Businesses can utilize IGST credit to settle centre, state tax dues: CBIC

Businesses that have accumulated Integrated GST (IGST) credit in their books can settle it against central and state tax dues in any proportion, the revenue department has said. Importers typically pay IGST on goods they bring into the country. Also IGST is paid on inter-state movement of goods. This tax is supposed to be set-off against the actual GST paid, or may be claimed as refund in certain cases.

The Central Board of Indirect Taxes and Customs (CBIC) in March had allowed utilisation of input tax credit (ITC) of IGST towards the payment of Central GST and State GST, in any order subject to the condition that the entire IGST liability has been first discharged using the accumulated credit.

However, there were confusion among taxpayers regarding the quantum of utilisation of IGST credit in paying CGST and SGST dues. The CBIC has now clarified that the IGST credit can be used in payment of CGST or SGST in any order or proportion.

Under Goods and Services Tax (GST), the tax levied on consumption of goods or rendering of service is split 50:50 between the centre (CGST) and the state (SGST). On inter-state movement of goods as well as imports, an IGST is levied, which accrues to the centre.

Source : Press Reports

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Capital Gains Tax Relief likely for Investors under New Government

With a view to give a further boost to the startup ecosystem in the country, DPIIT is considering exempting investors from capital gains tax when they exit a startup.

Once the new government takes over by the end of next month, the Department for Promotion of Industry and Internal Trade (DPIIT) is expected to moot the idea then.

This comes after the government decided to extend relief from angel tax to investors and entrepreneurs following hard lobbying by these groups. It now wants to examine the entire gamut of regulatory issues related to startups for a robust ecosystem.

As per a report appearing in ET, DPIIT is considering two alternatives to deliver this incentive — one, a blanket exemption, and two, a conditional exemption based on funds redeployed.

Earlier, a new section 54 EE has been inserted in the Income Tax Act for the eligible startups to exempt their tax on a long-term capital gain when same funds or a part thereof is invested in a fund notified by Central Government within a period of six months from the date of transfer of the asset.

The maximum limit, in this case, is Rs 50 lakh. Such amount shall be remain invested in the specified fund for a period of 3 years.

In another incentive, under Section 54 GB of the Income Tax Act, they get exemption from tax on capital gains arising from the sale of a residential house or plot if the amount of net consideration is invested in equity shares of an eligible startup.

The next set of planned incentives on capital gains shall cover all investments in startups.

While government official quoted in the report expressed that it would be difficult to exempt investors on the basis of income, DPIIT will suggest exemption from capital gains if investors would back local startups from exit money.

The proposed measure is tune with the framework in Singapore, HongKong and the UK where such angel investments get tax breaks if they reinvest them into startups. Startup investment, without doubt, has a higher risk profile than other assets, but the tax reliefs can help mitigate them to an extent.

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

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Non-filers of GST returns for 2 months to be barred from generating e-way bills from June 21

Non-filers of GST returns for two straight months will be barred from generating e-way bills for transporting goods effective June 21, the finance ministry said.

Businesses under GST composition scheme, however, will be barred from generating eway bill if they fail to file tax returns for two consecutive filing periods, which is six months.

The Central Board of Indirect Taxes and Customs (CBIC) has notified June 21, 2019, as
the day from which any “consignor, consignee, transporter, e-commerce operator or
courier agency” would be barred from generating electronic way or e-way bill for failure to file tax returns for the stipulated time period as mentioned in the GST rules.

As per rules, a composition scheme taxpayer who has not furnished the returns for two
consecutive tax periods and a regular taxpayer who has not filed returns for a consecutive period of two months would be restricted from generating e-way bill.

In the Goods and Services Tax (GST) regime, businesses have to file monthly tax returns
by the 20th day of the subsequent month. However, businesses opting for composition
scheme have to file quarterly returns by the 18th day of the subsequent month following the end of a quarter.

The Goods and Services Tax Network (GSTN) has put in place the IT system so that businesses which have not filed tax returns for the stipulated period would be barred from generating e-way bills.

The move, officials believe, would help check GST evasion. During April-December, there were 3,626 cases of GST evasion/violations, involving Rs 15,278 crore.
Touted as an anti-evasion measure, e-way bill system was rolled out on April 1, 2018, for moving goods worth over Rs 50,000 from one state to another. The same for intra or within the state movement was rolled out in a phased manner from April 15.

Transporters of goods worth over Rs 50,000 would be required to present e-way bill during transit to a GST inspector, if asked.

With almost two years into GST implementation, the government is now focussing on anti-evasion measures to shore up revenue and increase compliance.

“E-commerce, logistics, FMCG companies, and businesses working on the franchise model, would have to immediately develop and implement an automated workflow whereby defaulting business partners are moved out from the supply chain on real-time basis,”.

Source : Press Reports

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Enhancements in E-Way Bill System

E-way bill or Electronic-way bill is a document introduced under the GST regime that needs to be generated before transporting or shipping goods worth more than INR 50,000 within state or inter-state. The physical copy of e-way bill must be present with the transporter or the person in charge of the conveyance and should include information such as goods, recipient, consignor and transporter. The e-way bill was rolled out nationwide on 1st April 2018.

The National Informatics Centre (“NIC”) has introduced certain new enhancements to the E-Way Bill (EWB) system dated April 23, 2019. The purpose of introduction of such enhancement is to ease the process of generation of E-Way Bill system by the taxpayers and the transporters.

The enhancements are :

Auto calculation of distance based on PIN Codes for generation of e-Way Bill:

The e-Way bill system has enhanced with auto calculation of distance between the source and destination, based on the PIN Codes. The e-waybill system will calculate and display the estimated motorable distance between the supplier and recipient addresses.

Knowing the distance between two PIN codes: Route distance calculation between source and destination uses the data from various electronic sources.

Blocking the generation of multiple E-Way Bills on one Invoice/Document:

If the e-way Bill is generated once with a particular invoice number, then none of the parties – consignor, consignee or transporter, can generate the e-Way Bill with the same invoice number.

Extension of E-Way Bill in case the consignment is in Transit/Movement:

The transporters had proposed to incorporate the provision to extend the e-way Bill, when the goods are in Transit/Movement.

Report on list of E-Way Bills about to expire:

Taxpayers or transporters can now view the list of e-Way Bills about to expire in a period of 4 days [From current date (T) then (T)-1, (T)+1, (T)+2]. They can keep track of expiry dates for each of the consignments generated.

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Govt plans 3 days registration process for companies

The government is working on a plan to further simplify the process and shorten the time period for the incorporation of a company.

Under the new system, a single clearance with seamless registration of Permanent Account Number, Tax Account Number, Goods and Services Tax, Employee Provident Fund Organisation and Employee State Insurance Corporation, will lead to the completion of the process in flat three days.

With these measures, the Department for Promotion of Industry and Internal Trade (DPIIT) hopes the country shall scale up in the Ease of Doing Business ranking to enter the top 50, says a report appearing in ET.

There are, however, some teething issues which have to be taken care of. There are glitches in name reservation that is being sorted out by the MCA. Here the involvement of multiple agencies delays the clearance process. A seamless process is being proposed for registration with all central agencies being brought under a single layer.

Also, an alternative to authentication in place of digital signatures is proposed as a step to speed up registration.

In the World Bank ease of doing business index released in October last year, India had jumped 23 points to occupy 77th place. In the last two years, the country has climbed 53 notches as the government put special efforts in removing bottlenecks for businesses.

India’s effort in the direction also led to World Bank recognising India as one of the top improvers for the year. But it has a long way to go before it can catch up with China which is ranked at 46 place, the US (4) or even Singapore (2).

The indicators for the ranking that are taken into consideration by World Bank are starting a business, getting electricity, dealing with construction permits, getting credit, paying taxes and trading across borders.

The DPIIT has to cover a lot of ground in insolvency framework, ease of property registration, payment and refund of taxes and enforcement of contracts before it can really look forward to improving India’s ranking further.

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KYC for Registered Office – eForm INC-22A (ACTIVE)

Ministry of Corporate Affairs (MCA) notified a new rule 25A by way of the Company (Incorporation) Amendment Rules 2019 with effect from 25^th February’2019.

Pursuant to this, all companies incorporated on or before December 31, 2017 have to file e-form – ACTIVE (form INC – 22A) by April 25, 2019. In this post, we will discuss Rule 25A and Form Active Company Tagging Identities and Verification  (ACTIVE) which technically is Form INC – 22A.

Applicable Section/Rules– Rule 25A of Companies (Incorporation) Rules, 2014 and also Read with Section 12 of Companies Act, 2013.

Time Limit– On or before 25^th April, 2019

The Key Information to be gathered for filing of the Form are :

1. Registered Office Address
2. Geolocation (Latitude and Logitude)
3. Photograph of Registered office showing
   1. External view of building and
   2. Inside view of building with at least one Director / KMP who sign the form
4. Email ID of Company – to be Verified by an OTP
5. Details of all director (All directors DIN KYC must be activated).
6. Details of Statutory Auditor
7. Details of Cost auditor if any
8. Details of Company Secretary if any.
9. Information about Annual Return and Balance Sheet filed for the year 2017-18

Attachments:

1. Photograph of Registered Office showing external building including name of the company, address of its registered office, Corporate Identity Number along with telephone number, fax number, if any, e-mail and website addresses, if any painted or affixed.

2. Photograph of inside office along with atleast one Director/KMP who is signing the form.

Additional Key Points / Important Note :-

• Even Dormant companies need to file INC-22A
• Annual Filing should be up to date.
• E-mail ID should be unique for every company. Even in case of group companies under same management each and every company should have its unique E-mail ID.
• All Directors in the company should have “APPROVED” status of DIN.
• All companies who are required to appoint ‘Company Secretary’ as per the statutory requirement need to appoint ‘Company Secretary’ before filing INC-22A, if not appointed.
• In case of Section 8 company, if designation is selected as ‘Company Secretary’ enter either Membership No. /PAN.

Penalty for Non-Filing- Fine of Rs. 10000/- on or after 26^th April, 2019

Consequences of Non-Compliance- MCA will mark the form as ‘ACTIVE non-compliant’ unless “e-Form ACTIVE” is filed and the company will be barred from filing OR will not be able to file following forms:

(i) SH-07 (Change in Authorized Capital);

(ii) PAS-03 (Change in Paid-up Capital);

(iii) DIR-12 (Changes in Director except cessation);

(iv) INC-22 (Change in Registered Office);

(v) INC-28 (Amalgamation, De-merger)

Companies not required to file this form-

• Company which has not filed its due financial statements under section 137 or due annual returns under section 92 or both
• Companies which have been struck off or are under process of striking off
• Company which is under liquidation or amalgamation
• Company which has been dissolved

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

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Notices under GST

According to Section 46 of the CGST, 2017, where a registered person fails to furnish return under section 39, or section 44 or section 45, a notice shall be issued requiring him or her to furnish such return within fifteen days in such form and manner as may be prescribed.

Few section herewith reproduced below for understanding:

Sec 46 of CGST Act –

“Notice to return defaulters – Where a registered person fails to furnish a return under section 39, or section 44 or section 45 a notice shall be issued requiring him to furnish such return within fifteen days in such form and manner as may be prescribed.”

Sec 62 of CGST Act,2017 –

“(1)Notwithstanding anything to the contrary contained in Section 73 or Section 74 where a registered person fails to furnish the return under section 39 or section 45 even after service of notice under section 46 , the proper officer may proceed to assess the tax liability of the said person to the best of his judgment taking into account all the relevant material which is available or which he has gathered and issue an assessment order within a period of five years from the date specified under section 44 or furnishing of the annual return for the financial year to which the tax not paid relates.

.(2) Where the registered person furnishes a valid return within thirty days of the service of the assessment order shall be deemed to have been withdrawn. But the liability for payment of interest under sub-section (1) of section 50 or for the payment of late fee under section 47 shall continue”

Rule 68 of CGST Rules, 2017 –

“A notice in Form GSTR 3A shall be issued, electronically, to a registered person who fails to furnish return under section 39,or section 44 or section 45 or section 52.” 

Penalty for Non Filers

♠ For non filers the late filing fees are as follows:

NIL Return: Rs 20/per day

Other: Rs 50/Day

Along with late fee interest on delayed payment is also applicable.

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

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GST UPDATES

Wishing you a very Happy and Prosperous New Financial Year from VidyaSunil & Associates

GST AMENDMENTS / IMPORTANT POINTS AND NOTIFICATIONS FOR UPCOMING FINANCIAL YEAR  : 2019-2020

1. From 1st April’ 2019, Kindly start the Invoice number from serial number 1 (Don’t continue the previous year serial numbers).
2. Name board in English & State Language should be affixed in front of the Registered Office with GSTIN number and Registered Office Address.
3. GST RC Certificate (all the three pages) to be affixed in the Office Room.
4. Delivery challan and Invoice number should not be handwritten. Kindly confirm the same at the time of your purchase also.
5. Delivery challan is compulsory for the Job work units sending goods to other places( inclusive other job work units) within state also.
6. E way bill is compulsory with Invoice for any sales made within the state or outside the state and jobwork in other states.
7. Invoice has to be raised for Goods sent for Job work within 30 days.
8. GST Tax Invoice to be raised immediately at the time of sale itself.

 

9. HSN/SCN has to be mentioned in GST invoice, Delivery Challan and E way bill.
10. Export unit can sell sample goods under LUT method instead of IGST method, if there is no Shipping bill for that particular sale. Kindly keep the Sample invoices and Courier receipt for future reference.
11. Export unit have to track their ITC through their accountants while sending goods through IGST method. If the ITC value is less than the IGST value of export sale value , then kindly raise LUT invoice instead of IGST invoice to avoid IGST payment.

 

12. E way bill is compulsory for Export Sales.
13. For Local sales, E way bill is compulsory for the Sales Value (including GST)beyond Rs.50,000/-.
14. For Interstate sales, E way bill is compulsory for the sales value (including GST) beyond Rs.50,000/-
15. LUT to be applied by the Exporters every year.
16. Delivery challan should contain the total value of goods, GST Rate and GST value.

 

17. The threshold limits for obtaining registration for suppliers exclusively engaged in supply of goods has been increased from Rs 20 Lacs to Rs. 40 Lacs for all states other than certain specified states like Manipur, Mizoram, Nagaland etc.
18. GST return of March 2019 will be the last chance to avail any pending ITC or to amend any outward supply of FY 2017-18 as it has been extended from Sep 2018 (earlier time limit provided)

GST KEY UPDATES FOR REAL ESTATE PRACTICE

• Affordable housing properties: Effective GST rate of 1% without ITC
• Residential properties outside affordable segment: Effective GST rate of 5% without ITC
• With Respect to Input Tax Credit pertaining to Builders / Developers who have completed sizable component  of the project in Question or have Raised the Invoice shall be Allowed Input Tax Credit only for a limited amount of Input Credit
• Also, Builders will be given one time option to pay tax at old rates for ongoing projects
• Developers / Builders will have to mandatorily provide Commencement Certificate from competent authority and certificate from Chartered Engineer that work had commenced before 31^stMar 2019.
• Developer/Builders will have to exercise the right whether to pay at old rate of tax ad avail ITC or pay under new tax rate before 10^thMay 2019
• Construction of commercial properties to continue at effective GST rate of 12%(18% rate minus 1/3rd land deduction)

Advise for Connect :
VidyaSunil and Associates

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An Entrepreneur Check List to StartUps Legal Laws

Asia’s third largest economy i.e. India, now has between 4,200 and 4,400 startups, 110 incubators, 292 active angel investors and 156 active venture capital and private equity investors, according to Nasscom. India also saw its highest surge in terms of funding deals and amount of funding in March, 2015 wherein about 42 funding deals fetched above $800 million (about 50,000 crores).

India is a hotbed for startups and the political climate is in favor of mushrooming startups. To allow the business of the startup to flourish, following checklist is a must-to-follow. Start-ups are so passionate about scaling their venture that they forget to take care of certain issues which really bite them in the coming future; one can’t blame this tech wizards. This article is authored to provide insight to the Start-ups to keep the following points in mind from the seed stage to scaling up their venture-:

It’s critical for entrepreneurs to have basic legal knowledge. While startups innovate to
disrupt society in general, and laws of the land have to catch up to them, there are specific legal aspects that an entrepreneur needs to know about.

Choosing a Business Type: At the absolute beginning, when you set up your organization, you must brand it as a ‘private limited’ or ‘single proprietorship’ or something else. While this may seem unnecessary, it goes a long way to decide your company’s visibility, sustainability and profitability.

Choosing your brand will depend on your long-term goals and vision. Every type has a
separate set of laws, and you have to decide keeping the existing legal frameworks in mind.

Taxes: Taxes can be taxing. Every company has to pay central, state and local taxes. You
will be in a better position if you know the basics of accounting and the how taxation
works. Tax laws are tricky. More importantly, taxes vary across sectors, regions and
products. Keep all that in mind.

Securities laws: You’d want to list on the stock exchange at some point. The Securities and Exchange Board of India (SEBI) reforms these laws periodically. Keep up with these.
Business finance: Business finance means the way you manage your startup’s financial needs across its life cycle. This includes everything from FDI (foreign direct investment), angel investors, VCs (venture capitals) or even joint ventures. This will take your
business to the next level.

Labour laws: It’s obvious you’ll have people working for you. You’ll also need freelancers and contractors. Those are all protected under Labour laws. You must follow labour laws. This will increase their productivity and morale as well.

Intellectual Property (IP) laws: If you’re doing anything new – with codes, designs or research, intellectual property (IP) is with you.

Timely IP audits are important. Also, it’s critical that you file the right patent/trademark/copyright claims. This will prevent theft.

Information Technology law: IT laws include digital signatures and e-contracts. As you start using proprietary software and cloud computing services, you’ll get your hands on a bulk of data collected from consumers.

You must protect your client’s privacy electronically. There will be hackers who’d want to steal this data. That’s where knowledge of IT laws come in handy.

Contract law: When you can’t always hire, so you hire contractors. Contracts are indispensable to entrepreneurs. Hence, basic knowledge of fundamental principles of contracts can help.

Settling Disputes: Disputes are inevitable. What’s important is how you settle them. When disputes arise, legalities do creep in and things do get messy.

Since you are the CEO, if you know a bit about the formal and informal ways of dispute resolution, it’ll take you a long way. The best friction is no friction.

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

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Legal Laws for StartUps in India

Startups are the future of India. The rapid advancement in many sectors has led to a spurt in the numbers and quality of startups in India. It can be incorporated in various forms such as company including a one-person company, limited-liability partnership or a partnership firm. Each type of entity is governed by separate laws, though there are certain common laws which are to be complied with.

Other than laws relating to the incorporation, tax laws, labour legislations, environmental laws, securities laws, contract law, intellectual property laws and various other kind of laws are required to be adhered to. Startups should also be aware of dispute settlement mechanism which includes litigation, arbitration, mediation, conciliation and negotiation.

The Government of India has come up with a comprehensive policy on encouraging startups in India through various policies and regulations. An incorporated private limited company or a partnership firm registered under the Partnership Act, 1932 or a limited liability partnership under the Limited Liability Partnership Act, 2008 in India can be considered as a ‘Startup’ till seven years from the date of its incorporation/ registration for getting the benefits under the Government of India schemes.

Startups in the biotechnology sector have been provided an extended period of three more years from its incorporation. But there are certain further stipulations like the turnover for any of the financial years since incorporation has not exceeded ₹25 crores (as per the Companies Act) and further the entity is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation.

Certain startups which are incorporated between the 1st day of April, 2016 and the 1st day of April, 2019 (now extended by two more years to 1st day of April, 2021) are also eligible for tax benefits.

A certificate of an eligible business from the Inter-Ministerial Board of Certification of Department of Industrial Policy and Promotion is a perquisite for availing the benefits. The definition of “eligible business” under the Income Tax Act has been now expanded to mean a business carried out by an eligible startup engaged in innovation, development or improvement of products or processes or services or a scalable business model with a high potential of employment generation or wealth creation.

To ease the labour law compliances the Ministry of Labour & Employment has allowed the startups to self-certify compliance under various Labour Laws (including The Payment of Gratuity Act, 1972, The Employee’s State Insurance Act, 1948, The Contract Labour (Regulation And Abolition) Act, 1970, Employees’ Provident Funds & Miscellaneous Provisions Act, 1952, The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 and The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979) and has increased the tenure of compliance of self-certification under the Labour laws from 3 to 5 years. Also certain type of Startups will not require certain environment clearances under some Environmental Acts.

Under the Startups Intellectual Property Protection, reduced patent fees (rebate up to 80 percent of the regular fees) for the patent applicants will certainly boost innovation. New amended Trademark Rules provide 50 percent rebate in trademarks filing fee to startups.

Provision of patent and trademark facilitators is also a welcome step. For fast tracking the insolvency resolution process, the Ministry of Corporate Affairs has notified sections 55 to 58 of the Insolvency and Bankruptcy Code, 2016, and the fast track process includes a Startup (other than the partnership firm) as per the government policy.

To further encourage investments in startups by Foreign Venture Capital Investors (FVCI), the regulatory provisions have been accordingly amended such as Schedule 6 of Foreign Exchange Management (Transfer or Issue of security by a person resident outside India) Regulations, 2000 and Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Third Amendment) Regulations, 2016. A FVCI may contribute up to 100 percent of the capital of an Indian company engaged in any activity mentioned in Schedule 6 of Notification No. FEMA 20/2000, including startups irrespective of the sector in which it is engaged, under the automatic route. Start-ups can issue equity or equity-linked instruments or debt instruments to FVCI against receipt of foreign remittance, as per the FEMA Regulation.

Those Indian startups having an overseas subsidiary can open a foreign currency account with a bank outside India for the purpose of crediting to the account the foreign exchange earnings out of exports/sales made by the said startup or its overseas subsidiary.

The balances which represent exports from India shall be repatriated to India within the period prescribed for realisation of exports, in Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 dated January 12, 2016.

The Reserve Bank of India (RBI) has also allowed the Indian Startups to raise funds through ‘Convertible Note’ which means an instrument issued by a startup company evidencing receipt of money initially as debt, which is repayable at the option of the holder, or which is convertible into equity shares of the startup company, within a period not exceeding five years from the date of issue on the occurrence of certain specified events as per the other terms and conditions agreed to. A person resident outside India can purchase these convertible notes issued by an Indian startup company for an amount of ₹25 lakh or more in a single tranche.

But a startup engaged in a sector where investment by a person resident outside India requires government approval can issue convertible notes to a person resident outside India only with such approval. Again issue of equity shares against such convertible notes has to be in compliance with the entry route, sectoral caps and pricing guidelines.

A sound knowledge of all the legal intricacies in starting and managing the startups can help a long way to scale up the startups which will in turn result in the overall growth of the Indian economy.

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

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