Tag Archives: Arya Vysya

Centre relaxes norms, investment limit for angel tax concession to startups

Investments into eligible startups by non-residents, alternate investment funds – category I – shall also be exempt under this section beyond the limit of Rs 25 crores

Giving a major relief to startups, the government has decided to relax angel tax norms for startups, including increasing the investment limit to Rs 25 crore for availing income tax concessions by startups, an official said Tuesday.

Currently, startups avail tax concession only if total investment, including funding from angel investors, does not exceed Rs 10 crore.

A notification regarding simplifying the process for startups to get exemptions on investments under section 56(2)(viib) of Income Tax Act, 1961, will be issued shortly, the official said.

The definition of startups has been enhanced to an entity which has been in operation for up to ten years from its date of incorporation or registration, instead of the current seven years.

“An entity shall be considered as startup if its turnover for any of the financial year, since its incorporation or registration, has not exceeded Rs 100 crore instead of the existing Rs 25 crore,” the official said.

Besides, investments by listed companies with a net worth of Rs 100 crore or turnover of Rs 250 crore into an eligible startup shall be exempt from the section 56 (2) (viib) of the Income Tax Act, beyond the Rs 25 crore limit.

“Considerations of shares received by eligible startups for shares issued or proposed to be issued by all investors shall be exempt up to an aggregate limit of Rs 25 crore,” the official added.

Also, investments into eligible startups by non-residents, alternate investment funds – category I – shall also be exempt under this section beyond the limit of Rs 25 crores.

“For being eligible for exemption under Section 56(2)(viib), a startup should not be investing in immovable property, transport vehicles above Rs 10 Lakh, loans and advances, capital contribution to other entities and some other assets except in the ordinary course of its business,” the official said.

A startup shall also be eligible for exemption under Section 56(2)(viib) if it is a private limited company recognised by the department for promotion of industry and internal trade (DPIIT) and is not investing in specified asset classes.

Eligible startups only have to file a duly signed self-declaration by with DPIIT for availing exemption. DPIIT shall transmit these declarations to Central Board of Direct Taxes (CBDT).

Further, there is no requirement of making any application for exemption under this section and there will be no case-to-case examination of startups for exemption under Section 56(2)(viib) of Income Tax Act.

“The valuation of shares is no more a criterion for exemption of investments into eligible startups under Section 56(2)(viib) of Income Tax Act,” the official added.

The development assumes significance as several startups have claimed to receive angel tax notices, impacting their businesses.

Various startups have raised concerns on notices sent to them under the Section 56 of Income Tax Act to pay taxes on angel funds received by them.

Section 56(2)(viib) of the Income Tax Act provides that the amount raised by a startup in excess of its fair market value would be deemed as income from other sources and would be taxed at 30 per cent.

Touted as an anti-abuse measure, this section was introduced in 2012. It is dubbed as angel tax due to its impact on investments made by angel investors in startup ventures.

What kind of startups will get angel tax exemption? I-T dept to decide soon

The Section provides that the amount raised by a start-up in excess of its fair market value would be deemed as income from other sources and would be taxed at 30%

The Income Tax Department will soon decide on the kind of start-ups that can be exempted from angel tax, a top official said Thursday.

Central Board of Direct Taxes (CBDT) Chairman Sushil Chandra said they have received several suggestions from start-ups on exempting them from angel tax.

“Very shortly we will find out a solution on the basis of the suggestions we have received. We will have to decide which start-ups are real start-ups and how they can be exempted from Section 56(2) of Income Tax Act,” he said.

Chandra said even earlier, any start-up recognised by DPITT was exempt from Section 56(2) and tax notices sent to start-ups over funding have been stayed.

Last week, the Department for Promotion of Industry and Internal Trade (DPIIT), along with tax officials, met start-up industry representatives to hear their suggestions.

The meeting comes against the backdrop of various start-ups raising concerns on notices sent to them under Section 56(2) of I-T Act to pay taxes on angel funds.

The Section provides that the amount raised by a start-up in excess of its fair market value would be deemed as income from other sources and would be taxed at 30 per cent.

Touted as an anti-abuse measure, this Section was introduced in 2012. It is dubbed as angel tax due to its impact on investments made by angel investors in start-up ventures.

Last month, the government eased the procedure for seeking income tax exemption by start-ups on investments from angel funds and prescribed a 45-day deadline for a decision on such applications.

The new procedure says that to seek an exemption, a start-up should apply, with all documents, to DPIIT. The application of the recognised start-up shall then be moved to CBDT. A start-up recognised by DPIIT would be eligible to seek exemption, subject to certain conditions.

Startups will have to provide account details and return of income for last three years. Similarly, investors would also have to give their net worth details and return of income.

Source : Press Reports

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Breather for startups: Govt raises Investment cap for Angel Tax Concession

Currently, startups avail tax concession only if total investment, including funding from angel investors, does not exceed Rs 10 crore.

A notification regarding simplifying the process for startups to get exemptions on investments under section 56(2)(viib) of Income Tax Act, 1961, will be issued shortly, the official said.

The definition of startups has been enhanced to an entity which has been in operation for up to ten years from its date of incorporation or registration, instead of the current seven years.

“Considerations of shares received by eligible startups for shares issued or proposed to be issued by all investors shall be exempt up to an aggregate limit of Rs 25 crore,” the official added.

Also, investments into eligible startups by non-residents, alternate investment funds – category I – shall also be exempt under this section beyond the limit of Rs 25 crores.

Eligible startups only have to file a duly signed self-declaration by with DPIIT for availing exemption. DPIIT shall transmit these declarations to Central Board of Direct Taxes (CBDT).

“The valuation of shares is no more a criterion for exemption of investments into eligible startups under Section 56(2)(viib) of Income Tax Act, the official added.

The development assumes significance as several startups have claimed to receive angel tax notices, impacting their businesses.

Various startups have raised concerns on notices sent to them under the Section 56 of Income Tax Act to pay taxes on angel funds received by them.

Touted as an anti-abuse measure, this section was introduced in 2012. It is dubbed as angel tax due to its impact on investments made by angel investors in startup ventures.

Source : Press Reports

VidyaSunil & Associates is into practice of Tax Complaince, Audit, Accounts , Corporate / Business Finance & Outsourced CFO Services.

Advise for contacting VidyaSunil & Associates;

Website : http://www.vidyasunilassociates.com

E Mail ID : vidyasunilassociates@gmail.com

Cell No. : +91 9739834819

Books of Accounts under GST

Every registered person under GST is required to keep and maintain all specified Accounts and records at his principal place of business.

Section 35 of the CGST Act, 2017 has cast the responsibility on the owner or operator of warehouse or godown or any other place used for storage of goods and on every transporater to maintain specified records.

Books of Accounts

Every registered person must maintain records of-

Production or manufacture of goods
Inward and outward supply of goods or services or both (Purchase and Sales Register)
Stock of goods (Inventory Register)
Input tax credit availed (Electronic Credit Ledger)
Output tax payable and paid and (Electronic Liability and Electronic Cash Ledger)
Other particulars as may be prescribed
Records of goods or services imported or exported or
Records of supplies attracting payment of tax on reverse charge along with the relevant documents, including invoices, bills of supply, delivery challans, credit notes, debit notes, receipt vouchers, payment vouchers, refund vouchers and e-way bills.

Accounting Ledgers under GST

Uunder GST, a trader has to maintain the following a/cs (apart from accounts like purchase, sales, stock) –

Input CGST a/c
Output CGST a/c
Input SGST a/c
Output SGST a/c
Input IGST a/c
Output IGST a/c
Electronic Cash Ledger (to be maintained on Government GST portal to pay GST)

*Records*	*Information Required*	*By Whom?*
Register of Goods Produced	Account should contain detail of goods manufactured in a factory or production house	Every Assessee carrying out manufacturing activity
Purchase Register	All the purchases made within a tax period for manufacturing of goods or provision of services	All Assessee
Sales Register	Account of all the sales made within a tax period must be maintained	All Assessee
Stock Register	This register should contain a correct stock of inventory available at any given point of time	All Assessee
Input Tax Credit Availed	This register should maintain the details of Input Tax Credit availed for a given tax period	All Assessee
Output Tax Liability	This register should maintain the details of GST liability outstanding to be adjusted against input credit or paid out directly	All Assessee
Output Tax Paid	This register should maintain the details of GST paid for a particular tax period	All Assessee
Other Records Specified	Government can further specify by way of a notification, additional records and accounts to be maintained	Specific Businesses as notified by the government

Period for Retention of Accounts under GST

As per the GST Act, every registered taxable person must maintain the accounts books and records for at least 72 months (6 years). The period will be counted from the last date of filing of Annual Return for that year.

Consequences of Not Maintaining Proper Records

If the taxpayer fails to maintain proper records in respect of goods/services, then the proper officer shall treat such unaccounted goods/services as if the taxpayer had supplied them. The officer will determine the tax liability on such unaccounted goods.

The taxable person will be required to pay the tax liability calculated along with penalty.

VidyaSunil & Associates is into practice of Tax Complaince, Audit, Accounts , Corporate / Business Finance & Outsourced CFO Services.

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GST relief for home buyers on anvil; Piyush Goyal says GST Council will consider this…….

Home buyers may be in for a relief with Finance Minister Piyush Goyal announcing that the GST Council will soon consider changing the GST rate structure on housing. Piyush Goyal said that the GST Council will soon convene its next meeting, in which it will consider GST rate structure on real estate.

Further, ostensibly in an effort to revive under-construction housing projects stuck for need of financing, Piyush Goyal said that he wants banks to meet real estate sector in two weeks. A Group of Ministers headed by Gujarat Deputy Chief Minister Nitin Patel has suggested a 5% GST rate on buildings under construction. However, the GoM has not taken a call yet on the issue of making input tax credit available to property developers under the new proposed structure.

Narendra Modi’s NDA government has recently taken steps to give an impetus to the real estate sector. Piyush Goyal, in Budget 2019, extended tax sops for affordable home developers and removed tax on notional rent for a second housing unit as well as unsold units. He also extended the benefits under Section 80-IBA of the Income Tax Act for one more year — to housing projects.

Source : Press Reports

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Cement rate cut to 18% on the agenda of GST meet

Cutting the rate from 28% will cause the government a loss of Rs 13,000 crore annually

The GST Council will consider a proposal to slash the tax on cement to 18 per cent from 28 per cent at its meeting next week along with a ministerial panel report that proposes a cut in rates in under-construction properties, including affordable homes.

A rate cut in cement to 18 per cent will lead to a loss of Rs 13,000 crore annually to the government.

The Narendra Modi-government is keen to ensure the GST cut actually benefits the end users in terms of lower prices as the Lok Sabha elections loom.

Officials said the GST cut in cement and the panel report were on the agenda of the GST Council meeting on February 20. The Cement Manufacturers Association had been pitching for a cut in the GST to 18 per cent as it would boost infrastructure spending and create jobs, while reducing the costs of buying a house.

While cutting the rates, the council could come out with some guidelines to ensure the manufacturers pass on the benefits of the rate cut to consumers, officials said.

Union minister Arun Jaitley had in a Facebook post said lowering the tax rate on cement was a priority. Cement is the only commodity used by the common man that is taxed at the highest slab.

“Since the government and its agencies are one of the largest consumers of cement, the necessity of passing on GST rate cuts, whenever the rate reduction takes place, could result in some guidelines being issued as part of the rate reduction process,”.

Analysts said cement roughly accounts for a fifth of construction costs, and a 10 percentage point reduction in the tax burden will bring significant relief to buyers. A cut in the GST rate would boost demand and increase revenue collection.

Housing proposals

The council will also consider a report by a group of ministers (GoM) under Gujarat deputy chief minister Nitin Patel that has proposed a reduction in the rates for under-construction homes to 5 per cent from 12 per cent and in affordable housing to 3 per cent from 8 per cent — but without input tax credit.

Analysts said the margin in affordable housing is so low that builders were unlikely to pass on the GST benefits in the absence of input tax credit.

In the non-affordable segment, the builders are likely to pass on the benefits as the margins per square feet are high. Construction is a labour-intensive sector that contributes 8 per cent to the gross domestic product.

After a marginal growth of 1.3 per cent in 2016-17, construction activity had picked up pace to grow at 6 per cent in 2017-18.

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Complaince under GST

A Compliance audit involves verifying that the GST has been properly accounted for in your business transactions, and to ensure that the information is correctly reported in your GST Returns. This includes checking if your supplies are classified correctly, if GST was properly charged and accounted for, if input tax was claimed correctly, and if the values of supplies, purchases and taxes reported are complete. Compliance audit shall demonstrate the organisation’s process of recording transactions into computer system is correct.

The primary purpose of compliance audit is to ensure that organizations are well aware and fully compliant with the GST laws and regulations. Compliance audit will be “advisory” in nature to facilitate the businesses to understand their compliance requirements.

Some of the critical GST compliance requirements are listed below:

Under GST a tax invoice is an important document. It not only evidences supply of goods or services, but is also an essential document for the recipient to avail Input Tax Credit (ITC). A registered person cannot avail input tax credit unless he is in possession of a tax invoice or a debit note.

Schedule II of the CGST Act, 2017 lists a few activities which are to be treated as supply of goods or supply of services. For instance, any transfer of title to goods would be a supply of goods, whereas any transfer of right in goods without transfer of title would be considered as services.

GST is essentially a tax only on commercial transactions. Hence only those supplies that are in the course or furtherance of business qualify as Supply under GST. Hence any supplies made by an individual in his personal capacity do not come under the ambit of GST unless they fall within the definition of business as defined in the Act.

A supplier cannot take ITC of GST paid on goods or services used to make supplies on which recipient is liable to pay tax. – Any amount payable under reverse charge shall be paid by debiting the electronic cash ledger. In other words, reverse charge liability cannot be discharged by using input tax credit. However, after discharging reverse charge liability, credit of the same can be taken by the recipient, if he is otherwise eligible.

Section 35 of the CGST Act, 2017 provides that every registered person shall keep and maintain, at his principal place of business, as mentioned in the certificate of registration, a true and correct account of…

a. production or manufacture of goods;
b. inward and outward supply of goods or services or both;
c. stock of goods;
d. input tax credit availed;
e. output tax payable and paid; and
f. such other particulars as may be prescribed.

In addition, the rules also provide that the registered person shall keep and maintain records of –

a) goods or services imported or exported; or
b) supplies attracting payment of tax on reverse charge

along with relevant documents, including invoices, bills of supply, delivery challans, credit notes, debit notes, receipt vouchers, payment vouchers, refund vouchers and e-way bills.

monthly production accounts, showing the quantitative details of raw materials or services used in the manufacture and quantitative details of the goods so manufactured including the waste and by products thereof;

accounts showing the quantitative details of goods used in the provision of services, details of input services utilized and the services supplied;

Separate accounts for works contract showing –

the names and addresses of the persons on whose behalf the works contract is executed;
description, value and quantity (wherever applicable) of goods or services received for the execution of works contract;
description, value and quantity (wherever applicable) of goods or services utilized in the execution of works contract;
the details of payment received in respect of each works contract; and
the names and addresses of suppliers from whom he has received goods or services.
Any entry in registers, accounts and documents shall not be erased, effaced or overwritten, and all incorrect entries, otherwise than those of clerical nature, shall be scored out under attestation and thereafter correct entry shall be recorded, and where the registers and other documents are maintained electronically, a log of every entry edited or deleted shall be maintained. Further each volume of books of account maintained manually by the registered person shall be serially numbered.
Monthly reconciliation of Supplies as per Eway bill and GSTR 1.
E-way bill is to be issued irrespective of whether the movement of goods is caused by reasons of supply or otherwise. In respect of transportation for reasons other than supply, movement could be in view of export/import, job work, SKD or CKD, recipient not known, line sales, sales returns, exhibition or fairs, for own use, sale on approval basis etc.

VidyaSunil & Associates is into practice of Tax Complaince, Audit, Accounts , Corporate / Business Finance & Outsourced CFO Services.

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GST Registration

GST is a comprehensive indirect tax that has replaced many levies from the manufacturer to supplier to customer. The Goods and Service Tax Act, which was passed in the Parliament on March 29, 2017, came into effect on July 1, 2017. India has adopted a dual GST model, where both states and central government levy tax on goods and/or services. Goods and Services Tax (GST) registration is a must for every business owner whose annual turnover exceeds Rs 20.00 Lakhs.

GST is the biggest tax reform in India, tremendously improving ease of doing business and increasing the taxpayer base in India by bringing in millions of small businesses in India. By abolishing and subsuming multiple taxes into a single system, tax complexities would be reduced while tax base is increased substantially.

Under the new GST regime, all entities involved in buying or selling goods or providing services or both are required to register for GST. Entities without GST registration would not be allowed to collect GST from a customer or claim input tax credit of GST paid or could be penalised. Further, registration under GST is mandatory once an entity crosses the minimum threshold turnover of starts a new business that is expected to cross the prescribed turnover.

In the GST Regime, businesses whose turnover exceeds Rs. 20 lakhs (Rs 10 lakhs for NE and hill states) is required to register as a normal taxable person. This process of registration is called GST registration.

For certain businesses, registration under GST is mandatory. If the organization carries on business without registering under GST, it will be an offence under GST and heavy penalties will apply.

GST Registration is one time registration and no need to renewal. GST registration also work as new proprietorship firm registration for starting business and open current bank account to manage sale, purchase and consultancy.

Who Should Register for GST?

Individuals registered under the Pre-GST law (i.e., Excise, VAT, Service Tax etc.)
Businesses with turnover above the threshold limit of Rs. 20 Lakhs (Rs. 10 Lakhs for North-Eastern States, J&K, Himachal Pradesh and Uttarakhand)
Casual taxable person / Non-Resident taxable person
Agents of a supplier & Input service distributor
Those paying tax under the reverse charge mechanism
Person who supplies via e-commerce aggregator
Every e-commerce aggregator
Person supplying online information and database access or retrieval services from a place outside India to a person in India, other than a registered taxable person

Penalty for Not Registering Under GST

An offender who is not paying tax or fails to make full payment (genuine errors) will be penalized 10% of the tax amount due. The minimum penalty will be Rs. 10,000 if the 10% amounts to a lesser figure. In case the offender has intentionally evaded payment of taxes, the penalty levied will be 100% of the tax amount due.

VidyaSunil & Associates is into practice of Tax Complaince, Audit, Accounts , Corporate / Business Finance & Outsourced CFO Services.

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