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GST Notification..

🔷 # *TAXATION UPDATES* #🔷
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*_PMO asks Income-Tax department to crack down on black money in banks_*

*Crack down on all black money* deposited in banks during the demonetisation period. This according to a high ranking government official is the *clear mandate given* to the income tax department by the Prime Minister's Office, and this *instruction* was *issued* within days of the RBI revealing that 99% of the demonetised Rs 500 and Rs 1000 currency bills had returned to the banking system. *Prime Minister* Narendra Modi asked the tax department to *prioritise* the *unearthing of black money* in a speech he made to the Finance Ministry's Revenue Department, CBDT and CBEC in a closed door event on Sep 1 and 2. The income tax department according to sources will now *train* its *guns on "suspicious"* and *"unusual deposits"* made post the announcement of demonetisation on Nov 8, 2016. It will *match such deposits* with previous income tax *returns* to *establish unusual activity* and also question the source of funds.

*Deposits* in the *Jan Dhan accounts* that had *peaked to Rs 64,564 cr* during demonetisation are also likely to be *under the scanner* On the other hand, when it comes to the recently rolled-out *GST* the tax department has been *advised* by the Prime Minister's Office to *not pull up* those who have *become GST compliant* despite never having filed an IT return. The government *wants to go easy* on those trying to be GST compliant, atleast for the current financial year, even if they have *not filed* their *income tax returns* the official told. However, the *tax department* will *not spare* all those *individuals* and *companies* tat have *failed to register with the GST Network* The *message is loud and clear* Do not go after those that are trying to be tax compliant even if for the first time. Instead, *focus* on those that are *refusing* to be *GST compiant* said an official.
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*_GST Council may lower tax rates if high collections continue, says official_*

The all powerful GST Council may *consider lowering tax* on items of common consumption of the high trajectory of *collections continues* over the *next few months* an official said. The *first-month collection* under the new Goods and Services Tax (GST) regime has been *encouraging* and if the *rising trend continues* until December, it would make a *case for reduction of the tax rate* he said. The *tax reduction* could be either on items of common consumption or a *cut in headline rate* which will *benefit consumers* said the official who did not wish to be identified. The *GST Council* headed by Finance Minister Arun Jaitley could *look at the aspect* once the *clear trend is available* the official said, adding that it would be evident from the November tax collection.
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_Oriental Insurance Co Ltd vs. DCIT_

S. 115JB: As *Insurance companies* are required to *prepare accounts* as per the *Insurance Act* and *not as per Schedule VI* to the Companies Act, s. 115JB does not apply. Insurance companies are *not taxed on commercial profits* but on profits as computed under the Insurance Act. Accordingly, *income earned on sale/redemption of investments* is *not chargeable to tax*
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_Pr CIT vs. Bikram Singh_

S. 68: The *use of deceptive loan entries* to *bring unaccounted money* into banking *channels plagues* the *legitimate economy* of our country. The mere fact that the *identity of the lenders* is *established & payments* are made by *cheques* does *not mean they are genuine* If the lenders do *not have the financial strength* to lend such huge sums and if there is *no explanation* as to their relationship with the assessee, *no collateral security* and *no agreement* the transactions have to be *treated as bogus unexplained credits*
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_Mahyco Seeds Ltd vs. Dy.CIT_

*_ITAT_*

*Deduction allowable* u/s 43B for *stamp-duty paid on demerger*
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_Kitara capital Private Limited vs. ITO_

*_ITAT_*

*No TDS u/s 194J* on *payment* for *subscription of e-magazine/journal* by assessee engaged in *carrying out* research for private equity investments as the same is *neither royalty nor FTS*
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_ST Microelectronics Pvt. Ltd., Vs. ACIT_

*_ITAT_*

In case of *remand of quantum addition* to AO, penalty u/s. 271(1)(c) should also be *remanded*
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OCHOA Laboratories Ltd. vs. DCIT

*_ITAT_*

*Providing free air travel, stay* and *food in hotels, local car conveyance* etc. for *prescribing medicines* of the assessee (a pharma company) is akin to *giving commission* and certainly in contravention of the public policy. *Disallowance of 50% of sales promotion expenses justified*
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_Arunkumar J. Muchhala vs. CIT_

S. 68: Argument that the assessee did *not maintain "books of account"* and so s. 68 will *not apply* is *not acceptable* It is incumbent on every assessee doing *business to maintain proper books of account* It may be in any form. If the assessee has not done so, he *cannot be allowed* to *take advantage* of his own wrong. *Burden lies on the assessee* to show from where he has received the amount and what is its nature.
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_CIT vs. Sinhgad Technical Education Society_

S. 153A/ 153C: The *seized incriminating material* have to pertain to the AY in question and have co-relation, document-wise, with the AY. This *requirement u/s 153C* is *essential* and becomes a jurisdictional fact. It is an essential condition precedent that any money, bullion or jewellery or other valuable articles or thing or books of accounts or documents seized or requisitioned should belong to a person other than the person referred to in S. 153A. Kamleshbhai Dharamshibhai Patel 31 TM.com 50 (Guj) approved. SSP Aviation 20 TM.com 214 (Del) distinguished.

How will GST help India and common man?

To understand this, let us first understand what is Input Tax Credit. It is the credit an individual receives for the tax paid on the inputs used in manufacturing the product. So, if there is a 10% tax that the individual must submit to the government, he can subtract the amount he has paid in taxes at the time of purchase and submit the balance amount to the government.

Let us understand this with a hypothetical numerical example.

Say a shirt manufacturer pays Rs. 100 to buy raw materials. If the rate of taxes is set at 10%, and there is no profit or loss involved, then he has to pay Rs. 10 as tax. So, the final cost of the shirt now becomes Rs (100+10=) 110.

At the next stage, the wholesaler buys the shirt from the manufacturer at Rs. 110, and adds labels to it. When he is adding labels, he is adding value. Therefore, his cost increases by say Rs. 40. On top of this, he has to pay a 10% tax, and the final cost therefore becomes Rs. (110+40=) 150 + 10% tax = Rs. 165.

Now, the retailer pays Rs. 165 to buy the shirt from the wholesaler because the tax liability had passed on to him. He has to package the shirt, and when he does that, he is adding value again. This time, let’s say his value add is Rs. 30. Now when he sells the shirt, he adds this value (plus the VAT he has to pay the government) to the final cost. So, the cost of the shirt becomes Rs. 214.5 Let us see a breakup for this:

Cost = Rs. 165 + Value add = Rs. 30 + 10% tax = Rs. 195 + Rs. 19.5 = Rs. 214.5

So, the customer pays Rs. 214.5 for a shirt the cost price of which was basically only Rs. 170 (Rs 110 + Rs. 40 + Rs. 30). Along the way the tax liability was passed on at every stage of transaction and the final liability comes to rest with the customer. This is called the Cascading Effect of Taxes where a tax is paid on tax and the value of the item keeps increasing every time this happens.

Action	Cost	10% Tax	Total
Buys Raw Material @ 100	100	10	110
Manufactures @ 40	150	15	165
Adds value @ 30	195	19.5	214.5
Total	170	44.5	214.5

In the case of Goods and Services Tax, there is a way to claim credit for tax paid in acquiring input. What happens in this case is, the individual who has paid a tax already can claim credit for this tax when he submits his taxes.

In our example, when the wholesaler buys from the manufacturer, he pays a 10% tax on his cost price because the liability has been passed on to him. Then he adds value of Rs. 40 on his cost price of Rs. 100 and this brings up his cost to Rs. 140. Now he has to pay 10% of this price to the government as tax. But he has already paid one tax to the manufacturer. So, this time what he does is, instead of paying Rs (10% of 140=) 14 to the government as tax, he subtracts the amount he has paid already. So, he deducts the Rs. 10 he paid on his purchase from his new liability of Rs. 14, and pays only Rs. 4 to the government. So, the Rs. 10 becomes his input credit.

When he pays Rs. 4 to the government, he can pass on its liability to the retailer. So, the retailer pays Rs. (140+14=) 154 to him to buy the shirt. At the next stage, the retailer adds value of Rs. 30 to his cost price and has to pay a 10% tax on it to the government. When he adds value, his price becomes Rs. 170. Now, if he had to pay 10% tax on it, he would pass on the liability to the customer. But he already has input credit because he has paid Rs.14 to the wholesaler as the latter’s tax. So, now he reduces Rs. 14 from his tax liability of Rs. (10% of 170=) 17 and has to pay only Rs. 3 to the government. And therefore, he can now sell the shirt for Rs. (140+30+17) 187 to the customer.

Action	Cost	10% Tax	Actual Liability	Total
Buys Raw Material	100	10	10	110
Manufactures @ 40	140	14	4	154
Adds Value @ 30	170	17	3	187
Total	170		17	187

In the end, every time an individual was able to claim input tax credit, the sale price for him reduced and the cost price for the person buying his product reduced because of a lower tax liability. The final value of the shirt also therefore reduced from Rs. 214.5 to Rs. 187, thus reducing the tax burden on the final customer.

So essentially, Goods & Services Tax is going to have a two-pronged benefit. One, it will reduce the cascading effect of taxes, and second, by allowing input tax credit, it will reduce the burden of taxes and, hopefully, prices. 

What is a GST Return?

In a GST return the tax payer will give details of-

• Purchases
• Sales
• Output GST (on sales)
• Input tax credit (GST paid on purchases)

GST Return

What is a Return?

A return is a document containing details of income which a taxpayer is required to file with the tax administrative authorities. This is used by tax authorities to calculate tax liability.

Enrolment schedule for your State

Enrolment schedule for your State

Quick Enrolment Summary under GST on GST Common Portal (www.gst.gov.iin)

• State VAT department will provide provisional ID and password as per schedule.
• Open www.gst.gov.in
• Access The GST Common portal using provisional ID and password and create permanent username and password
• Login by using permanent username and password
• Fill the enrolment application form
• Verify the detail
• Sign with DSP or e-sign
• Submit the emrolment application and necessary attachment
• Done