Section 115BAA – New tax rate of 22% on domestic Companies

Priya kejriwal
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Section 115BAA – New tax rate of 22% on domestic Companies

The new section – Section 115BAA has been inserted in the Income Tax Act,1961 to give the benefit of a reduced corporate tax rate for domestic companies.

Section 115BAA states that domestic companies have the option to pay tax at a rate of 22% from the FY 2019-20 (AY 2020-21) onwards if such domestic companies adhere to certain conditions specified.

Conditions specified under eligibility criteria of section 115BAA

All domestic companies shall have an option to pay income tax at the rate of 22% (plus applicable surcharge and cess), provided the following conditions are complied with:

Such companies should not avail any exemptions/incentives under different provisions of income tax. Therefore, the total income of such company shall be computed without:

1Section – 10AASpecial provisions in respect of newly established Units in Special Economic Zones
2 Section – 32(1)(iia) Additional Depreciation   (it is pertinent to note that this restriction is only on additional depreciation and regular depreciation is permitted to be reduced from the total income of the assessee so long as it does not pertain to other deductions enumerated in this table)
3 Section 32AD Investment-Linked Deduction
4 Section – 33AB Tea development account, coffee development account and rubber development account
5 Section – 33ABA Site Restoration Fund
6 Section 35 Expenditure on Scientific Research
7 Section 35 AD Deduction in respect of expenditure on specified business
8 Section – 35CCC Expenditure on the agricultural extension project
9 Section – 35CCD Expenditure on a skill development project
10 Chapter VI A No deductions under Chapter VI A can be made while computing the total income for Section 115BAA, subject to the following exceptions:

a. Section – 80JJAA: Deduction in respect of employment of new employees. While all other deductions like 80C, 80G, etc cannot be availed while computing total income for section 115BAA, there is no such restriction on section 80JJAA deduction.

b. Section 80LA: Persons having eligible units in the International Financial Services Centre referred to in section 80LA(1A) shall be allowed to claim deduction u/s. 80LA while computing total income for section 115BAA.

c. Section 80M: Deductions in respect of inter-corporate dividends. Inserted vide Finance Bill, 2020, this deduction can be availed w.e.f. AY 2021-2022 while computing total income for section 115BAA.

Claiming a set-off of any loss carried forward or depreciation from earlier years, if such losses were incurred in respect of the aforementioned deductions

A claim by an amalgamated company for set-off of carried forward loss or unabsorbed depreciation belonging to an amalgamating company if such loss or unabsorbed depreciation is on account of the above deductions; claiming a deduction for additional/accelerated depreciation. The normal depreciation can however be claimed.

The above losses shall be deemed to have been allowed and shall not be eligible for carrying forward and set off in subsequent years this means that if the company opts for 115BAA then the opportunity for claiming set-off is lost forever.

Such companies will have to exercise this option to be taxed under section 115BAA on or before the due date of filing income tax returns. Once the company opts for section 115BAA in a particular financial year, it cannot be withdrawn subsequently.

The option should be in Form 10-IC, as notified by the CBDT. The form should be submitted online under a digital signature or an electronic verification code.

The new effective tax rate, which will apply to domestic companies availing the benefit of section 115BAA is 25.168%. The break up such tax rate is as follows:

Base tax rate Surcharge applicable Cess Effective tax rate
22% 10% 4% 22*1.1*1.04 = 25.168%

Such companies will not be required to pay Minimum Alternate Tax (MAT) under section 115JB of the act.

Comparison of Effective Tax Rate (inclusive of surcharge and cess) where company opts for Section 115BAA or not:

Total Income Effective Tax Rate (inclusive of surcharge and cess) Effective Tax Rate (inclusive of surcharge and cess)
Co. opts section 115BBA Co. doesn’t opts section 115BBA
Up to Rs. 1 crore 25.17% 26%
More than Rs. 1 crore but up to Rs. 10 crore 25.17% 27.82%
More than Rs. 10 crore 25.17% 29.12%

Let us now understand the Section 115BBA with the help of an example:-

ABC Ltd. was incorporated in years 2000-01, purchased a new plant and machinery of Rs. 10 lakhs on 01-04-2020.

Its turnover for the previous year 2017-18 was less than Rs. 400 crore and, therefore, it would be chargeable to tax at the rate of 25% for the Assessment Year 2020- 21.

The total income of the company for Assessment Year 2021-22 before allowing for additional depreciation in respect of new plant and machinery is Rs. 20 lakh.

For the Assessment Year 2021-22, the company shall have only 2 options – opt for section 115BAA or pay tax as usual at the rate of 25%.

The total income of the company and tax thereon in both the cases shall be computed as follows:

ParticularsIf co. opts for Section 115BAAIf Co. doesn’t opt for Section 115BAA
Total Income before allowing additional depreciation20,00,00020,00,000
Less: Additional depreciation available as per section 32(1)(iia) [Rs.10 lakh * 20%] NA2,00,000
Total Income (a)20,00,00018,00,000
Applicable tax rate (b)22%25%
Tax on total income (c=a*b)4,40,0004,50,000
Add: Surcharge (d)44000Nil
Tax After Surcharge (e= c + d)4,84,0004,50,000
Add: 4% Health and education cess (f= e*4%) 19,36018,000
Total Tax liability (g= e + f)5,03,3604,68,000
Extra Tax payable under Section 115BAA35,360–

If in above example, the company has not purchased any new plant and machinery during the year 2020-21 even in that case the amount of tax saving will not be much if company opts for section 115BAA 

ParticularsIf co. opts for Section 115BAAIf Co. doesn’t opt for Section 115BAA
Total Income (a)20,00,00020,00,000
Applicable Tax rate (b)22%25%
Tax on total income (c=a *b)4,40,0005,00,000
Add : Surcharge (d)44000Nil
Tax after surcharge (e= c+d)4,84,0005,00,000
Add : 4% Heath and education cess (f = e* 4 %)19,36020,000
Total Tax Liability (g= e+f)5,03,3605,20,000
Tax savings if co. opts 115BAA16,640

Can a company opt out of this section?

The domestic companies who do not wish to avail of this concessional rate immediately can opt for the same after the expiry of their tax holiday period or exemptions/incentives as mentioned in point 2 earlier.

However, once such a company opts for the concessional tax rate under section 115BAA of the Income Tax Act,1961, it cannot be subsequently withdrawn.

Also, check out the Complex Section 14A of the Income Tax Act, 1961.

Snapshot of compliance tracker for ROC forms – FY 2020-21

Priya kejriwal
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Snapshot of compliance tracker for ROC forms – FY 2020-21

All the business structures registered in India i.e. Private Limited Company, Public Limited Company, One Person Company, Limited Liability Partnership etc. need to file certain forms every year with the Registrar of Companies. All the Companies and LLPs registered in India are required to comply with ROC Annual Filing under the Companies Act, 2013 and Limited Liability Partnership Act, 2008 respectively.

The ROC compliance calendar for regular and annual filings during the year 2021 is provided below:

DescriptionForm*Due datePeriod
An annual statement for submitting details of the business of the LLP and its partners. All registered LLPs should file the form within 60 days from the close of the end of the financial year.
Form 11
(Annual returns of an LLP)
30 May 2021

FY 2020-21


Director KYC submission for DIN holders as of 31 March 2021. Every person who has a DIN allotted and the status of the DIN is ‘Approved’.
DIR-3 KYC
30 September 2021
FY 2020-21


To be filed in less than 15 days from the conclusion of AGM. Every company should intimate the ROC about the appointment of an auditor.Form ADT-1
(Appointment of auditor)
14 October 2021
FY 2020-21
The form should be filed annually with the ROC. It is also known as the statement of accounts and solvency. Every LLP should submit the data of its profit or loss and balance sheet.
Form 8
(Financial Reports of an LLP)
30 October 2021

FY 2020-21
To be filed 30 days from the conclusion of AGM. Specified companies should file the financial statements with the ROC.


Form AOC-4
(Filing of annual accounts)		30 October 2021


FY 2020-21



To be filed within 60 days from the conclusion of AGM. Every company should file an annual return, furnishing details about the company.

MGT-7
(Filing of annual returns) 
29 November 2021



FY 2020-21

Filing of resolutions with the ROC regarding Board Report and Annual Accounts. The details of the resolutions passed should be filed.

MGT-14
(Filing of resolution with MCA) 
Within 30 days of the board meeting

Within 30 days of the board meeting

All MSMEs should file a half-yearly return with the registrar for outstanding payments to Micro or Small Enterprises.

Form MSME
(outstanding payments to MSME’s)
30 April 2021 and 31 October 2021

30 April 2021
(For the period of  October’20 – March’21)
31 October 2021
(For the period of  April’21 – September’21)

The due dates mentioned are subject to change as and when notified by the concerned department.

Note: Measure taken to provide relief during COVID-19 for FY 2020-21:

The Companies (Auditor’s Report) Order, 2020 will be applicable from FY 2020-21 instead of FY 2019-20. Hence, CARO 2020 has to be followed for audits commencing April 2021.

It is very important to file all your ROC Compliance forms within the time limit prescribed by the MCA. Non-filing of annual returns entail hefty penalties. These are over and above normal fees charged by MCA and there is no way to reduce the penalties.

How to file an RTI application: A step-by-step guide

Priya kejriwal
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How to file an RTI application: A step-by-step guide

If that’s the question on your mind, you are at the right place. In this article, we will see how to file an RTI application with ease.

A lot of Indians have heard about RTI but are not very clear on what is RTI and what exactly is the meaning of RTI.

It is not a very complex topic but due to lack of awareness, we get overwhelmed by the mention of it.

RTI’s meaning is quite clear when you try to understand how to use it. In simple words, RTI means that any citizen of India can ask for any information which is supposed to be public knowledge. 

Right to Information Act has been implemented by the Government of India to provide a right to its citizens to ask the relevant questions to the Government and various public utility service providers, in a practical manner.

This was done to replace the earlier Freedom of information Act of 2002. The primary objective was also to help citizens get faster service from government agencies, as they can now ask why is a certain application or a process being delayed; and mainly to fulfill the aim of a corruption-free India.

What is the RTI act?

Under the RTI Act, any citizen can seek information from any public or government authority (however, it should not pertain to national security and defense or some personal information) and the authority is liable to respond within a period of 30 days to the application.

Now, information disclosure in India is restricted by the Official Secrets Act of 1923 and various other special laws, but many of these have been relaxed in light of the RTI act. 

The RTI act also requires all public authorities to have their records computerized for the widespread relay, such that requests for information by the citizens are processed faster because of information categorization.

What Information can one seek under the RTI Act?

The RTI act allows any Indian citizen to seek answers from any Government authority. This could be even for things like a delayed IT refund, passport or a driving license, or details of an infrastructure or repairs project going on or completed.

Even knowing the status of an FIR or the funds allocated to various government schemes, MP, MLA, PM relief fund, etc. Students can even seek copies of answer sheets from their Universities with this act.

The power of RTI and its applications are limitless. The idea is to ask the Right Questions!

How to file an RTI Application?

1. For submitting an RTI application, visit the online RTI Portal and click on submit request option.

2. On clicking on submit request option ‘Guidelines for use of RTI ONLINE PORTAL’ screen will be displayed. This screen contains various guidelines for using RTI online portal. The citizen has to click on the checkbox ‘I have read and understood the above guidelines and then click on submit button.

3. Then Online RTI Request Form screen will be displayed. Ministry or Department for which the applicant wants to file an RTI can be selected
from Select Ministry/Department/Apex body dropdown.

4. Applicant will receive SMS alerts in case he/she provides a mobile number. The fields marked * are mandatory while the others are optional.

5. If a citizen belongs to the BPL category, he has to select the option ‘Yes’ in the ‘Is the applicant below poverty line?’ field and has to upload a BPL card certificate in the supporting document field. (No RTI fee is required to be paid by any citizen who is below the poverty line as per RTI Rules, 2012)

6. On submission of the application, a unique registration number would be issued, which may be referred by the applicant for any references in the future.

7. If a citizen belongs to the Non-BPL category, he has to select the option ‘No’ in the ‘Is the applicant below poverty line?’ field and has to make a payment of Rs 10 as prescribed in the RTI Rules, 2012.

8. ‘Text for RTI request application’ should be up to 3000 characters. If the text is more than 3000 characters, then the application can be uploaded in the supporting document field.

9. After filling in all the details in the form, click on the ‘make payment’ option.

10. On clicking the option, the Online Request Payment form will be displayed. The payment mode can be selected in this form, which can be; internet banking, ATM-cum-debit card, or credit card.

11. After clicking on the ‘Pay’ button, the applicant will be directed to the SBI payment gateway for payment. After completing the payment process, the applicant will be redirected back to RTI Online Portal.

12. The applicant will get an email and SMS alert on the submission of the application.

Note: Only alphabets A-Z a-z number 0-9 and special characters , . – _ ( ) / @ : & \ % are allowed in text for RTI request application.

The application filed through this web portal would reach electronically to the nodal officer of the concerned Ministry/Department, who would transmit the RTI application electronically to the concerned CPIO.

What do to if your RTI request is rejected?

There is a fundamental difference between RTI Request and RTI Appeal.

RTI Request is applying for the first time. The request is made by the citizen to one person (i.e. PIO) to provide information. This means that it involves only the citizen and PIO.

RTI Appeal is an appeal before a senior officer against the decision of the PIO. This means that here, a third person (i.e. Appellate Authority) comes between the citizen and the PIO.

An appeal is only filed when the citizen is not satisfied with the reply of PIO or PIO rejects the citizen’s request for information.

This means RTI request is application process while RTI appeal is appellate procedure against the decision on RTI application.

Steps for filing RTI Application First Appeal

1. For submitting the First appeal application, click on the ‘submit first appeal’ option. Upon clicking, the ‘guidelines for use of RTI online portal’ screen will be displayed. This screen contains various guidelines for using RTI online portal.

2. Citizen has to click on the checkbox ‘I have read and understood the above guidelines and then click on submit button.

3. Online RTI first appeal form screen will be displayed. The applicant has to enter the registration number, email ID, and security code in the form.

4. Upon clicking the submit button, the online RTI first appeal form will be displayed. The applicant can then select a reason for filing an appeal application from the ‘ground for appeal’ dropdown field.

5. Text for RTI first appeal application should be up to 3000 characters. If the text is more than 3000 characters, then the application can be uploaded in the supporting document field. (As per RTI Act, no fee has to be paid for the first appeal).

6. On submission of the application, a unique registration number would be issued, which may be referred by the applicant for any references in the future.

The application filed through this web portal would reach electronically to the nodal officer of the concerned Ministry/Department, who would transmit the RTI application electronically to the concerned appellate authority.

For more guides and other articles, check out the ITAT Order’s blog.

Income Tax Slab Rate for AY 2021-22 (Latest)

Priya kejriwal
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Income Tax Slab Rate for AY 2021-22 (Latest)

Income tax payment for individuals and corporate entities is a mandatory requirement as per the Income Tax Act, 1961 if their annual income is above the minimum exemption limit.

However, taxpayers can also avail tax benefits under various sections of the Act. To reap these benefits, one must understand the income tax slab and applicable rates.

What is the Income Tax Slab?

In India, where individuals earn an income within a diverse range, levying a tax on all individuals at a specific rate would not be a fair policy.

The Act, therefore, segregates income ranges and levies tax at different rates as per the segregation. These groups are thus known as tax slabs. The slabs also vary based on age if the taxpayer is an individual and as per the classification of entities.

Income tax slabs are amended and revised each year during the Central Government’s Budget Session.

These amendments and revisions once proposed are approved by the Parliament and implemented as law.

Various Tax rates applicable are as follows:-

Income Tax Slab Rate for AY 2021-22 for Individuals opting for the old tax regime

Individual (resident or non-resident), who is of the age of fewer than 60 years on the last day of the relevant previous year:

Net income rangeIncome-Tax rate
Up to Rs. 2,50,000Nil
Rs. 2,50,000- Rs. 5,00,0005%
Rs. 5,00,000- Rs. 10,00,00020%
Above Rs. 10,00,00030%

Resident senior citizen, i.e., every individual, being a resident in India, who is of the age of 60 years or more but less than 80 years at any time during the previous year:

Net income rangeIncome-Tax rate
Up to Rs. 3,00,000Nil
Rs. 3,00,000 – Rs. 5,00,0005%
Rs. 5,00,000- Rs. 10,00,00020%
Above Rs. 10,00,00030%

Resident super senior citizen, i.e., every individual, being a resident in India, who is of the age of 80 years or more at any time during the previous year:

 Net income rangeIncome-Tax rate
Up to Rs. 5,00,000Nil
Rs. 5,00,000- Rs. 10,00,00020%
Above Rs. 10,00,00030%

Surcharge: – 

  • 10% of income tax where total income exceeds Rs. 50,00,000.
  • 15% of income tax where total income exceeds Rs. 1,00,00,000. 25% of income tax where total income exceeds Rs. 2,00,00,000.
  • 37% of income tax where total income exceeds Rs. 5,00,00,000.

Health and Education cess: – 4% of income tax and surcharge.

Note: A resident individual is entitled to a rebate under section 87A if his total income exceeds Rs. 5,00,000. The amount of rebate shall be 100% of income tax or Rs. 12,500, whichever is less.

Income Tax Rates For HUF/AOP/BOI/Any other Artificial Juridical Person under the old tax regime

Net income rangeIncome-Tax rate
Up to Rs. 2,50,000Nil
Rs. 2,50,000- Rs. 5,00,0005%
Rs. 5,00,000- Rs. 10,00,00020%
Above Rs. 10,00,00030%

Surcharge: –

  • 10% of income tax where total income exceeds Rs. 50,00,000.
  • 15% of income tax where total income exceeds Rs. 1,00,00,000.
  • 25% of income tax where total income exceeds Rs. 2,00,00,000.
  • 37% of income tax where total income exceeds Rs. 5,00,00,000.

Health and Education cess: – 4% of income tax and surcharge.

Income tax applicable to Individuals and HUF under new optional tax regime (Section 115BAC)

A new tax regime for individuals and HUF has been proposed by the Finance Bill, 2020 to tax the income of such assessees at lower tax rates if they agree to forego prescribed deductions and exemptions under the Income Tax Act.

Special provision for calculating the income of assessees opting for this section is prescribed under the said section.

Net income rangeAny Individual/ HUF
Up to Rs. 2,50,000Nil
From Rs 2,50,001 to Rs 5,00,0005%
From Rs 5,00,001 to Rs 7,50,00010%
From Rs 7,50,001 to Rs 10,00,00015%
From Rs 10,00,001 to Rs 12,50,00020%
From Rs 12,50,001 to Rs 15,00,00025%
Above Rs. 15,00,00030%

Surcharge: –

  • 10% of income tax where total income exceeds Rs. 50,00,000.
  • 15% of income tax where total income exceeds Rs. 1,00,00,000.
  • 25% of income tax where total income exceeds Rs. 2,00,00,000.
  • 37% of income tax where total income exceeds Rs. 5,00,00,000.

Health and Education cess: – 4% of income tax and surcharge.

Income Tax Rate for Partnership Firm:

A partnership firm (including LLP) is taxable at 30%.

Surcharge:- 12% of tax where total income exceeds Rs. 1 crore.

Health and Education cess: 4% of income tax plus surcharge.

Tax rates for domestic companies:

ParticularsTax rates
Company opting for section 115BA*25%
A company having turnover or gross receipt of up to Rs. 400 crore in the previous year 2017-18*30%
Company opting for section 115BAA**22%
Company opting for section 115BAB**15%
Any other company*30%
MAT***15%

Tax rates for foreign companies:

The tax rate for foreign companies is 40%.

CompanyNet income is between Rs. 1Cr. – 10 Cr.Net income exceeds Rs. 10Cr.
Domestic company7%12%
Foreign company2%5%

Health and Education cess: 4% of income tax plus surcharge.

Income Tax Slab Rate for Co-operative Society:

Income tax rates under the old regime: –

Net income rangeIncome-Tax rate
Up to Rs. 10,00010%
Rs. 10,000 to Rs. 20,00020%
Above Rs. 20,00030%
  • Surcharge:- 12% of tax where total income exceeds Rs. 1 crore.
  • Health and Education cess: 4% of income tax plus surcharge.

Income tax applicable to co-operative society under new optional tax regime (Section 115BAC): –

The income of a co-operative society under the new regime is taxable at a flat rate of 22% provided it forgoes specified deductions and exemptions and computes its income according to the provisions of the newly inserted section.

  • Surcharge:- 10% of income tax.
  • Health and Education cess: 4% of income tax plus surcharge.

Income Tax Slab Rate for Local Authority:

A local authority is taxable at 30%.

  • Surcharge:- 12% of tax where total income exceeds Rs. 1 crore.
  • Health and Education cess: 4% of income tax plus surcharge.

Income tax return filing is mandatory if the income falls under taxable slabs. So, make sure to keep a check on the due dates and file your income tax returns to avoid penalties.

Disclaimer: This information has been taken from the official site of the income tact department. Tax laws are subject to amendments made thereto from time to time. Please consult a professional tax advisor before acting on the above.

Startup India Seed Fund Scheme – Switching up The Startup Game?

Priya kejriwal
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Startup India Seed Fund Scheme – Switching up The Startup Game?

What is Startup India?

The Startup India initiative of the Government of India envisages building a robust Start-up ecosystem in the country for nurturing innovation and providing opportunities to budding entrepreneurs.

In a move that endeavors to foster growth and development in the startup sector, the Central Government recently notified a sector-agnostic ‘Startup India Seed Fund Scheme’ (“SISFS”).

The SISFS is projected to disseminate approximately INR 945,00,00,000 (Indian Rupees Nine Hundred and Forty-Five Crores) into the startup ecosystem.

What is Startup India Seed Fund Scheme?

Easy availability of capital is essential for entrepreneurs at the early stages of the growth of an enterprise.

Funding from angel investors and venture capital firms becomes available to startups only after the proof of concept has been provided.

Similarly, banks provide loans only to asset-backed applicants. It is essential to provide seed funding to startups with innovative ideas to conduct proof of concept trials.

Department for Promotion of Industry and Internal Trade (DPIIT) has created Startup India Seed Fund Scheme (SISFS) with an outlay of INR 945 Crore to provide financial assistance to startups for Proof of Concept, prototype development, product trials, market-entry, and commercialization. It will support an estimated 3,600 entrepreneurs through 300 incubators in the next 4 years.

The Hon’ble Prime Minister of India announced the scheme in his Grand Plenary address of Prarambh: Startup India International Summit on 16th January 2021. After approval of EFC and Hon’ble Finance Minister, the scheme has been notified on 21.01.2021.

The Seed Fund will be disbursed to eligible startups through eligible incubators across India. Startup incubators are institutions that help entrepreneurs to develop their business, especially in the initial stages.

e-Book-Startup-India-Seed-Fund-Scheme-2

Background:

Minister of Railways, Commerce & Industry, Consumer Affairs, and Food & Public Distribution Shri Piyush Goyal launched the Startup India Seed Fund Scheme (SISFS).

The Fund aims to provide financial assistance to startups for proof of concept, prototype development, product trials, market-entry, and commercialization.

The SISFS was drafted to address the primary obstacle faced by up and coming startups, which is the lack of access to adequate capital particularly at the product trial/ proof of concept stage.

The SISFS is just one in a series of measures being implemented by the government to bolster the startup sector, for instance, the recent union budget extended the eligibility period for startups to March 31, 2022, to avail the tax exemption under Section 80-IAC of the Income Tax Act, 1961.

The implementation of such measures is of utmost importance given the prevailing market scenario where it is difficult for most startups to raise capital particularly in light of the slowdown caused by the pandemic.

Accordingly, the enforcement of the SISFS comes at the most opportune time and we identify some of the key takeaways from the SISFS.

Key takeaways from the Startup India Seed Fund Scheme

Establishment of an Experts Advisory Committee (“EAC”)

The SISFS envisages the establishment of an EAC which will oversee the implementation and management of the SISFS.

The primary responsibility of the EAC will be to assess and select incubators (who fall within the eligibility criteria specified in the SISFS) with the objective of granting seed funds.

After the incubators have been selected, the EAC will supervise the process of dissemination of the seed funds to the selected incubators. The seed fund will be disbursed by the EAC to the incubators on the condition that certain targets relating to the utilization of the funds are met.

In addition, the EAC is also expected to ensure that the incubators are on the right track in relation to achieving the milestone-based objectives as set by the EAC.

Assistance to Incubators

The EAC shall disseminate INR 5,00,00,000 (Indian Rupees Five Crores) to the selected incubators over a series of milestone-based installments (as determined by the EAC).

The installments will only be disbursed to the incubators upon submission of proof to the EAC that the milestones have been accomplished.

In excess of the seed fund, the incubator will also be provided with a management fee (5% of the total commitment granted to the selected incubator) which is to be utilized for the operational expenditure incurred by the incubators in conducting due diligence and shortlisting Startups.

The seed fund grant provided to the incubator is to be used in full, within three years from the date of receipt of the first installment by the incubator.

Incubator Seed Management Committee (“ISMC”)

The selected incubators that are participating in the SISFS will need to establish an ISMC. The ISMC is an organ that will assess and shortlist suitable Startups for the provision of seed support.

The ISMC shall comprise of a nominee from the incubator who will act as chairman; representative from the State Government’s Nodal Team; representative of a venture capital fund or angel network; a domain expert from the industry; a domain expert from academic; two successful entrepreneurs and any other relevant stakeholder as deemed appropriated by the incubator.

Disbursement of Seed Funds to Startups

The incubators may onward disburse the seed fund to the Startups selected by the ISMC in the following manner:

  1. Up to INR 20,00,000 (Indian Rupees Twenty Lakhs) (milestone based payments) as grant for validation of proof of concept, or prototype development, or product trials;
  2. Up to INR 50,00,000 (Indian Rupees Fifty Lakhs) of investment for market entry, commercialization, or scaling up through convertible debentures or debt or debt-linked instruments.

There also seems to be an express prohibition on the Startups to use the seed fund for any purpose for which it has not been granted for.

The amount disbursed by the incubator to the Startup shall not exceed 20% of the total grant provided to the incubator.

Apart from monetary assistance, the incubators shall also equip the Startups with the physical infrastructure and equipment required to develop, research and test product prototypes and offer networking opportunities to the Startups by providing a marketing platform for the Startups to display the products developed to potential investors.

Indicators of Successful Implementation

The parameters for measuring the success of the Startups as assessed by the incubator will include progress of proof of concept; progress of prototype development; progress of product development; progress of field trials; progress of market launch; quantum of loan, angel or venture capital funding raised; jobs created by the Startup; turnover of the Startup and any other parameter as established by the incubator.

The status of progress under each of the above-mentioned parameters will be relayed from the Startup to the incubator and subsequently to the EAC.

Eligibility Criteria of the Scheme

1. A startup, recognized by DPIIT, incorporated not more than 2 years ago at the time of application.

Eligibility Criteria for Startup Recognition:

  1. The Startup should be incorporated as a private limited company or registered as a partnership firm or a limited liability partnership
  2. Turnover should be less than INR 100 Crores in any of the previous financial years
  3. An entity shall be considered as a startup up to 10 years from the date of its incorporation
  4. The Startup should be working towards innovation/ improvement of existing products, services, and processes and should have the potential to generate employment/ create wealth.
  5. An entity formed by splitting up or reconstruction of an existing business shall not be considered a “Startup”.
  6. The startup must have a business idea to develop a product or a service with a market fit, viable commercialization, and scope of scaling.
  7. The startup should be using technology in its core product or service, or business model, or distribution model, or methodology to solve the problem being targeted.
  8. Preference would be given to startups creating innovative solutions in sectors such as social impact, waste management, water management, financial inclusion, education, agriculture, food processing, biotechnology, healthcare, energy, mobility, defense, space, railways, oil and gas, textiles, etc.
  9. A startup should not have received more than Rs 10 lakh of monetary support under any other Central or State Government scheme. This does not include prize money from competitions and grand challenges, subsidized working space, founder monthly allowance, access to labs, or access to prototyping facility.
  10. Shareholding by Indian promoters in the startup should be at least 51% at the time of application to the incubator for the scheme, as per Companies Act, 2013 and SEBI (ICDR) Regulations, 2018.
  11. A startup applicant can avail of seed support in the form of grants and debt/convertible debentures each once as per the guidelines of the scheme.

How much seed funding can a startup receive under the scheme?

Seed Fund to an eligible startup by the incubator shall be disbursed as follows:

1. Up to Rs. 20 Lakhs as a grant for validation of Proof of Concept, or prototype development, or product trials. The grant shall be disbursed in milestone-based installments. These milestones can be related to the development of prototypes, product testing, building a product ready for market launch, etc.

2. Up to Rs. 50 Lakhs of investment for market entry, commercialization, or scaling up through convertible debentures or debt or debt-linked instruments

3. A startup applicant can avail of seed support in the form of grants and debt/convertible debentures each once as per the guidelines of the scheme.

Analysis and Conclusion:-

The SISFS has been structured to operate like a well-oiled machine with each component (the EAC, the incubator, and the Startups) playing a pivotal role in the holistic game plan.

The efficiency of the sector-agnostic scheme in attaining its objective of bolstering the startup sector will entirely depend on how well the respective organs function in synchronization.

The primary issue with SISFS is that there exists ambiguity concerning several facets of the implementation of the SISFS.

For instance, one of the eligibility criteria for Startups as established by the SISFS is that the “Startup must have a business idea to develop a product or a service with the market fit, viable commercialization, and scope of scaling.”

However, the SISFS does not establish the thresholds for what is to be considered as “market fit” or “viable commercialization.”

This is indicative of a larger problem with the SISFS which is that a lot of discretionary power is wielded by the EAC and the incubators in shortlisting “suitable” incubators and Startups respectively.

At the moment, the initiatives being ushered in by SISFS should be welcomed, however, the success of the SISFS will depend entirely on the administration and operation of the EAC, the incubator, and the Startups which is yet to be seen.

To apply for the scheme, Get in touch with a professional consultant. Drop a Whatsapp at https://wa.me/message/QJG5ISIMSXWZC1

Revision u/s 263 quashed when Cash deposit was examined in original assessment proceedings

Tithi Shah
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Revision u/s 263 quashed when Cash deposit was examined in original assessment proceedings

Pramod Kesharichand Shah Vs. The Principal Commissioner of Income Tax

[ITA No.43/SRT/2018]

Facts of the case

The assessee an individual, filed his return of income on 31.10.2007, declaring total income to the tune of Rs.9,14,884/-. The assesses case was re-opened under section 148 of the Income Tax Act, 1961 and the assessment under section 143(3) was passed on 28/01/2015, determining total income of Rs.9,14,890/-.

Later on, the ld. PCIT has exercised his jurisdiction under section 263 of the Income Tax Act 1961 and observed that assessment order passed by the assessing officer is erroneous as well as prejudicial to the interest of revenue and therefore, a notice under section 263 of the Act was issued to the assessee. The relevenat extracts of the notice are produced below:

“The AO has erred in accepting the claim made by the assessee that the cash deposits of Rs.16,00,000/- in the saving bank account no. xxxxxxxxxx2457 maintained with development credit bank, DCS, Daman Branch came out of land transaction in which the assessee was a confirming party. The AO has accepted this claim without any verification which was required to be made in the facts and circumstances of the case before accepting of the claim. It is further seen that the AO has erred in accepting a cash flow statement prepared and submitted by the assessee showing a brought forward/opening balance of Rs. 824009/- and further deposits of Rs. 9,50,000/- from the land transaction which the AO failed to verify. Almost complete absence of any inquiry on this issue makes the order erroneous as well as prejudicial to the interest of revenue.”

In response to the show cause notice of the Ld. PCIT under section 263 of the Act, The AR of the assessee attended and filed various documents and took adjournment. However, the ld. PCIT, after going through assessment records, rejected the contention of the assessee and held that assessing officer has failed to do proper inquiry in respect of cash deposit in bank account and it is indirectly and prima facie established that the assesses claim, as made before the Assessing Officer, is not correct and cannot be substantiated with help of relevant documents.

AR’s Arguments

The AR of the assessee has contended that reassessment proceedings initiated by the Assessing Officer under section 147 of the Act, is itself not valid; therefore the consequential exercise of the jurisdiction under section 263 of the Act is also going to be invalid. The AR submitted that during the reassessment proceedings, the Assessing Officer asked the assessee to furnish the details of cash deposit of Rs.16,00,000. The assessee submitted reply to AO by giving the entire details and there is no mistake on the part of the assessee in furnishing the details of cash deposit. Therefore order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of Revenue. Hence, the order passed by the ld. PCIT under section 263 of the Act should be quashed.

Findings of the Tribunal

The bench held that during the reassessment proceedings, the assessee submitted the details and the explanations of Rs.16,00,000/- cash deposited in the bank account. Just because the Assessing Officer did not bring this assessment order and has passed order in brief, does not mean that assessing officer has not examined the cash deposit. The assessing officer has applied his mind and passed the reassessment order under section 143(3) r.w.s.147 of the Income Tax Act. Hence, order passed by the Assessing Officer should not be erroneous. The assessee also submitted the details of cash deposit in response to notice under section 142(1) of the Act. The assessee also submitted the copy of the cash book before the assessing officer. Thus, the assessee has submitted the details of cash deposit from his side and it was on the Assessing Officer to examine it.

There is difference between ‘Lack of enquiry’ and ‘inadequate enquiry’. It is for the Assessing Officer to decide the extent of enquiry to be made as it is his satisfaction as what is required under law.

The hon’ble high court of Delhi in the case of CIT v. Sunbeam Auto Ltd. [(2010) 332 ITR 167], held that if there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass order u/s 263 of the Act, merely because the Commissioner has a different opinion in the matter and that only in cases where there is no enquiry, the power u/s 263 of the Act can be exercised. The ld. PCIT cannot pass the order u/s 263 of the Act on the ground that further/thorough enquiry should have been made by Assessing Officer.

Further, it was settled by honorable Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT [(2000) 243 ITR 83 (SC)] wherein it was held that if the A.O. adopts one of the possible courses available in the scheme of the I.T. Act which results in any loss of revenue or when two views are possible and the A.O. adopts one of them with which the C.I.T. does not agree, then it would not be an order prejudicial to the interest of revenue for invoking the jurisdiction u/s. 263 of the Act.

The object of section 263 is to examine whether order passed by the AO is erroneous as well as prejudicial to the interest of revenue. Therefore, based on this factual position, the order passed by the AO under section 143(3) r.w.s.147 of the Act should not be erroneous. We note that Coordinate Bench of I.T.A.T., Kolkata in the case of Plastic Concern vs. ACIT [61 TTJ 87 (Cal)] has held that mere possibility of gathering more material to prove the claim of the assessee wrong would not make the concluded assessment erroneous so long as the ld. A.O. had acted judiciously and conducted enquiries in the course of assessment proceedings. Held, that revisionary jurisdiction exercised by the Ld. Pr. C.I.T. u/s. 263 of the Act was not in tune with the facts and evidences on record duly explained to the Ld. Assessing Officer and verified by him and that being so the order passed u/s. 263 of the Act on such erroneous stand is liable to be quashed.

Quick checklist to complete in April itself

Priya kejriwal
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Quick checklist to complete in April itself

On April 1, the Central Board of Direct Taxes (CBDT) notified all the income-tax related (ITR) forms for assessment year 2020-2021. While you have time to file your returns (for income earned during the FY 21), till July 31, There are a number of tax-related tasks that need to be finished before this important deadline. Here is a checklist for you to see if you have missed something.

Vivad se Vishwas scheme

The deadline for the payment of tax without additional interest under the ‘Vivad se Vishwas’ scheme is 30 April, 2021. The Direct Tax ‘Vivad se Vishwas’ Act, 2020 was enacted on March 17, 2020, with the objective to bring down pending income tax litigations, generate timely revenue for the government and to benefit taxpayers. Make sure to pay the due tax if you have opted for the scheme by the end of April.

Furnishing Form 15G and 15H

Those who are having investment in fixed deposits (FDs) should submit form 15G or 15H as applicable to banks, if their income is expected to remain below the taxable limit. Ideally, this should be done at the start of the financial year, because banks are required to deduct TDS in case your interest income is more than Rs 40,000 in a year. For this purpose, the bank adds deposits held in all its branches to calculate this limit.

Form 15G and Form 15H are self declaration forms for an individual below 60 years of age and those above the age of 60 years, respectively. Some banks also allow you to submit the forms online.

If you own a startup, right time to apply for deduction under section 80IAC

Startup India is a flagship initiative of the Government of India, intended to build a strong eco-system for nurturing innovation and Startups in the country that will drive sustainable economic growth and generate large scale employment opportunities. The Government through this initiative aims to empower Startups to grow through innovation and design.

Tax exemption under Section 80IAC of the Income Tax Act is one of the benefits from the various benefits provided to startups under Startup India Scheme. To get Income Tax benefits in the form of 3 years tax holiday u/s 80IAC , get in touch with your Tax consultant as soon as possible or contact us on https://wa.me/message/QJG5ISIMSXWZC1

TDS/TDC Due date Calendar

30 April 2021 –

  • Due date for deposit of TDS for the period January 2021 to March 2021 when Assessing Officer has permitted quarterly deposit of TDS under section 192, 194A, 194D or 194H
  • Due date for furnishing of Form 24G by an office of the Government where TDS/TCS for the month of March, 2021 has been paid without the production of a challan
  • Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194-IA in the month of March, 2021
  • Due date for furnishing of challan-cum-statement in respect of tax deducted under Section 194-IB in the month of March, 2021
  • Due date for furnishing of challan-cum-statement in respect of tax deducted under Section 194 M in the month of March, 2021
  • Due date for deposit of Tax deducted by an assessee other than an office of the Government for the month of March, 2021

Submission of Form 60/ Form 61

As per Rule 114B, PAN Card No. is mandatory required to be furnished at the time of entering into the following transactions

    1. Sale or purchase of any immovable property exceeding Rs. 5,00,000
    2. Sale or purchase of any vehicle (excl two-wheelers)
    3. Any Fixed Deposit exceeding Rs. 50,000 with any Bank
    4. Any FD exceeding Rs. 50,000 with Post Office
    5. Contract exceeding Rs. 10,00,000 for sale/purchase of specified securities
    6. Opening a Bank Account
    7. Making an application for installation of a telephone connection
    8. Payment to Hotels and Restaurants for a payment exceeding Rs. 25,000

In case a person who enters into any of the certain specified transactions where PAN Card No. is mandatorily required to be submitted, but does not have a PAN Card, he shall file a declaration in Form 60/Form 61.

Form 60 is required to be filed in cases where a person enters into any of the transactions  but does not have a PAN card. Form 61 is required to be furnished in case a person who has agricultural income and is not in receipt of any other income chargeable to income tax.

Due date for submitting the above form is 30/04/2021 for all transaction incurred between the period October 1, 2020 to March 31, 2021

Is our GSTR filed for this month? Check your due dates

*Due date

Purpose

Period

Description
22nd AprilGSTR-3B(Quarterly)Jan-Mar’21Summary of outward supplies, ITC claimed, and net tax payable by taxpayers who opted for QRMP scheme and registered in category X states or UTs#
24th AprilGSTR-3B(Quarterly)Jan-Mar’21Summary of outward supplies, ITC claimed, and net tax payable by taxpayers who opted for QRMP scheme and registered in category Y states or UTs
25th AprilITC-04(Quarterly)Jan-Mar’21Summary of goods sent to/received from a job-worker
30th AprilGSTR-4(Annually)FY 2020-21Yearly return for taxpayers opted into the composition scheme for FY 2020-21

Pay your self-assessment tax

The due date to file the ITR for FY 21 is 31 July 2021, unless the government extends it. However, if there is any tax due at your end on income earned during the FY21, it will continue to attract interest, till you pay the same. So, it is prudent to self assess your tax liability and make the payment to avoid panel interest. This self assessment of due tax is called self-assessment tax (SAT). Once you pay the SAT, you can even file your returns instead of waiting till 31 July.

What are you waiting for? Complete all your checklist before we break into another lockdown.

Till then, Stay Positive, Test Negative!

Re-Registration of Trusts / Institutions [Notification No. 19/2021 dated 26.03.2021] :

CA Yash Kapadia
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Re-Registration of Trusts / Institutions [Notification No. 19/2021 dated 26.03.2021] :

The CBDT (Central Board of Direct Tax) has issued Notification No. 19/2021 dated 26th March, 2021 prescribing the procedure for Registration including re-approval / revalidation of existing Tax Exemption Registrations of Trust or Institutions. All the existing Trusts or Institution registered u/s. 10(23C) / 12A / 80G have to Re-Register with the Income Tax Department.

The new Rules and Forms will be applicable from 1stApril, 2021 and all charitable Trusts and Institutions already registered u/s. 12A or 12AA or 10(23C) and having 80G certificate must apply for re-approval/revalidation of their registration before 30thJune, 2021.

Re-registration u/s. 80G/12A has to be done in Form No. 10A (It seems that the application for registration u/s. 12A and 80G will have to be done separately. The clarification will be needed from the department in this regard as the application form is same for both the registrations). The 80G Certificate will be valid for period of 5 years. The subsequent registration at the end of 5 years shall be done in Form 10AB.

The following documents are required to be submit along with application:

  1. Self-Certified copy of Trust Deed / Memorandum and Article of Association.
  2. Self-Certified copy of PAN Card of Trust / Institution.
  3. Registration Certificate or Certificate of Incorporation (issued by charity commissioner, registrar of societies or registrar of companies)
  4. FCRA Registration Certificate, if registered.
  5. Old Registration Certificate u/s 12A / 80G.
  6. Audited Accounts along with Acknowledgement of Return of Income and Computation of total income for last 3 years.
  7. Note on the Activity of Trust / Institution.
  8. The details of Assets and Liabilities as on the date of Application (if applicable).


Furnishing of the statement u/s. 80G:

From F.Y. 2021-22, every trust / institution registered u/s. 80G shall have to furnish statement of donations based on which the deduction will be available to the donors. The details of donations have to be furnished in Form No. 10BD annually, on or before 31stMay of the subsequent financial year (e.g. the statement for F.Y. 2021-22 will have to be furnished on or before 31.05.2022). Following information shall be required to furnish the statement (Form 10BD):

  1. PAN / Aadhaar Number of the donor.
  2. If PAN / Aadhaar is not available then either the passport No. / Elector’s photo identity / Driving License/ Ration Card/ Tax Payer identification Number where the person resides.
  3. Type of donation i.e. Corpus / Specific Grant/ Others.
  4. Amount of donation.
  5. Mode of receipt – Cash/ Kind/ Electronic modes including Account Payee Cheque / Others.
  6. The certificate in Form No. 10BE to be given to the donor will be available for download from the website of the Income tax Department after furnishing of Form 10BD.
  7. It is important to maintain complete record of all donors including PAN and address from 01.4.2021.

Non-Applicability of ICDS III to Real Estate Developers:

CA Yash Kapadia
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Non-Applicability of ICDS III to Real Estate Developers:

In this article we will discuss the non-applicability of ICDS III to Real Estate Developers and the Real Estate Developers are not required to follow the Percentage Completion Method.

Relevant portion of ICDS III is reproduced as below:

ICDS III – Construction Contracts’ applies the determination of income of a contractors only arising from construction contracts.

As per ICDS III,‘ Construction Contract’ means a contract specifically negotiated for the construction of an asset or a combination of an assets that are closely interrelated or interdependent in terms of their design, technology and function or their ultimate purpose or use and includes:

  1. Contract for the rendering of services which are directly related to the construction of the asset, for example those for the services of project managers and architects;
  2. Contract for destruction or restoration of assets, and the restoration of the environment following the demolition of an assets.

So, the plain reading of the above definition clearly suggests that the construction undertaken by Real Estate Developers does not satisfy the above definition as the contract is not negotiated only for the construction of asset rather the Real Estate Developer is a person who constructs the asset as per his own schemes and designs and contracts with the buyer to sell the assets. The transaction between the residential flat purchaser and Real Estate developer is not one of mere construction of an asset or simple sale of goods but rather it is a combined contract for not only construction of the flat as also entire building with common amenities but also for transfer of legal title in the flat.

Prior to the ICDS III, AS – 7 – Construction Contracts was in force and it was also not applied to the Real Estate Developers. To clarify this more, the Expert Committee on ICDS (ICDS Committee) was constituted by the CBDT and the committee had in fact recommended that a separate ICDS should be notified for revenue recognition by Real Estate Developers.Pursuant to that, on 11thMay 2017, the CBDT has released draft ICDS on real estate transactions for public consultation. The draft ICDS on real estate transactions is largely based on ICAI’s Guidance Note on Accounting for Real Estate Transactions. Hence, from the above recommendation of the Expert Committee and on the basis of draft ICDS on real estate transactions as released by the CBDT, the very clear intention of CBDT as well as ICAI is that the Real Estate Developers are not covered by the ICDS III.

The CBDT has also clarified in the FAQ issued on 23rd March, 2017 vide Circular No 10/2017 (Reply to Question No. 12) that this ICDS is not applicable to Real Estate Developers. The Q:12 is as follows:

Q:12: Since there is no specific scope exclusion for real estate developers and Build – Operate – Transfer (BOT) projects from ICDS IV on Revenue Recognition, please clarify whether ICDS III and ICDS IV should be applied by real estate developers and BOT operators. Also, whether ICDS applicable for lease.

A:12: At present there is no specific ICDS notified for real estate developers, BOT projects and leases. Therefore, relevant provisions of the Act and ICDS shall apply to these transactions as may be applicable. The CBDT has tacitly accepted that ICDS III not applicable to Real Estate Developers.

Guidance Note on ICDS issued by ICAI also states that the ICDS III is not applicable to real estate developers. Hence, from all these instances, it is very clear that the ICDS III is not applicable to real estate developers and applies only to the contractors.

Now if we look into the applicability of percentage completion method, the Accounting Standard – 9 and guidance note on real estate transactions are relevant. For determination of the accrual of the income and the sale, the Accounting Standard – 9 read with Guidance Note for Real Estate Transactions is relevant. The Accounting Standard – 9 in respect of sale of goods in the real estate projects is explained in guidance note for Real Estate Transactions which was revised in 2017 by ICAI.

Section 5 of the Income Tax Act, 1961 states that the income is taxable in the year in which the same accrues to the taxpayer. Income is said to be ‘accrue’ when taxpayer has legal right to receive the income and accordingly, payer acknowledges a debt in favour of the taxpayer and hence there is no question of applicability of percentage completion method. Reliance can be placed on the judgment of Apex Court in the case of (CIT vs. Excel Industries Ltd (2013) 358 ITR 295 (SC). As the provisions of section 5 prevail over ICDS, contract revenue can be recognized on satisfaction of the test of accrual and not merely onthe basis of reasonable certainty of collection of contract revenue. This view is also supported by the ICAI’s Guidance Note.

AS-7 relating to construction contracts is not applicable to Developers/Builders so there is no question of recognizing the income on the percentage completion method. In support of the contention,  the decision of ITAT Mumbai Bench decision in case of Awadhesh Builders v/s. ITO [37 SOT 122] is relevant in which the ITAT held that in case of real estate developer, profit is earned only when the space constructed is sold. In case, due to some reasons, the project is terminated or is abandoned, the builder has to refund the advances received from the buyers and in that case, there cannot be any profit because the flats/shops could not be sold as the construction remained incomplete. In that case, it will be only be a case of investment by the builder, profit on which will arise only on sale of flats.

Thus, from the above discussion we can conclude that the ICDS III – ‘Construction Contracts’ is only applicable to the person who is Contractor and not applicable to the Real Estate Developers.

Thanking you.

For any query or assistance, you may reach at [email protected]

GST UPDATES IN UNION BUDGET 2021

Arohi Mehta
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GST UPDATES IN UNION BUDGET 2021
GST UPDATES IN UNION BUDGET 2021 The Finance Bill 2021, have proposed certain progressions in CGST Act, 2017 and IGST Act, 2017 to track input credit frauds and to secure Government incomes. Few amendments will be applicable from retrospective effect, while there are further clarifications on the some of the clauses or sections, also some of the sections are amended or added or deleted. The key updates about GST proposed changes in Union Budget’ 2021 are as under:
  1. The following clause or proviso are the new insertion in the CGST Act’2017:
    1. Section 7(1)(aa) is inserted in CGST Act with retrospectively effect from the 1s t July, 2017, so as to ensure levy of tax on activities or transactions involving supply of goods or services by any person, other than an individual , to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration.
    2. Section 16(2)(aa) is inserted in CGST Act to provide that input tax credit on invoice or debit note may be entitled only when the details of such invoice or debit note have been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note.
    3. Section 107(6) is inserted in CGST Act to provide that no appeal shall be filed against an order made under sub-section (3) of sect ion 129, unless a sum equal to twenty-five percent of penalty has been paid by the appellant.
    4. Explanation inserted to sub-section 75(12) of the CGST Act to clarify that “self-assessed tax” shall include the tax payable in respect of outward supplies, the details of which have been furnished under section 37,but not included in the return furnished under section 39.
  2. The following clause or proviso are amended in the CGST Act’2017:
    1. Section 50 of the CGST Act is being amended, retrospectively, to substitute the proviso to sub-section (1) so as to charge interest on net cash liability with effect from the 1s t July,2017.
    2. Section 83 of the CGST Act is being amended so as to provide that provisional attachment shall remain valid for the entire period starting from the initiation of any proceeding under Chapter XII (Assessments), Chapter XIV (Inspection, Search, Seizure and arrest) or Chapter XV (Demand and Recoveries) till the expiry of a period of one year from the date of order made thereunder.
  3. The following changes are proposed in the CGST Act’2017:
      1. Section 129 – Detention, seizure and release of goods
        1. When the owner comes forward for payment of such tax and penalty –He as to pay applicable tax and 200% penalty of the tax payable
        2. When the owner does not come forward for payment of such tax and penalty – He has to pay penalty equal to 50% of the value of goods or 200% of tax payable thereon whichever is higher
        3. Further proviso to sub sect ion (6) has been inserted which provides that the conveyance shall be released on payment by the transporter of penalty under sub-section 3 or Rs . 1 lac whichever is less.
      2. It is hereby proposed to include in zero rated supply –
            1. export of goods or services or both or
            2. supply of goods or services or both for authorized operations to a Special Economic Zone developer or a Special Economic Zone Unit
      3. It is being proposed that option of ‘With payment of Duty” would be allowed only to a notified class of person or notified class of goods or service. Further registered person making supply of goods has to link the foreign remittance with the refund claimed and in case of non-realization of sales proceeds within 30 days from the end of the expiry of time limit prescribed under FEMA Act 1999 would be liable to deposit the refund so received along with the applicable interest.
  4. The following sub-section is omitted in the CGST Act’2017:
    1. It is hereby proposed to omit Sub section 35(5)
    2. And section 44 has been substituted so as to provide that Form 9 and Form 9C i.e. the reconciliation shall be self-certified by the registered person within such specified time as may be prescribed.
Hope this article was useful to you. Stay connected & tuned for more updates.
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