J Manohar & Associates

01/02/2018

Salient Features of Finance Bill, 2018-taxation
1. No change in Tax Rate. All persons including individuals, HUF, Firms and Companies to pay same tax . However Education cess is being increased from 3 to 4 % to be known as Education and Health cess.
2. However for Domestic Companies having total turnover or gross receipts not exceeding Rs 250 crores in Financial year 2016-17 shall be liable to pay tax at 25% as against present ceiling of Rs 50 crore in Financial year 2015-16.
3. Long term Capital gain exemption under section 10(38) in respect of listed STT paid shares being withdrawn.
4. However capital gain up to 31.1.2018 shall not be taxed as cost of acquisition will be taken as Fair Market Value as on 31.1.2018.
5. Tax on STT paid long term capital Gain will be 10% under Section 112A. Further such tax will be liable for TDS.
6. Standard Deduction of Rs 40,000 for salaried employees. However benefit of transport allowance of Rs 19,200 and Medical Reimbursement of Rs 15,000 under Section 17(2) are being withdrawn. Thus net benefit to salaries class only Rs 5,800
7. Provision of Section 43CA, 50C and 56(2)(x) being amended to allow 5% of sale consideration in variation vis a vis stamp duty value. On account of location, disadvantage etc.
8. Provision of section 40(ia) and 40A(3) and 40A(3A)are being made applicable to Charitable Trust. Hence expenditure incurred without deduction of tax and in cash will not be eligible as application of income under section 10(23C) and section 11(1)(a).
9. Agriculture Commodity Derivates income /loss also not to be considered as speculative under section 43(5).
10. Income Computation and Disclosure Standards(ICDS) being given statutory backing in view of decision of Delhi High Court decision.
11. Marked to market loss computed as per ICDS to be allowed under section 36.
12. Gain or loss in Foreign Exchange as per ICDS to be allowed under new section 43AA.
13. Construction Contract income to be computed on percentage completion method as per ICDS.
14. Valuation of Inventory including Securities to be as per ICDS.
15. Interest on compensation, enhanced compensation. Claim or enhancement claim and subsidy, incentives to be taxed in the year of receipt only as per new Section 145B.
16. Conversion of stock in trade to capital asset to be charged as business income in the year of conversion on Fair Market value on the date of conversion.
17. 54EC benefit of investment in Bonds to be restricted to Capital gain on land and building only. Further period of holding being increased from 3 years to 5 years.
18. PAN to be obtained by all entities including HUF other than individuals in case aggregate of financial transaction in a year is Rs 2,50,000 or more. All directors, partners, members of such entities also to obtain PAN.
19. All companies irrespective of income to file return and in case it is not filed, such companies will be liable for prosecution irrespective of the fact weather it has tax liability of Rs 3,000 or not.
20. Assessments to be E assessment under new section 143(3A)
21. No adjustment under section 143(1) while processing on account of mismatch with 26AS and 16A.
22. Deemed dividend to be taxed in the hands of the company itself as Dividend Distribution of tax @ 30%.
23. Penalty for non filing financial return as required under section 285BA being increased to Rs 500 per day.

www.jmca.co.in

01/01/2018

Wishing you and your family a very happy new year 2018. May the year 2018 be an year of new opportunities and endless possibilities for you.
CA Manohar Jonnalagadda

14/12/2017

Ha..ha

31/10/2017

GSTN enables online Cancellation of Provisional Registration..
Friends, the migrated taxpayer can now apply for cancellation of provisional registration on GST portal, if he/she is not liable for registration under GST. The cancellation will be effective from appointed date.

26/10/2017

GST: Govt waives off penalty for late filing of GSTR-3B for Aug, Sept; relief for small businesses..

The government has waived off the penalty for delayed filing of initial returns under goods and services tax (GST) for August and September, giving a major relief for small and medium enterprises (SMEs), which are the most affected by the hasty implementation of goods and services tax (GST) GSTR-3B. Not just that, those who have paid the late fee will be credited it back.

19/09/2017

Small traders can opt for GST composition scheme till 30 September......

Under the GST composition scheme, small businesses, manufacturers and restaurants will be subject to a GST rate of 0.5%, 1% and 2.5% respectively on turnover..

The GST (goods and services tax) Network, or GSTN, the company that processes GST returns, on Sunday offered two more weeks for small traders who missed an earlier opportunity to sign up for a liberal compliance scheme involving quarterly return filings.

GSTN said in a statement that the ‘composition scheme’ for traders with up to Rs75 lakh annual sales is now open till 30 September. Those who opt for this can file returns on a quarterly basis unlike the others who have to file returns on a monthly basis. The earlier window for signing up for the scheme had ended on 16 August, under which about 11 lakh assessees signed up.

The decision to extend a second opportunity for those who missed out was taken at the last GST Council chaired by finance minister Arun Jaitley on 9 September in Hyderabad. Those who sign up before 30 September will get the benefit of the scheme from 1 October, until which they will be treated as normal assessees.

Under the scheme, small businesses, manufacturers and restaurants will be subject to a GST rate of 0.5%, 1% and 2.5% respectively on turnover.

“The composition scheme has been designed to simplify and reduce the burden of compliance for smaller taxpayers. Businesses opting for the scheme will see a lesser compliance burden as they will have to file returns only once in a quarter,” the GSTN statement said quoting chief executive officer Prakash Kumar.

Giving small businesses another opportunity to opt for quarterly payments is likely to ease the burden on the IT infrastructure supporting GST, which has faced several glitches.

A ministerial panel led by Bihar deputy chief minister Sushil Kumar Modi on Saturday reviewed the technical problems in the IT system with officials from Infosys Ltd, the company that built the IT network. The ministerial panel set a roadmap to resolve the glitches so that 80% of the problems will be rectified by October end

15/09/2017

Impact of GST on Education Sector

The educational institutions that have been granted the exemption from GST are pre-schools and higher secondary educational institutes both private and Govt.

The Right of Children to Free and Compulsory Education Act of 2009 has made education not only compulsory but has also made the Govt. responsible to provide education at economical rates. The Council has kept education sector free from its ambit.
Services related to education, provided by any educational institution to its students, faculty and staff like transportation, catering, mid day meals, admissions, examinations, housekeeping etc. have been exempted under GST. The educational institutions that have been granted the exemption from GST are pre-schools and higher secondary educational institutes both private and Govt.

The exemption has also been granted to the services provided by the Indian Institutes of Management to their students, by way of the –

1. 2 year full-time residential PG programs in Management for Post Graduate Diploma in Management, admission in which is granted via CAT
2. Fellowship programs in Management
3. 5 Year Integrated Programs in management studies (but excludes the Executive Development Program).

The education services provided by the below are also exempted from GST:

1. National Skill Development Corporation set up by the Government of India
2. Sector Skill Councils approved by the National Skill Development Corporation
3. Assessment agencies approved by the Sector Skill Council or the National Skill Development Corporation
4. Training partners approved by the National Skill Development Corporation or the Sector Skill Council are also included w.r.t the following programs:
(a) the National Skill Development Programme implemented by the National Skill Development Corporation
(b) a vocational skill development course under the National Skill Certification and Monetary Reward Scheme
(c) any other Scheme implemented by the National Skill Development Corporation”.

However, as the educational services led by training and coaching foundations don’t help in getting legally perceived qualifications therefore these are not exempted from GST. Let us take a look at them:

1. Higher Education Institutions and Private Institutions
The exemption under GST has been granted just for pre-schools till higher secondary education and since universities and other advanced educational institutions have not been mentioned in the exception list, and thus GST of 18% is expected to be levied on this.

Higher education in the private segment will end up being more costly and in turn, rivalry for admissions in government schools/colleges/foundations will increment. There will be a 3 to 5% of the obligation jump on the cost of administrations that will over the long haul impact the common man. The burden will be the most on middle class families who obtain education loans or put their life-long savings into educating their wards at reputed institutions.

2. Coaching Institutes
Coaching institutes form an integral part of education today as clearing competitive exams and entrance exams seems just impossible without taking professional coaching on how to clear and attempt them. GST has raised the rate of taxes to 18% from 14% for these coaching institutes. This will be a burden for all parents whose child is about to start coaching for IITs and other competitive examinations.

3. Cost of Organizing Events
Any educational/training events organized in India by foreign entities which are attended by professionals, individuals and overseas participants as well would be taxed under GST.

26/06/2017

26/06/2017

22/06/2017

GOODS AND SERVICES TAX (GST)


It replaces
1. VAT (State as well as Central)
2. Excise Duty
3. Octroi / Entry Tax / LBT

However, following taxes will continue
1. Customs Duty
2. Professional Tax
3. Stamp Duty
4. Motor Vehicle Tax
5. Electricity Duty
6. VAT on Petroleum Products

GST Council is the apex body created by Parliament for governance of this Act. It includes Finance Secretaries of Central as well as various State Governments

GST Rates - 5%, 12%, 18% & 28%
GST Exempt goods / services - 0%

Old VAT / Excise TIN will go and new PAN based Registration Number for GST is essential. Structure of this number is as under:
27AAAAA0000Azzi
Out of which first two digits are state code (in which Registration is taken) - '27' is for Maharashtra
Next 10 digits (AAAAA0000A) are PAN number of the assessee
and last 3 digits are serial number

Incidence of GST is on following :
1. Supply of Goods / Services
2. Agreed to Supply Goods / Services for Consideration (either in cash or kind)
3. 'Destination based' Tax is charged (If source & destination are in same state, it is Transaction within state, if Source & Destination are in different states, then it is Interstate Transaction)
4. Branch Transfer / Stock Transfer will attract GST

GST Registration is MANDATORY if Annual Turnover is Rs.20 Lacs or above.

Three types of GST are there :
1. Central Goods & Service Tax (CGST)
2. State Goods & Service Tax (SGST)
3. Integrated Goods & Service Tax (IGST)

Rates under GST
1.Rates of CGST & SGST shall be equal and will be 50% of the rates stipulated for thos specific Goods or specific Services. e.g. if the goods under transaction attract 18%, then CGST for them is 9% and SGST for them is 9%.

2.In case of Local Invoice or Within State Invoice, CGST and SGST both need to be charged SEPARATELY and to be mentioned in the Return accordingly.

3.Rates of IGST are equal to sum of rate under CGST and rate under SGST. Thus in above example, rate under IGST is 18% (9 + 9).

4.Tax Credit (or set-off, as was said in earlier days), shall be available for all these three taxes viz. CGST, SGST & IGST.

5.Earlier, in spite of 'C' or 'H' or 'F' forms, 2% Tax was a cost to the assessee. now since these forms are done away with, this 2% cost is avoided, since full set-off or ITC of all Interstate Transactions is allowed now.

6.There will be GST chargeable on FREE Items such as Medical Samples, Buy 1 get 1 Free etc. Valuation of such Free Items will have to be made, at par with sale of these items. Thus if your are giving 1 free for purchase of 10, You will have to Invoice for 11, levy GST and then you may give credit for the basic value of 1 being Free Item. Thus GST needs to be paid on all items, being delivered to the customer.

7.Invoice is allowed to be cancelled ONLY by way of issuing Credit Note and that too within a period of 6 months from the date of such invoice.

Composite Scheme
1.It is available for all assessees having Turnover < Rs.75 lacs
2.Under this scheme, 2.5% tax is applicable for Manufacturing Companies and 1% tax is applicable for all others.
3.No Set-off or Tax Credit shall be available under this scheme.
4.This is optional
5.Assessee has to apply for this and then GST Official's permission is required to opt for this.
6.If this scheme is availed, GST cannot be charged in the Invoices raised by the Assessee.
7. If this is availed in one year and for next year you intend to do away with this, you can apply to GST officials and take permission for the same i.e. either to Opt-in or Opt-out of the scheme.

Immovable Property is NOT Taxable under GST.
Thus, if the flat is booked before Completion Certificate, it is TAXABLE under GST,
whereas, if the flat is purchased after Completion Certificate (Ready-possession flat), it is NOT Taxable under GST

GST is applicable on Advance from Customer, as and when it is received from the customer, before raising invoice for the same. It needs to be declared in the Output GST Return (GSTR-1)

URD Purchases (Purchases from Unregistered Dealers / Suppliers)
If the Assessee has purchases from Unregistered Dealers, Assessee has to ACTUALLY pay GST on the same Reverse Charges). Assessee can take set-off (credit) of the same in next month.

No Revised Return is allowed under GST

Input Tax Credit (ITC) (similar to set-off under old system)
1.Assessee has to be in possession of Tax Invoice, or Debit Note or Credit Note.
2.Payment has to be made to the Supplier within 180 days. If the payment is not made to the supplier within this period the ITC has to be reversed by the Assessee. It can later be availed, as and when actual payment of this is made to the Supplier.
3. ITC for Reverse charges (GST paid on URD purchase or other specific services), can be availed in the next month, of the month of their actual payment.

GST Rating
1.There will be GST Rating (just like CIBIL Credit Ratings) in respect of Assessee, in consideration of timely filing of Returns, timely GST payment and other discipline followed by the Assessee.
2.This can be viewed by the Assessee, as also by others.
3.Thus while selecting the Supplier, his GST Rating can be viewed beforehand.
4.It will also be viewed by bankers, financial institutions while lending money to the Assessee.

Set-off (ITC) under GST
1.ITC under GST shall be available under GST in following order.
CGST - 1.CGST
2.SGST
3.IGST

SGST - 1.SGST
2.CGST
3.IGST

IGST - 1.IGST
2.CGST
3.SGST

RETURN Filing Due Dates
1. 10th of Next Month - Output GST (including Advance from Suppliers) i.e. Sale Return (GSTR-1)
2. 11th to 15th - system will be closed / blocked for any entry, but entries can be viewed during this period, including Entries of your suppliers. View Supplier's sales entries, and ensure if they match with your purchase entries in your books.
3. 17th of Next Month - Input GST i.e. Purchase Return (GSTR-2) These entries HAVE TO MATCH with the entries made by your suppliers in their Sales Return.
4. 21st if Next Month - Monthly Return in GSTR-3, alongwith payment. Liability of Payment shall be calculated by the System itself, after filing of GSTR-1 & 2 as mentioned above.
5. 31st December of Next Financial Year - Annual Return (GSTR-9), alongwith Audit Report. Audit is compulsory for Assessees having Turnover of Rs.1 Crore and more.
6.Thus during the year, total 37 Returns (12months X 3 each month = 36 plus 1 Annual) are to be filed by Assessee, for each of Place of Business. If the Assessee is caarying out business at more than one places, he has to obtain GST Registration at each of such place and has to file 37 Returns for each of such place of business.

Reverse Charges - GST to be paid on Self-Invoicing
1. URD Purchases (with Names & Addresses of such suppliers)
2. Services such as a. Goods Transport, b. Advocates Fees, c. Sponsorship, d. Rent a Cab.

TRANSITION PROVISIONS (For the period of switching over from present Tax System to GST)
1. Transit-1 Return to be filed within 90 days. Set-off or ITC for these items shall be pending till this is filed.
2. June 29 - Reverse Charges to be paid