Important Changes in GST w.e.f. 01-10-2019

Reverse Charge

Renting of Motor Vehicle

Services provided by way of renting of motor vehicle by any Individual/Firm/LLP to any Body corporate (companies), covered under reverse charge mechanism, taxable @5%. However, if the service provider charges GST @12% then he can continue with Forward Charge. Then no Reverse Charge applicable.

Exemption

Warehousing (Notification No 21/2019- Central Tax (Rate)

W.e.f 01.10.2019, services provided by way of storage or warehousing of cereals, pulses, fruits, nuts & vegetables, spices, copra, sugarcane, jaggery, raw vegetable fibres such as cotton, flax, jute etc, indigo, unmanufactured tobacco, betel leaves, tendu leaves, coffee and tea are exempt from tax. Earlier this exemption was on limited items of agricultural produce and few other products.

Transportation of goods by Air/Vessel(Notification No 21/2019)

The services by way of transportation of goods by an aircraft or vessel from customs station of clearance in India to a place outside India shall be exempted till the 30th day of September 2020. This exemption was to end on 31.03.2019. However, it has been extended for a further 1 year.

Exports against Supply by Nominated Agency (Notification No 17/2019)

The Central Government under Notification No 26/2018, exempted supply of gold supplied by Nominated agency to the recipient under ‘Export against Supply by Nominated Agency’ subject to certain conditions mentioned in said notification. Now it also includes “Silver and platinum” under ‘Export against Supply by Nominated agency’ Scheme, w.e.f. 01.10.2019

Composition Scheme

Aerated Water (Notification No. 18/2019 and 43/2019)

Any person engaged in the manufacturing of aerated water shall not be eligible to levy tax under Composition Scheme, w.e.f. 01.10.2019. However, if a dealer has taken registration under composition scheme of 6% tax as goods and service provider both, then he cannot even trade-in aerated water.

Rate Changes

Packing Material (Notification No 14/2019)
Bags of polyethylene, bulk containers of man-made fibers chargeable at the tax rate of 12%. (earlier it was 5% in some cases(tariff 63053200 and 63053300) and 18% in some cases (tariff 3923), w.e.f. 01.10.2019
Woven and non-woven bags and sacks of polyethylene or polypropylene strips or the like, whether or not laminated, of kind use of packing of goods, shall be chargeable at the rate of 12%., w.e.f. 01.10.2019

Caffeinated Beverages(Notification No 17/2019)

The taxable rate on all the caffeinated beverages increased from 18% to 28%, w.e.f 01.10.2019 (Ex- Energy Drinks such as red bull). However, it is still a confusion as to which beverages are to be considered caffeinated beverages.

Precious or semi-precious Stone (other than diamonds) (Notification No 14/2019)
The semi-precious stones shall be now taxable at the rate of 0.25% (earlier it was 3%). The long-pending demand of the Jewellers has been fulfilled. However, pearls continue to be charged at 3% tax rate.

The director at his discretion may resign from directorship on reasonable ground matters by giving notice. The resignation of a director shall take effect from the date on which the notice is received by the company or the date, if any, specified by the director in the notice, whichever is later. (Section 168 of the Companies Act, 2013)

Section 168 of Companies Act, 2013 discusses the terms and conditions related to the resignation of a director.

Compliance by director

1. The notice should be given to the company stating the resignation along with the reasons.
2. Form DIR-11 should be filed with ROC.
3. Documents required for filing DIR – 11
   Notice of resignation
   Proof of dispatch – a. Acknowledgment/ Receipt from the respective courier, b. Notice of resignation (if given by hand directly)
4. Acknowledgment of receipt by the company

Compliance by Company

• On receipt of notice of resignation held a board meeting for such director resignation matter
• Pass a board resolution stating the acceptance or rejection of notice of resignation.
• File Form DIR-12 with ROC.
• Documents required for filing DIR – 12
• Notice of resignation
• Evidence of cessation – Board Resolution accepting the resignation

Violation of Section 269SS and 269ST

Background of Insertion

Various legislative steps have been taken by the Finance Act, 2017 to curb black money by discouraging cash transaction and by promoting the digital economy. These prominently include placing a restriction on cash transaction by the introduction of new sections 269ST & 271DA to the Income-Tax Act

Section 269ST states that no person shall receive an amount of Rs 2 Lakh or more:

• In aggregate from a person in a day; or
• In respect of a single transaction; or
• In respect of transactions relating to one event or occasion from a person.

However, the Central Board of Direct Taxes (CBDT) has clarified that this cash withdrawal limit does not apply for withdrawals from Banks and Post offices.

Even if there is a technical violation of provisions of Section 269SS and Section 269T, as per settled judicial principals, no penalty u/s 271D or 271E is not leviable if,

• The transaction is duly recorded in books of the parties to the transaction
• Identity and confirmation of parties to the transaction is on record
• No black money/tax evasion/malafide intention is involved in the transaction

Thus, if entire transactions of the loans and the acceptance or repayments thereof are shown in the regular books of accounts and assessee was acting in a bonafide belief coupled with genuineness of the transactions, it constitutes a “reasonable cause” within the meaning of section 273 B of the I.T. Act so as to come out of the rigors of penal provisions of section 271D and 272E.

Penalty for failure to comply with provisions of section 269ST, 271DA.

If a person receives any sum in contravention of the provisions of section 269ST, he shall be liable to pay, by way of penalty, a sum equal to the amount of such receipt:

• Provided that no penalty shall be imposable if such person proves that there were good and sufficient reasons for the contravention.
• Any penalty imposable under sub-section
• Shall be imposed by the Joint Commissioner.

Penalty for failure to comply with the provisions of section 269SS.271D.

If a person takes or accepts any loan or deposit or specified sum in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit or specified sum so taken or accepted.

Cash Transaction Limit under Income Tax

The following are the main income tax sections that pertain to cash transaction limit:

• Section 40A(3) and Section 43 – Pertains to Cash Payment
• Section 269SS and Section 269ST – Pertains to Cash Receipts
• Section 269T – Pertains to Repayment of Certain Loans / Deposits

Composition Scheme is a simple and easy scheme under GST for taxpayers. Small taxpayers can get rid of tiresome GST formalities and pay GST at a fixed rate on turnover. This scheme can be opted by any taxpayer whose turnover is less than Rs. 1.5 Crore. A servicer provider can opt composition scheme if turnover is less than Rs. 50 Lakh.

Tax payers who are NOT Eligible for opting composition scheme

1. Casual taxable person or a non – resident taxable person.
2. Person making Inter – State Supplies
3. Business which supply goods through an e-commerce operator.

Circumstances which must be satisfied for opting Composition Scheme

1. No Input Tax Credit can be claimed by taxpayer who opts composition scheme.
2. Such person can not supply exempted goods.
3. The tax payer has to pay tax at normal rates for transactions under the Reverse Charge Mechanism.
4. If a taxable person has different segments of businesses (such as textile, electronic accessories, groceries, etc.) under the same PAN, they must register all such businesses under the scheme collectively or opt out of the scheme.
5. Such person has to mention the words ‘ Composition Taxable Person ‘ on every notice, Bill and signboard displayed prominently at their place of business.
6. A manufacturer or trader can now also supply services to an extent of 10% of turnover, or Rs.5 lakhs, whichever is higher.

GST Rates

Documents required for registration are same.
GSTR – 4 is the GST return need to be filed by composite dealer for every quarter.

FORM GSTR – 9 is to be filed which is known as Annual return. It is compilation return of all Intra and Inter State Outward/ Inward Supplies made during the particular financial year. It is consolidated return of monthly and quarterly returns. It is filed once in a year. It is mandatory to file annual return.

Types of Annual Return

Due Date

GSTR 9 -It should be filed within August 31st, 2019 for the financial year 2017-18
December 31st, 2019 for the financial year 2018-19

Details in Annual Return

Penalty for Non – Filing or Late Filing :

Penalty is Rs. 200 per day (i.e Rs. 100 CGST & Rs. 100 SGST) of default. This is subject to a maximum of 0.25% of the taxpayer’s turnover in the relevant state or union territory. However, there is no late fee on IGST yet.

General FAQ

1. Can it be revised ?
No, once the return is filed it can not be revised.

2. What if additional liability arises ?
Liability identified during the filing of annual return can be deposited with Government using DRC-03 Form (i.e., Liability not earlier paid through GSTR-3B)

3. A GSTR-3B was filed with wrong (excess) outward supplies and tax paid on the same, but the actual/correct supplies were declared in GSTR-1 for the same period, then in that case is there any way to get a refund of excess amount paid?
If taxes are erroneously paid in excess in GSTR-3B, the same can be claimed as a refund (as per Section 54 of CGST Act) or be adjusted against tax payments of subsequent periods. But, the same cannot be claimed though GSTR-9. The refund needs to be claimed by making an application for the same on GST portal.

The Rule 12A of Companies (Appointment and Qualification of Directors) fourth Amendment Rules, 2018 provided that ‘Every individual who has been allotted a Director Identification Number (DIN) as on 31st March of a financial year as per these rules shall, submit e-form DIR-3-KYC to the Central Government on or before April 30th, 2019.’

Every Director who has been allotted DIN on or before the end of the financial year, and whose DIN status is ‘Approved’, would be mandatorily required to file form DIR-3 KYC before April 30th of the immediately next financial year.

Details Required for filing

• Copy of Pan Card
• Personal Mobile number
• Personal Emai
• Permanent/ Present address.
• Copy of Aadhar Card (Mandatory) – Back and Front both
• DIN ( Director Identification Number )
• Digital Signature of the applicant.

Consequences of Non – Filing or Late Filing

“If a Director, fails to file eform DIR-3 KYC before the expiry of the due date, then MCA21 system will mark his/her DIN as ‘De-activated’ with reason as ‘Non-filing of DIR-3 KYC’. However, the de-activated DIN shall be re-activated only after eform DIR-3 KYC is filed along with payment of Rs. 5000. In order to avoid any delay which would result in payment of Rs. 5000, the Directors are advised to file the same before the due date”. At present still MCA has not released any update on DIR – 3 KYC for financial year 2019-20.

Section 80C: Deduction in respect of payment of Life insurance premium, Children Education Expenditure etc.

1. Payment of tution fees to any university,college,school or any other educational instituion situated in India for the purpose of full-time education of the children.
2. Payment of Life insurance premium for insurance policy taken on the life:
   • In case of individual: Such individual, his/her spouse,and child (whether major or minor)
3. Contribution made towards Public Provident Fund (PPF) in respect of following persons:
   • In case of individual: Such individual, his/her spouse and child (whether major or minor
   • In case of HUF : Any member of HUF
4. Contribution in the Unit Linked Insurance Plan (ULIP) of Unit Trust of India or ULIP of LIC Mutual Funda u/s 10(23D)
5. Contribution made towards Statutory Provident Fund (SPF) and Recognised Provident Fund
6. Contribution made towards an approved Superannuation Fund
7. Payment of subscription to a notified deposit scheme

An entity cannot survive in an isolated environment.Its existance depends upon the external factors even called as the business environment.

Hence, it becomes the obligation of an organization to look after the society in which they are growing.It is because of this reason, the concept of Corporate Social Responsibility has gained its importance.India is the first country to mandate provisions for this which are governed under the Companies Act,2013.Section 135 covers the abovesaid provisions

DEFINITION OF CORPORATE SOCIAL RESPONSIBILITY

CSR has been defined as under, but not limited to
1.Projects or programs with reference to activities that are specified in the Schedule
2.Projects or programs related to activities undertaken by the board in pursuance of reccomendations of the CSR committee according to the declared CSR policy subject to the condition that such policy covers subjects explained in the schedule

APPLICABILITY

As per 135(1) the provisions of Corporate Social Responsibility is applicable to all companies, whether public or private, if in the immediate preceeding financial year
Netwoth exceeding Rs.500 crore or more
Turnover exceeding Rs.1000 crore or more
Net profit exceeding Rs.5 crore or more

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

Public company:- Minimum 3 directors, out of whom one shall be an Independent director
Private company:- Minimum 2 directors

EXPENDITURE

Average Net Profit for 3 immediate [receeding financial years is profit, then the comoany shall spend atleast 2% of average net profit of the three immediate preceeding years and so disclose it in the Boards Report.

PENAL PROVISIONS

The company is punishable with a fine of minimum of Rs.50,000 which may extend to Rs.25,00,000
Every officer in default is punishable with a fine of minimum of Rs.50,000 which may extend to Rs.5,00,000 or with an imprisonment for a term which can extend to 3 years or both

ACTIVITIES PERMITTED UNDER CSR

• Eradicting extreme poverty and hunger
• Promotion of education
• Reducing child mortality
• Employment enhancing vocational skills ,social business projects
• Contribution to Prime Minister’s National Relief Fund or any other fund set up by the
• Central Government or the State Governments for socio economic development
• Relief Funds for the welfare of Scheduled Castes , the Scheduled Tribes , other backward classes, minorities and women and such other matters as may be prescribed.
• Ensuring environmental sustainability
• Gender equality and women empowerment
• Improving maternal health

Budget Highlights :

1. Income Tax

1. Interest on House Loan Deduction – Section 80 EEA
   It was increased by Rs. 1.5 Lakhs for Interest on home loan taken on self occupied property if,
   • Such Loan is taken before 31-03-2020.
   • House with the cost of 45 Lakhs will be eligible.
2. Interest on Electric Vehicle Loan – Section 80 EEB
   Additional deduction of Rs. 1.5 Lakhs for interest on loan taken to purchase electric vehicle & Custom Duty is Exempted on purchase of electric vehicle
3. Interchangeability of PAN and Aadhar for ease and convenience of taxpayers, Income Tax return can be filed using Aadhar Number
4. TDS on Cash Withdrawls – Section 194 N
   To discourage cash payments TDS@ 2% on withdrawals exceeding Rs. 1Cr per annum from a bank account
5. Surcharge on Individuals
   3% surcharge hike on an income of Rs. 2 crore and upto Rs.5 Crore; 7% on Rs. 5 Crore or above.
6. Securities Transaction Tax (STT)
   STT restricted only to the difference between settlement and strike price in case of exercise of options.
7. Corporate TAX
   Tax rate reduced to 25% for companies with annual turnover up to Rs. 400 crore.
8. Relief for Start-ups
   • Capital gains exemptions from sale of residential house for investment in start-ups
     extended till FY21.
   • Angel tax’ issue resolved- start-ups and investors filing requisite declarations and
     providing information in their returns not to be subjected to any kind of scrutiny in
     respect of valuations of share premiums.
   • Funds raised by start-ups to not require scrutiny from Income Tax Department
   • E-verification mechanism for establishing identity of the investor and source of
     funds.
   • Special administrative arrangements for pending assessments and grievance redressal
   • No inquiry in such cases by the Assessing Officer without obtaining approval of
     the supervisory officer.
   • No scrutiny of valuation of shares issued to Category-II Alternative Investment Funds.
   • Relaxation of conditions for carry forward and set off of losses.
9. Section 35 AD deduction extended to Li-On battery, semi-conductor, Laptops, Fabrication & Photovoltaic cell

2. Indirect Taxes

A. Defence

Defence equipment not manufactured in India exempted from basic customs duty

B. Make In India

1. Basic Customs Duty increased on cashew kernels, PVC, tiles, auto parts, marble slabs,
   optical fibre cable, CCTV camera etc.
2. Exemptions from Custom Duty on certain electronic items now manufactured in India
   withdrawn.
3. End use based exemptions on palm stearin, fatty oils withdrawn.
4. Exemptions to various kinds of papers withdrawn.
5. 5% Basic Custom Duty imposed on imported books.
6. Customs duty reduced on certain raw materials such as:
7. Inputs for artificial kidney and disposable sterilised dialyser and fuels for nuclear
   power plants etc.
8. Capital goods required for manufacture of specified electronic goods.

C. Other Indirect Tax provisions

1. Export duty rationalised on raw and semi-finished leather
2. Increase in Special Additional Excise Duty and Road and Infrastructure Cess each by Rs. 1 per litre on petrol and diesel
3. Custom duty on gold and other precious metals increased
4. Legacy Dispute Resolution Scheme for quick closure of pending litigations in Central
   Excise and Service tax from pre-GST regime

Advance TAX

Any amount which is paid as a tax on income earned or received, before the end of the financial year is called an advance tax. It is also called a ‘pay-as-you-earn’ scheme. As in case of salaried taxpayers, Tax is deducted by the employer on salary, so such salaried taxpayers are required to pay advance tax on income apart from salary if any and which is not reported to the employer.
Advance tax is mandatory only if Tax Liability is 10,000 or more. For computing tax liability, income for which tax is already deducted should be excluded.

Exemption for applicability

1. Resident Senior citizen and having Income from Business or Profession.
2. Assessee for whom Tax Liability is less than 10,000.

Due Date and Amount of Advance tax

• Advance tax is computed based on existing tax slab rates.
• The assessee who is opting presumptive taxation scheme has to pay its advance tax in one installment by 15th March
• While filing Income tax returns assessee need to fill the challan details of which advance tax was paid.
• Interest is charged if advance tax is not paid on or before the due date.

Interest for Non- Payment or Short-Payment of Advance TAX – Section 234B
Interest liability would be 1% per month or part of a month from 1st April following the financial year up to the date of determination and it would be attracted only if the advance tax paid is less than 90% assessed tax.
Interest payable on deferment of Advance TAX – Section 234 C
Interest liability would be a 1% of the difference between advance tax payable and advance tax paid.
Interest = [Advance Tax Payable – Advance Tax Paid ] * 1%

Tax Deducted at Source

The concept of TDS was introduced with an aim to collect tax from the very source of income. As per this concept, a person (deductor) who is liable to make payment of specified nature to any other person (deductee) shall deduct tax at source and remit the same into the account of the Central Government. The deductee from whose income tax has been deducted at source would be entitled to get the credit of the amount so deducted on the basis of Form 26AS or TDS certificate issued by the deductor.