Komal Thakkar & Associates

04/09/2017

New sections under I-T Act which are applicable in the present tax audit season._

The tax audit season for FY 2016-17 is currently on. Several new sections were introduced in Budget 2016 which are applicable from FY 2016-17 - which have to be borne in mind while filing your ITR. A few land slide changes applicable from this year are brought to your notice:

1. *Implementation of ICDS:* The _Income Computation and Disclosure Standards_ have been made applicable from FY 2016-17 or AY 2017-18. The CBDT has issued 10 such standards which are all mandatory for all assessees having income from business and other sources. These standards define how income is to be computed under certain situations and mostly applicable to all assessees - both corporates and non-corporates. These are complicated and cannot be ignored while preparing your return of income even in non audit cases where presumptive income is returned.

If income is not declared in accordance with the ICDS, the return may be picked up for scrutiny and the AO may do a best judgement assessment by rejecting the books of account.

2. *Section 270A:* This section which seeks to levy penalty has come into force from this year in respect of UNDER REPORTING and MISREPORTING of income. If the return is picked for scrutiny which results in addition of any income in the assessment, stringent penalty will be levied as under:
- 50% of the tax demand in case of underreporting;
- 200% of the tax demand in case of misreporting.
This penalty is automatic and leaves no discretion for the assessing officer. Penalty for concealment until last year u/s 271(1)(c) was discretionary and sparingly levied on erring assessees. Not following ICDS will trigger a penalty under this section.

3. *Section 271J:* This section provides to levy penalty of ₹ 10,000 on a professional who furnishes incorrect information in reports or certificates! The three professionals on whom this penalty can be levied are chartered accountants, merchant bankers and property valuers. The erring professional may be further subject to disciplinary action by their respective regulatory body.

12/07/2017

1) HSN code is not link with tax Rate till everybody understand HSN code. And for Turnover below 1.5 Cr. No need to mention HSN code in invoice, from 1.5 Cr. – 5 Cr only mention 2 digit of HSN code and above 5 Cr mention only 4 Digit of HSN code.

2) For invoice, No format and No colour is Specified by department. You can design your own invoice. Only thing to keep in mind is that some details are mandatory is to mention in Invoice.

3) If our supplier register under composite scheme (below turnover of 75 lacs) he could not take credit of GST or he could not pass GST credit. He has to pay only 2% of turn over as GST if he is manufacturer and 1% if He is Traders. And 5% if he is restaurant.

4) If our GST input is more then GST output (ie for E rickshaw industries most of items input credit of 28% and output GST is 12%) in that case after every month return files person can apply for refunds (RDF1) and that refund will be obtain within 60 days otherwise departments is liable to pay interest on it. and refund application can be done upto 2 years. So worries of Capital block is remove.

5) There are Anti-Profiteering Rules. - Every one is can take modvat credits of Excise , Services Tax , VAT , Octroi , Entry Tax on its stock items and it has to pass to customers. For example, If I am buying today a iron pipe at Rs.62 per Kg plus 5% VAT ( which included 12.5% excise , 2% CST and 3.5% Octroi.) but after 1st july supplier can credit of all the tax and he has to reduce its basic price. He can not charge Rs 62 + 18% GST but he has to reduce its price by tax amount and decide new base price, if any supplier is not abiding by it then we can complain against him and department will penalise on such suppliers.

6) No need of E way bill till next 6 months.

7) If we does not received payments in 60 days from customers then we can claim for GST amount charge on it. So most people worried removed if customers fail to pay us then we lose our Tax amount also. And if customers pays after six months then we can again pay GST which we have taken back as credit.

8) All people worried there is 37 Returns in year. And there is no revise return. But its not 100% truths. Every month we have to files our output ( sales or services) we add our invoice day to day base to GST portal. And save it. we can edit also that invoice. On 10th or before 10th we just have to upload all edited sales invoice. Since we have edited invoice before uploading no need of revise return. Till 15th you can check all your purchase and verified (no need to files return its only verification) on 20th you just need to update your final return after correction if any. And if there is any mistake found we can rectified that mistake in next months return So it become more simple then before.

Thus GST is very easy and it remove all headache of Form C , Deal with different departments like Excise, Sales Tax , Octroi , Entry Tax and many others. So we all should welcome GST open heartedly.

19/04/2017

In India, the quantum of domestic black money is huge which adversely affects the revenue of the Government creating a resource crunch for its various welfare programmes. Black money is generally transacted in cash and large amount of unaccounted wealth is store and used in form of cash.”

With above observation in the explanatory memorandum to the Finance Bill – 2017, section 269ST is incorporated in the Income Tax Act -1961. Section 269ST reads as under:

‘269ST- No person shall receive an amount of two lakh rupees or more—

(a) in aggregate from a person in a day; or

(b) in respect of a single transaction; or

(c) in respect of transactions relating to one event or occasion from a person

otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account:

Provided that the provisions of this section shall not apply to—

(i) any receipt by—

(a) Government;

(b) any banking company, post office savings bank or co-operative bank;

(ii) transactions of the nature referred to in section 269SS;

(iii) such other persons or class of persons or receipts, which the Central Government may, by notification in the Official Gazette, specify.

Explanation.—For the purposes of this section,—

(a) “banking company” shall have the same meaning as assigned to it in clause (i) of the Explanation to section 269SS;

(b) “co-operative bank” shall have the same meaning as assigned to it in clause (ii) of the Explanation to section 269SS.’.

Section 269ST is a step to promote less cash economy & restricts the cash transactions in excess of Rs. 2 Lakh from a person in a single day or in respect of any single transaction or in respect of transactions relating to one event or occasion from any person. The way the section has been drafted, outcome would be very stringent, at least till the time government provides certain genuine exclusion by notification.Even genuine Transactions in Cash would be affected by Section 269ST.

Though the wording of the new law is simple, the outcome would not be so. Though the object is noble, its implications would be draconian. There are no exceptions as such and penalty would be imposable whether the recipient is a businessmen or a salaries assessee, whether it is a trust of company, whether recipient is a society or HUF, whether its partnership firm or a company.

The section is unfettered & it places restriction on the recipient (& not on payer). The nature & character of receipt is irrelevant i.e., exempt income or taxable income etc. There is no exemption even for sale of agricultural produce.

Let us try to understand the implications of the new law. Section 269ST restricts the cash acceptance in three ways, as under:

19/04/2017