prpri Direct & Indirect Taxes Updates- May 2021 Direct & Indirect Taxes Updates- May 2021

Recent circulars/ notifications/ rules/ clarifications/News

♦ Furnishing & upload of Form No. 34BB on Income Tax E-filling Portal (Notification No. 05 of 2021-Income Tax 24/05/2021)

♦ CBDT notifies Rule 11UAE Computation of Fair Market Value of Capital Assets for the purposes of section 50B of Income-tax Act, 1961 (Notification No.68/2021 [G.S.R. 338(E)] 24/05/2021)

♦ CBDT notifies “Government Employees Superannuation Board” as pension fund Section 10 (23EE) Notification No. 65/2021-Income Tax [S.O. 1855(E)] Dt 13/05/2021

♦ CBDT notifies “Public Sector Pension Investment Board “ as pension fund ( Section 10 (23EE) Notification No. 64/2021-Income Tax [S.O. 1854(E)] Dt 13/05/2021.

♦ Income Tax Return , Tax Audit due Date & Other (Statement of Financial Transactions & reportable account ,TDS return etc) Dates extended Circular No. 9 of 2021 – Income Tax Dt 20/05/2021.

♦ I-T-E filling portal to close for 6 days – New Portal from 7th D.O. F. No. Pr. DGIT(S)/486-2020-21 Dt 19/05/2021

Income Tax Compliance calendar – June 2021

Things to remember
Due Date Particulars
7th June 2021 Due date for deposit of Tax deducted/collected for the month of May, 2021. However, all sum deducted/collected by an office of the government shall be paid to the credit of the Central Government on the same day where tax is paid without production of an Income-tax Challan
14th June 2021 -Due date for issue of TDS Certificate for tax deducted under section 194-IA in the month of April, 2021

-Due date for issue of TDS Certificate for tax deducted under Section 194-IB in the month of April, 2021

-Due date for issue of TDS Certificate for tax deducted under Section 194M in the month of April, 2021

15th June 2021 Due date for furnishing of Form 24G by an office of the Government where TDS/TCS for the month of May, 2021 has been paid without the production of a challan

The due date for furnishing of Form 24G for month of May, 2021 has been extended from June 15, 2021 to June 30, 2021 vide Circular no. 9/2021, dated 20-05-2021

-Quarterly TDS certificates (in respect of tax deducted for payments other than salary) for the quarter ending March 31, 2021

-First instalment of advance tax for the assessment year 2022-23.

-The due date for issue of certificate of TDS in respect tax deducted from the salary paid during the Financial Year 2020-21 has been extended from June 15, 2021 to July 15, 2021 vide Circular no. 9/2021, dated 20-05-2021

-Due date for furnishing statement in Form no. 3BB by a stock exchange in respect of transactions in which client codes been modified after registering in the system for the month of May, 2021

-Furnishing of statement (in Form No. 64D) of income paid or credited by an investment fund to its unit holder for the Previous year 2020-21

30th June 2021 -Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194-IA in the month of May, 2021

-Due date for furnishing of challan-cum-statement in respect of tax deducted under Section 194-IB in the month of May, 2021

-Due date for furnishing of challan-cum-statement in respect of tax deducted under Section 194M in the month of May, 2021

-Return in respect of securities transaction tax for the financial year 2020-21.

-Quarterly return of non-deduction of tax at source by a banking company from interest on time deposit in respect of the quarter ending March 31, 2021.

-Statement to be furnished (in Form No. 64C) by Alternative Investment Fund (AIF) to units holders in respect of income distributed during the previous year 2020-21

-Report by an approved institution/public sector company under Section 35AC(4)/(5) for the year ending March 31, 2021

-Due date for furnishing of statement of income distributed by business trust to its unit holders during the financial year 2020-21. This statement is required to be furnished to the unit holders in form No. 64B

-Due date for linking of Aadhaar number with PAN

-Payment of tax under the Direct Tax Vivad se Vishwas Act, 2020 without additional charge

-Due date for furnishing of Form 24G by an office of the Government where TDS/TCS for the month of May, 2021 has been paid without the production of a challan

-Quarterly statement of TDS deposited for the quarter ending March 31, 2021.

-The due date for furnishing statement of financial transaction for financial year 2020-21 has been extended from May 31, 2021 to June 30, 2021 vide Circular no. 9/2021, dated 20-05-2021.

-Furnishing of statement (in Form No. 64D) of income paid or credited by an investment fund to its unit holder for the Previous year 2020-21

 

Important cases decided

♦ TDS (Section 194A) not applicable if amount was below threshold limit (ACIT Vs Singareni Colleries Company Ltd.) (ITAT Hyderabad)

♦ LTCG Tax not Payable on sale of additional FSI (ITAT) Batliboi Limited Vs DCIT (ITAT Mumbai)

♦ Depreciation on Toll Road allowed at rate allowed for intangible asset. BSC C&C Kurali Toll Road Ltd. Vs DCIT (ITAT Delhi)

♦ ITAT deleted Transfer Pricingadjustment for export commission; Gives Relief to Honda Motorcyle.  Honda Motorcycle & Scooter India pvt.Ltd Vs DCIT (ITAT Delhi)

Disallowance made under section 14A was not to be added for computing of section 115JB book profit (Sun Pharmaceutical Vs ACIT (ITAT Ahmedabad)

INDIRECT TAXES UPDATES

GST

GST Compliance Calendar – Returns  to be filed in the M/O June 2021

GST Return Form Name Filing Period Due Dates in June 2021
GSTR-1 (Outward return) Monthly (May’2021)      11th  June  2021
GSTR 3B (Tax summary return) May ‘2021 20th June 2021 ( In case Aggregate turnover more  than or equal to Rs 5 crore in the previous Year)

22nd  / 24th  June 2021 (in case Aggregate turnover less than or equal to Rs 5 crore in the previous financial year registered in X /Y category respectively.

GSTR 5A (online information & data access) May’2021 20th June 2021
GSTR 05 (by non-taxable resident persons ) May’ 2021 20th   June 021
GSTR 06 (ISD) May’ 2021 13th  June 2021
GSTR 07 (TDS) May’ 2021 10th  June 2021
GSTR 08 (TCS) May’ 2021 10th  June 2021

The 43rd GST Council met under the Chairmanship of Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman through video conferencing on 28th May 2021. The GST Council has made the following recommendations relating to changes in GST rates on supply of goods and services and changes related to GST law and procedure:

Form Due Date Relaxation- Turnover upto ₹ 5 Crores Relaxation- Turnover > ₹ 5 Crores
GSTR-3B for May 2021 20.06.2021
  • No late fee till July 20 2021
  • Nil rate of interest rate till 5th July , 2021
  • 9 percent interest till July 20, 2021
  • 18 percent interest post July 20, 2021
  • No late fee till 5th July , 2021
  • 9% for the next 15 days till 5th July 2021
  • 18% thereafter post 5th july’2021

Form Due Date Relaxation- Turnover upto ₹ 5 Crores
GSTR-3B for March 2021 20.04.2021
  • No late fee till June 20, 2021
  • Nil rate of interest rate till May 5, 2021,
  • 9% for the next 45 days 20th June 2021, 18% thereafter
GSTR-3B for April 2021 20.05.2021
  • No late fee till 4th July , 2021 (45 days from due date)
  • Nil rate of interest rate till 4th June , 2021,
  • 9% for the next 30 days 4th July 2021, 18% thereafter

Major Decisions of 43rd GST Council Meeting

GST Annual Return Filing – Annual Return Filing will continue to be optional for 2020-21, for small Tax payers with turnover less than Rs. 2 Crore Reconciliation statements for 2020-21 to be furnished by taxpayers with turnover of Rs. 5 Crore or more by self certification.

GST Late fees- Late fees have also been rationalized Maximum amount of late fee has been reduced; will come into effect from future tax periods This will provide long-term relief for small GST Taxpayers

GST amnesty scheme- To provide relief to small taxpayers, amnesty scheme has been recommended for reducing late fee To benefit around 89% of GST taxpayers, they can file pending returns, avail benefits of scheme, with reduced late fees

Quarterly Return Filing and Quarterly Payment – Law Committee will look into issues involving Quarterly Return Filing and Quarterly Payment, the modalities need to be worked out

 GST compensation cess- On GST compensation cess, same formula as last year to be adopted this year too Rough estimate is that Centre will have to borrow Rs. 1.58 Lakh Crore and pass it on to States

Certain other COVID-19 related relaxations to be provided, such as

  • Extension of due date of filing GSTR-1/ IFF for the month of May 2021 by 15 days
  • Extension of due date of filing GSTR-4 for FY 2020-21 to 31.07.2021
  • Extension of due date of filingITC-04 for QE March 2021 to 30.06.2021.
  • Cumulative application of rule 36(4)for availing ITC for tax periods April, May and June, 2021 in the return for the period June, 2021
  • Time limit for completion of various actions, by any authority or by any person, under the Act, which falls during the period from 15 April 2021 to 29 June 2021, to be extended up to 30 June 2021 subject to certain exceptions

Cases Law

IGST on oxygen concentrators Exemption to imports through canalizing agencies while imposing 12% IGST on goods for personal use, arbitrary and unreasonable distinction: The Delhi High Court has held that condition in Notification No. 41/2021-Cus., dated 3 May 2021 under which exemption from IGST is available to import of oxygen concentrator, by the State Government or, any entity authorised by any State Government only, is manifestly arbitrary. According to the Court, the notification places unreasonable distinction between two identically circumstanced users (canalizing agencies and individuals) depending on how the oxygen concentrator has been imported. Finding no justification in excluding individuals from the purview of notification dated 3 May 2021, the Court noted that while it is permissible for the State to identify a class of persons for extending tax exemption, it is not permissible for the State to exclude a set of persons who would ordinarily fall within the exempted class by creating an artificial, unreasonable, and substantially unsustainable distinction. Notification No. 30/2021-Cus., dated 1 May 2021, granting exemption only to duty more than 12% IGST, on oxygen concentrators, was hence quashed. The Court observed that oxygen concentrator is a piece of medical equipment required for treatment, mitigation, and/or prevention of the disease [i.e. coronavirus] or disorder in human beings and would be eligible to exemption under SI. No. 607A of Notification No. 50/2017-Cus., subject to conditions. (Gurcharan Singh v. Ministry of Finance – Order dated 21 May 2021 in W.P.(C) 5149/202, Delhi High Court)

GST payable on interest paid for delayed payment to foreign exporter Rate  to  be same as that applicable on imported goods: The Gujarat Authority for Advance Ruling has held that payment of interest by the importer for delayed payment of value of goods to the foreign exporter will be covered under the supply of services under Entry No. 5(2)(e) of Schedule-II of the Central Goods and Services Tax Act, 2017 and is liable to GST according to Section 15(2)(d) of the said Act. Observing that such interest is included as a part of the value of the imported goods as per Section 15(2)(d), it concluded that the rate of GST payable will be the same as that of the IGST applicable on the imported goods. Further, noting that reimbursement amount paid to the foreign exporter in respect of the expenditure incurred by the latter on stamp duty/tax on behalf  of the importer-applicant for the Corporate Guarantee, did not fulfil all the conditions laid down under Rule 33 of the Central Goods and Services Tax Rules, 2017, the AAR held that the same was not excludible from the value of supply. The amount was held to be covered under the term ‘consideration’ as had direct relation to the business connection. (Enpay Transformers Components India Pvt. Ltd. – 2021 TIOL 125 AAR GST)

No ITC available on promotional material provided to franchisees, distributors, etc. AAAR holds such supply as non-taxable supply: The Karnataka Appellate AAR has held that the Input Tax Credit is not available on promotional items purchased by the appellant­ manufacturer and provided to the exclusive brand operators/franchisees, distributors and retailers free of cost, for use in their showrooms for displaying their products. The AAAR was of the view that the said supply is a non-taxable supply It noted that the provision of  promotional materials is neither covered within the scope of a taxable supply as defined in Section 7 of the CGST Act nor is it a supply covered under Schedule  I of the said Act. ITC was also denied to the appellant on carry bags, calendars, diaries, pens, etc., embossed/engraved with the brand name, which are distributed to the EBOs/distributors/retailers for the purpose of giving away to the customers. Holding that this supply was also a non-taxable supply, the AAAR also observed that these give away promotional items, distributed at the sole discretion of the appellant without any contractual obligation or consideration, acquire the character of gifts and are barred from being eligible for ITC under Section 7(5)(h). (Page Industries Ltd. 2021 TIOL 17 AAAR GST)

Customs

Customs {Import of Goods at Concessional Rate of Duty) Rules, 2017 Amendments effective 2 February 2021 explained: The CBIC has issued a detailed Circular to explain the amendments in the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 which have come into effect from 2 February 2021. Circular No. 10/2021-Cus., dated 17 May 2021 while highlighting that now 100% outsourcing for manufacture of goods on job-work basis  has been permitted for importers  who do not have any manufacturing facility at all, also states that now option is available to the importers to import capital goods for a specified purpose and after use, clear the same on payment of the differential duty and interest, at a depreciated value. The Circular also elaborately lays down the procedure required to be followed by the importer, including for one-time prior intimation of intent, intimation before import, clearance from port of import, receipt of goods, sending and receiving goods to/from job worker, re-export or clearance for home consumption, quarterly return and maintenance of account. . (Circular No. 10/2021-Cus., dated 17 May 2021)

Cases Law

EPCG scheme Non-mentioning of authorisation in case of third-party exports is not fatal: The Madras High Court has held that the requirement of mentioning EPCG licence of the manufacturer in the shipping bill, in case of third-party exports, though mandatory as  per Para 5.7.1 of the Foreign Trade Policy, factum of export is capable of being satisfied constructively as well. Observing that such non-mention is not fatal to the claim of concessional rate of duty, the High Court also noted that the provisions of Section 149 of the Customs Act, 1962 provides a forum to the assessee-petitioner to establish this by way of contemporaneous records. The Court noted that this could be done by the assessee by any number of methods, including confirmations from third party, correspondences and other documents at its disposal, among others. (YSI Automotive India Pvt. Ltd. v. Commissioner – Order dated 29 April 2021 in W.P. Nos.3591 of 2019 & 9046 of 2020, Madras High Court)

Wooden boards Classification under Heading 4407 and 4409: In a case involving interpretation of Tariff Headings  4407 and 4409 of the European Union’s Combined Nomenclature, the Court of the Justice of the European Union has held that planed wooden boards, the four corners of which have been rounded over the entire length of the board, are not to be regarded as ‘continuously shaped’ and are accordingly classified under Heading 4407 and not under Heading 4409. The Court was of the view that the light rounding of the sides of the wooden boards results from planing; that the boards had not undergone any continuous shaping process facilitating their assembly or making it possible to obtain mouldings or beadings and hence are not to be  classified under Heading 4409. (Voge/ Import Export NV v. Belgische Staat- Decision dated 15 April 2021 in Case C-62/20, CJEU)

Excise & Service Tax

Sabka Vishwas (LDR) Scheme – Case of erroneous refund excluded even if SCN for same culminating in demand order: Observing that as per Section 125(1)(d) of the Finance (No. 2) Act, 2019, a person who has been served with the notice to show cause under indirect tax enactment for an erroneous refund or  refund shall be ineligible  to make a declaration under the Sabka Vishwas Legacy Dispute Resolution Scheme, the Rajasthan High Court has held that it does not make any difference that the notice to show cause issued stood culminated  in passing of the order creating the demand on amount of erroneous refund. The Court rejected the petitioner’s plea that the refund amount claimed fell within the definition of ‘amount in arrears’ under clause (c) of Section 121 as it was not a case where a show cause notice for  an erroneous refund or refund was issued. The petitioner has contended it was rather the case where an order in original was passed, although, the show cause notice issued was for recovery of erroneous refund/refund. (Saraswati Marble and Granite Industries Pvt. Ltd. v. Union of India – 2021 TIOL 1056 HC RAJ CX)

With Warm Regards & Jai Hind

CMA Rakesh Bhalla | 9779010685 | nancybhalla@yahoo.co

Information Source – M/s LKS, CBIC.gov.in., various internet websites including Income tax website, Dailyhunt, Deloitte, livemint.com,  related links and various notifications, circulars, orders, press releases and other sources-many thanks to all.

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