2018 was Rs. 50 lakh. A redeems his entire investment in May 2019 for Rs. 52 lakh netting a gain of Rs. 42 lakh. Due to grandfathering clause, however, A's taxable gain would be only Rs. 2 lakh.
A had made another lump-sum investment of Rs. 10 lakh in shares of another listed company in January 2016. The fair market value of the investment on January 31, 2018 was Rs. 4 lakh, and he ultimately sold all these shares in June 2019 for a sum of Rs. 5 lakhs. In this transaction A incurred a loss of Rs. 5 lakh calculated for tax purposes as per the above mentioned formula.
Overall, A had a long-term capital loss of Rs 3 lakh (Rs 2 lakh minus Rs 5 lakh).
Remember as per income tax rules, capitals gains are required to be calculated for every transaction undertaken during the financial year. As mentioned in the example above, A has undertaken two transactions during FY 2018-19, therefore, capital gains are required to be calculated separately for each transaction.
Reporting of LTCG in ITR-2 for FY 2018-19
Once you have calculated long-term capital gains for each transaction, then you have an option of directly reporting the LTCG on aggregate basis as follows:-
In the above table, you would see that Cost of acquisition is considered as Higher of A and B. However, just by looking at the aggregate numbers the higher of A and B would be Rs 54 lakhs.
But since we are making transaction-wise calculations, the higher of A and B is calculated for both transactions separately, and then added up. For the first transaction it is Rs. 50 lakhs and for the 2nd it is Rs. 10 lakhs. The addition of the two is Rs. 60 lakhs which should reported in the schedule ..
Those who opt to fill up the schedule for reporting transaction-wise sale details would see that the income tax department's utility automatically calculates and populates the amount of Rs. 60 lakhs in the CG schedule as cost of acquisition.
Adjustment for Rs. 100,000 exemption
Under the law, income tax at the rate of 10% is to be calculated only on the gains in excess of Rs. 100,000. The amount of Rs. 100,000 is not to be reduced from the total amount of the capital gains. Therefore, the taxpayers should not make any adjustment for the same in the CG schedule. This has also been clarified by the income tax department in its FAQ section.
Under the Schedule SI (Special Income), the total amount of gains is reported in the columns income, and taxable income. However, in the last column, the income tax on such gains is calculated at the rate of 10% only after deduction Rs. 100,000 from the total amount of such capital gains. If the total amount of such capital gains is less than Rs. 100,000 then the tax on the same would be calculated as zero. Note that, all these numbers in Schedule SI are pulled from the CG schedule and automatically populated by the income tax department's software. The taxpayers, however, should review these numbers before finalizing their return.
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Simplification of process of Incorporation of Section 8 Companies:
1) With a view to simplify the process for incorporating Section 8 Companies, requirement of prior filing of INC-12 for new section-8 companies is being dispensed with vide the Companies(Incorporation) Sixth Amendment Rules, 2019 dated 7th June, 2019.
2) Henceforth, Section 8 Companies can be incorporated by either reserving names through Run and filing SPICe thereafter or by directly filing SPICe. Licence No for a section 8 company shall henceforth be allotted at the time of incorporation itself.
3) In view of the above, all pending INC-12 SRNs for new Companies pending at respective RoCs would be marked as ‘Rejected’ on 15th August 2019. Such applicants may thereafter directly file SPICe for obtaining License Number and for incorporation of Section 8 Companies.
4) Stakeholders who have already obtained License Numbers and are yet to file SPICe form for incorporating Sec 8 companies may do so at their convenience but may please note that the forms shall be processed only after a certain time lag to allow for work flow changes to take effect.
5) Those stakeholders who have already filed SPICe forms which are pending at CRC may kindly await processing of these forms after the work flow changes take effect.
