Monday, 31 July, 2017

Vistra India Update 332

July 16 - July 31, 2017

INCOME TAX

No withholding taxes on GST component

Hitherto wherever in terms of the agreement/contract between the payer and the payee, the service tax component comprised in the amount payable to a resident is indicated separately, withholding tax was to be deducted at source under Chapter XVII -B of the Act on the amount paid/payable without including such service tax component.  With the introduction of Goods and Service Tax (GST) effective from 1st July 2017, CBDT had received references from stakeholders seeking clarification as to what treatment would be required to be given to the component of GST on services into which the erstwhile Service tax has been subsumed.  CBDT has clarified that wherever in terms of the agreement or contract between the payer and the payee, the component of 'GST on services' comprised in the amount payable to a resident is indicated separately, withholding tax shall be deducted at source under Chapter XV Il-B of the Act on the amount paid or payable without including such 'GST on services' component. GST for these purposes shall include Integrated Goods and Services Tax, Central Goods and Services Tax, State Goods and Services Tax and Union Territory Goods and Services Tax.

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Clarifications on computation of book profit for the purposes of levy of Minimum Alternate Tax (MAT) under section 115JB of the Income-tax Act, 1961 for Indian Accounting Standards (Ind AS) compliant companies

Finance Act, 2017 amended the provisions of section 115JB of the Income-tax Act,1961(‘the Act’) so as to provide the framework for computation of book profit for the purposes of levying Minimum Alternate Tax (MAT) in case of Indian Accounting Standards (Ind AS) compliant companies in the year of adoption and thereafter. This framework was specified on the basis of the recommendations of the MAT-Ind AS Committee (‘the Committee’) constituted for this purpose. Subsequently, representations have been received from various stakeholders regarding certain issues arising from the implementation of provisions of amended section 115JB of the act. These representations were forwarded to the Committee for examination. After detailed examination of implementation issues raised by the stakeholders, the Committee vide report dated 17th June, 2017 has recommended certain amendment to the provisions of section 115JB of the Act with effect from 1st April, 2017 (i.e. A.Y.2017-18) which is the date of coming into effect of the amendments made in section 115JB of the Act by the Finance Act, 2017. The recommendations of the Committee regarding issuance of circular in the form of FAQs have been accepted by the Government and circular in the form of FAQs has been issued vide No 24/2017 dated 25.07.2017.

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Amendment to Form No. 3CEFA – Application for opting Safe Harbour Rules

  • The Central government has amended Form No. 3CEFA - Application for opting Safe Harbour Rules.  The amended Form includes the following.
  • Employee cost in relation to operating expense declared
  • Currency of denomination of the amount of loan for each loan transaction
  • Whether credit rating of AE has been done? If yes, the credit rating rank and the name of the credit rating agency
  • Details of international transaction in respect of receipt of low value-adding intra-group services

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Due date for filing Income tax returns extended for AY 17-18 for Individuals

31st July 2017 was the due date of filing Income tax returns for Individuals for AY 17-18. As the tax payers faced difficulties in filing their tax returns due to various reasons including technical difficulties, the CBDT has extended the due date from 31st Jul 2017 to 5th August 2017.  Further it is clarified that it would be sufficient if Aadhar number or Aadhar enrolment number is quoted while filing the return. The actual linking of PAN with Aadhar can be done subsequently, but any time before 31st August 2017. However these returns shall not be processed u/s 143(1) until the linkage of Aadhar with PAN is completed.

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COMPANY LAW

Companies (Incorporation) Second Amendment Rules 2017

The government announced new rules that will amend the Companies (incorporation) Rules, 2014 to provide change in the process to shift the company’s registered office within the same state (Rule 28) and shifting of a company’s registered office from one state or union territory to another (Rule 30). These changes are intended to simplify and streamline the process of shifting the registered office of the Companies.

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Clarification on Exemptions/Relaxations to Private Companies

The Ministry of Corporate Affairs had issued notifications under Section 462 of the Companies Act, 2013, providing exemptions under various provisions of the Act to Private Companies. The auditor of the Private Company need not express opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls if such private company satisfies the following condition.

  • Company having turnover less than Rs. 50 Crores as per latest audited financial statement AND which has aggregate borrowings from banks or financial institutions or any Body corporate at any point of time during the financial year less then Rs. 25 Crore.

It is now been clarified that the aforesaid exemption is available for those audit reports in respect of financial statements pertaining to financial year commencing on or after 1st  April, 2016, which are made on or after the date of the said notification.

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GOODS AND SERVICES TAX

Central Goods and Services Tax (Fourth Amendment) Rules, 2017

The Central Government through Notification Number 17/2017 – Central Tax has amended Central Goods and Services Tax Rules, 2017 to make the following changes. 

1. Use of Exchange Rates for converting the Currencies other than INR for determining the taxable value of Goods and Services

a) In case of Goods the rate shall be as prescribed by the Customs under the Customs Act, 1962

b) In case of Services the rate shall be the rate of exchange determined as per the generally accepted accounting principles

2. Endorsements to be made on the face of the Invoices issued for export of goods or services

a) Filing of Form GSTR- 3B, etc.

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CUSTOMS

Publishing of rate of exchange for conversion of the foreign currency

The Central Board of Excise and Customs (CBEC) vide Notification No. 72 /2017 - Customs (N.T.) notified the rate of exchange for conversion of the foreign currency into Indian currency or vice versa for Export and Import of goods, with effect from 21st of July 2017.  The Notification is appended below for reference:

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