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Financial/Estate Planning
Job Work under Goods and Service Tax

Job Work under Goods and Service Tax

A job work means processing or working on raw material or semi-finished goods supplied by a principal manufacturer to a job worker. Suppose there is a registered person Mr. A who manufactures bags and he sends his semi-manufactured bags to Mr. B, a job worker, without paying any tax on such removal for installing chains on the bags. Here Mr. A is the principal and Mr. B is the job worker. According to section 143 of the CGST Act,

  1. A registered person, hereinafter referred to as the principal, may send the inputs and capital goods, without paying tax on such
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Related Party transactions

Related Party transactions

A related party is a party related to a body corporate /company in any other way other than by the companies own transactions. It means that a special relationship persists between the parties even before the transaction takes place. Section 2(76) of the Companies Act, 2013 (“the Act”), defines a related party with reference to a company

  • director or a key managerial person or their relatives or,
  • a firm, private company in which the partner, director / manager or his relative is a partner or,
  • a private company or a public company in which a director or manager is a
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Tax Audit Report (Form 3CD)

Tax Audit Report (Form 3CD)

In order to get the various amendments made to Income-tax Act, 1961 and other laws (indirect taxes) within the format of tax audit report (TAR), the Central Board of Direct Taxes (CBDT) issued notification No. 33/2018  on 20 July 2018 amending the report format of tax audit. These amendments to TAR will come in force from 20 August 2018, which implies that the tax audits filed with the Income-tax on or after 20 August 2018 will have to be in the amended TAR. The point wise changes have been discussed in the ensuing paragraphs:

  1. Clause no. 4 of Form
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Section 194N

Section 194N

Tax Deducted at Source (TDS) is income tax reduced from the money paid at the time of making specified payments such as rent, commission, professional fees, salary, interest etc. by the persons making such payments. Usually, the person receiving income is liable to pay income tax. But the government with the help of TDS provisions makes sure that income tax is deducted in advance from the payments being made by you. The recipient of income receives the net amount (after reducing TDS). The recipient will add the gross amount to his income and the amount of TDS is adjusted against … Read more

GST Returns

GST Returns

A return is a document containing details of income which a taxpayer is required to file with the tax administrative authorities. This is used by tax authorities to calculate tax liability. In the GST regime, any regular business has to file two monthly returns and one annual return. This amounts to 26 returns in a year. One has to manually enter details of one monthly return – GSTR-1. The other returns GSTR 3B will get auto-populated by deriving information from GSTR-1 filed by you and your vendors. There are separate returns required to be filed by special cases such as … Read more

Reduced corporate taxes

Reduced corporate taxes

Various amendments to Income-tax Act, 1961 {Finance (no.2) Act, 2019} has been introduced vide Taxation Laws (Amendment) Ordinance, 2019. In order to boost growth in this period of sluggish economy and to promote “Make in India” initiative, Govt. of India has made series of announcements stated here as under:

  1. A new section 115BBA has been introduced, which gives domestic companies an option to pay tax at reduced rates from 30 per cent to 22 per cent. Effective tax rate, including surcharge and applicable cess reduced from 34.944 per cent to 25.168 per cent.
  1. Another section 115BAB has been introduced wherein
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Double-Taxation-Relief

Double Taxation Avoidance Agreement

Double Taxation means taxing the same income twice for the same purpose earned in same period and in the same tax jurisdiction. When such income is taxed in two countries, the aggregate of the tax liability will form substantial part of his total income.

Double Tax Avoidance Agreement (DTAA) is a tax agreement between two or multiple countries to prevent double taxation of income earned in both countries. DTAA is an agreement between two countries that the income of non-residents should not be taxed both in their country of origin and in the country in which they live.

In 1920, … Read more

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Adoption of ASC: 606 Revenue from Contracts with Customers

ASC 606 is the new revenue recognition standard in US GAAP that has significantly affected the revenue recognition practices of most companies in United States. It provides a comprehensive, industry-neutral revenue recognition model intended to increase financial statement comparability across companies and industries. The standard affects all businesses that enter into contracts with customers to transfer goods or services whether public, private and non-profit entities unless those contracts are within the scope of other standards (for example: leases and insurance contracts). Both the public and private companies should comply with be ASC 606. It focuses on recognizing revenue more consistently. … Read more

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Labor Laws in India

In India, we have numerous laws which regulate the labor in the country and ensure to provide high degree of workers protection and manage the rules relating to the same. This blog describes the basic introduction and applicability of two most common and important funds to various organizations in order to ensure proper working of the system. These are Employee State Insurance (ESI) and Employee Provident Fund (EPF) schemes. ESI is a contributory fund whereby the employees in India are benefited through self-financing and healthcare insurance fund contributed by them and their employer. This scheme is administered and regulated as Read more

Place of supply of goods under GST

Place of supply of goods under GST

The Goods and Service Tax Act was introduced as a destination based tax i.e. the state in which the goods consumed have the right to collect the amount of tax so it becomes critical to decide in which state the goods have been consumed and consequently who should collect the amount of tax. For solving this issue the concept of ‘Place of Supply’ was introduced both for goods and services. 

Place of Supply when there is movement of goods

Supply Place of Supply
Involves movement of goods, whether by the supplier or the recipient or by any other person  Location
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Latest norms of differential voting rights

Latest norms of differential voting rights

In a fillip to startups, the Ministry of Corporate Affairs (MCA) recently amended the Companies (Share Capital and Debentures) Rules, 2014 (SCAD Rules) which are relaxed norms for shares with Differential Voting Rights (DVR) that will help such companies to retain control while raising equity capital. A differential voting right share is one with higher or lower voting rights but the same economic interest as ordinary shares. Shares with higher voting rights have been used by entrepreneurs around the world to retain control of their companies even while selling ordinary equity to investors to raise capital. The MCA move was … Read more

Risk - Based Internal Audit

Risk – Based Internal Audit

Over the last few years, cyber-crimes have grown in number and in the ways cybercriminals exploit them. Due to this, the need to manage risks has been recognized by organizations and adopted as a crucial part of a good governance best practice. A Risk-Based Internal Audit (RBIA) is focused on the organization’s response to the risks they face in achieving their goals and objectives. An RBIA differs from other types of audits as it is based on the business goals and their associated risks. With this approach, internal auditors gain other responsibilities – now they not only manage the control Read more

Tax Audit under Section 44 AB Tax Audit under Section 44 AB

Tax Audit under Section 44 AB

Section 44AB of the Income Tax Act stipulates provisions pertaining to the tax audit under the Income Tax Audit. A tax audit is conducted to ensure that the taxpayer has properly maintained the books of accounts and other records, and they truly reflect the income of the taxpayer. Moreover, it is intended to verify whether the assesse has complied with various requirements like filing of income tax returns, accurate specification of claim and income tax deductions, etc. In short, tax audit is a measure which is initiated to curb fraudulent tax practices. The audited accounts must be reported by a Read more

GST offences, penalties and appeals

GST offences, penalties and appeals

Being a destination based, transaction wise tax, Goods and Services Tax (GST) ropes in strict compliance procedures for all the taxpayers or people falling under the gamut. Since every transaction is being recorded and tracked between the source and destination, it is obligatory for the taxpayers to maintain and declare information with utmost accuracy. 

Offences
To have a crystal clear movement of goods intra-state or inter-state, reduce corruption and efficient tax collection system, GST defines strict penalty rules and offenses guidelines which the taxpayers have to follow. Below listed are the offences and applicable penalties under GST Act:

  1. A supplier
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GST transition

GST transition

With the introduction and (Goods and Service tax) GST implementation, the Indian tax structure for goods and services has become much broader. Under GST, multiple taxes are admixed into one. Transition from traditional tax structure to GST needs careful exercise. Hence, it is vital to have rules ensuring smooth transition to GST in place. The 3 types of transitional provisions are:

  • Input tax credit (ITC)
  • Refunds and arrears
  • Other cases : Job work, Input Service Distributor(ISD), Composition scheme

Input tax credit (ITC)
Various provisions are made for the smooth ITC transition under VAT, excise duty or service tax to GST.  … Read more

New Taxation Rules

New Taxation Rules

Union Finance Minister Nirmala Sitharaman in her maiden budget speech announced some income tax-related changes which will come into effect from September 1, 2019. Cash withdrawals exceeding INR 1 crore in aggregate in a year from finance institutions will attract TDS while in case of property transactions, the definition of immovable property has been broadened to include charges like club membership fee and car parking fee for TDS levy. Also, in another income tax rule change, a higher TDS will be levied if life insurance maturity proceeds received are taxable in your hands. Here is a 5-point explainer of new Read more

Introduction to 15CA & 15 CB

Introduction to 15CA & 15 CB

When it comes to filing taxes, it is not only individuals who need to ensure that all the proper procedures are followed and forms are submitted. When a person makes any payment or remit any money to non-resident, the bank will need to check whether the tax was paid or not. Making payments outside India requires certain compliances. One such compliance is to submit Form 15CA and 15CBinstitutions have rules that must be followed, which helps the income tax department to determine the taxable amounts of NRI’s. Foreign remittances have tax implications, which may be missed out inadvertently by taxpayers. Read more

Time of Supply (TOS) of Goods under GST

Time of Supply (TOS) of Goods under GST

In order to calculate and discharge a tax liability, it is important to know the date when the tax liability arises i.e. the date on which the charging event has occurred. Point of taxation under GST is the point in time when goods are deemed to have been provided and services are deemed to be rendered. The concept of point of taxation is not new, a similar concept was also there in earlier tax regime. The point of taxation enables a person to determine the tax rate, value and due date for payment of taxes.
Under GST, time of supply … Read more

Decoding the Direct Tax Code

Decoding the Direct Tax Code

Over the period of 6 decades, the Income Tax Act of India has undergone various impediments. The judgments of the  courts or amendments by parliament has made the Act lengthy and hard to interpret as there was a need to ease up the provisions and make it shorter. It is expected that the government may introduce the country with the newly drafted Direct Tax Code (DTC) drafted by 8 members of the task force .The motive behind drafting the DTC includes simplifying the tax regime and provide relief to domestic and foreign companies. Below mentioned are the changes proposed by … Read more

Ambiguities in Goods & Service Tax

Ambiguities in Goods & Service Tax

Since the inception of the Goods and Service Tax in India, GST has been a matter of discussion for every layman and experts in the country. Like every coin has 2 sides, the implementation of GST in the country also has arguably many merits and demerits as compared to the earlier subsumed taxes. Moving on to the inch closer for unifying tax reforms, the holes in the implementation of the act are triggered along with some important observation of Comptroller Auditor General of India (CAG).

Observation of CAG on indirect tax collection
The CAG in the latest reports on indirect … Read more