What is Inverted Duty Structure Refund and who can avail it Under GST?

What is Inverted Duty Structure Refund and who can avail it Under GST?

Inverted Duty structure is the condition where tax rate payable on inputs is higher than tax rate charged on output of sales. When the input credit has been accumulated on account of inverted tax structure, but supplies of labor and products or both as might be told by the public authority on proposal of the council, then a registered person is eligible to claim refund of such accumulated ITC.

TIME LIMIT

According to 54(1) of the CGST Act, a taxable registered person can apply for refund within 2 years from the date of filing of return.

PROCESS OF CLAIMING REFUND UNDER INVERTED TAX STRUCTURE UNDER GST

An enlisted citizen might guarantee a discount of unutilized input tax reduction toward the finish of any expense period for which the credit by virtue of the pace of information sources being higher than the paces of duty on yield supplies.

1. File RFD-01 on GST portal within 2 years from the end of financial year in which refund is to be claimed. ARN receipt will be generated on the portal

2. Take the Print out of the filed application along with ARN receipts

3. Submit the printed documents along with other relevant supporting documents to the jurisdictional authority unless online return is not allowed

4. A tax official will process the refund and will disburse the refund manually

EXCEPTIONS WHERE REFUNDS CANNOT BE CLAIMED

1. Yield supplies are nil appraised or completely excluded supplies aside from provisions particularly informed by central government on recommendation of General Counsel

2. On the off chance that the merchandise sent out of India are liable to trade Duty

3. If supplier claims refunds of output Tax under IGST supply

4. If the supplier avails duty drawbacks or refund of IGST on such supplies

MAXIMUM AMOUNT OF REFUND

The most extreme sum that can be discounted is [(Turnover of transformed appraised supply of labor and products) x (Net info tax reduction/Adjusted aggregate turnover) – Tax payable on such inverted rate of supply of goods and services

ISSUES AND CONTENTIONS

An assembling industry might have different contributions with variable duty rates. In this case it is difficult to correlate the outputs with the inputs. Hence the result is in the inaccurate computation of refund amount.

Author- Adv.Shivam Kumar

Legal and content Executive, Taxblock India Pvt. Ltd

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TAX EXEMPTIONS AVAILABLE FOR STARTUPS IN INDIA

TAX EXEMPTIONS AVAILABLE FOR STARTUPS IN INDIA

According to Section 2(40) of the companies act, 2013, startup means

(i) A private company registered under companies act, 2013 or any previous act

(ii) Recognized as a startup in accordance with the Department of Industrial Policy and
promotions (DIPP).

In order to accelerate the spreading of the startup movement in India, the Government had announced an action plan known as the Startup India initiative that addresses all the aspects of startup ecosystems. The key features of this action plan were

(i) Easy registration with lesser compliances

(ii) Tax Holidays for a period of 3 consecutive years out of the block 10 initial years

(iii) Exempted from previous experience/ turnover in getting government tenders

(iv) GOI has set up Rs. 10000 crores to provide funds to startup as venture capital

ELIGIBILITY FOR STARTUPS

(I) is registered as a private limited company, partnership, or LLP

(II) If the annual turnover of the company exceeds Rs. 100 crores in any of the preceding financial years

(III) Has not completed a period of 10 years from its incorporation

(IV) Is working towards innovation, development, or improvement of product or services or process

TAX EXEMPTIONS AVAILABLE FOR A STARTUP COMPANY

Exemptions from SECTION – IAC- Eligible startup can claim up to 100% of profits and gains for 3 consecutive years in a block of 10 years provided the turnover of the company does not exceed 100 crores in any of the previous financial years.

Exemptions for tax on Long term Capital Gains: An eligible company can claim exemption on long-term capital gains under section 54EE if such amount or part thereof is invested in a fund notified by the central government within a period of 6 months from the date of transfer of assets.

Tax exemption on investments above fair market value: The government has exempted the tax invested above the fair market value in eligible startups. Such investments include investments made by resident angel investors or incubators that are not registered as venture capital funds.

Tax exemption available to individuals or HUF of long term capital gains: Section 54GB allows the tax exemption on long-term capital gains on the sale of a residential property if such gains are invested to acquire 50% or more equity shares of the eligible startups, tax on long term capital will be exempt provided that such shares are held at least for 5 years from the date of its acquisition.

Set off of carrying forward losses: The carry forward of losses in respect of eligible start-ups is allowed if all the shareholders of such company who held shares in which the loss was incurred continue to hold shares on the last day of the previous year in which loss has been carried forward

Author- Adv.Shivam Kumar

Legal and content Executive, Taxblock India Pvt. Ltd

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Reverse Charge Mechanism Under GST Act

Reverse Charge Mechanism Under GST Act

Reverse charge mechanism (RCM) is the mechanism where GST is collected by the buyer instead of seller. There are two types of reverse charge that is :

• On the basis of nature of supply or on supplier covered under section 9(3) of CGST/ SGST (UTGST) act and 5(3) of IGST Act
• On the basis on taxable supply from unregistered person to registered person covered under section 9(4) of CGST/ SGST (UTGST) and 5(4) of IGST Act.
• Supply of services through an e – commerce operator under section 9(5) of CGST Act

According to section 9(3) of CGST/ SGST (UTGST) act and 5(3) of IGST Act, the government may on recommendation by the council, by notification specifies a list of categories of goods or services that are charged under reverse charge mechanism.

According to section 9(4) of CGST/ SGST (UTGST) act and 5(4) of IGST Act, the government may on recommendation by the council, by notification specifies supply of taxable goods and services or both by an unregistered supplier to registered person shall be paid directly by the buyer instead of seller.

According to section 9 (5) of CGST Act, if a service provider uses an ecommerce operator to provide specified services, he will be liable to pay GST under reverse charge mechanism. For example providing house-keeping services like plumbing and carpentering through e – commerce operators such as urban clap, the e commerce operator is responsible to collect GST from customers instead of service providers.

REGISTRATION

A person whose turnover exceeds 40 lakhs (20 lakhs in case of special category except J&K) in case of sale of goods and 20 lakhs (10 lakhs in case of specified categories) in case of services  is required to compulsorily register under GST and thus under reverse charge mechanism.

TIME OF SUPPLY

The time of supply depends on the basis of supply of supply of goods or supply of services

Reverse Charge mechanism in case of supply of goods is:

a) date of receipt of goods by the buyer;

b) or date of payment or date of amount debited in supplier’s bank account, whichever is earlier;

c) or the date immediately after thirty days from the date of issue of invoice or any other similar other document.

Reverse Charge Mechanism in case of supply of services,:

1. date of payment received by the buyer;

2. or date of amount debited in supplier’ bank account, whichever is earlier;

Or date immediately after sixty days from the date of issue of invoice or any other similar document.

Where it is not possible to determine time of supply using both the methods, time of supply would be date of entry in the books of account of the recipient.

COMPLIANCES UNDER REVERSE CHARGE MECHANISM

• As per section 31 of the CGST Act, 2017 read with Rule 46 of the CGST Rules, 2017, The supplier has to mention the reverse charge taxability in the invoice. Similarly, the supplier also needs to mention the same  in receipt voucher as well as refund voucher.
• Maintenance of books of accounts by registered persons under reverse charge mechanism
• Any amount payable under reverse charge shall be paid by debiting an amount in  the electronic cash ledger.
• All information related to Invoice level should be furnished separately in the table 4B of GSTR-1
• Advance payment made for reverse charge supplies is also liable for GST.

Author- Adv.Shivam Kumar

Legal and content Executive, Taxblock India Pvt. Ltd

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CBIC exempts Import of COVID-19 Vaccine from Customs Duty

CBIC exempts Import of COVID-19 Vaccine from Customs Duty

On Thursday, the Central Board of Indirect Taxes and Customs (CBIC) announced that imports of COVID-19 vaccine will be exempt from Customs Duty from October 1 to December 31.

In a notification, the Board stated, “The Central Government, upon being satisfied that it is required in the public interest to do so, thus exempts the commodities of the sort mentioned when imported into India from the entire duty of customs leviable.”

The government has designated ‘COVID-19 vaccine’ as an exemption for any vaccinations imported into the country.

Currently, these vaccines are subject to a 10% customs tariff. Imports of Covid vaccinations were spared from customs tax for three months by the government in April.

The government has exempted some Covid therapeutic drugs from the levy and reduced the tax on other materials, but the Covid vaccines remain to be subject to a 5% GST.

To Read the Official Notification Download PDF Given Below :

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DIFFERENCE BETWEEN EPF, PPF & NPS AND TAX BENEFITS AROUND IT

DIFFERENCE BETWEEN EPF, PPF & NPS AND TAX BENEFITS AROUND IT

EMPLOYEE PROVIDENT FUND:

The scheme was initiated under the Employee’s Provident Fund and Miscellaneous Act, 1952, for the benefit of employee after his retirement. The scheme was a collection of fund by the employer and employee.

FEATURE OF THE SCHEME:

• Under this scheme, the employer and employee both contributes the 12% of the employee’s salary and dearness allowance to employee’s provident fund account every month.
• The employee contributes the total 12% of his Employee Provident Fund Account whereas the employer contributes 8.33% to Employee’s pension scheme and remaining which is 3.67% to the Employee provident Fund Account.
• Important point is that the employee can only open one account during his lifetime, in case of changing in job the previous employer should transfer the amount to new employer.

WHAT ARE THE BENEFITS OF THE SCHEME?

1. The scheme provides a benefit to employee by saving his part of the salary on monthly basis.

2. The interest rate under this scheme is fixed by the Employee provident Fund Office, current rate under Employee Provident Fund is 8.5% p.a.

3. The amount which is to be received by the employee and interest accrued on the amount which is to be collected is tax free.

4. In case of death of the account holder, the nominee or legal heirs can withdraw the amount from such

PUBLIC PROVIDENT FUND:

This scheme is launched by the government of India, as launched by the government it is consider as the safest investment.

FEATURES OF THE SCHEME:

• Any person who is citizen of India can invest in Public Provident Fund by opening a account at any post office, nationalized bank or any major private bank.
• The individual who opened an account under this scheme can withdraw the partial amount after the completion of 5 years.

BENEFITS UNDER THE SCHEME:

1. Under this scheme the rate of interest is decided on a quarterly basis individually, the current rate of interest i.e. for FY 2021-2022 is 7.1%.

2. The investment made under this scheme is totally risk free, as the interest is paid by the government.

3. Investment under Public Provident Fund offers a deduction of Rs. 1.5 lakh under Section 80C in a financial year.

4. The investor can also take loan against the amount deposited under this account after the expiry of 3^rd year to 6^th

NATIONAL PENSION SYSTEM:

National Pension System which was earlier known as National Pension Scheme, the objective for investment under this scheme is the contribution made by the subscriber can further invest into different market linked instruments such as equities and debts.

FEATURES OF THE SCHEME:

• Pension Fund Regulatory Authority of India is a regulatory authority for National Pension System.
• The eligibility for investing under this scheme is any Indian Citizen between the ages of 18 to 60 years can invest.
• The investment made under National Pension System will be further invested into 4 different classes such as equities, corporate bonds, government bonds and alternative assets.

BENEFITS UNDER NATIONAL PENSION SYSTEM SCHEME:

1. The investor can partially withdraw the amount from the account opened under this scheme after the expiry of 3 years.

2. The investor can also claim the tax benefit of Rs. 1.5 lakh under Section 80C of the Income Tax Act.

Refer 3. Benefits of NPS Account

i) Low Cost:-

NPS is considered t​o be the world’s lowest cost pension scheme. Administrative charges and fund management fee are also lowest.​

ii) Simple:-

All applicant has to do is to open an account with any one of the POPs being run through all Head Posts Offices across India and get a Permanent Retirement Account Number(PRAN)

iii) Flexible:-

Applicant can choose his/her own investment option and Pension Fund or select Auto choice to get better returns.

​iv) Portable:-

Applicant can operate an account from anywhere in the country and can pay contributions through any of the POP-SPs irrespective of the POP-SP branch with whom the applicant is registered, even if he/she changes his/her city, job etc and also make contributio​n through eNPS. The accou​nt can be shifted to any other sector like Government Sector, Corporate Model in case the subscriber gets the employment

Author- Adv.Shivam Kumar

Legal and content Executive, Taxblock India Pvt. Ltd

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FY 2020-21 Missing Invoices in GST

FY 2020-21 Missing Invoices in GST

Well, we all know how important the month September is as far as Income Tax is concerned but this year, thanks to Infosys January 2022 is the new September

Now, as far as the GST is concerned September return has it’s own relevance. As we all are aware, the GSTR-1 for the month of September has to be filed by the 11th of October wherein we will show the sales details of concern and whereas the due date to pay taxes is 20th of October but alas, here is one important point to remember, if a concern has forgotten or have some missing Sales invoices or Purchase Invoices or Credit Notes pertaining to FY 2020-21, September 2021 return which you will file in October is the last opportunity to file those, in other words, you cannot file any invoices pertaining to the last Financial Year i.e 2020-21 beyond October.

So, one important aspect which every business people out there must remember

 

 

 

 

 

 

 

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President of ICAI recommends CA students to prepare for a career as a global professional

President of ICAI recommends CA students to prepare for a career as a global professional

CA Nihar Jambusaria, President of the Institute of Chartered Accountants of India ( ICAI ), has exhorted CA students to prepare to become global professionals.

According to CA Nihar Jambusaria, as students in this prestigious profession, you must regularly update your knowledge outside the curriculum. To be future-ready, you must prepare yourself for next-generation accounting with policy standards that are in step with the rest of the world. International accounting authorities are working on Sustainability Reporting to encourage and prepare strong global firms that can provide inclusive growth and prosperity following the epidemic.

Last year, the ICAI established the Sustainability Reporting Standards Board with the goal of formulating and issuing Sustainability Accounting Standards, developing appropriate reporting technology platforms such as XBRL Taxonomies and analytical tools/ techniques, providing guidance and interpretation of standards, and collaborating with the government/regulators to spread these standards.

He also stated that as a budding accounting professional, you must gain an understanding of Sustainability Reporting and other new-age developments such as valuation methods, insolvency process, and so on in order to identify the underlying opportunities in the upcoming thrust area not only in the local business environment but also in order to become a global accountant.

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