GST on E-commerce operators

Srishti Sharda
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GST on E-commerce operators

GST (Goods and Service Tax) has been imposed on supply of goods and services.

GST on E-commerce operators remains the same as any other mode of supplies

This article is helpful to those who want to start selling on e-commerce platforms out there and understand the GST requirements.

According to Section 2(44) of CGST Act, 2017 E-commerce means supply of goods or services or both through online mode i.e. using internet.

According to Section 2(45) of CGST Act, 2017 E-commerce operation means any person who owns and manages the online business either directly or indirectly i.e. using internet.

GST Registration for E-commerce Operators

All the persons who manage/own business online are required to obtain GST registration irrespective of the value of supply made by them. In case of services notified u/s 9(5) of CGST Act, 2017 the e-commerce operator is liable to pay tax, on behalf of the suppliers. If such services are supplied through its platform, all the provisions of the Act shall apply to such e-commerce operator as if he is the supplier for this purpose. The process of Registration is as follows:

  • The concerned E-commerce operator is required fill the E- application form REG-07 on the common portal i.e. https://www.gst.gov.in/.
  • The application to be submitted should be duly signed or verified through EVC (Electronic Verification Code).
  • Submit the form, either directly by logging in to the portal or from the facilitation centres notified by the Commissioner.
  • The authorized officer will grant registration after verification and will proceed to  issue a certificate of registration in FORM GST REG-06 within 3 working days from the date of submission of application.

Cancellation of Registration

If the concerned person is not liable to deduct TDS or TCS anymore and it comes to the knowledge of the officer than  where the total value of such supply, under an individual contract, exceeds Rs. 2,50,000.

TCS for E-commerce Operators

E-commerce operator is liable to collect tax (Tax Collected at Source – TCS) from the supplier. The Tax Collected at source acts as a mechanism, wherein, the e-commerce operator collects the part of the tax when the supplier supplies the required goods or service through its portal where the total value of such supply, under an individual contract, exceeds Rs. 2,50,000.. TCS is deducted at the rate of 1% on the net value of the goods or services supplied through the e-commerce operator. The E-commerce operator should collect tax in respect of the supplies by such operator from customers and transfer it to actual supplier. Further, operator should remit to government before 10 days after the end of the month from the date on which the invoice is created.

GST Return Filing for E-Commerce

The return of GST is to be filed by the E-commerce in Form GSTR – 8 every month within 10 days after the end of such month. Under this return, the details of outward supplies of goods and services made by sellers and amount of TCS collected are to be reflected. E-commerce operator is also required to file an annual statement by 31st day December following the end of the financial year in which the tax collected. The amount of TCS which is paid by the e-commerce operator to the government will be reflected in the Form GSTR-2 of the actual registered supplier (on whose account such collection has been made) on the basis of the statement filed by the e-commerce operator. The Government has notified following categories of services, tax on inter-state supplies/intra-state supplies shall be paid by ECO-

S. No.Description of supply of ServiceSupplier of servicePerson Liable to Pay GSTNotification No.
1Transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycleAny personE-commerce operator Notification No. 17/2017-Central Tax (Rate) dt 28th June, 2017 Corresponding IGST Notification No. 14/2017-Integrated Tax (Rate) dt 28th June, 2017
2Providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes Any person except who is liable for registration under sub- section (1) of section 22 of the said CGST ActE-commerce operator –do– 
3Services by way of house- keeping, such as plumbing, carpentering etc Any person except who is liable for registration under sub- section (1) of section 22 of the said CGST ActE-commerce operator Inserted vide Notification No. 23/2017-Central Tax(Rate) dated 22nd Aug, 2017Corresponding Notification No. 23/2017-Integrated Tax (Rate) dated 22nd Aug, 2017

Frequently Asked Questions

  1. Is GST required for e commerce?

Ans. Yes, it is mandatory for all the e commerce operators irrespective of sales turnover.

2. Can I sell online without GST?

Ans. There is a scheme called GST Composition Scheme. … In such platforms, you can sell online without GST only if you sell goods that are exempted

3. Who pays GST seller or buyer?

Ans. GST is paid by consumers but it is remitted by the businesses who sell goods or services.

30 Inspiring Warren Buffett Quotes

Raghav Bajaj
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30 Inspiring Warren Buffett Quotes

I have read in a Book that “Buffett’s investment principles are “simple, old and few”. Most of his success came because of his personality, character, and willingness to learn from and teach others. Of his many outstanding qualities, the role as a teacher is the one for which he would most like to be remembered.”

Recently, I have made Warren Buffett my teacher, mentor and guide by reading, re-reading his quotes so that I can implement some bit of it in my life also, especially, in the journey of Financial Market.

Over his lifetime, he has experienced several bear market and has learned how to stay the course and stick to his investing principles, when other investors were selling or rethinking their strategies. Therefore, discipline is an essential element in becoming a successful long term investor. Some of his quotes have helped me become a more disciplined investor. Therefore, sharing some quotes which might help you as well:

1. In the business world, the rearview mirror is always clearer than the windshield.  

American business will do just fine over time. And stocks will do well just as certainly, since their fate is tied to business performance. Periodic setbacks will occur, yes, but investors and managers are in a game heavily stacked in their favor. (The Dow Jones Industrials advanced from 66 to 11,497 in the twentieth century, a staggering 17,320% increase that materialized despite four costly wars, a Great Depression, and many recessions. And don’t forget that shareholders received substantial dividends throughout the century as well.)

2. Risk comes from not knowing what you are doing.

3. It’s better to hang out with people better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction.

4. Rule No. 1: Never lose money.
Rule No. 2: Don’t forget No. 1.

5. I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.

6. If you buy things you do not need, soon you will have to sell things you need.

7. Before looking at new investments, we consider adding to old ones. If a business is attractive enough to buy once, it may well pay to repeat the process.

8. The ability to say “no” is a tremendous advantage for an investor.

9. If you own See’s Candy, and you look in the mirror and say, “Mirror, mirror on the wall, how much do I charge for candy this fall?” and it says, “More,” that’s a good business.

10. If a business does well, the stock eventually follows.

11. The definition of a great company is one that will be great for 25 or 30 years.

12. Do not take yearly results too seriously. Instead, focus on four-or five-year averages.

13. What the wise do in the beginning, fools do in the end.

14. We always live in an uncertain world. What is certain is that the United States will go forward over time.

15. You can’t make a good deal with a bad person.

16. There are some parts of the game that we don’t understand, so we don’t play with them.

17. When you’re associating with the people that you love, doing what you love, it doesn’t get any better than that.

18. Great investment opportunities come around when excellent companies are surrounded by unusual circumstances that cause the stock to be misappraised.

19. I read annual reports of the company I’m looking at, and I read the annual reports of the competitors—that is the main source of material.

20. All there is to investing is picking good stocks at good times and staying with them as long as they remain good companies.

21. Diversification is a protection against ignorance. It makes very little sense for those who know what they’re doing.

A lot of great fortunes in the world have been made by owning a single wonderful business. If you understand the business, you don’t need to own very many of them.

22. If you are in a poker game and after 20 minutes you don’t know who the patsy is, then you’re the patsy.

23. It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.

24. Smile when you read a headline that says, “Investors lose as market falls.” Edit it in your mind to, “Disinvestors lose as market falls—but investors gain.” Though writers often forget this truism, there is a buyer for every seller and what hurts one necessarily helps the other.

25. I always knew I was going to be rich. I don’t think I ever doubted it for a minute.

26. The market, like the Lord, helps those who help themselves.

If “investors” frenetically bought and sold farmland to each other, neither the yields nor prices of their crops would be increased. The only consequence of such behavior would be decreases in the overall earnings realized by the farm-owning population because of the substantial costs it would occur as it sought advice and switched properties. Nevertheless, both individuals and institutions will constantly be urged to be active by those who profit from giving advice or effecting transactions. The resulting frictional costs can be huge and, for investors in aggregate, devoid of benefit. So ignore the chatter, keep your costs minimal, and invest in stocks as you would in a farm.

27. Beware of geeks bearing formulas.

28. The difference between successful people and very successful people is that very successful people say “no” to almost everything.

29. Do not save what is left after spending, but spend what is left after saving.

30.  It’s a mistake paying attention to the day to day fluctuations of a stock —it makes no difference.

5 Mistakes which can end your trading career in share market.

Raghav Bajaj
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5 Mistakes which can end your trading career in share market.

Making mistakes is part of the learning process when it comes to trading or investing. Investing is generally referred for a longer period of time. Traders generally buy and sell futures and options or shares for short duration which can be 1 minute also and 2-3 months.

Some types of trading are:

  1. Scalping (trades which lasts for seconds to minutes)
  2. Day trading (about buying and selling on the same day, without holding positions overnight)
  3. Momentum trading (the trader identifies a stock that is “breaking out” and jumps on to capture as much of the momentum on the way up or down as possible)
  4. Swing trading (trading that attempts to capture gains in a stock within one to seven days)
  5. Position trading (Position traders stay in trades for weeks to months)

Mistake 1 – Trading is a Get Quick Rich Scheme

Many people believe that trading is scheme to become rich quickly. Think about it, if it was, everyone trading would already be millionaires. Trading is a skill and which takes time to learn. Skilled traders can and do make money in this field. However, like any other occupation or career, success doesn’t just happen overnight. Therefore trading without knowledge, skills, experience and practise has a direct relationship with losses.

Mistake 2 – Not having a Trading Plan

It’s a challenge to turn a profit through day trading, and although every day trader believes they can make money, most people who attempt day trading end up with a net loss because of poor money management rules, lack of discipline, risk management and emotions.

“Risk comes from not knowing what you are doing”

Experienced traders get into a trade with a well-defined plan. They know their exact entry and exit points, the amount of capital to invest in the trade and the maximum loss they are willing to take.

Beginners tend to lose money because they may not have a trading plan and a big sign that you don’t have a trading plan is not using stop-loss orders and common trading mistake is when a trader cancels a stop loss order on a losing trade just before it get triggered because they believe that the price trend will reverse.

Mistake 3 – Poor Money management skills

Money management looks so simple but it has many aspects relating to it. Money management includes

  • Know your risk per trade
  • Always use stop-loss
  • Consider Risk Reward ratio before entering any trade
  • Use Broker leverage wisely
  • Controlling Fear and Greed
  • Keep a trading journal and note the learning and mistakes from every trade.

Not following abovementioned money management skills will lead you to more and more losses and will bring an end to your trading career.

Mistake 4 – Never gamble on events

Gambling on events is not always a good idea.

For example: Budget 2020 has created lots of expectations around the country that government will bring in various reforms and plans to boost the economy and market also had various expectations some of them are like reduction of long term capital gain, Removal of Dividend Distribution tax and many more. So, the stocks which might can get boost by the actions of government were already valued accordingly before the event. However, the event didn’t go as expected and had adverse effect on the market.

These are the images of Share price of Reliance, HDFC Bank and SBI Life Insurance of the budget day of 2020. SBI Life insurance crashed 10% in minutes just because it was expected that the limit of deduction u/s.80C will be increased and insurance companies will benefit from it. However, when such expectations didn’t fulfill the share prices of Life insurance companies crashed 10% in just few minutes.

Mistake 5   Tip based trading                   

Nowadays, Tip based trading is getting very popular. There are so many channels on telegram for share market tips and many beginners who want to enter in share market tend to follow such tips. There might be certain good advisors also. However, following the free tips of advisors without applying your mind and by showing blind trust on some advisors will only lay off your capital in some duration. Because while following the tip there is general belief that these tips are from someone who is more experienced than us. Further, late replies or no reply from advisors can also lead to huge losses.

Therefore, it is advisable to be cautious while following any tips.      

Conclusion:

During the journey of my trading, I kept my trading journal and noted some mistakes from every trade. We must identify the mistakes and learn from it otherwise it will not take much time to end up in losses. It is said that if you learn from your mistake then it is worth doing.

Identifying these mistakes have helped me to plug the loopholes and manage my capital in a more better way.

It isn’t the way it really seems. Does negative crude oil price means that we get paid to refill our vehicles?

Sneha Kejriwal
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It isn’t the way it really seems. Does negative crude oil price means that we get paid to refill our vehicles?

Since the beginning of the year 2020, the economy has gone through major historic events whether it be the death of NBA legend Kobe Bryant, the spread of coronavirus, the impeachment trial of USA president, and other nation wise events.

21st April, 2020 was one such historical moment for the world. On one hand, where everyone is fighting against coronavirus, the prices of the WTI crude oil had fallen to negative $37 per barrel.

Whether we as an individual be benefitted from the news of negative crude oil price or does it put the economy in a disadvantageous position?

First, let us understand what is “Negative crude oil price”.

We often think that the major factors for determining the price of any commodity is the market’s “demand” and “supply”. The same is prevalent in the case of WTI crude oil. However, in this case another major factor that has affected the price is “storage capacity”.

To buy any commodity, an individual has an option either to buy at the current market price or at a predetermined rate in future month by entering into a futures contract. A person enters into a future contract either to hedge their risk through taking physical delivery of the commodity in the future month but at an agreed rate or to speculate in commodity by making cash settlement which does not include physical delivery.

The problem occurred when the demand for crude oil decreased (due to coronavirus) so much that there was no buyer on the other hand. And the speculators, who aimed at settling the financial difference between the buying price and the settlement price, had no other option than to take physical delivery of the May contracted oil. The speculator may not have a refinery or storage facility where crude oil could be stored. So now even if the speculator takes the delivery, where will they store the barrels of oil? This is where the factor of storage has taken the front seat and became a driving force behind the pricing of crude oil futures.

The speculators had to pay someone to store the barrels of oil until the demand for the same is increased. Therefore, making payments to take oil has led to a negative oil price. If the speculators had proper storage capacity, then the economy would have never seen such type of situation.

All this transaction has taken place between the producers and the intermediaries which will not affect the end customer.

Therefore, we individual consumers aren’t going to be benefitted from this transaction.

Now let’s see how will this affect the Indian economy.

There are three benchmark oils depending on their quality and location – Brent, WTI, and Dubai/Oman. India is one of the biggest importers of crude oil and cooking gas which is supplied from diversified sources. India imports Brent oil from Iraq and Saudi Arabia, which is the main source of supply.

The decrease in WTI crude oil price shall have a low impact on the Indian economy as India is not a major importer of WTI crude oil. Also, the negative price of WTI crude oil was only for May Future contract, the June delivery futures are still trading in positive territory at $20+/BBL.

How does this situation affect the environment?

Negative oil price means that US crude oil producers are not facing a glut and if they don’t stop drilling, they will have to give the oil away free and/or pay people to buy that oil. If this oil could not be sold, then they may opt for dumping or disposal. However, this will cause an environmental disaster and result in billions of dollars of penalty.

It is always said that excess of anything is dangerous. Hence proved!.

What Idea will work post Lockdown during COVID19? Any Idea ?

ABHISHEK MITTAL
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What Idea will work post Lockdown during COVID19? Any Idea ?

Covid-19 is what’s known as a black swan event—something both unexpected and extreme relative to historical norms.

Market is flooded with lot of webinars for strategies and ideas. It feels like last 100 years management rules and gyaan is coming forefront in one form or the other. Everyone is estimating what the world be like after covid, how the market will react, demand forecasts.

However, critical point is that demand forecasts that underpin your business could be wrong for at least the next 3 to 12 months. The consulting industry which had many key management principles of Strategic, Tactic and Operational Models. Strategic Models like BCG matrix, Blue ocean strategy, Competitive analysis: Porter’s five forces, Scenario-planning, SWOT analysis. Operational Models like 6 Sigma, Sevens S, Discounted Cash Flow Model, Balanced Score Card, Philip Kotler 5ps of Marketing, Benchmarking, Performance Management, Value Chain Mapping, HR Transformation.

Their application of management principles has worked differently for different industries in different era’s. In 90’s the era was of Blue of Ocean Strategy and Six Sigma, In next decade the era was of Branding and HR Transformation. In current Decade it is all about Artificial Intelligence and Data Analytics. So this time which management principle has to be priority for Entrepreneurs of SME’s. This kind of time comes once in century where all possible forecasts, strategy, thinking may fail as the world is not what it was.

The SME’s have not looked beyond Product Innovation in their journey. We need to understand innovation from Different perspectives. Innovation strategies are neither promoted or applied in SME’s DNA properly. Consultants applied Management principle in a non-structured manner and stereotypically in every organization without understanding long term implications of same.

Certainly, Companies that will succeed are adaptable and innovative—at scale. Those characteristics are human-centred. And they are particularly valuable during recessions. According to  The Economist, in a recent report on the short-term future of commerce, “ingenuity, not just financial muscle, will become a source of advantage, allowing cleverer firms to operate closer to full speed.”

Innovation can be in different functions of business Distribution Innovation, Technology Innovation, Product Innovation, Customer Innovation, Employee Innovation, Finance Innovation. These innovations can be process oriented, incremental or disruptive. Every time the war like situation, Global Depression, US Depression 2008 has created new industries and markets altogether.

Challenging Times are also Opportunities to Improve Your Innovation Model Periods of disruption highlight existing challenges for companies. Management should safeguard the business while anticipating business trends, quickly addressing volatility and proactively establishing long term financial and operational resilience across the business.

Conclusion::

The above principles are also some of the tools which will help companies to understand macro points and coordinate the resources easily. But all the organization within the same industry will have to implement customized solutions. Management Consultants also cannot apply management principles to the industries without understanding its DNA, Cutlure and Objectives.

Management of Technology, Finance & Business is not required by true consultant or companies but Innovation on all of that aspects are required for better business resilience and survival. Adaptability to Invention by any organization will be the most critical factor in surviving them.

Latest GST Revised Due Date due to Covid-19

Vedant Biyani
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Latest GST Revised Due Date due to Covid-19

Government through Circular No. 136/06/2020-GST dated 3rd April 2020 has extended the due dates for GST filings in order to give relief to various businesses due to the spread of Covid-19 pandemic.

The GST revised due date for filing of returns as well as making the payment towards it for the months of Feb 2020 to May 2020 are covered in this article.

Revised Due Date of GSTR 1

Due date (Revised) for the GSTR 1 return of for the months of March, 2020, April, 2020 and May, 2020, and for the quarter ending on 31st March, 2020, for the registered persons has been extended to 30th June 2020.

Revised Due Dates for GSTR 3B

Due Dates(Revised) for class of Registered persons as per Turnover is mentioned below in the table.

Tax PeriodMore than 5 Crores1.5 to 5 CroresLess than 1.5 Crores
February-202024-06-202029-06-202030-06-2020
March-202024-06-202029-06-202003-07-2020
April-202024-06-202030-06-202006-07-2020
May-202027-06-2020Note 1 & 2Note 1 & 2

Note 1: Taxpayers whose principal place of business is in the States of Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana, Andhra Pradesh, the Union territories of Daman and Diu and Dadra and Nagar Haveli, Pondicherry, Andaman and Nicobar Islands or Lakshadweep, the return in FORM GSTR-3B for the month of May, 2020 shall be furnished on or before 12 July, 2020.

Note 2: Taxpayers whose principal place of business is in the States of Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand or Odisha, the Union territories of Jammu and Kashmir, Ladakh, Chandigarh or Delhi, the return in FORM GSTR-3B for the month of May, 2020 shall be furnished on or before 14 July, 2020.

Late Fees

Late fee for delay in furnishing returns in FORM GSTR-3B and FORM GSTR 1 has been waived for the tax periods of February, 2020 to April, 2020 provided the return is filed by the extended due date.

Interest

If the return is filed for the tax period of February, 2020 to April, 2020 till the extended due dates then

For Taxpayers having the turnover of more than 5 Crores– NIL for first 15 days from the actual due date and 9% thereafter till the date on which the payment is made. For Taxpayers having the turnover upto 5 Crores– NIL Rate of Interest.

Important Note: If the return is filed for the tax period of February, 2020 to April, 2020 after the extended due dates then the interest is to be paid at the rate of 18% from the original due date till the date on which the payment is made.

E-way bill

E-way bill generated under rule 138 of the CGST Act, 2017 and if its period of validity expires during the period 20-03-2020 to 15-04-2020, the validity period of such e-way bill shall be deemed to have been extended till the 30-04-2020.

Revised Due Dates for GST Forms:

Form GST CMP-08 for the quarter ending on 31-03-2020– Revised due date is 07-04-2020.

Form GSTR-4 for F.Y. ending on 31-03-2020– Revised due date is 15-07-2020.

Form GST CMP-02 for F.Y. 2020-2021– Revised due date is 30-06-2020.

Form GST ITC-03 for F.Y. 2020-2021– Revised due date is 31-07-2020.

Due date of GSTR 5, GSTR 6, GSTR 7, GSTR 8 for the tax period of Mar, Apr and May 2020 is extended to 30-06-2020.

Any time limit for completion or compliance of any action which falls during the period from the 20th day of March, 2020 to the 29th day of June, 2020, and where completion or compliance of such action has not been made within such time, the due date of the same has been extended to 30th day of June, 2020.

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E-way Bill

Srishti Sharda
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E-way Bill

Electronic Way Bill is a unique document which is system generated or generated electronically for consignment of goods from one place to another. It may be either inter-state or intra-state, as such a person registered under GST cannot transport the goods worth more than Rs. 50,000/- without generating an e-way bill for the same. On generation of an e-way bill a unique number E-way Bill Number (EBN) is generated and is made available to supplier, recipient and transporter. E-way Bill can also be generated or cancelled through SMS, Android App and by site-to-site integration through API.

When should an E-way bill be issued?

E-Way bill will be issued when there is a transport of goods in a vehicle/ conveyance of value more than Rs. 50,000 (either each Invoice or in aggregate of all invoices in a vehicle/conveyance)-

  • In relation to a supply
  • For reasons other than a supply ( say a return)
  • Due to inward supply from an unregistered person.

Here, Supply is considered as payment in the course of business or payment which may not be in the course of business or in case of barter exchange.

As per the latest update for E-way Bill as on 23rd March 2018:-
The transporters need not generate the E-way bill (as Form EWB-01 or EWB-02) where all the consignments in the conveyance:

Individually (single Tax Invoice/Delivery Challan) is less than or equal to Rs 50,000 but, In Aggregate (all Tax Invoice/Delivery Challan put together) exceeds Rs 50,000.

Who should generate an E-way Bill? – EXEMPTION

The E-way bill under the GST regime will be generated by:-

  1. Every Registered person who is making the transport of goods of value more than Rs. 50,000/-* (Either individual or aggregate) to or from the registered person:
  2. In relation of Supply(Eg:- Sales);
  3. In relation of the reasons other than supply(Eg:- Sales Return);
  4. In relation to an inward Supply from an unregistered person.

*E-way bill needs to be generated even if the value of goods is less than Rs. 50,000/- in the provisions like the movement of Handicraft goods and movement of goods for Inter-state Job work.

  • Every Unregistered person who is making transport of goods
  • Every Transporter carrying goods by road, rail, air etc. also has to generate E-way bill if its supplier has not generated it.

Part A and Part B of E-way Bill system:-

An e-waybill comprises of two segments- Part A and Part B. Part A of the e-way bill contains the details like GSTIN of the supplier, GSTIN of the recipient, place of dispatch, place of delivery, document date, document number, the value of goods, HSN Code and the reason for the transportation.  This part is to be filled by the consignor or consignee.

Part B is for filling vehicle details like mode of transport, Vehicle/Transport document number, and date, place of dispatch. We need to enter the exact date and time when he starts from the source to destination because the finance ministry has clarified that the validity of an e-Way bill would start from the date transporter entered in part B.

The Process to Generate E-Way Bills:-

E-way bill can be generated or canceled through web-portal (https://ewaybillgst.gov.in) and through SMS services.For generating new e-way bill using the portal, following steps are to be done after log in to portal:-

Generate New>fill up the required details, if you are supplier select outward option and if you are the recipient then select inward option>In the next page, you need to add product name and description, HSN code and enter the estimate distance of transport.

You will need a transporter registration and GST registration to generate the e-Way bill using website.

Legality of the E-way Bill:-

When the distance to be covered by the goods:

  • is less than 100 km – The E-way bill is valid for 1 day after the e-way bill has been procured.
  • is more than 100 km – The validity would be increased by one day after the e-way bill has been procured.

Consequences of not carrying E-way bill:-

The consequences of not generating & carrying the E-Way bill can result in both monetary and non-monetary losses to the taxpayer. Goods being moved in the contravention of Law are liable for:

  • Monetary Penalty

Moving goods without the cover of an invoice and E-Way bill constitutes an offence and attracts a penalty of Rs.10,000 or the tax sought to be evaded (whichever is greater).Hence, the bare minimum penalty that is levied for not complying the rules is Rs. 10,000.

  • Detention and Seizure:-

The vehicle that is found to be transporting the goods without an Eway bill can be detained or seized and would be released only on payment of appropriate tax and penalty as specified by the officer. Under this, there could be two situations:

If the owner wishes to pay the penalty, he must pay 100% of the tax payable.

If not, the penalty will be equal to 50% of the value of goods.

Apart from the legal consequences mentioned above, it is also important to note that the vehicle, as well as the goods of the taxpayer, can be detained.

Impact of COVID – 19 on Real Estate Sector

Srishti Sharda
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Impact of COVID – 19 on Real Estate Sector

The sudden outbreak of COVID-19 has pushed the world into deep financial and economic crises. Challenges faced by the world are increasing day by day spanning across issues of unemployment, rate of poverty, disruption in demand and supply etc. In the current scenario, lockdown has brought the industrial, real-estate, financial and banking sectors to a standstill and the recovery curve will depend on the fiscal stimulus rolled out by the government. Indian debt capital markets are facing significant strain as COVID-19 spreads globally.

Although the real estate sector had been facing financial stress even prior to COVID-19, the outbreak of this pandemic has came out as double whammy for the entire sector. The extent of impact of the disease will be only known after the lock down is over. The problems which can be faced by the real estate sectors can basically be summed up into the following factors:

  • Delay in completion of the Projects: With this sudden move towards nationwide lockdown, many projects which were ongoing were left as it is and because of which many homebuyers had to suffer unexpected delay in possession causing them unnecessary expenses of rent and the EMIs. Even after the end of lockdown, it might take certain time to bring the construction activity to its fuller capacity and optimum effectiveness for completion of the projects.
  • Dispute in Demand and Supply: At the times of such emergencies, people tend to save money to spend it only on the basic necessities. Post crisis, their inclination towards investing in a property will decline as a result of which the demand for house properties will fall. Commercial real estate market will be impacted more as it is a slow mover. If Corona virus keeps impacting the economic supply chains for longer terms than expected, there is a possibility that commercial investment decisions may stray from real estate. According to a recent update, housing sales is likely to witness a YOY drop of 25-35%  in 2020.
  • Labour Issues and price stability: Many daily wage laborers have migrated from their work place to their hometown and this has caused a great problem to the builders. Also it can be predicted by looking at the present scenario that the prices will absolutely remain the same even though the cost may raise, causing the developers to suffer a fall in profit margin as they may face less demand. Although price reduction is necessary to create demand but it may turn out to be threatening to the real estate developers as such the market scenario is extremely challenging and most developers have a corresponding finance cost mounting with delay in project completion.

Steps taken by RBI to boost the real estate sector due to the COVID-19 pandemic:

  • The Reserve Bank of India (RBI) firstly, has extended loans which were given for restructuring of projects for about a period of 12 months, without downgrading the asset classification. This is for projects that were delayed for reasons which were beyond the control of realtors and comes as a major relief to the real estate sector. They say it will benefit residential projects that were delayed on account of regulatory issues.
  • The Central Bank has taken a decision to reduce the reverse repo rate by 25 basis point which is now 3.75% and has provided with additional liquidity for the National Housing Bank (NHB) which will help to accelerate and facilitate bank credit flows towards to the besieged sector in the wake of Covid-19 crisis This reduction in the reverse repo rate will help the banks in lending more amount of money.
  • The Central Bank decided to allot amount of Rs. 10,000 crore to National Housing Bank, which shall be a big relief to the real estate sector struggling under liquidity crisis. It further decided to extend the moratorium period on NBFC loan for the commercial real estate projects. It is observed that due to COVID-19 the ability of the borrowers to repay has reduced therefore, the NPA count shall not include 90-day moratorium.
  • For NBFCs and micro finance institutions, the RBI proposed to make available liquidity worth ₹50,000 crore under the Targeted Long term repo operation (TLTRO) 2.0. This will allow banks to access 3-year funding from RBI to invest in investment grade corporate papers of small and mid-sized NBFCs and MFIs which can be utilized in onward lending to the real estate sector.
  • The Reserve Bank of India has also taken additional measures to support the economy by making an one-year extension for commencement of commercial operations (DCCO) of project loans for real estate projects that are delayed for reasons beyond the control of promoters and are expected to provide relief to real estate sector. Since the repayment schedule will now be extended by a year, the cash flow will be ploughed back into the project, indirectly infusing liquidity into the stuck project.
  • Further the RBI decided that scheduled commercial banks will be allowed to deduct the equivalent of incremental credit disbursed by them as retail loans for automobiles, residential housing and loans to micro, small and medium enterprises (MSMEs), over and above the outstanding level of credit to these segment 2020 from their net demand and time liabilities (NDTL) for maintenance of cash reserve ratio (CRR). The aforementioned exemption will be available for incremental credit up to July 31st, 2020.
  • The government has introduced an Alternative Investment Fund(AIF) with a total collection of USD 3,570 million to bail out 1600 real estate projects which were stuck due to liquidity crunch. It is expected that these measures will boost growth by increasing the consumption in real estate and associate sector.

Countries around the world have implemented the changes to the real estate policy in order to lessen the burden on tenants and in some cases the landlords. Though the government has taken various measure but they can be proven better if the Government can take the following measures to stabilize the real estate sector in the Indian economy:

  • To solve the problem of high price and taxes paid by the people, the government should reduce the rates of GST charged by it and give some concessions.
  • Government should try to increase the money supply in our economy by maintaining the cash inflows and outflows to increase the purchasing power in the hands of the consumer and creating the demand thereof.
  • The government must take measures to boost the investments which would increase the demand to purchase residential property among the people.
  • The government needs to take appropriate safety measures after the lockdown so that the laborers can resume the ongoing projects which were stuck and take necessary step so that the workers work in a healthier environment.
  • Further the government should work on making RERA more effective so that the projects which have been halted due to lack of funds can be revived back and completed as soon as possible.
  • Lending rate for the reality projects maybe fixed at a lower repo rate in the long run and the NPA classification should be extended beyond 90 days for the projects which are very crucial.

Although the real estate sector is under crises, it is the only one expected to provide largest employment before and after the lockdown in the country and is likely to contribute to around 13 % to country’s GDP by 2025 and become the third largest globally at USD 1 trillion by 2030.

Cash Deposit during Demonetisation period

Vivek Jhaveri
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Cash Deposit during Demonetisation period

It was 8 pm on the 8th November when heartbeat of every Indian skipped a beat because the Honourable Prime Minister of India announced that since midnight 500 rupee and 1000 rupee currency notes would no longer be a legal tender. The citizens were given time until December 31, 2016 to deposit their old currency in their respective bank accounts.

Cash Deposit during Demonetisation

During the said period there has been a huge cash deposit of cash in all the bank accounts of old demonetized currency (or SBNs). The Income Tax Department had issued notice u/s. 142(1) of the I.T. Act, 1961 to more than 1.16 lakh individual and firms that made cash deposits over Rs 25 lakh after the demonetisation. A stand was taken by many taxpayers that the SBNs deposited were proceeds out of genuine cash sales made during the year and not out of undisclosed income of past years.

In addition to this, the CBDT came up with a Standard Operation Procedure Instruction/Internal Guidance Note for assessing officer with regard to handling of cases related to demonetisation vide circular dated 09.08.2019 in F.no.225/145/2019 – ITA.II. It specifically instructed the Assessing Officers to make a comparative analysis of cash sales, cash deposited (year wise and month wise). The Guidelines also suggested to keep an eye on the special indicators for bogus sales or backdated sales and to further look at the situations described below:

1. Any unusual increase in the cash sales during the period November to December 2016 as compared to previous assessment year.
2. Any sudden deposit of cash to another account or entity, which may seem inconsistent.
3. Any unusual increase in the percentage of cash trails of identifiable persons as compared to previous assessment year.

The books of accounts were produced during the course of assessment proceedings and no defect could be pointed out in the same, however still in many instances, the assessing officer has made the addition of cash deposited during the demonetisation period on the pretext that assessee has created fictitious books of accounts. The assessing officer has simply assumed that the assessee had undisclosed income since past many years and the same was deposited in bank account in the garb of bogus cash sales or cash in hand which has been skillfully portrayed in the books of accounts. The addition in such cases has been made u/s. 68 and 69 of the I.T. Act, 1961.

The following arguments may be made at appeallate stage in such cases. 

1. Assessee opting to file return u/s. 44AD is not obliged to explain individual entry of cash deposit in bank unless the AO proves that the said cash deposit has no nexus with gross receipts.
2. Cash in hand cannot be ascribed to bogus sales without bringing evidence on record, when assessee had filed Sales & Purchase details like Sales Register, Purchase Register, Sales and Purchase Invoices, Stock Register and the AO had not made any further enquiry.
3. When cash deposited in reflected as cash sales in books of accounts and if the AO has not rejected the books of accounts u/s 145(3), he cannot make any seperate addition for cash deposit. 
4.Once assessee’s option to be taxed u/s 44AD is accepted, additions u/s. 68  and u/s 69A is not permissible without proving why s.  44AD inapplicable.
5. Assessee filing return u/s 44AD cannot be asked to prove that 92% of his receipts have been expended.

As demonetisation was a historic event and the issues at hand shall be decided on the basis of judicial precedents, the following judgements would be of relevance to deal with the said issue.

In favour of the revenue:

1. Kale Khan Mohammad Hanif v. CIT 1963 50 ITR 1 SC.
The Income-tax officer had assessed the gross profits of the businesses on the basis of certain percentages of the total sales which had also to be fixed by estimates.

Whether the burden of proving the source of the cash credits is on the assessee?

It was held that the onus of proving the source of a sum of money found to have been received by the assessee is on him. If he disputes liability for tax, it is for him to show either that the receipt was not income or that if it was, it was exempt from taxation under the provisions of the Act. In the absence of such proof, the Income-tax Officer is entitled to treat it as taxable income.

2. CIT v. Devi Prasad Vishwanath Prasad
The High Court, in disposing of the application under section 66(2), expressed that the question again assumes that it was for the Income-tax Officer to indicate the source of the income before the income could be held taxable and unless he did so, the assessee was entitled to succeed. That is not, in our judgment, the correct legal position. Where there is an unexplained cash credit, it is open to the Income-tax Officer to hold that it is income of the assessee and no further burden lies on the Income-tax Officer to show that that income is from any particular source. It is further for the assessee to prove that even if the cash credit represents income, it is income from a source which has already been taxed.

Case laws on cash deposits in favour of assessee:

1. Shree Sanand Textiles Industries Ltd. V. DCIT vide ITA No. 1166/AHD/2014.
We also note that the provisions of section 68 cannot be applied in relation to the sales receipt shown by the assessee in its books of accounts. It is because the sales receipt has already been shown in the books of accounts as income at the time of sale only. We are also aware of the fact that there is no iota of evidence having any adverse remark on the purchase shown by the assessee in the books of accounts. Once the purchases have been accepted, then the corresponding sales cannot be disturbed without giving any conclusive evidence/finding. In view of the above we are not convinced with the finding of the learned CIT(A) and accordingly we set aside the same with the direction to the AO to delete the addition made by him.

2. CIT v. Vishal Exports Overseas Limited (Gujarat High Court) Tax Appeal No. 2471 of 2009
Revenue carried the matter in appeal before the Tribunal. The Tribunal did not address the question of correctness of the C.I.T. (Appeals)’s conclusion that amount of Rs.70 lakhs represented the genuine export sale of the assessee. The Tribunal however, upheld the deletion of Rs.70 lakhs under section 68 of the Act observing that when the assessee had already offered sales realisation and such income is accepted by the Assessing Officer to be the income of the assessee, addition of the same amount once again under section 68 of the Act would tantamount to double taxation of the same income.

3. Lakshmi Rice Mills v. Commissioner of Income-tax [1974] 97 ITR 258 (PAT.)

Section 69A of the Income-tax Act, 1961 – Unexplained moneys – Assessment year 1946-47 – Whether when books of accounts of assessee were accepted by revenue as genuine, and cash balance shown therein was sufficient to cover high denomination notes held by assessee, assessee was not required to prove source of receipt of said high denomination notes which were legal tender at that time – Held, yes.

Conclusion:
When the assessing officer has not doubted the genuineness of purchases or opening stock, and has not rejected the books of accounts u/s 145(3),  then the assessing officer cannot deny the source of cash deposit out of cash sales and thus he cannot make any addition u/s. 69 of the Act.

Related:
8 Income Tax Judgements during previous demonetisation

Extensions under various provisions of Direct Tax due to COVID-19

Arohi Mehta
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Extensions under various provisions of Direct Tax due to COVID-19

The COVID-19 pandemic has broadly impacted the majority of the countries across the world. Accordingly the Government of India has taken rapid & quick steps in various sectors like medical, finance to help meet the challenge addressed by this danger of COVID-19. While the focus is primarily to stop the spread done by viruses, governments additionally have a hard-hitting task of managing the economic aftermath of this pandemic. One such measure was announced by the Finance Minister on 24th March 2020 through Press Release to give relaxation in Statutory and regulatory compliances across the Sectors for the taxpayers so that the compliances can be met and there are no penal consequences for delays which are beyond the control. Several other Orders, Notifications were also released by the Government. Here we talk about its impact or changes on our Indian Direct Tax Structure.

  1. Due Date Extensions through Press Release on 24th March 2020 by Finance Minister:
ParticularsThenNow
Belated Return of FY 18-19 (AY 19-20)31st March 202030th June 2020
Revised Return of FY 18-19 (AY 19-20)31st March 202030th June 2020
Aadhaar-PAN linking31st March 202030th June 2020
Vivad se Vishwas Scheme 2020:
Declaration & Payment without additional payment of 10%		31st March 202030th June 2020
Issue of
notice,
intimation,
notification,
approval order,
sanction order,
filing of appeal,
furnishing of return,
statements,
applications,
reports,
any other documents,
time limit for completion of proceedings by the authority		Between 20th March 2020 to29th June 202030th June 2020
Any investment/ construction/ purchase made by the taxpayer for claiming rollover benefit/deduction for FY 19-20 in respect of Capital Gain u/s 54 to 54GB of IT Act

Any investment/payments by the taxpayer for claiming deduction for FY19-20 under Chapter VIA-A of IT Act including 80C(LIC, PPF, NSC, etc), 80D(Mediclaim), 80G(Donations)

Commencement of operations for SEZ units for claiming deduction u/s 10AA of IT Act		31st March 202030th June 2020

  1. Reduced Rate of Interest through Press Release on 24th March 2020 by Finance Minister:

For delay in payments of advanced tax, self-assessment tax, regular tax, TDS, TCS, equalization levy, STT, CTT made between 20th March 2020 & 30th June 2020,  reduced interest rate at 9% instead of 12 % or 18 % p.a.( i.e. 0.75% p.m. instead of 1% or 1.5% p.m. ) will be charged for this period. 

No late fee/penalty shall be charged for delay relating to this period between 20th March 2020 and 30th June 2020.

Here is the chart showing the above relief as announced by the finance minister as compared to provisions of the section under Income Tax Act’1961:

ParticluarsSectionInterest as per sectionReduced interest rate
due to COVID-19 outbreak
Regular Tax234A12% annually (1% p.a.)9% p.a.
Advance tax234B12% annually (1% p.a.)9% p.a.
TDS201(1A)18% annually (1.5%p.a.)9% p.a.
TCS206C(7)12% annually (1% p.a.)9% p.a.
Equalisation levy17012% annually (1% p.a.)9% p.a.
STT10412% annually (1% p.a.)9% p.a.
CTT12312% annually (1% p.a.)9% p.a.

  1. Opening of ITAT Offices & Benches:

ITAT issues Office Order dated 16.04.2020 regarding opening of ITAT benches and offices from 20th April’2020 ensure all preparatory arrangements concerning social distancing in offices as also that the permitted activities are implemented in a phased manner after strict implementation of the guidelines.

  1. Issue all pending Income Tax Refunds:

Ministry of Finance (MoF) issues Press Note dated 8th April 2020 to provide immediate relief to the business entities and individuals benefiting around 14 lakh taxpayers by issuing all pending Income Tax refunds up to Rs. 5 Lakhs.

  1. PM Cares Fund:
    • Donation to PM Cares Fund:
      • Ministry of Finance (MoF) issues Press Note dated 31st March 2020 wherein it is declared that donations made to PM Cares Fund shall be eligible for 100% deduction u/s 80G of IT Act. Further limit of deduction of 10% of Gross Income shall not be applicable for donations to this fund.
      • As the date for deduction u/s 80G has extended to 30th June 2020, donations made till 30th June 2020 under this fund shall also be eligible for claiming deduction in FY19-20.
      • Any Person including Corporates paying concessional tax on income for FY20-21 under new regime can also donate up to 30th June 2020 & claim deduction u/s 80G for the FY19-20 & shall not lose his eligibility to pay tax in concessional taxation regime for the income of FY20-21.
    • Income received from Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND):
      • As per Amendment in the Income Tax Act 1961(2020) Income received from PM Cares Fund would be Exempt under section 10(23C)(i).
  1. Issue of Certificate for Lower Rate/Nil Deduction/Collection of TDS or TCS u/s 195,197 & 206C(9):

CBDT issues Orders u/s 119 & Clarification stating that certificates for FY 19-20 will be applicable for the FY20-21 till 30th June 2020 until the certificate for FY 20-21 is issued by the Assessing Officer.

  1. Submission of Form 15G & 15H for FY 20-21:
    • CBDT issues Order u/s 119 of IT Act 1961 dated 3rd April 2020 to mitigate the genuine hardship of the eligible person who is not able to submit the Form 15G & 15H for FY 20-21 timely to Bank & other Institutions by increasing validity of the Form 15G & 15H submitted for the FY 19-20 till 30th June 2020 for FY 20-21 .
    • The payer who has not deducted tax based on the said Forms shall have to report details of such payments in TDS statement for the quarter ending on 30th June 2020 following the provisions of Rule 31A(4)(vii) of IT Act 1962.

All these changes, extensions in due dates and relief in interest, fee, and the penalty for late filings of various statutory forms amid a nationwide lockdown to tackle the pandemic by the government is the key strategy of helping the individual taxpayers, businesses, and corporates which will not reduce the compliance burden. But it’s just shifted for some period and hence taxpayers should evaluate their all forms of compliance obligations and try to manage all such obligation through the e-filing or online mechanisms as though, now India has transformed into Digital India & most of the compliance work can be discharged Online so taxpayers should try to discharge it as soon as possible to fulfill the obligations within extended timelines, to avoid any issues/penal consequences at a later date. Although the government has taken steps to ease the burden for taxpayers, it is a responsibility of every taxpayer to discharge their tax obligation timely & on a priority basis.

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