Bloomsbury’s Desk Referencer for Professionals (Second Edition)

Contents at a Glance

Contents at a Glance Brief Profile of Contributing Professionals .................................................................... v Table of Contents ......................................................................................................... xiii Part I Goods and Services Tax A. GST (Authors: Rakesh Garg and Sandeep Garg) Chapter 1

GST in India – At-a-Glance..................................................................... 5

Chapter 2

Compliance chart with limitation periods under GST ........................... 48

Chapter 3

HSN Code-wise tariff for Goods ........................................................... 64

Chapter 4

HSN Code-Wise Tariff for Services .................................................... 394

Chapter 5

Non-Creditable Supplies under GST ................................................... 509 B. Excise and Customs (Post GST) (Author: Puneet Chopra)

Chapter 1

Central Excise (Post GST) ................................................................... 515

Chapter 2

Customs (Post GST) ............................................................................ 526 Part II Direct Tax (Authors: Gaurav and Dipesh Makhjani)

Chapter 1

Brief Overview of Income-Tax ........................................................... 549

Chapter 2

Residential Status and Scope of Total Income .................................... 555

Chapter 3

Rates of Taxation ................................................................................. 562

Chapter 4

Exempt Income .................................................................................... 569

Chapter 5

Expenditure Relating to Exempt Income ............................................. 574

Chapter 6

Income from Salaries ........................................................................... 577

Chapter 7

House Property .................................................................................... 599

Chapter 8

Profits & Gains from Business or Profession [PGBP]......................... 607

Chapter 9

Capital Gains ....................................................................................... 627

Chapter 10

Income from other Sources .................................................................. 647

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Chapter 11

Clubbing of Income ............................................................................. 652

Chapter 12

Set-Off and Carry Forward of Losses .................................................. 655

Chapter 13

Deductions to be Made in Computing total Income ............................ 658

Chapter 14

Payment of Tax & Interest ................................................................... 670

Chapter 15

Return of Income ................................................................................. 678

Chapter 16

Assessment Proceedings ...................................................................... 684

Chapter 17

Appeals & Revision ............................................................................. 689

Chapter 18

TDS and TCS ....................................................................................... 691

Chapter 19

Dividend Distribution Tax and Taxability of Dividend Income ................................................................................................. 701

Chapter 20

Penalty under Income Tax Act ............................................................ 704

Chapter 21

Survey, Search & Seizure .................................................................... 708

Chapter 22

Taxation of Companies & Other Persons ............................................ 711

Chapter 23

New PAN Requirements and Statement of Financial Transaction .......................................................................................... 717

Chapter 24

Income Computation and Disclosure Standards ..................................722

Chapter 25

Depreciation, STT, CII, NSC, KVP ..................................................... 729

Chapter 26

How to Deal with Notices Received from the Income-Tax Department735

Chapter 27

Tax Planning ........................................................................................ 739 Part III Employment and other laws (Author: Kiron Prabhakar) A. Employment

Chapter 1

The Employees’ Compensation Act, 1923 .......................................... 749

Chapter 2

The Factories Act, 1948 ....................................................................... 754

Chapter 3

The Employees’ State Insurance Act, 1948 ......................................... 765

Chapter 4

The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 ............................................................................ 772

Chapter 5

The Punjab Shops and Commercial Establishment Act, 1958 ............. 780

Chapter 6

The Maternity Benefit Act, 1961 ......................................................... 789

Chapter 7

The Payment of Bonus Act, 1965 ........................................................ 799

Chapter 8

The Contract Labour (Regulation and Abolition) Act, 1970 ............... 805

Chapter 9

The Payment of Gratuity Act, 1972 ..................................................... 814

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Contents at a Glance

Chapter 10

The Equal Remuneration Act, 1976 .................................................... 825

Chapter 11

The Sexual Harassment of Women at Work Place Act, 2013 ............. 830 B. Other Laws

Chapter 1

The Copyright Act, 1957 ..................................................................... 839

Chapter 2

The Limitation Act, 1963 .................................................................... 846

Chapter 3

The Environmental Laws..................................................................... 850

Chapter 4

The Information Technology Act, 2000 .............................................. 858

Chapter 5

The Competition Act, 2002 ................................................................. 863

Chapter 6

The Prevention of Money Laundering Act, 2002 ................................ 866

Chapter 7

The Right to Information Act, 2005 .................................................... 870

Chapter 8

The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 ......................................................... 875 Part IV Company Law (Authors: Milind Kasodekar and Shilpa Dixit)

Chapter 1

Registers (Books, Documents, Records) & Returns to be maintained by Companies ................................................................... 883

Chapter 2

List of Sections, Rules and Forms under the Companies Act, 2013 .......................................................................... 899

Chapter 3

Resolutions under Companies Act 2013 .............................................. 923

Chapter 4

Table of fees under the Companies Act, 2013 ..................................... 933

Chapter 5

List of fines and penalties .................................................................... 939 Part V Foreign Exchange Management Act (Author: Arun Gupta)

Chapter 1

Foreign Exchange Management Laws ................................................. 983

Chapter 2

Capital Account Transactions .............................................................. 994 Part VI Securities Law (Author: Arun Gupta)

Chapter 1

Background and Introduction ............................................................ 1031

Chapter 2

SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 ................................................................................................... 1036

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Chapter 3

SEBI (Prohibition of Insider Trading) Regulations, 2015 ................. 1044

Chapter 4

SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ................................................................................................... 1050

Chapter 5

SEBI (Depositories and Participants) Regulations, 1996................... 1071

Chapter 6

SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 .............................................................................. 1074

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Table of Contents

Table of Contents Brief Profile of Contributing Professionals ................................................................... ix Contents at a Glance ..................................................................................................... vii Part I Goods and Services Tax A. GST (Authors: Rakesh Garg and Sandeep Garg) Chapter 1

GST in India – At-a-Glance .................................................................. 5

1.1

GST – Meaning and its Scope ............................................................................... 5

1.2

Legislative Framework ......................................................................................... 6

1.3

Taxable Event and Charging Provisions ............................................................... 7

1.4

Rates of GST, Import & Export ............................................................................ 8

1.5

Exemptions and Exempt Supplies ....................................................................... 10 1.5.1

1.6

1.7

1.8

Power to grant exemption ...................................................................... 10

Meaning and Scope of the Term “Supply” ......................................................... 11 1.6.1

Scope of supply (Section 7 & 8 of GST Act) ........................................ 11

1.6.2

Inter-State supply vs. Local Supply and Place of Supply (Section 7 to 13 of IGST Act) ............................................................... 12

1.6.3

Time of supply (Section 12 & 13 of GST Act) ...................................... 13

1.6.4

Value of supply (Section 15 of GST Act) ............................................. 14

Threshold Limit (Basic Exemption) .................................................................... 15 1.7.1

Exemption limit (Sec 22 of GST Act) ................................................... 15

1.7.2

When threshold limit is not applicable (Sec 24 of GST Act) ................ 16

Taxable Persons & Registration .......................................................................... 16 1.8.1

Taxable person [Sec 2(107) of GST Act] .............................................. 16

1.8.2

Who is liable for registration mandatorily under GST [Sec 22(1) of GST Act] ......................................................................... 17

1.8.3

Who is not liable to take registration? (Sec 23 of GST Act) ................. 17

1.8.4

Agriculturist [Section 2(7) of GST Act] ................................................ 17

1.8.5

Time limit for taking registration [Section 25(1)] ................................. 18

1.8.6

Voluntary Registration under GST [Section 25(3)] ............................... 18 xiii

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1.9

Composition Scheme [Section 10] ......................................................................18

1.10

Output Tax ..........................................................................................................19 1.10.1 Meaning of output tax ............................................................................19 1.10.2 Steps for computation of output tax .......................................................19

1.11

Input Tax .............................................................................................................20 1.11.1 Input tax credit in the GST ....................................................................20 1.11.2 Restrictions in claiming ITC [Sec 16 of GST Act] ................................ 21 1.11.3 Utilization of credit [Sec 49(5)] ............................................................. 22

1.12

Job Work [Section 19, 143 of GST Act] ............................................................. 22

1.13

Tax Invoice, Bill of Supply, Debit/Credit Notes .................................................23 1.13.1 Who is required to issue tax invoice or bill of supply or receipt voucher or delivery challan? ..................................................................23 1.13.2 Contents of tax invoice (Rule 46 of the GST Rules) ............................. 24 1.13.3 Circumstances when a debit note or credit note is issued (Sec 34 of the GST Act) ........................................................................25

1.14

Accounts and Records .........................................................................................26 1.14.1 Maintenance of Accounts and Records (Sec 35 of the GST Act) ..........26 1.14.2 Retention of Accounts and Records (Sec 36 of the GST Act) ...............27

1.15

Returns under the GST (Chapter IX of the GST Act) .........................................28 1.15.1 Types of returns or reports and periodicity ............................................28 1.15.2 Other features of the Returns .................................................................28 1.15.3 Returns process flow ..............................................................................28 1.15.4 Matching process ...................................................................................29

1.16

Payment of Tax (Section 49 of the GST Act) .....................................................30 1.16.1 Broad features ........................................................................................30 1.16.2 Payments to be made in the GST ...........................................................31 1.16.3 Persons liable to pay GST ......................................................................31 1.16.4 Modes of payment of GST .....................................................................31

1.17

Tax Deduction at Source (TDS) (Section 51) .....................................................31 1.17.1 Persons may be required to deduct TDS ................................................31 1.17.2 Rates of TDS..........................................................................................32 1.17.3 When to deduct TDS..............................................................................32 1.17.4 Obligations of deductor of TDS ............................................................. 32

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1.18

Tax Collection at Source (TCS) (Section 52) ..................................................... 33 1.18.1 Time of collection of TCS and its value ................................................ 33 1.18.2 Rates of TCS ......................................................................................... 33 1.18.3 Obligations of collector of TCS ............................................................. 34 1.18.4 Matching of TCS with supplies by the supplier .................................... 34

1.19

Supplier of online information and database access or retrieval services located outside India to specified person in the taxable territory (OIDAR) (Section 14 of IGST Act) .................................................................................... 35 1.19.1 Applicability of the provisions .............................................................. 35 1.19.2 Meaning of “online information and database access or retrieval services� (OIDAR) ................................................................................ 35 1.19.3 Role of intermediary who arranges the services .................................... 35 1.19.4 Registration, payment of tax and returns ............................................... 36

1.20

Refund (Section 54 & 55 of the GST Act) .......................................................... 36 1.20.1 Circumstances ....................................................................................... 36 1.20.2 Time limit .............................................................................................. 37 1.20.3 Procedure for claiming refund ............................................................... 38

1.21

Assessment and Audit ......................................................................................... 38 1.21.1 Meaning of assessment and scope ......................................................... 38 1.21.1.1

Self-assessment (Section 59 of the GST Act) ...................... 39

1.21.1.2

Re-assessment...................................................................... 39

1.21.1.3

Provisional assessment (Section 60 of the GST Act) .......... 39

1.21.1.4

Summary assessment (Section 64 of the GST Act) ............. 39

1.21.1.5

Best judgment assessment ................................................... 39

1.21.2 Audit (Sec 65 of the GST Act) .............................................................. 40 1.21.3 Specific provisions for determination of tax .......................................... 41 1.21.4 Special Audit (Section 66 of the GST Act) ........................................... 42 1.22

E-way Bill .......................................................................................................... 43

1.23

Advance Ruling (Section 95 of the GST Act) ..................................................... 43

1.24

Appeals (Chapter XVIII of the GST Act) ........................................................... 44

1.25

Information Returns (Section 150 of the GST Act) ............................................ 46 1.25.1 Who is required to file information return? ........................................... 46 1.25.2 What type of information may be asked in the return? .......................... 47

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1.25.3 Penalty for non-furnishing of information return [Section 123 of GST Act] ................................................................................................ 47 1.25.4 Penalty for non-furnishing of information return ...................................47 Chapter 2

Compliance chart with limitation periods under GST ..................... 48

Chapter 3

HSN Code-wise tariff for Goods ......................................................... 64

HSN Code-wise Tariff for Goods ................................................................................ 66 Section I

Live Animals, Animal Products .......................................................... 66

Chapter 1

Live animals ............................................................................................... 66

Chapter 2

Meat and edible meat offal ......................................................................... 67

Chapter 3

Fish and crustaceans, molluscs and other aquatic invertebrates ................. 70

Chapter 4

Dairy produce; birds’ eggs; natural honey; edible products of animal origin, not elsewhere specified or included etc. .............................. 73

Chapter 5

Products of animal origin, not elsewhere specified or included ................. 76

Section II

Vegetable Products .............................................................................. 80

Chapter 6

Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage ...................................................................................... 80

Chapter 7

Edible vegetables and certain roots and tubers ........................................... 80

Chapter 8

Edible fruit and nuts; peel of citrus fruits or melons .................................. 83

Chapter 9

Coffee, tea, mate and spices ....................................................................... 88

Chapter 10 Cereals ........................................................................................................ 90 Chapter 11 Products of the milling industry; malt; starches; inulin; wheat gluten ....... 92 Chapter 12 Oil seeds and oleaginous fruits; miscellaneous grains, seeds and fruit; industrial or medicinal plants; straw and fodder etc ................................... 96 Chapter 13 Lac; gums, resins and other vegetable saps and extracts ............................ 99 Chapter 14 Vegetable plaiting materials; vegetable products not elsewhere specified or included ................................................................................ 100 Section III

Animal or Vegetable Fats and Oil and their Cleavage Products; Prepared Edible Fats; Animal or Vegetable Waxes ...... 102

Chapter 15 Animal or vegetable fats and oil and their cleavage products; prepared edible fats; animal or vegetable waxes etc. .............................................. 102 Section IV

Prepared Food Stuffs, Beverages, Spirits and Vinegar, Tobacco and Manufactured Tobacco Substitutes ........................... 107

Chapter 16 Preparation of meat, of fish or of crustaceans, molluscs or other aquatic invertebrates ................................................................................. 107 Chapter 17 Sugars and sugar confectionery ................................................................ 108

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Chapter 18 Cocoa and cocoa preparations .................................................................. 109 Chapter 19 Preparations of cereals, flour, starch or milk; pastry cooks' products ...... 110 Chapter 20 Preparations of vegetables, fruit, nuts or other parts of plants ................. 113 Chapter 21 Miscellaneous edible preparations ........................................................... 116 Chapter 22 Beverages, spirits and vinegar .................................................................. 119 Chapter 23 Residues and waste from the food industries; prepared animal fodder ....................................................................................................... 121 Chapter 24 Tobacco and manufactured tobacco substitutes ....................................... 124 Section V

Mineral Products ............................................................................... 128

Chapter 25 Salt; sulphur, earths and stones; plastering materials, lime and cement ...................................................................................................... 128 Chapter 26 Ores, slag and ash..................................................................................... 134 Chapter 27 Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes etc. .............................................. 137 Section VI

Products of the Chemical or Allied Industries ................................ 142

Chapter 28 Inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or of isotopes etc. .............................................................................................. 142 Chapter 29 Organic chemicals .................................................................................... 143 Chapter 30 Pharmaceutical products .......................................................................... 144 Chapter 31 Fertilisers.................................................................................................. 149 Chapter 32 Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and other colouring matter, paints and varnishes; putty and other mastics; inks etc. ...................................................................... 152 Chapter 33 Essential oils and resinoids; perfumery, cosmetic or toilet preparations .............................................................................................. 156 Chapter 34 Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial waxes, prepared waxes, polishing or scouring preparations, candles and similar articles, modelling pastes, "dental waxes" and dental preparations with a basis of plaster etc. ................................................................................... 160 Chapter 35 Albuminoidal substances; modified starches; glues; enzymes ................. 163 Chapter 36 Explosives; pyrotechnic products; matches; pyrophoric alloys; certain combustible preparations etc. ....................................................... 165 Chapter 37 Photographic or cinematographic goods .................................................. 167 Chapter 38 Miscellaneous chemical products ............................................................ 169

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Section VII

Plastics and Articles thereof, Rubber and Articles thereof ............ 176

Chapter 39 Plastics and articles thereof ...................................................................... 176 Chapter 40 Rubber and articles thereof....................................................................... 179 Section VIII

Raw Hides and Skins, Leather, Furskins & Articles thereof; Saddlery and Harness; Travel Goods, Handbags and Similar Containers; Articles of Animal Gut (Other than Silk-Worm Gut) ................................................................................. 184

Chapter 41 Raw hides and skins (other than furskins) and leather ............................. 184 Chapter 42 Articles of leather; saddlery and harness; travel goods, handbags and similar containers; articles of animal gut (other than silk-worm gut) etc. ................................................................. 187 Chapter 43 Furskins and artificial fur, manufactures thereof ...................................... 189 Section IX

Wood and Articles of Wood; Wood Charcoal; Cork and Articles of Cork; Manufactures of Straw, of Esparto or of other Plaiting Materials; Basketware and Wickerwork ................. 191

Chapter 44 Wood and Articles of wood; wood charcoal ............................................ 191 Chapter 45 Cork and articles of cork .......................................................................... 196 Chapter 46 Manufactures of straw, of esparto or of other plaiting materials; basketware and wickerwork ..................................................................... 198 Section X

Pulp of Wood or of other Fibrous Cellulosic Material; Recovered (Waste and Scrap) Paper or Paperboard; Paper and Paperboard & Articles thereof ....................................... 199

Chapter 47 Pulp of wood or of other fibrous cellulosic material; recovered (waste and scrap) paper or paperboard etc. .............................................. 199 Chapter 48 Paper and paperboard; articles of paper pulp, of paper or of paperboard ................................................................................................ 200 Chapter 49 Printed books, newspapers, pictures and other products of the printing industry; manuscripts, typescripts and plans etc. ........................ 207 Section XI

Textile & Textile Articles .................................................................. 210

Chapter 50 Silk ........................................................................................................... 210 Chapter 51 Wool, fine or coarse animal hair; horse hair yarn and woven fabric ........ 210 Chapter 52 Cotton ....................................................................................................... 211 Chapter 53 Other vegetable textile fibres; paper yarn and woven fabrics of paper yarn ................................................................................................. 212 Chapter 54 Man-made filaments ................................................................................. 214 Chapter 55 Man-made staple fibres ............................................................................ 214

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Chapter 56 Wadding, felt and nonwovens; special yarns; twine, cordage, ropes and cables and articles thereof etc. ................................................. 215 Chapter 57 Carpets and other textile floor coverings ................................................. 218 Chapter 58 Special woven fabrics; tufted textile fabrics; lace; tapestries; trimmings; embroidery ............................................................................. 219 Chapter 59 Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind suitable for industrial use etc. ....................................... 222 Chapter 60 Knitted or crocheted fabrics ..................................................................... 226 Chapter 61 Articles of apparel and clothing accessories knitted or crocheted............ 227 Chapter 62 Articles of apparel and clothing accessories, not knitted or crocheted .... 235 Chapter 63 Other made up textile articles; sets; worn clothing and worn textile articles; rags ............................................................................................. 243 Section XII

Footwear, Headgear, Umbrellas, Sun Umbrellas, Walking-Sticks, Seat-Sticks, Whips, Riding-Crops and Parts thereof, Prepared Feathers and Articles made theewith; Artificial Flowers; Articles of Human Hair ..................................................................... 248

Chapter 64 Footwear, gaiters and the like; parts of such articles................................ 248 Chapter 65 Headgear and parts thereof....................................................................... 249 Chapter 66 Umbrellas, sun umbrellas, walking-sticks, seat-sticks, whips, riding-crops and parts thereof .................................................................. 251 Chapter 67 Prepared feathers and down and articles made of feathers or of down; artificial flowers; articles of human hair etc. ............................................ 252 Section XIII Articles of Stone, Plaster, Cement, Asbestos, Mica or Similar Materials; Ceramic Products; Glass and Glassware ...................... 254 Chapter 68 Articles of stone, plaster, cement, asbestos, mica or similar materials .... 254 Chapter 69 Ceramic products ..................................................................................... 258 Chapter 70 Glass and glassware ................................................................................. 261 Section XIV

Natural or Cultured Pearls, Precious or Semi-Precious Stones, Precious Metals Clad with Precious Metal and Articles thereof; Imitation Jewellery; Coin ................................................................. 266

Chapter 71 Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal and articles thereof; imitation jewellery; coin etc. ................................................................................... 266 Section XV

Base Metal & Articles of Base Metal ............................................... 270

Chapter 72 Iron and steel ............................................................................................ 270 Chapter 73 Articles of iron or steel ............................................................................. 272

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Chapter 74 Copper and articles thereof....................................................................... 278 Chapter 75 Nickel and articles thereof ........................................................................ 280 Chapter 76 Aluminium and articles thereof ................................................................ 281 Chapter 77 (Reserved for possible future use) ............................................................ 284 Chapter 78 Lead and articles thereof .......................................................................... 284 Chapter 79 Zinc and articles thereof ........................................................................... 285 Chapter 80 Tin and articles thereof ............................................................................. 286 Chapter 81 Other base metals; cermets; articles thereof ............................................. 286 Chapter 82 Tools, implements, cutlery, spoons and forks, of base metal; parts thereof base metal ..................................................................................... 287 Chapter 83 Miscellaneous articles of base metal ........................................................ 291 Section XVI

Machinery and Mechanical Appliances; Electrical Equipment and Parts thereof; Sound Recorders and Reproducers, Television Image and Sound Recorders and Reproducers, and Parts and Accessories of such Articles ...................................... 295

Chapter 84 Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof .............................................................................................. 295 Chapter 85 Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles etc. ............... 318 Section XVII Vehicles; Aircraft; Vessels & Associated Transport Equipment .......................................................................................... 332 Chapter 86 Railway or tramway locomotives, rolling-stock and parts thereof; railway or tramway track fixtures and fittings and parts thereof; mechanical (including electro-mechanical) traffic signaling equipment of all kinds etc. ....................................................................... 332 Chapter 87 Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof.................................................................................... 334 Chapter 88 Aircraft, spacecraft, and parts thereof ...................................................... 342 Chapter 89 Ships, boats and floating structures .......................................................... 343 Section XVIII Optical, Photographic, Cinematographic, Measuring, Checking, Precision, Medical or Surgical Instruments and Apparatus; Clocks and Watches; Musical Instruments; Parts and Accessories thereof ........................................................... 346 Chapter 90 Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof etc. ............................................................................. 346

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Chapter 91 Clocks and watches and parts thereof ...................................................... 356 Chapter 92 Musical instruments; parts and accessories of such articles ..................... 358 Section XIX

Arms and Ammunition; Parts and Accessories thereof ................. 361

Chapter 93 Arms and ammunition; parts and accessories thereof .............................. 361 Section XX

Miscellaneous Manufactured Articles ............................................. 363

Chapter 94 Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lamps and lighting fittings, not elsewhere specified or included; illuminated signs, illuminated name-plates and the like; prefabricated buildings etc. ...................................................................... 363 Chapter 95 Toys, games and sports requisites; parts and accessories thereof ............ 366 Chapter 96 Miscellaneous manufactured articles ....................................................... 368 Section XXI

Works of Art, Collectors' Pieces And Antiques .............................. 373

Chapter 97 Works of art, collectors' pieces and antiques ........................................... 373 Chapter 98 Project imports, Laboratory chemicals, passenger's baggage, personal importation by air or post; ship stores etc. ............................................... 374 Miscellaneous Goods .................................................................................................. 377 Chapter 4

HSN Code-Wise Tariff for Services ................................................. 394

HSN code wise GST Tariff – Services ......................................................................... 396 Miscellaneous Services ................................................................................................ 495 Explanations and definitions given in the Notifications relating to the services .......... 498 Chapter 5 5.1

Non-Creditable Supplies under GST ............................................... 509

Non Creditable Goods/Services/Supplies ......................................................... 509 B. Excise and Customs (Post GST) (Author: Puneet Chopra)

Chapter 1

Central Excise (Post GST) ................................................................ 515

1.1

Introduction ....................................................................................................... 515

1.2

Transition Provisions ........................................................................................ 518 1.2.1

Carry forward of Credit from Pre-GST to Post-GST........................... 518

1.3

Proceedings under the Pre-GST Laws .............................................................. 521

1.4

Compliances ...................................................................................................... 522 1.4.1

Registration ......................................................................................... 522

1.4.2

Payment of Duty .................................................................................. 522

1.4.3

Records ................................................................................................ 523

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1.5

1.4.4

Invoice .................................................................................................523

1.4.5

Returns .................................................................................................524

Cenvat Credit..................................................................................................... 524

Chapter 2

Customs (Post GST)...........................................................................526

2.1

Introduction .......................................................................................................526

2.2

Levy of Customs Duty ......................................................................................527

2.3

Pre-GST Customs Duties on Imports ................................................................ 527

2.4

Post GST Customs Duties on Imports ............................................................... 528

2.5

Valuation of Goods Imported and Exported......................................................529 2.5.1

Inclusions in Transaction Value........................................................... 530

2.6

Sale Between Related Persons...........................................................................532

2.7

Import Valuation Rules .....................................................................................533 2.7.1

Identical goods (Rule 4) .......................................................................533

2.7.2

Transaction value of similar goods (Rule 5) ........................................533

2.7.3

Deductive value (Rule 7) .....................................................................534

2.7.4

Computed value (Rule 8) .....................................................................534

2.7.5

Residual method (Rule 9) ....................................................................535

2.8

Important Definitions under the IMPORT Valuation Rules .............................. 535

2.9

Valuation of Export Goods................................................................................536

2.10

Export Valuation Rules .....................................................................................537 2.10.1 Determination of export value by comparison (Rule 4) .......................537 2.10.2 Computed value method (Rule 5) ........................................................537 2.10.3 Residual method (Rule 6) ....................................................................537

2.11

Import and Export Procedure ............................................................................537

2.12

Assessment ........................................................................................................538 2.12.1 Self-assessment of imported and export goods ....................................538 2.12.2 Provisional Assessment .......................................................................538

2.13

Special Valuation Branch (SVB) Customs ........................................................539 2.13.1 Cases, which may be considered for SVB Investigations ....................540 2.13.2 Procedure for cases where reference to SVB is not required ...............541 2.13.3 Finalisation of assessments ..................................................................542

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2.14

Baggage Allowance .......................................................................................... 542 2.14.1 Passenger arriving from countries other than Nepal, Bhutan or Myanmar. ............................................................................................ 543 2.14.2 Passenger arriving from Nepal, Bhutan or Myanmar. ......................... 544 2.14.3 Jewellery .............................................................................................. 545 2.14.4 Transfer of residence ........................................................................... 545

2.15

Transition Provisions ........................................................................................ 546 Part II Direct Tax (Authors: Gaurav and Dipesh Makhjani)

Chapter 1

Brief Overview of Income-Tax ......................................................... 549

1.1

Introduction ....................................................................................................... 549

1.2

Components of Law of Income-Tax in India .................................................... 549

1.3

Concept of Income ............................................................................................ 550

1.4

Charge of Income-Tax ...................................................................................... 550

1.5

Person who are Liable to pay Income-Tax........................................................ 550

1.6

Concept of Assessment Year (AY) and Previous Year (PY) ............................ 550

1.7

Gross Total Income ........................................................................................... 551

1.8

Heads of Income ............................................................................................... 551

1.9

Income which do not form Part of Total Income .............................................. 552

1.10

Clubbing of Income .......................................................................................... 552

1.11

Set-off and Carry Forward of Losses ................................................................ 552

1.12

Allowable Deductions from Total Income ........................................................ 552

1.13

Rate of Income-Tax .......................................................................................... 553

1.14

Rebate ............................................................................................................... 553

1.15

Computation of Total Income and Tax Liability............................................... 553

Chapter 2 2.1

Residential Status and Scope of Total Income ................................ 555

Determining Residential Status ......................................................................... 555 2.1.1

Resident/Non-Resident ........................................................................ 555

2.1.2

Ordinarily/ Not Ordinarily Resident .................................................... 557

2.2

Scope of Total Income ...................................................................................... 558

2.3

Meaning of Income Deemed to be Received .................................................... 559

2.4

Meaning of Income Deemed to Accrue or Arise in India ................................. 559 xxiii

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Chapter 3

Rates of Taxation ............................................................................... 562

3.1

Rates of Tax ...................................................................................................... 562

3.2

Special Rate ....................................................................................................... 562

3.3

Normal Rate ...................................................................................................... 563

3.4

3.5

3.3.1

Individual ............................................................................................. 563

3.3.2

For Co-Operative Society ....................................................................565

3.3.3

Residuary (for HUF, AOP/BOI, Artificial Juridical Person) ...............565

Surcharge........................................................................................................... 566 3.4.1

Rate of Surcharge ................................................................................566

3.4.2

Marginal Relief ....................................................................................566

Rebate under Section 87A ................................................................................. 567

Chapter 4

Exempt Income .................................................................................. 569

4.1

Agricultural Income .......................................................................................... 569

4.2

Other Exempt Income ....................................................................................... 570

Chapter 5

Expenditure Relating to Exempt Income ......................................... 574

5.1

Expenditure Incurred for Earning Exempt Income ........................................... 574

5.2

Mode of Computing Expenditure for Earning Exempt Income ........................ 574

Chapter 6

Income from Salaries ......................................................................... 577

6.1

Basis of Charge ................................................................................................. 577

6.2

Consideration for Taxing Income as Salary ...................................................... 577

6.3

Meaning of the Term ‘Salary’ ........................................................................... 577

6.4

Salary when Accrue or Arise in India ............................................................... 578

6.5

Steps to Compute Income under the Head Salary ............................................. 578

6.6

Taxability of Allowances .................................................................................. 579

6.7

Leave Salary ...................................................................................................... 583

6.8

Taxability of Various Retirement Benefits ........................................................ 583 6.8.1

Gratuity ................................................................................................ 583

6.8.2

Retrenchment compensation ................................................................ 584

6.8.3

Voluntary retirement compensation .....................................................585

6.8.4

Pension.................................................................................................586

6.9

Provident Fund .................................................................................................. 586

6.10

Deductions......................................................................................................... 587

xxiv

Table of Contents

6.11

Perquisites ......................................................................................................... 588

6.12

Arrear of Salary - Rebate under Section 89 ...................................................... 598

Chapter 7

House Property .................................................................................. 599

7.1

Basis of Charge ................................................................................................. 599

7.2

Owner/Deemed Owner ..................................................................................... 599

7.3

Taxability in the Case of Co-Owner ................................................................. 600

7.4

Self-Occupied and Let Out................................................................................ 600

7.5

Computation of Income from House Property .................................................. 600 7.5.1

For let out property .............................................................................. 600

7.5.2

For self-occupied property................................................................... 602

7.6

Subsequent Recovery of Unreailsed Rent ......................................................... 605

7.7

Arrears of Rent .................................................................................................. 605

7.8

Composite Rent - House Property Let Out Along with Movable Assets such as Machinery, Plant, Furniture or Fixtures etc .......................................... 605

7.9

Special Provisions for House Property held as Stock-in-Trade [Inserted by Finance Act, 2017 w.e.f. AY 2018-19] ......................................... 606

Chapter 8 8.1

Profits & Gains from Business or Profession [PGBP] .................... 607

Part A: How to Arrive at Profit and Gains from Business and Profession ........ 607 8.1.1

Income Chargeable under the Head PGBP .......................................... 607

8.1.2

Deductions Allowable Against Income under PGBP .......................... 608

8.1.3

Depreciation ........................................................................................ 611

8.1.4

Important Concepts of Depreciation .................................................... 611

8.1.5

Certain Deductions Allowable only on Payment ................................. 612

8.1.6

Special Category of Deduction ............................................................ 613

8.1.7

Disallowances of Expenditure ............................................................. 617

8.2

Part B: Speculative Transaction ........................................................................ 619

8.3

Part C: Accounts & Audit of Accounts ............................................................. 620

8.4

8.3.1

Method of Accounting ......................................................................... 620

8.3.2

Books of Accounts .............................................................................. 620

8.3.3

Audit of Accounts................................................................................ 621

PART D: Presumptive Taxation ....................................................................... 623 8.4.1

Section 44AD ...................................................................................... 623

8.4.2

Section 44ADA ................................................................................... 624 xxv

Bloomsbury’s Desk Referencer for Professionals, 2e

8.4.3 Chapter 9

Section 44AE [Business of plying, hiring or leasing goods carriages] ...................................................................................625 Capital Gains ...................................................................................... 627

9.1

Basis of Charge ................................................................................................. 627

9.2

Meaning of Capital Asset .................................................................................. 627

9.3

9.2.1

Inclusion .............................................................................................. 627

9.2.2

Exclusion ............................................................................................. 627

Meaning of Transfer .......................................................................................... 628 9.3.1

Exceptions............................................................................................ 629

9.4

Short Term/Long Term Assets .......................................................................... 630

9.5

Computation of Capital Gain ............................................................................ 631

9.6

Cost of Acquisition............................................................................................ 633

9.7

Cost if Improvement .......................................................................................... 635

9.8

Cost of Acquisition and Cost of Improvement in Special Cases ....................... 635

9.9

Rates of Capital Gain ........................................................................................ 637

9.10

Deductions......................................................................................................... 638

9.11

Capital Gain in Special Cases ........................................................................... 643

Chapter 10

Income from other Sources ............................................................... 647

10.1

Basis of Charge ................................................................................................. 647

10.2

Income Specifically Covered under “Income from other Sources”................... 647

10.3

Gifts and their Taxability .................................................................................. 649

10.4

Deductions......................................................................................................... 650

10.5

Expenditure not Deductible ............................................................................... 651

Chapter 11

Clubbing of Income ........................................................................... 652

11.1

Introduction ....................................................................................................... 652

11.2

Situations where Income/Losses is to be Clubbed in the Hands of Transferor .......................................................................................................... 652

Chapter 12

Set-Off and Carry Forward of Losses .............................................. 655

12.1

Set-off of Losses ................................................................................................ 655

12.2

Carry Forward of Losses ................................................................................... 655

12.3

Manner and Conditions for Set-Off and Carry Forward of Losses ................... 655

Chapter 13 13.1 xxvi

Deductions to be Made in Computing total Income ....................... 658

Introduction ....................................................................................................... 658

Table of Contents

13.2

Deductions on Payment .................................................................................... 658

13.3

Deductions on Certain Income .......................................................................... 664

Chapter 14 14.1

Payment of Tax & Interest ............................................................... 670

Part A: Advance Tax ......................................................................................... 670 14.1.1 Who is Liable to pay Advance Tax ..................................................... 670 14.1.1.1

Exception ........................................................................... 670

14.1.1.2

Computation of tax liability for the purpose of advance tax ........................................................................ 670

14.1.2 Instalments and date of deposit of Advance Tax ................................. 670 14.1.3 Certain issues on Advance Tax ........................................................... 671 14.2

Part B: Self-Assessment Tax ............................................................................. 671

14.3

Part C: Interest under Section 234A/B/C & Fees under section 234f ............... 672 14.3.1 Interest under Section 234A – Interest for Default/Delay in Furnishing ROI .................................................................................... 672 14.3.1.1

Chargeability ..................................................................... 672

14.3.1.2

Computation ...................................................................... 672

14.3.1.3

Base amount for computation of rate of interest ................ 672

14.3.2 Interest under SECTION 234B – Interest for Default in Payment of Advance Tax .................................................................... 673 14.3.2.1

Chargeability ..................................................................... 673

14.3.2.2

Computation ...................................................................... 673

14.3.3 Interest under Section 234C ................................................................ 674 14.3.3.1

For corporates assesse ....................................................... 674

14.3.3.2

For person claiming presumptive taxation under section 44AD or 44ADA ................................................... 674

14.3.4 Fees under Section 234F (Inserted by Finance Act, 2017 wef AY 2018-19)................................................................................. 674 14.3.5 Illustration ........................................................................................... 675 Chapter 15

Return of Income ............................................................................... 678

15.1

Obligation to File Income Tax Return .............................................................. 678

15.2

Return Form ...................................................................................................... 679

15.3

Concept of Paperless Returns............................................................................ 680

15.4

Due Date of Furnishing Income Tax Return ..................................................... 680

15.5

Mode of Filing Income Tax Return................................................................... 681 xxvii

Bloomsbury’s Desk Referencer for Professionals, 2e

15.6

Belated Return ................................................................................................... 682

15.7

Revised Return .................................................................................................. 682

15.8

Defective Return ............................................................................................... 683

15.9

Quoting of Aadhaar Number (Inserted by Finance Act, 2017 wef 1st july 2017) .............................................................................................. 683

Chapter 16

Assessment Proceedings .................................................................... 684

16.1

Self-Assessment ................................................................................................ 684

16.2

Processing – Intimation/Deemed Intimation ..................................................... 684

16.3

Scrutiny/Regular Assessment in Response to Notice under Section 143(2) ..... 685

16.4

Best Judgement Assessment .............................................................................. 686

16.5

Income Escaping Assessment/Re-Assessment .................................................. 686

16.6

Steps to be taken by the Assessee upon Receipt of the Assessment Order ....... 687

Chapter 17

Appeals & Revision ............................................................................ 689

17.1

Appeals .............................................................................................................. 689

17.2

Revision............................................................................................................. 690

Chapter 18

TDS and TCS ..................................................................................... 691

18.1

What is TDS & TCS? ........................................................................................ 691

18.2

Rates of TDS/TCS ............................................................................................. 691 18.2.1 Rate of TDS .........................................................................................691 18.2.2 Rates of TCS ........................................................................................695

18.3

When TDS/TCS is to be Deducted .................................................................... 695

18.4

When TDS/TCS is to be Paid ............................................................................ 696 18.4.1 How to pay TDS/TCS ..........................................................................697

18.5

Filing of TDS/TCS Statement ........................................................................... 697 18.5.1 Due Date .............................................................................................. 697 18.5.2 Quarterly Statement forms ...................................................................698 18.5.3 How to file TDS/TCS Statement .........................................................698

18.6

TDS/TCS Certificate ......................................................................................... 698

18.7

Other Important Issues ...................................................................................... 699

Chapter 19

Dividend Distribution Tax and Taxability of Dividend Income................................................................................................. 701

19.1

Introduction ....................................................................................................... 701

19.2

Meaning of Dividend for DDT .......................................................................... 701

xxviii

Table of Contents

19.3

Taxability of Dividend ...................................................................................... 701

19.4

Taxability of Dividend received from a Subsidiary Company .......................... 701

19.5

Tax Rates .......................................................................................................... 702

19.6

Time limits under DDT Regime ....................................................................... 702

19.7

Credit/Deduction – Whether Available ............................................................. 703

Chapter 20

Penalty under Income Tax Act ......................................................... 704

Chapter 21

Survey, Search & Seizure ................................................................. 708

21.1

Survey ............................................................................................................... 708

21.2

Search and Seizure ............................................................................................ 708

Chapter 22 22.1

Taxation of Companies & Other Persons ........................................ 711

Part A: Taxation on Companies ........................................................................ 711 22.1.1 Minimum Alternate Tax (MAT).......................................................... 711

22.2

22.1.1.1

Rate of MAT...................................................................... 711

22.1.1.2

How to calculate Book Profit ............................................ 711

22.1.1.3

MAT Credit ....................................................................... 713

Part B: Taxation on Other Persons .................................................................... 713 22.2.1 Alternate Minimum Tax (AMT).......................................................... 713 22.2.1.1

Rate of AMT...................................................................... 714

22.2.1.2

How to calculate Adjusted Total Income .......................... 714

22.2.1.3

AMT Credit ....................................................................... 715

22.2.2 Remuneration to Partners .................................................................... 715 22.2.2.1

Maximum Remuneration Allowable ................................. 715

22.2.3 Dividend Income (in excess of 10 Lakhs) in special cases .................. 716 Chapter 23

New PAN Requirements and Statement of Financial Transaction ........................................................................................ 717

23.1

Introduction ....................................................................................................... 717

23.2

Mandatory Quoting of PAN (Rule 114B) ......................................................... 717

23.3

Verification of PAN in respect of specified transaction .................................... 719

23.4

Requirements where Counter Party does not have PAN ................................... 719

23.5

Furnishing of Statement of Financial Transactions ........................................... 719

Chapter 24 24.1

Income Computation and Disclosure Standards ............................ 722

Background ....................................................................................................... 722

xxix

Bloomsbury’s Desk Referencer for Professionals, 2e

24.2

General Facts About ICDS ................................................................................722

24.3

Key Deviations of ICDS from Indian Accounting Standards (ICAI) ................723

Chapter 25

Depreciation, STT, CII, NSC, KVP .................................................. 729

25.1

Depreciation as per Income Tax Act ................................................................. 729

25.2

Depreciation as per Companies Act .................................................................. 730

25.3

Cost Inflation Index ........................................................................................... 731

25.4

Securities Transaction Tax ................................................................................ 732

25.5

NSC ................................................................................................................... 733

25.6

KVP ................................................................................................................... 733

Chapter 26

How to Deal with Notices Received from the Income-Tax Department ......................................................................................... 735

26.1

Background ....................................................................................................... 735

26.2

notices Received from Income-Tax Department and how to Deal with the Same ............................................................................................................ 735

26.3

Summons Under Sec 131 of the Income-Tax Act ............................................. 738

26.4

Power to Call for Information under Section 133(6) of the Income-Tax Act................................................................................................. 738

Chapter 27

Tax Planning ...................................................................................... 739

27.1

What is Tax Planning? ...................................................................................... 739

27.2

Slab Rate Benefits ............................................................................................. 739

27.3

Rebates Available under Income-Tax Act......................................................... 740

27.4

Permissible Deductions from GROSS Total Income ........................................ 740

27.5

Exempt Income ................................................................................................. 740

27.6

Benefits Available for HUF .............................................................................. 740

27.7

Benefits Available for Companies ..................................................................... 741

27.8

Benefits Available for Partnership Firms/LLP .................................................. 741

27.9

Tips for Salaried Person .................................................................................... 742

27.10 Tips For Business Income ................................................................................. 742 27.11 Tips for Capital Gain ......................................................................................... 743

xxx

Table of Contents

Part III Employment and other laws (Author: Kiron Prabhakar) A. Employment Chapter 1

The Employees’ Compensation Act, 1923 ....................................... 749

1.1

Introduction ....................................................................................................... 749

1.2

Implementation of the Act ................................................................................ 749

1.3

To Whom this Act Applies ............................................................................... 750

1.4

Salient Features of the Act ................................................................................ 750

1.5

Conclusion ........................................................................................................ 752

1.6

Compliance Table ............................................................................................. 752

Chapter 2

The Factories Act, 1948 ..................................................................... 754

2.1

Introduction ....................................................................................................... 754

2.2

Limited Jurisdiction .......................................................................................... 754

2.3

Definitions......................................................................................................... 755

2.4

Liabilities of Persons Responsible for Management of a Factory ..................... 755

2.5

Salient Features ................................................................................................. 755 2.5.1

Approval, Licensing and Registration of Factories ............................. 755

2.5.2

Employer has to Ensure the Health of the Worker .............................. 756

2.5.3

Employer has to Ensure the Safety of the Worker ............................... 756

2.5.4

Employer to Ensure Welfare of the Worker ........................................ 757

2.5.5

Working Hours for the Adult Workers ................................................ 757

2.5.6

Provisions Relating to Employment of a Young Person ..................... 758

2.5.7

Provisions Relating to Protection of Women Workers [Section 66] ......................................................................................... 758

2.6

General Penalties for Offences.......................................................................... 759

2.7

Conclusion ........................................................................................................ 759

2.8

Compliance Table ............................................................................................. 759

Chapter 3

The Employees’ State Insurance Act, 1948 ..................................... 765

3.1

Introduction ....................................................................................................... 765

3.2

Implementation of the Act ................................................................................ 765

3.3

Applicability of the Act [Section 1(4) read with Section 2(4)] ......................... 766

3.4

Salient Features of the Act ................................................................................ 766 xxxi

Bloomsbury’s Desk Referencer for Professionals, 2e

3.4.1

Registration of Factories and Establishments [Section 2A] .................766

3.4.2

Benefits [Section 46] ...........................................................................766

3.4.3

Eligible Employees [Rule 50 of ESI (Central) Rules, 1950] ...............767

3.4.4

Purposes for which the Fund may be Expanded - [Section 28] ...........767

3.4.5

Contributions .......................................................................................767

3.4.6

Rate of Contribution [Rule 51 of ESI (Central) Rules, 1950] ..............767

3.4.7

Employee's Contributions in Respect of Certain Employees [Rule 51A of ESI (Central) Rules, 1950] .............................................767

3.4.8

Time and Mode of Deposit ..................................................................768

3.4.9

Employees State Insurance Fund [Section 26].....................................768

3.4.10 Offences and Penalties .........................................................................768 3.5

Conclusion......................................................................................................... 768

3.6

Compliance Table ............................................................................................. 769

Chapter 4

The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 ........................................................................... 772

4.1

Introduction ....................................................................................................... 772

4.2

Objective ........................................................................................................... 772

4.3

Applicability ...................................................................................................... 772

4.4

Schemes............................................................................................................. 773 4.4.1

Employees Provident Fund Scheme, 1952 [Section 5] ........................773

4.4.2

Employees Deposit-Linked Insurance Scheme, 1976 .......................... 774

4.4.3

Employees Pension Scheme, 1995 ......................................................775

4.5

Income Tax Act ................................................................................................. 776

4.6

Reduction of Wages .......................................................................................... 776

4.7

Penalties ............................................................................................................ 776

4.8

Conclusion......................................................................................................... 776

4.9

Compliance Table ............................................................................................. 776

Chapter 5

The Punjab Shops and Commercial Establishment Act, 1958 ....... 780

5.1

Introduction ....................................................................................................... 780

5.2

Objective ........................................................................................................... 780

5.3

Applicability ...................................................................................................... 781

5.4

Registration ....................................................................................................... 781

5.5

Opening and Closing Hours [Section 9] ............................................................ 781

xxxii

Table of Contents

5.6

Closed Day [Section 10] ................................................................................... 781

5.7

Working Hours [Section 7] ............................................................................... 781

5.8

Interval [Section 8]............................................................................................ 782

5.9

Working Hours for a Young Person .................................................................. 782

5.10

Child.................................................................................................................. 782

5.11

Wages................................................................................................................ 782

5.12

Leave (Section 14) ............................................................................................ 782

5.13

Health ................................................................................................................ 783

5.14

Records [Section 20] ......................................................................................... 783

5.15

Termination ....................................................................................................... 783

5.16

Penalties [Section 26]........................................................................................ 783

5.17

Conclusion ........................................................................................................ 784

5.18

Compliance Table ............................................................................................. 784

Chapter 6

The Maternity Benefit Act, 1961 ...................................................... 789

6.1

Introduction ....................................................................................................... 789

6.2

Object ................................................................................................................ 789

6.3

Applicability ..................................................................................................... 789

6.4

entitlement......................................................................................................... 790

6.5

Employment ...................................................................................................... 790

6.6

Claim Notice for Maternity Benefits ................................................................. 791

6.7

Payment ............................................................................................................ 791

6.8

Leave(s)............................................................................................................. 791

6.9

No Deductions In Wages .................................................................................. 792

6.10

Forfeiture [Section 18] ...................................................................................... 792

6.11

Duties of Employer ........................................................................................... 793

6.12

Penalty .............................................................................................................. 793

6.13

Conclusion ........................................................................................................ 793

6.14

Compliance Table ............................................................................................. 794

Chapter 7

The Payment of Bonus Act, 1965...................................................... 799

7.1

Introduction ....................................................................................................... 799

7.2

Implementation of the Act ................................................................................ 799

7.3

Applicability of the Act [Section 1(3)] ............................................................. 800

xxxiii

Bloomsbury’s Desk Referencer for Professionals, 2e

7.4

Act not Apply to Certain Class of Employees [Section 32] .............................. 800

7.5

Salient Features of the Act ................................................................................ 800

7.6

Conclusion......................................................................................................... 802

7.7

Compliance Table ............................................................................................. 802

Chapter 8

The Contract Labour (Regulation and Abolition) Act, 1970 ......... 805

8.1

Introduction ....................................................................................................... 805

8.2

Objective ........................................................................................................... 805

8.3

Applicability [Section 1(4)] ............................................................................... 805

8.4

Important Definition(s) under the Act ............................................................... 806

8.5

Registration of Certain Establishments [Section 7] ........................................... 806

8.6

Revocation of Registration in Certain Cases [Section 8] .................................. 807

8.7

Prohibition of Employment of Contract Labour [Section 10] ........................... 807

8.8

Licensing of Contractors and Grant of Licenses [Section 12 and 13] ............... 807

8.9

Welfare and Health of the Contract Labour ...................................................... 808

8.10

Liability of Principal Employer in Certain Cases [Section 20] ......................... 809

8.11

Responsibility of Payment of Wages [Section 21] ............................................ 809

8.12

Registers, Records and Collection of Statistics ................................................. 810

8.13

Offences and Penalties [Section 23, Section 24 and Section 25] ...................... 810

8.14

Conclusion......................................................................................................... 811

8.15

Compliance Table ............................................................................................. 811

Chapter 9

The Payment of Gratuity Act, 1972 .................................................. 814

9.1

Introduction ....................................................................................................... 814

9.2

Objective ........................................................................................................... 814

9.3

Applicability [Section 1(3)] ............................................................................... 814

9.4

Relevant Definition(s) under the Act ................................................................ 815

9.5

Payment of Gratuity [Section 4] ........................................................................ 816

9.6

Compulsory Insurance [Section 4a] .................................................................. 817

9.7

Nomination [Section 6] ..................................................................................... 817

9.8

Determination of the Amount of Gratuity [Section 7] ....................................... 818

9.9

Penalties [Section 9] .......................................................................................... 818

9.10

Conclusion......................................................................................................... 818

9.11

Compliance Table ............................................................................................. 818

xxxiv

Table of Contents

Chapter 10

The Equal Remuneration Act, 1976 ................................................. 825

10.1

Introduction ....................................................................................................... 825

10.2

Objective ........................................................................................................... 825

10.3

Applicability ..................................................................................................... 826

10.4

Relevant Definition(s) Under the Act ............................................................... 826

10.5

Act to have Overriding Effect [Section 3] ........................................................ 826

10.6

Duty of Employer to Pay Equal Remuneration to Men and Women for same Work or Work of a Similar Nature [Section 4] .................................. 826

10.7

No Discrimination to be Made While Recruiting Men and Women Workers [Section 5] .......................................................................................... 827

10.8

Duty of Employers to Maintain Registers [Section 8] ...................................... 827

10.9

Penalties [Section 10]........................................................................................ 827

10.10 Conclusion ........................................................................................................ 828 10.11 Compliance ....................................................................................................... 828 Chapter 11

The Sexual Harassment of Women at Work Place Act, 2013 ........ 830

11.1

Introduction ....................................................................................................... 830

11.2

Background ....................................................................................................... 830

11.3

Fundamental Provisions of the Act ................................................................... 831

11.4

Conclusion ........................................................................................................ 834

11.5

Compliance Table ............................................................................................. 834 B. Other Laws

Chapter 1

The Copyright Act, 1957 ................................................................... 839

1.1

Introduction ....................................................................................................... 839

1.2

Fundamental Provisions of the Act ................................................................... 839 1.2.1

What is the meaning of ‘copyright’? ................................................... 839

1.2.2

Who is the first owner of the copyright? ............................................. 840

1.2.3

Can a copyright be assigned? .............................................................. 841

1.2.4

Term of copyright ................................................................................ 841

1.2.5

Can a copyright be licensed? ............................................................... 842

1.2.6

Registration of copyright ..................................................................... 842

1.2.7

Infringement of copyright .................................................................... 844

1.2.8

Offences and penalties ......................................................................... 844

1.2. 9

Civil remedies ...................................................................................... 845 xxxv

Bloomsbury’s Desk Referencer for Professionals, 2e

1.2.10 Appeal mechanism ...............................................................................845 1.3

Conclusion......................................................................................................... 845

Chapter 2

The Limitation Act, 1963................................................................... 846

2.1

Introduction ....................................................................................................... 846

2.2

Relevant Definition(s) Under the Act ................................................................ 846

2.3

Bar of Limitation ............................................................................................... 847

2.4

Condonation of Delay [Section 5] ..................................................................... 847

2.5

Legal Disability ................................................................................................. 847

2.6

Computation of Period of Limitation ................................................................ 848

2.7

Conclusion......................................................................................................... 849

Chapter 3

The Environmental Laws .................................................................. 850

3.1

Introduction ....................................................................................................... 850

3.2

Water (Prevention and Control of Pollution) Act of 1974 (“Water Act, 1974”) .......................................................................................... 851

3.3

The Water (Prevention and Control of Pollution) Cess Act (“Water Act-II, 1977”) ...................................................................................... 851

3.4

Air (Prevention and Control of Pollution) Act of 1981 (“Air Act, 1981”) ........ 852

3.5

Environment (Protection) Act, 1986 (“EPA, 1986”) ......................................... 852

3.6

Hazardous and Other Wastes (Management and Transboundary Movement) Rules 2016 (“Hazardous and Other Wastes Rules”) ...................... 854

3.7

Bio-Medical Waste Management Rules, 2016 (“BMW Management Rules”) .......................................................................... 855

3.8

E-Waste (Management) Rules, 2016 ................................................................. 855

3.9

Solid Waste Management Rules, 2016 (“SWM Rules”) ................................... 856

3.10

Plastic Waste Management Rules, 2016 (“PWM rules”) .................................. 856

3.11

Conclusion......................................................................................................... 856

Chapter 4

The Information Technology Act, 2000 ........................................... 858

4.1

Introduction ....................................................................................................... 858

4.2

Applicability ...................................................................................................... 858

4.3

Non-Applicability of the Act ............................................................................. 858

4.4

Evolution of Key Terms .................................................................................... 859

4.5

E-Contracts ........................................................................................................ 859

4.6

Breach of Privacy and Confidentiality under the Act ........................................ 860

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Table of Contents

4.7

Cyber Crime and Punishment ........................................................................... 861

4.8

Conclusion ........................................................................................................ 862

Chapter 5

The Competition Act, 2002 ............................................................... 863

5.1

Introduction ....................................................................................................... 863

5.2

Objectives ......................................................................................................... 863

5.3

Applicability ..................................................................................................... 863

5.4

Main Features of the Competition Act .............................................................. 864

5.5

Competition Commission of India (CCI) [Section 7 and Section 8] ................. 865

5.6

Penalties ............................................................................................................ 865

5.7

Competition Appellate Tribunal [Section 53(A)] ............................................. 865

5.8

Conclusion ........................................................................................................ 865

Chapter 6

The Prevention of Money Laundering Act, 2002 ............................ 866

6.1

Introduction ....................................................................................................... 866

6.2

Fundamental Provisions of the Act ................................................................... 866 6.2.1

Relevant definition(s) under the Act.................................................... 866

6.2.2

Offence of money laundering .............................................................. 867

6.2.3

Punishment for money laundering ....................................................... 867

6.2.4

Attachment of property involved in money laundering ....................... 868

6.2.5

Obligations of banking companies, financial institutions and intermediaries ...................................................................................... 868

6.2.6

Power of director to impose fine ......................................................... 868

6.2.7

Appellate mechanism .......................................................................... 869

6.2.8

Cognizable and non-bailable offence .................................................. 869

6.2.9

Punishment for vexatious search ......................................................... 869

6.2.10 Punishment for false information or failure to give information ......... 869 6.3

Conclusion ........................................................................................................ 869

Chapter 7

The Right to Information Act, 2005 ................................................. 870

7.1

Introduction ....................................................................................................... 870

7.2

Background of the Act ...................................................................................... 870

7.3

Important Provisions of the Act ........................................................................ 871 7.3.1

Relevant Definitions ............................................................................ 871

7.3.2

Obligation of public authorities ........................................................... 871

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7.3.3

Public information officers ..................................................................872

7.3.4

Request for obtaining information [Section 6 of the Act 2005] ...........872

7.3.5

Disposal of request [Section 7 of the Act, 2005] .................................873

7.3.6

Exemption from disclosure of information ..........................................873

7.3.7

Appeal [Section 19 of the Act, 2005] ..................................................874

7.3.8

Penalties [Section 20] ..........................................................................874

7.3.4 Conclusion......................................................................................................... 874 Chapter 8

The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 ....................................................... 875

8.1

Introduction to the Act ...................................................................................... 875

8.2

Fundamental Provisions of the Act ................................................................... 875 8.2.1

Meaning of ‘Undisclosed Foreign Income and Assets’ .......................876

8.2.2

Scope of total undisclosed foreign income and assets .........................876

8.2.3

Applicability of the Act .......................................................................876

8.2.4

Basis of charge .....................................................................................876

8.2.5

Computation mechanism .....................................................................876

8.2.6

Assessment procedure..........................................................................877

8.2.7

Appeal mechanism ...............................................................................877

8.2.8

Liability of manager of a company ......................................................878

8.2.9

Penalties ............................................................................................... 878

8.2.10 Offences and prosecution.....................................................................879 8.3

Conclusion......................................................................................................... 879 Part IV Company Law (Authors: Milind Kasodekar and Shilpa Dixit)

Chapter 1

Registers (Books, Documents, Records) & Returns to be maintained by Companies ................................................................. 883

Chapter 2

List of Sections, Rules and Forms under the Companies Act, 2013 ......................................................................... 899

Chapter 3

Resolutions under Companies Act 2013........................................... 923

READY REFERENCER .............................................................................................. 923 I. Matters requiring special resolution under Companies Act 2013 ............................. 926 II. Items of business to be transacted by Postal Ballot ................................................. 931 III. Items of ordinary business ...................................................................................... 932

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Table of Contents

Chapter 4

Table of fees under the Companies Act, 2013 ................................. 933

Table of fees to be paid to the registrar at the time of registeration ............................. 933 Filing fees for submission of reports/returns to the ROC ............................................. 935 Delayed filing fees ....................................................................................................... 936 Fees on applications (including appeal) made to central government .......................... 936 Chapter 5

List of fines and penalties .................................................................. 939

Compounding of offences under the Companies Act, 2013 ......................................... 939 Annexure I List of compoundable offences ................................................................. 942 Annexure II List of non-compoundable offences ......................................................... 971 Annexure III List of offences punishable for fraud ...................................................... 976 Part V Foreign Exchange Management Act (Author: Arun Gupta) Chapter 1

Foreign Exchange Management Laws ............................................. 983

1.1

Introduction ....................................................................................................... 983

1.2

Applicability (With Effective Date) .................................................................. 983

1.3

Important Terms ................................................................................................ 983

1.4

Overall Structure ............................................................................................... 985

1.5

Regulatory Framework ..................................................................................... 986

1.6

Rules and Regulations Made under FEMA ....................................................... 987

1.7

Types of Transactions ....................................................................................... 989

1.8

1.7.1

Capital Account Transactions (CAT) .................................................. 989

1.7.2

Current Account Transactions (CUAT) ............................................... 990

Contravention, Penalties, Appeals etc ............................................................... 990 1.8.1

FEMA 1999 Provisions Relating to Penalties ..................................... 990

1.8.2

Compounding Provisions under FEMA .............................................. 991

Chapter 2 2.1

1.8.2.1

Governing Law .................................................................. 991

1.8.2.2

Authorities who can compound offences under Rule 4 of the Foreign Exchange (Compounding Proceedings) Rules, 2000 ........................................................................ 991

1.8.2.3

Compounding requirements .............................................. 992

Capital Account Transactions .......................................................... 994

Foreign Direct Investment in India – FDI ......................................................... 995

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2.1.1

Governing Law ....................................................................................995

2.1.2

Definition ............................................................................................. 995

2.1.3

Type of Instruments .............................................................................995

2.1.4

Type of Entities in India in which FDI can be Received .....................995

2.1.5

Who Can make Investment in Indian Entities......................................996

2.1.6

Sectors .................................................................................................996

2.1.7

Modes of Foreign Investment .............................................................. 997 2.1.7.1

Case I - Subscription of shares ...........................................998

2.1.7.2

Case II - Transfer of shares ................................................998

2.1.7.3

Case III - Downstream Investment ..................................1000

2.1.8

Analyses for Downstream Investment ...............................................1000

2.1.9

Calculation of Indirect INVESTMENT .............................................1000

2.1.10 Entry Routes for Investments in India ...............................................1000 2.1.10.1

Automatic Route .............................................................. 1001

2.1.10.2

Approval Route ................................................................ 1001

2.1.11 Compliances – Adhoc ........................................................................1002 2.1.11.1

CASE I – FDI by subscribing to the shares of new or existing entity...................................................................1002

2.1.11.2

CASE II – FDI by purchase of shares from the existing shareholder ......................................................... 1002

2.1.11.3

Case III – Downstream Investment ..................................1003

2.1.12 Compliances – Annual .......................................................................1003 2.1.13 Obligation of Compliance ..................................................................1004 2.1.14 Pricing Norms ....................................................................................1004

2.2

xl

2.1.14.1

In case of Subscription of Shares .....................................1004

2.1.14.2

In case of further issue and allotment made by the Company through private placement/ Preferential issue .............................................................. 1004

2.1.14.3

In case of Transfer of shares ............................................1004

2.1.14.4

In case of downstream investment ...................................1004

Overseas Direct Investment Outside India – ODI ........................................... 1005 2.2.1

Governing Law ..................................................................................1005

2.2.2

Purpose .............................................................................................. 1005

Table of Contents

2.3

2.4

2.5

2.2.3

ODI and Related Definitions ............................................................. 1005

2.2.4

Financial Commitment ...................................................................... 1005 2.2.4.1

Definition......................................................................... 1005

2.2.4.2

Components of Financial Commitment ........................... 1006

2.2.4.3

Prescribed Limit of Financial Commitment .................... 1006

2.2.5

Routes of Investment ......................................................................... 1006

2.2.6

Sector which require prior RBI approval for making investment outside India ...................................................................................... 1007

2.2.7

Compliances – transaction based ....................................................... 1007

2.2.8

Compliances – Annual ...................................................................... 1008

External Commercial Borrowing from Outside India – ECB ......................... 1008 2.3.1

Governing law ................................................................................... 1008

2.3.2

Types of ECB .................................................................................... 1008

2.3.3

Routes of Lending ............................................................................. 1009

2.3.4

Limits prescribed for obtaining ECB ................................................. 1009

2.3.5

Procedure for availing ECB under automatic route ........................... 1009

2.3.6

Procedure for availing ECB under approval route ............................. 1010

2.3.7

Information which are required initially from the applicant .............. 1010

2.3.8

Important parameters ......................................................................... 1011

2.3.9

Compliances ...................................................................................... 1015

Opening of Foreign Offices in India ............................................................... 1015 2.4.1

Governing law ................................................................................... 1015

2.4.2

Available routes ................................................................................. 1015

2.4.3

Permitted activities ............................................................................ 1016

2.4.4

Reporting requirements ..................................................................... 1017

Acquisition and Transfer of Immovable Property in India or Outside India ................................................................................................... 1017 2.5.1

Acquisition and transfer of immovable property in India .................. 1017 2.5.1.1

Governing law ................................................................. 1017

2.5.1.2

Person eligible to acquire immovable property in India ............................................................................. 1018

2.5.1.3

Permitted modes of acquisition ....................................... 1018

2.5.1.4

Acquisition of property requires RBI approval ............... 1019

2.5.1.5

Reporting requirements ................................................... 1019 xli

Bloomsbury’s Desk Referencer for Professionals, 2e

2.5.2

Chapter 3

Acquisition and transfer of immovable property outside India ..........1019 2.5.2.1

Governing law .................................................................1019

2.5.2.2

Modes of acquiring property outside India by a resident ..........................................................................1020

Current Account Transactions ....................................................... 1021

3.1

Introduction ..................................................................................................... 1021

3.2

Export of Goods and Services from India ....................................................... 1021

3.3

3.4

3.5

3.2.1

Governing Law ..................................................................................1021

3.2.2

Prescribed currency for doing export activities .................................1022

3.2.3

Realization and repatriation of proceeds of export of goods/software/services .....................................................................1022

3.2.4

Export modes and process .................................................................1022

Import of Goods and Services in India ............................................................ 1023 3.3.1

Governing Law ..................................................................................1023

3.3.2

Time Limit for settlement of Import Proceeds ...................................1023

3.3.3

Provisions in case of Advance Remittances ......................................1024 3.3.3.1

Advance remittance for import of goods and evidence of import ........................................................... 1024

3.3.3.2

Advance remittance for the import of services ................1024

Miscellaneous Remittances Outside India ....................................................... 1025 3.4.1

Applicability ......................................................................................1025

3.4.2

Transactions which are permitted under the said rules ......................1025

Liberalised Remittance Scheme (LRS) ........................................................... 1027 3.5.1

Applicability ......................................................................................1027

3.5.2

Transactions covered under LRS .......................................................1027

3.5.3

Limit prescribed under LRS............................................................... 1028

3.5.4

Documentation by the remitter .......................................................... 1028 Part VI Securities Law (Author: Arun Gupta)

Chapter 1

Background and Introduction ........................................................ 1031

1.1

Introduction ..................................................................................................... 1031

1.2

SEBI Act 1992 & Important SEBI Regulations .............................................. 1032

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Table of Contents

Chapter 2

SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 ............................................................................. 1036

2.1

Introduction ..................................................................................................... 1036

2.2

Applicability ................................................................................................... 1036

2.3

Open Offer ...................................................................................................... 1037

2.4

Compliances, Timeliness, Penalties and Disclosures ...................................... 1038 2.4.1

Informal guidance issued by SEBI specific to a company ................ 1040

2.4.2

Event based compliances ................................................................... 1041

Chapter 3

SEBI (Prohibition of Insider Trading) Regulations, 2015 ........... 1044

3.1

Background ..................................................................................................... 1044

3.2

Applicability ................................................................................................... 1044

3.3

Effective Date ................................................................................................. 1045

3.4

Important Regulations ..................................................................................... 1045 3.4.1

Trading plan ...................................................................................... 1045

3.4.2

Code of fair disclosure and conduct .................................................. 1045

3.4.3

Trading windows ............................................................................... 1046

3.5

Disclosure Obligations .................................................................................... 1046

3.6

Practical Examples of Events of Disclosure in Different Situations ............... 1048 3.6.1

1st Case: Series of transactions.......................................................... 1048

3.6.2

2nd Case: One transaction ................................................................. 1048

3.6.3

3rd Case: Incremental transaction ..................................................... 1049

Chapter 4

SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ............................................................................. 1050

4.1

Background ..................................................................................................... 1050

4.2

Current Listing Regulations ............................................................................ 1051

4.3

Applicability ................................................................................................... 1051

4.4

Effective Date ................................................................................................. 1051

4.5

Compliances, Timelines and Penalties ............................................................ 1052

Chapter 5

SEBI (Depositories and Participants) Regulations, 1996 ............. 1071

5.1

Background and Introduction .......................................................................... 1071

5.2

Applicability ................................................................................................... 1072

5.3

Effective Date ................................................................................................. 1072

5.4

Compliances, Timelines and Penalties ............................................................ 1072

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Chapter 6

SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 ............................................................................. 1074

6.1

Introduction ..................................................................................................... 1074

6.2

Applicability .................................................................................................... 1074

6.3

Effective Date .................................................................................................. 1075

6.4

Procedures under SEBI (ICDR) Regulations .................................................. 1075 6.4.1

6.5

Preferential issue of specified securities ............................................1075 6.4.1.1

Pricing of equity shares (frequently traded shares) ..........1075

6.4.1.2

Conditions required before preferential issue ..................1076

6.4.1.3

Ineligible persons ............................................................. 1076

6.4.1.4

Lock-in of specified securities .........................................1077

Right issue ....................................................................................................... 1077 6.5.1

Restriction on rights issue ..................................................................1081

Annexures:

Important Glossary Terms ................................................................. 1083

Annexure A:

UnderRegulation 2(1) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 ..................................... 1083

Annexure B:

Under Regulation 2(1) of SEBI (Prohibition of insider trading) Regulations, 2015 ..................................................... 1085

Annexure C:

Under Regulation 2(1) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ............................. 1087

Annexure D:

Under Regulation 2(1) of SEBI (Depositories and Participants) Regulations, 1996 ......................................................... 1087

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Chapter 1

GST in India – At-a-glance

Part I Goods and Services Tax

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2

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Chapter 1

GST in India – At-a-glance

A. GST

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4

Chapter 1

Chapter 1

GST in India – At-a-glance

CHAPTER 1

GST in India – At-a-glance Since, States’ GST Acts are mirror image of the CGST Act, 2017, therefore, in this chapter, sections of CGST Act and SGST Act have been referred as sections of GST Act, unless separate reference of sections in CGST Act and SGST Act is otherwise required.

1.1

GST – MEANING AND ITS SCOPE

(1)

The term “GST” stands for “Goods and Services Tax”, and is a comprehensive indirect tax levy on manufacture, sale and consumption of goods as well as services at the national level.

(2)

Its main objective is to cover most of the indirect tax levies into a single tax, replacing multiple tax levies, overcoming the limitation of current indirect tax structure, and creating efficiencies in the tax administration.

(3)

GST may be defined as a tax on supply of goods and services, which is leviable at each point of sale of goods or provision of service, where the seller of the goods or provider of services may claim the credit of input tax which he has paid while purchasing the goods or procuring the services.

(4)

GST has brought in its scope all goods and services, except specified petroleum products and alcoholic liquor for human consumption, for levy of GST.

(5)

GST on the supply of following goods shall be levied with effect from such date(s) as may be notified by the government on the recommendations of the Council -

(6)

Petroleum crude,

High speed diesel,

Motor spirit (commonly known as petrol),

Natural gas, and

Aviation turbine fuel.

It extends to whole of India except Jammu and Kashmir. However, Jammu & Kashmir GST Act has also enacted effective from 6 July 2017 and provisions have been made to integrate the J&K GST Act with GST Acts of rest of India.

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1.2

Chapter 1

LEGISLATIVE FRAMEWORK

(1)

The Constitution (101stAmendment) Act, 2016 has conferred concurrent taxing powers on the Union as well as the States (including Union territory with Legislature) to make laws for levying GST on every transaction of supply of goods or services or both.

(2)

Parliament has exclusive power to make laws with respect to GST where supply of goods and/or services takes place in the course of inter-State trade or commerce.

(3)

In accordance with Art. 279A of the Constitution of India, the President constituted the Goods and Services Tax Council (GST Council, in short) on 15 September 2016 with the following members:

(4)

(5)

(a)

The Union Finance Minister … Chairperson

(b)

The Union Minister of State in charge of Revenue or Finance … Member

(c)

The Minister in charge of Finance or Taxation or any other Minister nominated by each State Government … Members

The GST Council shall make recommendations to the Union and the states on, inter-alia, following matters (i)

the taxes, cesses and surcharges levied by the Centre, the States and the local bodies which may be subsumed under GST;

(ii)

the goods and services that may be subjected to or exempted from GST;

(iii)

the date on which the GST shall be levied on petroleum crude, high speed diesel, motor sprit (commonly known as petrol), natural gas and aviation turbine fuel;

(iv)

model GST laws, principles of levy, apportionment of IGST and the principles that govern the place of supply;

(v)

the threshold limit of turnover below which the goods and services may be exempted from GST;

(vi)

the rates including floor rates with bands of GST;

Name of legislation and controlling authority

Name of the legislation

To be administered by

Scope of taxation

Central GST Act

Central Government

Every supply of goods and/or services within the state/UT, i.e. Intrastate supplies

State GST Act, e.g., Delhi GST Act, Respective State U.P. GST Act, Haryana GST Act, Government Kerala GST Act, and so on

6

Chapter 1

GST in India – At-a-glance

Name of the legislation

To be administered by

UT GST Act

Central Government

IGST Act

Central Government

(6)

Scope of taxation

Inter-state supplies

There has been uniformity in various SGST Acts and the CGST Act.

1.3

TAXABLE EVENT AND CHARGING PROVISIONS CGST/SGST

Sec 9

IGST

Sec 5

(1)

CGST and SGST shall be levied on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption and specified petroleum products.

(2)

IGST shall be levied on all inter-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption and specified petroleum products.

(3)

GST on reverse charge basis

(4)

•

The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the CGST/SGST/IGST on which shall be paid on reverse charge basis by the recipient of such goods or services or both.

•

The GST in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient. Intrastate supplies of goods and/or services upto INR 5,000 from any or all the suppliers in a day has been exempted from reverse charge vide notification no. 08/2017 (Central Tax-Rate) dated 28 June 2017.

Specified e-commerce operators – Deemed suppliers The Government may, on the recommendations of the Council, by notification, specify categories of services, the tax on supplies of which shall be paid by the electronic commerce (e-commerce, in short) operator, if such services are supplied through it, as if he is the supplier liable for paying the tax in relation to the supply of such services.

These provisions are similar to present provisions applicable under the service tax where the aggregator, such as, Uber, Ola, etc., are, instead of the individual service provider, deemed as supplier of service.

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Chapter 1

In exercise of the powers, the Government has notified following services under section 9(5) of the Act vide notification no. 17/2017 (Central TaxRate) dated 28 June 2017: (i)

Services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle; and

(ii) services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes, except where the person supplying such services through electronic commerce operator is liable for registration under sec 22(1) of the GST Act. (5)

Levy of compensation cess •

The Goods and Services Tax (Compensation to States) Act, 2017 (Compensation Cess Act, in short), provides for payment of compensation to the States for loss of revenue arising on account of implementation of the goods and services tax for a period of 5 years.

•

Compensation cess shall be levied on inter-state and local supply of goods or services or both.

•

Cess shall be levied on the specified goods and the rates stated in Schedule to the Act, which mainly comprises pan masala, tobacco and its products, coal, specified motor cars and aerated waters.

1.4 (1)

(2)

RATES OF GST, IMPORT & EXPORT As per Art. 279A of the Constitution of India, the GST Council shall make recommendations to the Union and the States on (a)

goods and services that may be subjected to, or exempted from GST;

(b)

rates including floor rates with bands of GST;

(c)

any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster.

Maximum rates of GST GST shall be levied at such rates, as may be notified by the Government on the recommendations of the Council. However, the maximum rates would be as under: -

8

•

CGST – 20%

•

SGST – 20%

•

IGST – 40%

Chapter 1

(3)

GST in India – At-a-glance

GST Rates – In relation to levy of tax on supply of goods, there is 6 tier rate-structure: uncut diamonds, bullions/jewellery, Lower, Lower-Standard, Standard and Luxury (0.25, 3, 5, 12, 18, 28).

In relation to taxation of services, there is 3 tier rate-structure: 12, 18, 28.

Following are the notifications issued in this regard:

Nature

CGST Notification No.

Goods – Tax rate

• •

• Services – Tax rate

IGST Notification No.

1/2017-Central Tax (Rate) • dated 28 June 2017 Corrigendum dated 30 • June 2017 and 12 July 2017 and 27 July 2017 18/2017-Central Tax • (Rate) dated 30 June 2017

1/2017-Integrated Tax (Rate) dated 28 June 2017 Corrigendum dated 30 June 2017, , 12 July 2017 and 27 July 2017 16/2017-Integrated Tax (Rate) dated 28 June 2017

11/2017-Central Tax (Rate) 8/2017-Integrated Tax (Rate) dated 28 June 2017 dated 28 June 2017, Corrigendum dated 30 June 2017 and 05 July 2017 Compensation cess Notification No.

1/2017-Compensation Cess (Rate) dated 28 June 2017, Corrigendum dated 30 June 2017 2/2017-Compensation Cess (Rate) dated 28 June 2017, Corrigendum dated 01 July 2017 (4)

HSN (Harmonized System of Nomenclature) codes have been used for classifying the goods and services under the GST regime.

(5)

Import of goods and services has been treated as inter-state supplies and would be subject to IGST in addition to the applicable customs duties (BCD). This IGST would be levied in lieu of CVD and SAD; and shall be available as input tax credit for further transactions.

IGST on goods imported into India shall be levied and collected in accordance with the provisions of sec 3 of the Customs Tariff Act, 1975 on the value as determined under the said Act at the point when duties of customs are levied on the said goods under sec 12 of the Customs Act, 1962.

(6)

Zero-rated supply

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Chapter 1

•

As per sec 2(24) of the IGST Act, zero-rated supply shall have the meaning assigned to it under sec 16 of the IGST Act.

•

As per sec 16 of the IGST Act, zero rated supply” means any of the following taxable supply of goods and/or services, namely: (a)

export of goods and/or services or both; or

(b)

supply of goods and/or services or both to a SEZ developer or an SEZ unit.

1.5

EXEMPTIONS AND EXEMPT SUPPLIES

1.5.1

Power to grant exemption CGST/SGST

(1)

Sec 11

IGST

Sec 6

By way of Notification Where the Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendations of the Council, by notification, exempt generally, either absolutely or subject to such conditions as may be specified therein, goods or services or both of any specified description from the whole or any part of the tax leviable thereon with effect from such date as may be specified in such notification. Following are the notifications issued in this regard: -

Nature

CGST Notification No.

IGST Notification No.

GoodsExemptions

2/2017-Central Tax (Rate) dated 28 June 2017 Corrigendum dated 12 July 2017 and 27 July 2017

2/2017-Integrated Tax (Rate) dated 28 June 2017 Corrigendum dated 12 July 2017 and 27 July 2017

ServicesExemptions

12/2017-Central Tax (Rate) 9/2017-Integrated Tax dated 28 June 2017 dated 28 June 2017

(2)

(Rate)

By way of special order in exceptional cases Where the Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendations of the Council, by special order in each case, under circumstances of an exceptional nature to be stated in such order, exempt from payment of tax any goods or services or both on which tax is leviable.

(3)

Explanation to notification or special order already issued The Government may, if it considers necessary or expedient so to do for the purpose of clarifying the scope or applicability of any notification of exemption or special order issued, insert an Explanation in such notification

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Chapter 1

GST in India – At-a-glance

or order, as the case may be, by notification at any time within one year of issue of the notification/order. Every such Explanation shall have effect as if it had always been the part of the first such notification or order, as the case may be.

1.6

MEANING AND SCOPE OF THE TERM “SUPPLY”

1.6.1

Scope of supply (Section 7 & 8 of GST Act)

(1)

Supply includes all forms of supply (goods and/or services) such as, sale, transfer, barter, exchange, license, rental, lease, or disposal. It also includes agreeing to supply.

(2)

Supply should be made for a consideration; and in the course or furtherance of business. However, in case of import of services, even ‘in the course or furtherance of business’ is not required.

Thus, there should be something in return which the person supplying will obtain from recipient. It is not important that what is received in return is ‘money’; it can be money’s worth.

(3)

It involves delivery of goods and/or services to another person or agreement thereof. Transfer of property in goods from the supplier to recipient is not necessary.

(4)

Branches of the same person have been considered as distinct persons. MultiState Entities have to take care of transfer value.

(5)

Certain supplies which are even without consideration have also been included in the definition of the term “Supply”, as specified in Schedule I of CGST/SGST Act, as under: (a)

Permanent transfer/disposal of business assets where input tax credit has been availed on such assets.

For example, transfer of business asset by the partnership firm to its retiring partner in settlement of his dues.

(b)

Supply of goods and/or services between related persons when made in the course or furtherance of business,

(c)

Supply of goods or services between distinct persons as specified in section 25 (from one unit to another, both having same PAN) when made in the course or furtherance of business.

However, gifts not exceeding INR 50,000/- in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both.

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(d)

Supply of goods by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal.

(e)

Supply of goods by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal.

(f)

Import of services by a taxable person from a related person or from his other establishments outside India, in the course or furtherance of business.

(6)

Schedule II of GST Act comprises various circumstances and situations when the activity shall either be considered as supply of goods or as service.

(7)

Schedule III comprises various activities or transactions, which shall neither be considered as supply of goods nor as services.

(8)

The GST Act has also defined composite supply and mixed supply and manner of determining their tax liability.

1.6.2

Inter-State supply vs. Local Supply and Place of Supply (Section 7 to 13 of IGST Act) •

IGST Act formulates the principles when a supply of goods or services or both shall be treated as inter-state supply or intra-state (local) supply.

•

Generally, subject to other provisions in respect of place of supply, where “location of the supplier” and “place of supply” are in different states/UT, it is inter-state supply; and if within the same state or UT, it is intra-state or local supply.

•

Local supply shall be subject to (CGST + SGST); whereas inter-state supply shall be subject to IGST.

•

Framework of Place of Supply provisions:

Place of supply of goods

Place of supply of services

Section 10: Goods other than supply of goods imported into, or exported from India

Section 12: Services where the location of supplier of service and the location of the recipient of service is in India

Section 11: Goods imported into, or exported from India

Section 13: Services where the location of the supplier or the location of the recipient is outside India

12

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GST in India – At-a-glance

Place of supply in case of goods, in general, in B2B Transactions: Where supply involves movement of goods, whether between two parties or in case of “bill to ship to” transactions, the place of supply would generally be the billing address of the recipient, irrespective of shipping address in the different State, except where supply between two persons terminates in a state other than the state where place of business of the recipient is located. Thus, if supplier is located at Delhi, and the billing address is also in Delhi, the supplier will charge (CGST + SGST); and if the billing address is, say, in Haryana, the supplier will charge IGST.

Place of supply in case of services, in general, in B2B Transactions: Supply made to

Registered Person

Location of Recipient

Other Person

Address on Record exists

Other Cases

Location of Recipient

Location of Supplier

However, the major exceptions are supply of immovable property (such as, construction, renting, hotels, etc.) and right to admission (such as, cinema halls, IPL/ cricket matches, etc.) where the place of supply would be at the place where immovable property is located or where the event is held, as the case may be.

Thus, in the cases of hotels and admission to events, since the location of property and the place of supply coincide, the supplier would only charge (CGST + SGST), even if the recipient is located outside the state or even if the recipient comes from outside the State for receiving the service.

1.6.3 (1)

Time of supply (Section 12 & 13 of GST Act) In case of supply of goods (other than taxable on reverse charge), time of supply (i.e. taxable event) shall generally be earliest of the following: (a)

Date of issuance of invoice by the supplier;

(b)

Last date on which supplier is required to issue invoice in terms of sec 31;

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(c) (2)

Date of receipt of payment/ advance by supplier (earliest of date of entry in accounts books or credit date in the bank).

In case of supply of services (other than taxable on reverse charge), time of supply (i.e. taxable event) shall be: (a)

(b) (3)

Chapter 1

If the invoice under sec 31(2) is issued – (i)

Within time: Earliest of date of issuance of invoice OR Date of receipt of payment/ advance by supplier (earliest of date of entry in accounts books or credit date in bank);

(ii)

Not within time: Earliest of date of provision of service OR Date of receipt of payment/ advance by supplier (earliest of date of entry in accounts books or credit date in bank);

Other cases: date on which the recipient shows the receipt of services in his books of account.

In case of supply of goods/services on reverse charge basis, time of supply shall generally be earliest of the following: (a)

the date of the receipt of goods (not applicable in case of services);

(b)

the date on which the payment is made (earliest of credit date in the books of accounts or debit date in the bank account); or

(c)

the date immediately following 30 days in case of goods, and 60 days in case of services, from the date of issue of invoice by the supplier.

If it is not possible to determine time of supply as above, then the time of supply shall be the date of entry in books of account of the recipient of supply.

1.6.4 (i)

(ii)

14

Value of supply (Section 15 of GST Act) Value of supply is, generally, the transaction value, i.e., the price actually paid or payable for the said supply of goods and/or services, where •

supplier and recipient are not related, and

•

the price is the sole consideration for the supply.

Value of supply includes the amount which has been incurred by the receiver, reimbursements, free of charge supplies, royalties/license fees as condition of sale, incidental expenses, subsidies linked to price (other than by the central/state government) late fee, interest, penalty for late payment, post supply discount subject to conditions and all taxes other than GST levies.

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GST in India – At-a-glance

(iii)

Discount given after supply is permitted to be excluded if it is linked to the invoice in terms of an agreement entered into at or before the time of such supply and also, ITC credit for the same has been reversed by the recipient.

(iv)

The value of the supply of goods or services or both between distinct persons (branch with same PAN) or related persons, other than where the supply is made through an agent, shall,(a)

be the open market value of such supply;

(b)

if open market value is not available, it shall be the value of supply of goods or services of like kind and quality;

(c)

if value is not determinable under clause (a) or (b), it shall be the value as determined in accordance with the GST Rules.

However, where the recipient is eligible for full input tax credit, the value declared in the invoice shall be deemed to be the open market value of goods or services. In other words, in such cases, invoice value shall be accepted.

1.7

THRESHOLD LIMIT (BASIC EXEMPTION)

1.7.1

Exemption limit (Sec 22 of GST Act)

S. No.

States

Amount of Aggregate Turnover in a Financial Year

(a)

States/UTs barring specified in Sl. No. (b) below

INR 20 lakhs

(b)

Special category states – comprising of 11 states viz. Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand.

INR 10 lakhs

“Aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, non-taxable supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis; but excludes CGST, SGST, IGST, UTGST and Cess. [Sec 2(6)] Moreover, exempt supplies include non-taxable supplies, i.e. alcoholic liquor for human consumption, petroleum products, etc.

Further, for the purpose of sec 22, turnover made on behalf of principals would be included in the turnover of agents. Furthermore, the supply of goods, after 15

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S. No.

States

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Amount of Aggregate Turnover in a Financial Year

completion of job-work, by a registered job worker shall be treated as the supply of goods by the principal referred to in section 143, and the value of such goods shall not be included in the aggregate turnover of the registered job-worker.

1.7.2

When threshold limit is not applicable (Sec 24 of GST Act)

The threshold limit is not applicable in the following cases: (i)

Persons making any inter-state taxable supply;

(ii)

Casual taxable persons making taxable supply;

(iii)

Persons who are required to pay tax under reverse charge;

(iv)

Persons required to pay tax under sec 9(5) [where tax shall be paid by the ecommerce operator];

(v)

Non-resident taxable persons making taxable supply;

(vi)

Persons who are required to deduct TDS under sec 51, whether or not separately registered under this Act;

(vii) Persons who supply goods and/or services on behalf of other taxable persons whether as an agent or otherwise; (viii) Input service distributor, whether or not separately registered under the Act; (ix)

Persons who supply goods and/or services, other than supplies made under sec 9(5), through electronic commerce operator, who is required to collect tax at source (TCS) under sec 52;

(x)

Every e-commerce operator;

(xi)

Every person supplying online information and database access or retrieval services from a place outside India to a person in India, other than a registered person; and

(xii) Such other person or class of persons as may be notified by the government on the recommendations of the Council.

1.8

TAXABLE PERSONS & REGISTRATION

1.8.1

Taxable person [Sec 2(107) of GST Act] “Taxable person” means a person who is -

16

registered under the GST Act, or

liable to be registered under sec 22 or sec 24 of the GST Act.

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1.8.2

1.8.3

GST in India – At-a-glance

Who is liable for registration mandatorily under GST [Sec 22(1) of GST Act]

Every supplier shall be liable to be registered in the state or union territory, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds INR 20 lakhs [INR10 lakhs in the Special Category States]

Other persons to whom threshold limit does not apply [discussed in earlier paras in this chapter]

Who is not liable to take registration? (Sec 23 of GST Act)

The person is not liable for registration if he is: (a)

engaged exclusively in the business of supplying goods and/or services that are either not liable to tax (such as, specified petroleum products, alcoholic liquor for human consumption, etc.) (Or) are wholly exempt from tax under GST Act or under IGST Act; or

(b)

an agriculturist to the extent of supply of produce out of cultivation of land; or

(c)

category of persons as notified by the government, on the recommendations of the Council.

In exercise of the powers conferred by sec 23(2), the Central Government has notified that the persons who are only engaged in making supplies of taxable goods or services or both, the total tax on which is liable to be paid on reverse charge basis by the recipient of such goods or services or both under section 9(3) of the Act as the category of persons exempted from obtaining registration under the aforesaid Act. Thus, if the entire tax is paid by the recipient for specified services (such as, advocates or goods transport operators) in terms of sec 9(3) of the Act, the supplier of these services is not liable for registration under the Act.

1.8.4

Agriculturist [Section 2(7) of GST Act]

“Agriculturist” means an individual or a Hindu Undivided Family who undertakes cultivation of land – (a)

by own labour, or

(b)

by the labour of family, or

(c)

by servants on wages payable in cash or kind or by hired labour under personal supervision or personal supervision of any member of family.

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1.8.5

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Time limit for taking registration [Section 25(1)]

Within 30 days from the date on which the person becomes liable.

However, a casual taxable person or a non-resident taxable person shall apply for registration at least 5 days prior to the commencement of business.

1.8.6

Voluntary Registration under GST [Section 25(3)]

The person, who is not liable to obtain registration mandatorily, may register voluntarily. All provisions of GST shall be applicable after registration.

1.9

COMPOSITION SCHEME [SECTION 10]

(1)

Small taxpayers with an aggregate turnover in a financial year up to the specified limit of INR 75 Lakhs, shall be eligible for composition levy.

However, in the case of nine states, the limit shall be INR 50 Lakh. These states are: (i) Arunachal Pradesh (ii) Assam (iii) Manipur (iv) Meghalaya (v) Mizoram (vi) Nagaland (vii) Sikkim (viii) Tripura, and (ix) Himachal Pradesh.

(2)

Composition levy is not available to the person if: (a)

he is engaged in the supply of services other than supplies referred to in clause 6(b) of Schedule II (i.e. restaurant services serving food and non-alcoholic drinks);

(b)

he is engaged in making any supply of goods which are not leviable to tax under this Act [the phrase used in this clause is similar to the definition of non-taxable supply under sec 2(78) of the Act]. Nontaxable supplies are specified petroleum products and alcoholic liquor for human consumption, etc.;

(c)

he is engaged in making any inter-State outward supplies of goods;

(d)

he is engaged in making any supply of goods through an e-com operator required to collect TCS under sec 52; or

(e)

he is a manufacturer of notified goods.

In exercise of these powers, in respect of the following commodities, the manufacturer cannot opt for the composition levy: No. Classification (Tariff Description item/Chapter) 1 2105 00 00 Ice cream and other edible ice, whether or not containing cocoa

18

2

2106 90 20

Pan masala

3

24

Tobacco and manufactured tobacco substitutes

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(3)

GST in India – At-a-glance

Rate of composition levy

S.No. Nature of Supplier

Rate of Levy (% of the Turnover in the State) CGST

SGST

Total

(i)

Manufacturer, other than manufacturers of such goods as may be notified by the government

1%

1%

2%

(ii)

Suppliers making supplies in respect of food with service (e.g. caterers, restaurants, dhabas) referred to in clause (b) of paragraph 6 of Sch II

2.5%

2.5%

5%

(iii)

Any other suppliers composition levy

0.5%

0.5%

1%

1.10

eligible

for

OUTPUT TAX

1.10.1 Meaning of output tax CGST/SGST

Sec 2(81)

IGST

Sec 2(18)

“Output tax” in relation to a taxable person, means the GST chargeable under the respective GST Act on taxable supply of goods or services or both, made by the supplier or by his agent, and excludes tax payable by him on reverse charge basis.

1.10.2 Steps for computation of output tax (1)

First determine the rate of tax applicable to the goods and/or services supplied vis-à-vis their HSN;

(2)

Then determine the aggregate turnover under each of the following statutes for every state where having GSTIN(a) IGST (b) CGST (c) SGST

(3)

Then determine the aggregate turnover of taxable supplies under each statute in the following categories-

(4)

(a)

Goods wise – Rate of tax-wise

(b)

Service wise – Rate of tax-wise

Multiply the respective turnover with the applicable rate of tax.

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1.11

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INPUT TAX

1.11.1 Input tax credit in the GST (1)

Input tax credit has been defined under sec 2(62) read with sec 2(63) of the GST Law. As per the combined reading of these provisions, ITC in relation to a registered person means and includes -

ITC means and includes

ITC excludes

(i) CGST, SGST, IGST and UTGST;

Tax paid under composition levy under sec 10

(ii) IGST charged on import of goods; (iii) Reverse charges under the CGST/SGST/ IGST/ UTGST Acts

(2)

(3)

20

Input tax credit – Sec 16(1) •

Every registered person shall,

•

subject to such conditions and restrictions as may be prescribed, and

•

in the manner specified in sec 49,

•

be entitled to take credit of input tax,

•

charged on any supply of goods or services or both to him,

•

which are used or intended to be used in the course or furtherance of his business, and

•

said amount shall be credited to electronic credit ledger of such person.

In relation to the eligibility of ITC, the government has not made any distinction amongst inputs, capital goods and input services. Further, claim of input tax credit on all goods, services and capital goods is available in one go.

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(4)

GST in India – At-a-glance

Summary of input tax credit in GST:

1.11.2 Restrictions in claiming ITC [Sec 16 of GST Act]

• S. No.

In GST, taxability of sale/service will also determine the eligibility of input tax credit, which may be as under: Nature of Supply

Availability of Input Tax

1

Taxable supply

Yes

2

Exempt supply

No

3

Non-taxable supply

No

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S. No.

Nature of Supply

Availability of Input Tax

4

Zero rated supply

Yes

1.11.3 Utilization of credit [Sec 49(5)] IGST Credit

CGST Credit

SGST Credit

YES: To the followings, in the stated order: • Payment of IGST, • Payment of CGST, • Payment of SGST, • Payment of UTGST.

YES: To the followings, in the stated order: • Payment of CGST, • Payment of IGST. NO: • Payment of SGST • Payment of UTGST

YES: To the followings, in the stated order: • Payment of SGST, • Payment of IGST. NO: • Payment of CGST • Payment of UTGST

1.12

JOB WORK [SECTION 19, 143 OF GST ACT]

(1)

As per sec 143(1), “principal” means a registered person sending taxable goods for job work. Thus, sec 143 is NOT applicable to “unregistered taxable person”

(2)

Facilities to the principal •

To send any inputs/capital goods to a job worker for job work without payment of tax,

•

To send inputs/capital goods subsequently from one job worker to another job worker without payment of tax,

•

To claim ITC on goods transferred to job worker.

(3)

Sec 143 is optional. Principal may supply goods to job worker after charging of GST.

(4)

Sec 143 enables the principal to send taxable goods to a job worker (and also to another job-worker therefrom) without payment of tax, subject to•

Intimation, and

•

certain conditions, as may be prescribed.

(5)

If the benefit under sec 143 is availed, the principal shall be responsible and accountable for all the transactions between him and the job worker

(6)

If inputs are not received within 1 year (capital goods in 3 years), it shall be deemed as supply in the hands of the principal on the day when goods were originally sent.

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GST in India – At-a-glance

(7)

The challan issued by the principal to the job worker shall contain the details specified in rule 55.

(8)

The details of challans in respect of goods dispatched to a job worker or received from a job worker or sent from one job worker to another during a quarter shall be included in FORM GST ITC-04 furnished for that period on or before the 25th day of the month succeeding the said quarter. [Rule 45 of CGST Rules]

1.13

TAX INVOICE, BILL OF SUPPLY, DEBIT/CREDIT NOTES

1.13.1 Who is required to issue tax invoice or bill of supply or receipt voucher or delivery challan?

Key Documents

(i) Invoice/Tax Invoice

(ii) Bill of Supply

(iii) Receipt Voucher

(iv) Delivery Challan

§ Every registered person shall issue a tax invoice for supply of – o taxable goods, or o taxable services. § The expression “tax invoice” also includes any revised invoice issued by supplier in respect of a supply made earlier. § Tax invoice is not required to be issued if value of goods/ services supplied is less than INR 200 except when requested by the recipient.

§ Instead of a tax invoice, a bill of supply shall be issued in the following cases: o A registered person supplying exempted goods/services , or o A registered paying tax under composition scheme. § Individual bill of supply is not required to be issued if value of goods/ services supplied is less

§ On receipt of advance payment with respect to any supply of goods or services, registered person shall issue a receipt voucher, evidencing receipt of such payment. § Where, after receipt of advance, subsequently no supply is made and no tax invoice is issued in pursuance thereof, the said registered person may issue to the person who had made the payment, a refund voucher

In the following cases, goods may be supplied on the basis of delivery challan: (a) Supply of liquid gas where the quantity at the time of removal from the place of business of the supplier is not known, (b) Transportation of goods for job work, (c) Transportation of goods for reasons other than by way of supply, or (d) Such other supplies as may be notified by the Board.

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Bloomsbury’s Desk Referencer for Professionals, 2e However, consolidated tax invoice shall be issued at the end of the day.

•

than INR 200 except when requested by the recipient.

Further, any tax invoice/any other similar document issued under any other Act for the time being in force in respect of any nontaxable supply shall be treated as bill of supply.

against payment.

Chapter 1 such

Central/State Government may specify the categories of services in respect of which any other document issued in relation to the supply shall be deemed to be a tax invoice, subject to prescribed conditions.

1.13.2 Contents of tax invoice (Rule 46 of the GST Rules) Tax invoice shall be issued by the supplier containing the following details:(a)

Name, address and GSTIN of the supplier;

(b)

A consecutive serial number, not exceeding 16 characters, in one or multiple series, containing alphabets or numerals or special characters hyphen or dash and slash symbolised as “-” and “/” respectively, and any combination thereof, unique for a financial year;

(c)

Date of its issue;

(d)

Name, address and GSTIN/Unique ID Number, if registered, of recipient;

(e)

Name and address of the recipient and address of delivery, along with the name of State and its code, if such recipient is unregistered and where the taxable value of supply is INR 50,000/- or more;

(f)

name and address of the recipient and the address of delivery, along with the name of the State and its code, if such recipient is un-registered and where the value of the taxable supply is less than INR 50,000/- and the recipient requests that such details be recorded in the tax invoice

(g)

HSN code of goods or services (Vide Notification No. 12/2017 (Central Tax) dated 28 June 2017, the registered person shall mention ‘Nil’ number of digits of HSN code for aggregate turnover in the preceding financial year

24

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GST in India – At-a-glance

upto INR 1.5 cr., ‘2’ digits between INR 1.5 cr. and INR 5 cr. and ‘4’ digits if the said turnover excceds INR 5 cr.); (h)

Description of goods or services;

(i)

Quantity in case of goods and unit or Unique Quantity Code thereof;

(j)

Total value of goods or services;

(k)

Taxable value of goods or services taking into account discount or abatement, if any;

(l)

Rate of tax (CGST, SGST, UTGST, Cess or IGST);

(m)

Amount of tax charged in respect of taxable goods or services (CGST, SGST, UTGST, Cess or IGST);

(n)

Place of supply along with the name of State, in case of a supply in the course of inter-state trade or commerce;

(o)

Place of delivery where the same is different from place of supply;

(p)

Whether the tax is payable on reverse charge;

(q)

The word “Revised Invoice”, as the case may be, indicated prominently, where applicable along with the date and invoice number of the original invoice; and

(r)

Signature or digital signature of the supplier or his authorized representative.

1.13.3 Circumstances when a debit note or credit note is issued (Sec 34 of the GST Act) •

Where a tax invoice has been issued, and o

the taxable value and/or tax charged in that tax invoice is found to exceed the taxable value and/or tax payable in respect of such supply; or

o

where the goods supplied are returned by the recipient; or

o

where goods or services or both supplied are found to be deficient,

then the taxable person, who has supplied such goods and/or services, may issue to the recipient a credit note.

•

Where a tax invoice has been issued and the taxable value and/or tax charged in that tax invoice is found to be less than the taxable value and/or tax payable in respect of such supply, then the taxable person, who has supplied such goods and/or services, may issue to the recipient a debit note.

•

Credit notes & debit notes shall contain the prescribed particulars. Otherwise, these notes may not be considered for adjustment of tax liability.

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Chapter 1

•

Credit notes and debit notes must have serial number and date of the corresponding tax invoice or, as the case may be, bill of supply against which the same are being issued.

•

Credit notes and debit notes must be accepted by the recipient to validate the claim of reduction in output tax by the issuer of such notes.

•

No credit note shall be issued if incidence of tax/interest on such supply has been passed on to any other person.

•

Debit note includes supplementary invoice.

1.14

ACCOUNTS AND RECORDS

1.14.1 Maintenance of Accounts and Records (Sec 35 of the GST Act) (1)

Every registered person shall keep and maintain, at his principal place of business, a true and correct account of the following: •

Production or manufacture of goods;

•

Inward supply of goods and/or services;

•

Outward supply of goods and/or services

•

Stock of goods;

•

Input tax credit availed;

•

Output tax payable and paid; and

•

Such other particulars as may be prescribed in this behalf.

•

The term “principal place of business” means the place of business specified as the principal place of business in the certificate of registration [Sec 2(89)].

•

As per sec 2(85), the term “Place of Business” includes -

•

26

(a)

Place from where the business is ordinarily carried on, and includes a warehouse, a godown or place where a taxable person stores goods, and provides/receives goods/services;

(b)

Place where a taxable person maintains his books of account;

(c)

A place where a taxable person is engaged in business through an agent, by whatever name called.

Registered assesses may keep and maintain such accounts and other particulars in the electronic form in the manner as may be prescribed.

Chapter 1

GST in India – At-a-glance

(2)

Multiple places of business: As per Rule 56(7) of the GST Rules, every registered person shall keep the books of account at the principal place of business and books of account relating to additional place of business mentioned in his certificate of registration. Therefore, it appears that records of additional places can be kept at the principal place of business.

(3)

Every owner or operator of warehouse or godown or any other place used for storage of goods, irrespective of whether he is a registered taxable person or not, shall maintain records of consigner, consignee and other relevant details of the goods as may be prescribed

(4)

The Commissioner has been empowered to notify a class of taxable persons to maintain additional accounts or documents for such purpose as may be specified.

(5)

Relaxation by the Commissioner: If any class of taxable persons is not in a position to keep and maintain accounts in accordance with the provisions of this section, the commissioner may permit such class of taxable persons to maintain the accounts in such manner as may be prescribed.

(6)

Except when goods are lost, stolen, destroyed, written off or disposed of by way of gift or free samples, if the registered taxable person fails to account for the goods and/or services in his books of account, the proper officer shall determine the amount of tax payable on the goods and/or services that are not accounted for, as if such goods and/or services had been supplied by such person and in this regard, the provisions of sec 73 or 74, as the case may be, shall apply, mutatis mutandis, for determination of such tax.

1.14.2 Retention of Accounts and Records (Sec 36 of the GST Act) •

Every assessee shall retain the prescribed books of accounts and other records until the expiry of 72 months (6 years) from the due date of filing of Annual Return for the year pertaining to such accounts and records.

•

In case an appeal or revision or any other proceeding is pending before any Appellate Authority or Revisional Authority or Tribunal or Court or is under investigation for an offence under Chapter XIX, then the assessee shall retain the books of account and other records pertaining to the subject matter of such appeal or revision or proceeding or investigation for a period of one year after final disposal of such appeal or revision or proceeding or investigation, or for the period specified records under sec 36(1), whichever is later.

•

Such accounts and documents, where maintained manually, shall be kept at every related place of business mentioned in the certificate of registration and where maintained digitally, shall be accessible at every related place of business.

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Proper electronic back-up of records of current year including earlier years, shall be maintained and preserved in such manner that, in the event of destruction of such records due to accidents or natural causes, the information can be restored within reasonable period of time.

•

1.15

RETURNS UNDER THE GST (CHAPTER IX OF THE GST ACT)

1.15.1 Types of returns or reports and periodicity Please refer Chapter 2 of Part-I of this book for detailed compliance chart.

1.15.2 Other features of the Returns •

Return shall be filed for each GSTIN;

•

If a person has more than one TIN in one state, he shall file multiple returns;

•

Filing of return o

The filing of return shall be only through online mode;

o

Facility of offline generation and preparation of returns shall be available but offline returns shall have to be uploaded before the due date.

Return without payment of self-assessed tax

•

o

The return may be filed; however, such return shall be treated as an invalid return;

o

Not to be taken into consideration for matching of invoices and for inter-governmental fund settlement among states and the centre.

1.15.3 Returns process flow GSTR-1 Returns of Outward Supplies Captures the transaction level details of the outward supplies of a tax payer

Forms the basis for the statement of details of the inward supplies of all suppliers

GSTR-2 Returns of Inward Supplies

Freezing of outward and inward supplies of every tax payer à Calculation of tax liability à Payment in the Monthly Return i.e. GSTR-3

GSTR-3 Monthly Return

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GST in India – At-a-glance

Time Flow (GSTR-1/2) RECIPIENT

SUPPLIER

GSTR-1 Returns of Outward Supplies

Accept or reject modifications

GSTR-1 Amended after accepted changes

Part A-GSTR-2A/GSTR4A/GSTR-6A

Early uploading of invoices shall be allowed à Submission of return by 10th of next month

Able to see the invoices uploaded by their suppliersà Available for amendment after 10th of next month

Inward Supplies made available on the basis of GSTR-1 after 10th of next month

GSTR-1A Inward supplies added/corrected/del eted by recipient made available to be filed on or before 17th of the next month

Final GSTR-2 Submission on or before 15th of the next month Final GSTR-4 Submission on or before 18th of month next to quarter Final GSTR-6 Submission before 13th of the next month

Addition/correction/dele tion of invoices -From 11th to 15th of the next month -From 11th to 18th of month next to quarter (composition) -From 11th to 13th of the next month (ISD)

1.15.4 Matching process •

ITC claim matching ITC claim matching after submission of GSTR-3

GST-ITC-1A: Mismatches of current tax period

GST-ITC-1A: Mismatches of earlier tax period

GST-ITC-1A: Duplicate Claims of ITC

ITC claim in GSTR-2 > Output tax in GSTR-1

Invoices/Debit Notes accepted w/o amendment in GSTR2A/GSTR-2 by Recipient + Valid Return by Supplier

Rectification by Recipient/ Supplier

Addition to Current Month Output tax Liability of GSTR-3

No Yes

ITC Claim < = Output Tax paid

No

Yes

ITC matching

Addition to Next Month Output tax Liability of GSTR-3

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Output Tax Liability Reduction Matching

•

Output Tax Liability Reduction matching after submission of GSTR-3 GST-ITC-1A: Mismatches of current tax period Liability Reduction claim> Admitted by Recipient

Credit Notes Accepted w/o amendment in GSTR-2A/GSTR-1 by Recipient + Valid Return by Recipient

GST-ITC-1A: Mismatches of earlier tax period

Rectification

by Recipient/ Supplier

No No

Yes Reduction claim < = ITC admitted on such Credit Note by Recipient + Valid Return by Recipient

1.16

GST-ITC-1A: Duplicate Claims of Liability reduction

Addition to Current Month Output tax Liability of GSTR-3

Yes Matching

Addition to Next Month Output tax Liability of GSTR-3

PAYMENT OF TAX (SECTION 49 OF THE GST ACT)

1.16.1 Broad features •

Electronic online payment process – Paperless, and no use of manually prepared challan;

•

GSTN - Single point interface for challan generation;

•

Any time, anywhere mode of payment of tax;

•

Faster remittance of tax revenue to the government account;

•

Speedy accounting and reporting;

•

Electronic reconciliation of all receipts;

•

Ease of payment - Four modes including Net Banking, Credit Card (CC)/Debit Card (DC), NEFT/RTGS and Over the Counter (OTC);

•

Common challan form with auto-population features;

•

Use of single challan and single payment instrument;

•

Common set of authorized banks;

•

Payment through any bank;

•

Common accounting codes.

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GST in India – At-a-glance

1.16.2 Payments to be made in the GST •

Central GST (CGST)

•

State GST (SGST);

•

Integrated GST (IGST);

•

UT GST (UTGST)

•

Cess

•

Tax deducted at source (TDS);

•

Tax collected at source (TCS);

•

Interest, penalty, fees and any other payment.

1.16.3 Persons liable to pay GST •

Supplier of goods/service including those paying tax under composition;

•

Imports and other specified/notified supplies à the liability may be casted on the recipient under the reverse charge mechanism unless assessed under Customs Law;

•

Third person (say, in the case of e-commerce operator responsible for TCS or government department responsible for TDS).

1.16.4 Modes of payment of GST Modes of Payment

Mode I Internet Banking including Credit/Debit Card through Auth. Banks

1.17

Mode II Over the Counter (pay upto INR 10,000) per challan per tax period subject to exceptions in cash/cheque/DD

Mode III RTGS/ NEFT

Payment Acceptance by Dept. officers in enforcement cases ONLY

TAX DEDUCTION AT SOURCE (TDS) (SECTION 51)

1.17.1 Persons may be required to deduct TDS (a)

A department or establishment of the Central or State Government, or

(b)

Local authority, or

(c)

Governmental agencies, or 31

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(d)

Chapter 1

Such persons or category of persons as may be notified, by the Central or a State Government on the recommendations of the Council.

1.17.2 Rates of TDS S.N.

Act

Rate of TDS (on the payment made or credited to supplier)

(i)

CGST

1%

(ii)

SGST

1%

(iii)

IGST

2%

1.17.3 When to deduct TDS The deductor is required to deduct TDS if the total value of such supply under a contract exceeds INR 2.5 lakhs. “Value of supply” means amount indicated in the invoice excluding tax.

TDS is required to be deducted on all taxable goods and/or services.

1.17.4 Obligations of deductor of TDS (a)

Every deductor is liable for registration under the GST Law. Further, threshold limit shall not apply to the deductor of TDS.

(b)

He shall pay the TDS deducted to the government by the 10th day of the month succeeding the month in which TDS was deducted by debiting the electronic cash ledger maintained; and the electronic tax liability register shall be credited accordingly.

(c)

He shall issue TDS certificate in Form GSTR-7A, to the deductee within 5 days of crediting the amount so deducted to the Government, mentioning therein –

(d)

32

•

the contract value,

•

rate of deduction,

•

amount deducted,

•

amount paid to the appropriate government, and

•

such particulars as may be prescribed in this behalf.

He shall submit monthly return of TDS in Form GSTR 7 return by the 10th day of the month succeeding the month in which TDS was deducted, electronically on the Common Portal either directly or through Facilitation Centre.

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GST in India – At-a-glance

(e)

Details of tax deducted at source by the deductor shall be made available to the deductee in Part C of Form GSTR-2A electronically and the said deductee may include the same in Form GSTR-2.

(f)

Deductor is not required to submit Annual Return in Form GSTR 8.

(g)

The provisions of sec 51 are yet to be notified, which means that the deductor, until notified, is not required to deduct TDS on the specified contract value.

1.18

TAX COLLECTION AT SOURCE (TCS) (SECTION 52)

1.18.1 Time of collection of TCS and its value •

Every electronic commerce operator (ECO), not being an agent, shall collect an amount calculated at the specified percentage of the net value of taxable supplies made through it where the consideration with respect to such supplies is to be collected by the operator.

•

“Net value of taxable supplies” shall mean Aggregate value of taxable supplies of goods or services made during any month, other than services notified under sec 9(5), by all registered taxable persons through the ECO (-) Aggregate value of taxable supplies returned to the suppliers during the said month.

TCS would not be collected where notification is issued under sec 9(5).

Under this category, electronic commerce operator shall be responsible for depositing the tax on ‘radio taxi’ or ‘passenger transport services’ provided through him.

•

TCS shall not be applicable where goods are supplied by the ECO on its own account.

•

The provisions of sec 52 are yet to be notified, which means that the collector, until notified, is not required to collect TCS.

1.18.2 Rates of TCS S.N.

Act

Rate of TDS (of the net value of taxable supplies)

(i)

CGST

1%

(ii)

CGST

1%

(iii)

IGST

2%

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1.18.3 Obligations of collector of TCS (a)

TCS shall be paid within 10 days from the end of the month in which the collection is made;

(b)

ECO shall furnish a statement of outward supplies of goods/services (including returns thereof), electronically, giving the details of the amounts collected during the calendar month within 10 days from the end of the month in which the collection was made;

(c)

The statement in Form GSTR-8, shall contain details of amounts collected, supplier-wise in respect of all supplies effected through the website/url of the ECO during the calendar month.

(d)

ECO shall furnish an annual statement in Form GSTR-9B, electronically, containing the details of outward supplies of goods or services or both effected through it.

1.18.4 Matching of TCS with supplies by the supplier (a)

Amount so remitted by the ECO shall be treated as if it is amount of tax paid by the concerned supplier and shall reflect in the supplier’s electronic cash ledger.

The expression ‘concerned supplier’ means the supplier of goods/services making supplies through the ECO.

(b)

Concerned supplier shall claim credit of the amount collected and reflected in the statement of the ECO furnished, in the manner prescribed.

(c)

Details of the supplies furnished by the e-commerce operator would be compared with the corresponding outward supplies reflected by the concerned supplier in his valid monthly return. If the details do not match, discrepancy shall be communicated to both, the e-commerce operator and the concerned supplier.

(d)

After communication, if discrepancy is not rectified by the supplier in his valid return or the ECO in his statement for the month in which discrepancy is communicated, the same shall be added to the output tax liability of concerned supplier where the value of outward supplies furnished by the ECO is more than the value of outward supplies furnished by the supplier, in his return for the month succeeding the month in which the details of discrepancy are made available and such addition to the output tax liability and interest payable thereon shall be made available to the supplier electronically.

34

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1.19

GST in India – At-a-glance

SUPPLIER OF ONLINE INFORMATION AND DATABASE ACCESS OR RETRIEVAL SERVICES LOCATED OUTSIDE INDIA TO SPECIFIED PERSON IN THE TAXABLE TERRITORY (OIDAR) (SECTION 14 OF IGST ACT)

1.19.1 Applicability of the provisions Sec 14 of the IGST Act fastens the liability to pay tax upon the supplier of service located in a non-taxable territory supplying online information and database access or retrieval services to non-taxable online recipient. Thus, the provisions have three essentials: (i)

Supplier of service is located in a non-taxable territory;

(ii)

Supplier is supplying online information and database access or retrieval services; and

(iii)

Service is received by the non-taxable online recipient in India.

1.19.2 Meaning of “online information and database access or retrieval services” (OIDAR) OIDAR means services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology and includes electronic services, such as,(a)

Advertising on the internet;

(b)

Providing cloud services;

(c)

Provision of e-books, movie, music, software and other intangibles via telecommunication networks or internet;

(d)

Providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network;

(e)

Online supplies of digital content (movies, television shows, music, etc.);

(f)

Digital data storage; and

(g)

Online gaming.

1.19.3 Role of intermediary who arranges the services •

Where the supplier of service is located in a non-taxable territory, and

•

provision of such service is arranged or facilitated by an intermediary located in the non-taxable territory, then 35

Bloomsbury’s Desk Referencer for Professionals, 2e

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•

such intermediary shall be deemed to be supplying such services to the nontaxable online recipient.

•

However, if the intermediary satisfies all the following conditions, he shall not be deemed as supplier of service: (a)

the invoice or customer’s bill or receipt issued or made available by such intermediary taking part in the supply clearly identifies the service in question and its supplier in non-taxable territory;

(b)

the intermediary neither collects or processes payment in any manner nor is responsible for the payment between the non-assessee online recipient and the supplier of such services;

(c)

the intermediary involved in the supply does not authorise delivery;

(d)

the general terms and conditions of the supply are set by the service provider; and not by the intermediary.

1.19.4 Registration, payment of tax and returns •

For the purpose of payment of IGST, the supplier of the said services shall take a single registration under a Simplified Registration Scheme, as may be prescribed by submitting an application for registration, duly signed or verified through EVC, in Form GST REG-10.

•

Any person located in taxable territory, representing such supplier for any purpose in the taxable territory, shall take a registration and pay IGST on behalf of the supplier.

•

Where the supplier does not have a physical presence in the taxable territory or does not have a representative in the said territory, such supplier may appoint a person in the taxable territory for the purpose of paying IGST; and such person shall be liable to pay tax.

•

Every registered person providing online information and data base access or retrieval services from a place outside India to a person in India other than a registered person shall file return in Form GSTR-5A on or before the 20th day of the month succeeding the calendar month or part thereof.

1.20

REFUND (SECTION 54 & 55 OF THE GST ACT)

1.20.1 Circumstances •

36

Under the GST, export and supply to SEZ developer/unit have been considered as zero-rated supplies. However, the inputs and input services shall be purchased only after payment of GST. Therefore, refund arises to the exporters/SEZ developers/units due to tax paid by them on-

Chapter 1

GST in India – At-a-glance

o

inputs and input services exported as such; or

o

inputs or input services used in the goods and/or services exported out of India.

•

Refund of balance in electronic cash ledger as defined under sec 49(6).

•

Refund of unutilized input tax credit, subject to restrictions provided under sec 54(3) of the GST Act.

•

Where the taxpayer is a manufacturer and its inputs are taxable at a higher rate of tax as compared to finished goods/services.

•

Payment of pre-deposit amount as a condition for entertainment of appeal, which is ultimately allowed in the favour of the taxpayer: thus, resulting in refund of the pre-deposit amount.

•

Refund of tax paid on inward supplies to embassies, diplomats, etc. notified under sec 55.

•

Payment of tax wrongly as IGST in lieu of (CGST+SGST); or vice-a-versa subject to prescribed conditions. [Sec 19 of the IGST Act and Sec 77 of the GST Act].

•

Refund of tax paid on a supply which is not provided, either wholly or partially, and for which invoice has not been issued or where a refund voucher has been issued.

•

The IGST paid by tourist leaving India on any supply of goods taken out of India by him shall be refunded in the prescribed manner.

1.20.2 Time limit •

As per sec 54 of the GST Act, an application for refund of tax and/or interest shall be made to the proper officer of IGST/CGST/SGST within 2 years from the relevant date in a prescribed form.

However, for the persons specified under sec 54(2), i.e. United Nation Organisations, embassies, etc., the period shall be 6 months from the last day of the quarter in which such supply was received.

•

Claim for refund of the balance in electronic cash ledger as defined under sec 49(6), can be made in the monthly GST returns in prescribed manner.

•

The relevant date is critical to determine time within which the refund claim has to be filed. If the refund claim is filed after the relevant date, the claim would be rejected at the threshold; and there is no provision in the Act to condone the delay in filing of refund claim.

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•

The person in charge of the conveyance carrying the export goods duly files an export manifest or an export report covering the number and the date of shipping bills or bills of export.

•

A declaration to the effect that the SEZ unit/developer has not availed the input tax credit of the tax paid by the supplier of goods or services or both, in a case where the refund is on account of supply of goods or services made to a SEZ unit/developer.

•

A statement showing the details of transactions considered as intra-State supply but which is subsequently held to be inter-State supply.

•

A statement showing the details of the amount of claim on account of excess payment of tax.

•

In respect of supplies to a SEZ unit/developer, the application for refund shall be filed by the supplier of goods after such goods have been admitted in full in the SEZ for authorized operations, as endorsed by the specified officer of the Zone;

•

In respect of supplies to a SEZ unit/developer, the application for refund shall be filed by the supplier of services along with such evidence regarding receipt of services for authorized operations as endorsed by the specified officer of the Zone.

•

In respect of supplies regarded as deemed exports, the application shall be filed by the recipient of deemed export supplies.

1.20.3 Procedure for claiming refund •

Applicant shall file an application in Form GST RFD-1, electronically, through the Common Portal either directly or from a Facilitation Centre.

•

Refund application has to be supported by prescribed documents evidencing facts that the refund is due to the applicant.

•

Claim for refund relating to balance in the electronic cash ledger in terms of sec 49(6) may be made through the return for the relevant tax period in Form GSTR-3, Form GSTR-4 or Form GSTR-7.

1.21

ASSESSMENT AND AUDIT

1.21.1 Meaning of assessment and scope As per sec 2(11) of the GST Act, the term “assessment” means determination of tax liability under this Act and includes self-assessment, re-assessment, provisional assessment, summary assessment, and best judgment assessment.

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GST in India – At-a-glance

1.21.1.1 Self-assessment (Section 59 of the GST Act) A registered taxable person shall undertake self-assessment of the taxes payable and furnish a return for each tax period as specified in sec 39, which deals with returns.

Determination of tax liability is to be undertaken by the tax payer himself and stated in the return to be filed by him.

1.21.1.2 Re-assessment The term re-assessment has not been defined under the Act. In general, power to reopen the assessment should be exercised on the basis of materials in assessment record and not on the basis of mere change of opinion.

Assessment cannot be reopened on the basis of materials already considered at the time of original assessment.

Mere change of opinion is not a reasonable ground for reassessment. Change of opinion would arise only in a case where reassessment is made on the same set of facts and with the same materials on record. If fresh materials are brought on record or if there was something to show that the dealer had concealed some material from the assessing officer, then the application of mind to new facts or materials by the assessing officer cannot be said to be mere change of opinion.

1.21.1.3 Provisional assessment (Section 60 of the GST Act) Provisional assessment can be invoked by a taxable person by making a request/application to the proper officer; and such request may be made only under the following two circumstances(i)

He is unable to determine the value of goods and/or services, or

(ii)

He is uncertain about the rate of tax applicable.

1.21.1.4 Summary assessment (Section 64 of the GST Act) Summary assessment is generally used in a tax legislation to denote ‘fast track assessment’ based on return filed by the assessee.

•

The proper officer must have sufficient ground or reason to believe that any delay in assessment will adversely impact the interest of revenue.

•

The proper officer must have evidence in his possession that the person has incurred, or is likely to incur, a liability to pay tax under this Act.

1.21.1.5 Best judgment assessment •

As per sec 62, the proper officer may apply best of his judgment where a registered taxable person fails to file his return, which may pertain to any of the following category -

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Bloomsbury’s Desk Referencer for Professionals, 2e

•

o

Return for the tax period in case of a normal taxable person,

o

Return in case of a person opting for composition,

o

Final return at the time of cancellation of registration.

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As per sec 63, the proper officer may also apply best of his judgment for the relevant tax periods and issue an assessment order where o

a taxable person fails to obtain registration even though liable to do so, or

o

whose registration has been cancelled under sec 29 but who was liable to pay tax.

1.21.2 Audit (Sec 65 of the GST Act) •

•

As per sec 2(13) of the GST Act, the term “audit” means o

examination of records, returns and other documents maintained or furnished by the registered person under this Act or rules made thereunder or under any other law for the time being in force,

o

to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and

o

to assess his compliance with the provisions of this Act or rules.

The Commissioner of CGST/SGST or any officer authorized by him, by way of general or special order may undertake audit of the business transactions at o

the place of business of the registered person, or

o

the Department’s office.

•

Intimation of audit will be issued to the taxable person at least 15 days in advance.

•

The audit shall be completed within a period of 3 months from the date of commencement of audit; or under certain conditions, the extended period, which may be a further period not exceeding 6 months.

•

During the course of audit, the authorized officer may require the registered person,

40

(i)

to afford him the necessary facility to verify the books of account or other documents as he may require and which may be available at such place, and

(ii)

to furnish such information as he may require and render assistance for timely completion of the audit.

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GST in India – At-a-glance

The proper officer may initiate proceeding for determination of tax under sec 73 or 74, levy of interest and/or penalty if the audit conducted reveals any evidence of -

•

o

tax not paid or short paid, or

o

input tax credit wrongly availed or utilised, or

o

amount erroneously refunded.

1.21.3 Specific provisions for determination of tax S.No.

Particulars

Section 73

Section 74

(1)

(2)

(3)

(4)

1

Main Reason for service of show cause notice (SCN) in Form GST DRC-01

Tax default other than fraud or any willful-misstatement or suppression of facts to evade tax

Tax default due to fraud or any willful-misstatement or suppression of facts to evade tax

2

Circumstances/ Defaults

Sec 73(1): - Any tax has not been paid or short paid, or - any tax has been erroneously refunded, or - where input tax credit has been wrongly availed or utilized (hereinafter stated as “tax default”)

Sec 74(1): - Any tax has not been paid or short paid, or - any tax has been erroneously refunded, or - where input tax credit has been wrongly availed or utilized (hereinafter stated as “tax default”)

3

Time Limit for Sec 73(2): At least 3 months issuance of prior to the time limit SCN specified in sec 73 (10) for issuance of order

Sec 74(2): At least 6 months prior to the time limit specified in sec 74 (10) for issuance of order

4

Service a statement

5

Issuance of Sec 73(9): After considering order after the representation in Form determination GST DRC–06, PO shall determine the amount of tax,

Sec 73(3),(4) and Sec 74(3),(4): Where SCN has been issued for any period, the Proper Officer (PO) may serve statement of tax default in Form GST DRC-02 for other periods provided grounds are same as stated in the SCN Sec 74(9)/74(11): After considering the representation in Form GST DRC–06, PO shall

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S.No.

Particulars

Section 73

Section 74

(1)

(2)

(3)

(4)

interest and penalty, which shall be equivalent to 10% of tax or INR 10,000/-, whichever is higher.

A summary of the order shall be uploaded electronically in Form GST DRC–07, which shall be treated as notice for recovery.

determine the amount of tax, interest and penalty.

Sec 74(11): If amount of tax along with interest and 50% penalty of tax is paid within 30 days of issuance of order, all proceedings (except u/s 132) shall be deemed to be concluded.

A summary of the order shall be uploaded electronically in Form GST DRC–07, which shall be treated as notice for recovery.

6

Time limit for Sec 73(10): 3 years from the issuance of due date for filing of annual order return for the financial year to which the tax not/short paid or ITC wrongly availed or utilised relates to, or within 3 years from the date of erroneous refund.

Sec 74(10): 5 years from the due date for filing of annual return for the financial year to which the tax not/short paid or ITC wrongly availed or utilised relates to, or within 5 years from the date of erroneous refund.

7

Rectification of Any rectification of the order, in accordance with the order, if any provisions of sec 161, shall be made by the proper officer in Form GST DRC-08.

1.21.4 Special Audit (Section 66 of the GST Act) •

•

42

Special audit can be ordered in writing by any officer not below the rank of Assistant Commissioner, (with the prior approval of the Commissioner), if such officer is of the view that o

the value has not been correctly declared, or

o

the credit availed is not within normal limits.

The officer not below the rank of Assistant Commissioner, who has an adverse opinion or suspicion on the above aspects, after commencement and before completion of any scrutiny, enquiry, investigation or any other proceedings under the Act (i.e., at any stage of proceedings), may direct a

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GST in India – At-a-glance

registered person to get his books of accounts audited. The provisions are applicable notwithstanding that the accounts of the registered person have been audited under any other provisions of this Act or any other law for the time being in force.

•

Direction for special audit shall be given after prior approval of the Commissioner.

•

Audit shall be conducted by -

•

o

the Chartered Accountant, or

o

the Cost Accountant.

The Auditor shall submit his report within 90 days (extendable to further 90 days).

1.22

E-WAY BILL

As per Chapter XVI: E-Way Rules of the CGST Rules 2017, till such time as an Eway bill system is developed and approved by the Council, the Government may, by notification, specify the documents that the person in charge of a conveyance carrying any consignment of goods shall carry while the goods are in movement or in transit storage.

As per Frequently Asked Questions (FAQs), “The present system for E-way Bill in States to continue, till the E-Way Bill procedures are finalized”.

1.23

ADVANCE RULING (SECTION 95 OF THE GST ACT)

(1)

As per sec 95 of the GST Act, ‘advance ruling’ means a written decision provided by the authority to an applicant on matters or on questions as enumerated in sec 97(2) or sec 100(1) of the Law.

(2)

The question on which the advance ruling is sought shall be in respect of (a)

Classification of any goods and/or services;

(b)

Applicability of a notification issued under provisions of the Act having a bearing on the rate of tax;

(c)

Principles to be adopted for the purposes of determination of value of the goods and/or services;

(d)

Admissibility of input tax credit of tax paid or deemed to have been paid;

(e)

Determination of the liability to pay tax on any goods and/or services under the Act;

(f)

Whether applicant is required to be registered under the Act; 43

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(g)

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Whether any particular thing done by the applicant with respect to any goods and/or services amounts to or results in a supply of goods and/or services, within the meaning of that term.

(3)

Application in Form GST ARA-1 shall be accompanied by a fee of INR 5,000/-.

(4)

Advance Ruling Authority will be located in every state.

(5)

Authority for advance ruling shall comprise of one member CGST and one member SGST. They shall be appointed by the central and state government respectively. Their qualification and eligibility condition for appointment shall be prescribed in the GST Rules.

(6)

Appeal in Form GST ARA-2 may be filed against the order by the applicant or CGST/SGST officer; filing fee is INR 10,000/-.

(7)

Advance ruling shall be binding only on the applicant and on the jurisdictional tax authority of the applicant. Therefore, it is limited to the person who has applied for an advance ruling.

(8)

Advance ruling shall be binding till the period when the law, facts or circumstances supporting the original advance ruling have changed.

1.24

APPEALS (CHAPTER XVIII OF THE GST ACT)

(1)

Any person aggrieved by any order or decision passed against him has the right to appeal. However, as per sec 120, some decisions/orders are not appealable.

(2)

Appellate levels in the GST Act

Appeal level

Appropriate appellate authority

Orders passed by

1st

Appellate Authority

Adjudicating Authority

2nd

Appellate Tribunal

Appellate Authority

High Court

Appellate Tribunal

Supreme Court

High Court

3

rd

4th

Time limit of filing and disposal of appeal

(3) S. N.

44

Nature of appeal

Time limit

A

Appeal to the Appellate Authority

(i)

Appeal by the aggrieved person- Sec 107(1), (4)

3 months from the date of communication of the decision or order (Condonation - 1 month)

Form GSTAPL-01

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S. N.

GST in India â&#x20AC;&#x201C; At-a-glance

Nature of appeal

Time limit

(ii)

Acknowledgment of filing of appeal

-

(iii)

Appeal/Application by the 6 months from the date of GST officer as per direction communication of the decision or of the Commissioner - Sec order (Condonation - 1 month) 107(2),(3)

GSTAPL-03

(iv)

Order clearly indicating final amount of demand confirmed

GSTAPL-04

-

Form GSTAPL-02

B

Appeal to the Appellate Tribunal

(i)

Appeal by the aggrieved person - Sec 112(1), (6)

3 months from the date of communication of the decision or order (Condonation - 3 months)

GSTAPL-05

(ii)

Acknowledgment of filing of appeal

Within 7 days of filing of appeal

GSTAPL-02

(iii)

Appeal/Application by the GST Officer as per direction of the Commissioner - Sec 112(3), (4)

6 months from the date of communication of the decision or order

GSTAPL-07

(iv)

Submission of a memorandum of cross objection by other party Sec 112(5), (6)

Within 45 days of the receipt of notice (Condonation â&#x20AC;&#x201C; 45 days)

GSTAPL-06

(v)

Disposal of appeal by the Appellate Tribunal - Sec 113(4)

One year from the date of filing of appeal, wherever possible

-

(vi)

Issue of statement indicating final amount of demand confirmed by jurisdictional officer

-

C

(4)

Appeal to the High Court - 180 days from the date of receipt Sec 117(2) of order

GSTAPL-04

GSTAPL-08

The Appellate Tribunal may, in its discretion, refuse to admit any such appeal where the tax or input tax credit involved or the difference in tax or input tax credit involved or the amount of fine, fee or penalty determined by such order, does not exceed INR 50,000/-. [Section 112(2)] 45

Bloomsbury’s Desk Referencer for Professionals, 2e

(5)

(6)

1.25

Chapter 1

Filing and restoration fee before the Appellate Tribunal: The fees for filing and restoration of appeal shall be INR 1000/- for every INR 1 Lakh of tax or input tax credit involved or the difference in tax or input tax credit involved or the amount of fine, fee or penalty determined in the order appealed against, subject to maximum of INR 25,000/-. [Rule 110(5) of the GST Rules] Deposit of amount before filing of appeal (Stay Amount) No appeal before the Appellate Authority or the Appellate Tribunal, shall be filed, unless the appellant has paid– (a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him; and (b) In case of Appellate Authority - A sum equal to 10% of the remaining amount of tax in dispute, arising from the said order, in relation to which the appeal has been filed, and In case of Appellate Tribunal - a sum equal to 20% of the remaining amount of tax in dispute, in addition to amount paid before the Appellate Authority, arising from the said order, in relation to which the appeal has been filed.

INFORMATION RETURNS (SECTION 150 OF THE GST ACT)

1.25.1 Who is required to file information return?

Following persons may be required to furnish information return, within such time, in such form and manner, to such authority or agency as may be prescribed Taxable person, • Local authority or other public body or association, • Department of VAT or central/state excise duty or customs duty, • Income tax authority, • Banking company, • State Electricity Board or electricity distribution Co., • Registrar or the sub-Registrar appointed under sec 6 of the Registration Act, • 1908, Registrar under the Companies Act, 2013, • Registering authority under the Motor Vehicles Act, 1988, • Collector of the Right to Fair Compensation and Transparency in Land • Acquisition, Rehabilitation and Resettlement Act, 2013,

46

Chapter 1

• • • • • •

GST in India – At-a-glance

Recognised stock exchange, A depository referred in the Depositories Act, 1996, An officer of the Reserve Bank of India, G.S.T. network, The person to whom UIN has been granted under sec 23(8), Any other person as may be specified.

1.25.2 What type of information may be asked in the return?

Information may relate to details of payment of tax, • details of transaction of goods or services, • transactions related to a bank account, • consumption of electricity, • transaction of purchase, sale or exchange of goods or property or right or • interest in a property.

1.25.3 Penalty for non-furnishing of information return [Section 123 of GST Act] INR 100/- for each day of the period during which the failure to furnish such return continues maximum upto INR 5,000/-.

1.25.4 Penalty for non-furnishing of information return INR 100/- for each day of the period during which the failure to furnish such return continues maximum upto INR 5,000/-.

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